Pink Floyd: Pandora's Internet radio royalty ripoff
usatoday.com
usatoday.com
https://news.ycombinator.com/item?id=3850935
Of course, ultimately, people are (rationally) compelled by the own immediate interests. That's what allows people to deride musicians for trying to "cling to obsolete business models", as if a verdict on the viability of someone's business model entitled people to ignore their rights. So I don't expect Roger Waters and David Gilmour to have much more luck pressing this argument than any other musician has had.
You are reading about the thoughts of a musician long past their prime. They have created vast wealth at one point in time, and now they only have the records to really keep them going.
Vast availability of music DOES NOT MAKE MONEY FOR ARTISTS unless the labels are 100% cut out. Even then the numbers are small. They won't make minimum wage.
HOWEVER... vast availability of music WILL increase their concert attendance. Which means -- $ for the musicians.
This is why old timer musicians from an age where record sales were the way to make $$ will be against the new order of things. Pink floyd is not currently in the business of selling out madison square garden every night of their visit to new york.
NOW I do not necessarily know which way is the better way. In fact I prefer freely available music online and concerts. However I am not in a position to make the call :P
Pink Floyd used to routinely sell out everywhere - they almost define the term "progressive rock".
It's not fair to say they're not in the business of selling out Madison Square Garden - they're not technically in business at all anymore. They still earn royalties but David Gilmour is his own act now.
Some of the discussion is interesting as well. The point about the tech industry being ruthless at extracting surplus value, and that not always producing socially beneficial outcomes, seems correct.
1) Pandora's biggest cost by ridiculously far is royalty payments.
2) Pandora is not now and has never been profitable.
Lots of stuff is broken to make this so, but it's not a case of big bad "piratey" Pandora ripping off poor defenseless artists and laughing all the way to the bank.
1. Royalty rates increase every 3-4 years. This is one of the big reasons why companies like Netflix have a hard time retaining contracts with content owners.
2. There are many middlemen involved in the online music/movie business. By the time everyone gets a cut, there is not much left in pool. This also ensures that everyone gets a very tiny portion.
The online media industry is a complicated mess, and I don't see any long-term solution to it coming up soon.
This thread has a much better discussion of the actual numbers. https://news.ycombinator.com/item?id=5935183
In short, Pandora is small right now and that's why the payout seems small. But by paying per-listener as opposed to per-broadcast, it has the potential to scale to higher payouts than traditional radio.
You can find the info on where the 85% comes from in this story[1] but the important paragraph is below.
"Pandora CEO Joe Kennedy appeared at a hearing on Capitol Hill in support of the Internet Radio Fairness Act, or IFRA, which would lower the amount of royalties that Pandora and other Internet radio services pay to artists. The industry has estimated the act would allow Pandora to reduce payments to artists by as much as 85 percent."
[1]http://www.huffingtonpost.com/2012/12/04/pandora-artist-roya...
More effective, I'd argue; sure, its likely that a smaller percentage of the Pandora listeners are new listeners, but the targeting of Pandora stations is more focussed better than radio so a larger percentage of the Pandora listeners that are new listeners are likely to become fans.
Do you think Amazon would be more or less effective without personalized product recommendations? Which is better for niche products, Amazon or Walmart?
I would way rather have my product sold in Walmart. That's why Walmart suppliers are willing to accept such thin margins. Amazon's great for consumers. As a consumer, I like it that they have pretty much anything I would want to buy.
As a content creator, put me in Walmart any time, as I will be surrounded by a much smaller number of competing products. Being on the same shelf as big sellers Justin Bieber and Skrillex is a dream scenario for an emerging artist. My needs as a producer are way different from my needs as a consumer.
What's interesting is that even for the top 100 the Pandora model has the potential to scale to higher royalties than the radio model, which pays the same whether 1 or 1 million people listen to a broadcast. Less popular bands find niche audiences, more popular ones get paid for every single listen.
In other words, radio is focused around the head (big hits in any genre) while Pandora reaches the "long tail".
In another universe: "Pink Floyd gets paid for every person listening to their music on Pandora. Band claims it's a win over traditional broadcast from which they received nothing"
The old days aren't coming back. Your unloyal customers will steal your product if you don't sell it cheaply enough for their liking.
Subsequently, you either have the choice of trying to make money on your loyal customers only or changing your product. You could try stopping your unloyal customers from stealing from you from some means, but that has not been an avenue that has a high return since it tends to also involve treating your loyal customers like unloyal customers.
Like all those thieving bastards listening to AM/FM broadcast radio, which pays no royalties to performers?
Home radio is killing music!
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I thing Spotify is far, far worse than piracy because with piracy at least people know the artists aren't making in money. People somehow believe that listening to a couple of brief ads per hour, or paying a whopping $10 a month, is enough to receive unlimited access to all music ever created. What a disaster.
Fast forward one generation of kids who are now grown-ups and you have an entire generation of music listeners who will not pay ... whatever CDs used to cost where you live.
The toothpaste is not going back in the tube. The time when David Gilmour could make living sitting on his fat arse is over. He will just have to accept that, and the sooner he realizes that the good old days are not coming back, the sooner he can do something productive. Like cultivate new ways to raise revenue.
I think the music industry understood it moderately well and didn't like it; the small independent labels understood it especially well, because their bottom lines shrivelled away to nothing without them having the capital or market clout to create an alternative.
The time when David Gilmour could make living sitting on his fat arse is over.
Right...all musicians are exactly like David Gilmour or whatever former star you consider to be an overpaid has-been...even if they never actually got rich or famous, they should pay the price of his arrogance.
/facepalm
There was a time where people made a fortune by digging for gold, then the world changed and now it's really hard to make a living by digging for gold. You can cry and say how unfair it is but that's not going to change anything.
Musicians today have to make a living through concerts, merchandising or whatnot. I personally think that this is actually a good development. The web allows musicians to cut out music labels and without much investment reach a large audience, increasing chances of building a fan base and making money from concerts, etc.
There is a sense of entitlement that is out of sync with reality here.
The world has changed. Whining about it isn't going to change that.
I think the problem is that these huge shifts are happening so often that it's difficult for the industry to keep up. First we had piracy, then after a while legal downloads were introduced with iTunes. Now only a few years later the entire industry has been changed again due to YouTube, Spotify etc. For an industry as huge as the music industry, adjusting to these shifts quickly is difficult. Once everyone finally figures out how to make money through streaming something else will have come along.
This has to be balanced against the (probably greater) number of people whose careers fizzled or stalled because so many smaller labels went out of business in a short period. File sharing and streaming has been a disaster for lots of less well-known genres that don't necessarily support large tours. Serious electronic music (as supposed to 'Superstar DJ' BS) has only recently started to put up green shoots in the US, and I'm not sure how long that's going to last: the largest importer/distributors of dance music on the East & West Coast of the US went out of business this spring and nobody is even willing to bid on the liquidation stock: http://www.ebay.com/itm/261230689524?ssPageName=STRK%3AMEWAX...
Next time you read some gushing article about the resurgence of vinyl think about those 70,000 records ending up in landfill.
Of course, not nearly everybody pays $10/month - actually, AFAIK, paid subscription to Pandora costs $3/month and not everybody pays even that. Judging from Pandora's income, only minuscule part of the users does. But I think discounting $10/month as inadequate is wrong, it's actually quite a lot of money if collected on Pandora's scale. The problem is getting that many people to actually pay $10 :)
According to my math, it would be $187.50, not $187,500.
Let’s try a more realistic scenario. Let’s say that at some point in the future 10% of Spotify members pay $3 per month, and that Spotify spends 65% of its revenues on royalties (just like iTunes). That would mean that each one of the 80,000 artists would get $36.50 per month (if all artists’ music were played the same amount of times).
That being said, nowhere close to that many people pay pandora, and the monthly subscription is $3, and not $10.
150 million times $10 divided by 80,000 is $18,750. However, smsm42 was talking about giving 1% of that to the artists, which would be $187,50.
> nowhere close to that many people pay pandora, and the monthly subscription is $3, and not $10.
Which I covered in my alternative scenario.
Deleted comment
Pink Floyd can sob 'till the cows come home, but it's not going to make me believe that <del>he's</del> they're entitled to money for something <del>he's</del> they've already done.
It's true that musicians sort of used to be paid up-front, in the traditional label model where a record company gave a musician a big advance to make an album, and then pocketed most of the actual profits from the sales of that the album (akin to hiring an engineer to build a bridge, then collecting tolls on that bridge). But that's no longer the model for most up-and-coming independent artists, and in any case, that just shifts the royalty-collecting burden to the record companies, who still need to be able to recoup their initial advances.
Another approach, which works well for bridge-building, is that the government just pays some engineers to build a bridge, then lets everyone use the bridge for free. This is like the really old school practice in which a wealthy prince commissions Beethoven to write a string quartet, and once complete that string quartet is then freely available for anyone to perform. As a model for music in the modern world, this would mean socializing the music production business, i.e., taxing everyone the price of a Spotify subscription and pumping that money into NEA grants for artists to record new music, which would then be free for everyone. On the bright side, this would eliminate all worries about piracy and chilling effects from anti-piracy enforcement. But there are also lots of drawbacks, e.g., in this model the decision as to what music should exist would be made, not by the market (as in the indie model), or a profit-oriented record company (as in the label model), but by government bureaucrats whose incentives come from the political process. Of course this could have some good effects (maybe they'd fund fewer Justin Biebers) but IMHO there are serious problems with a system in which an artist's viabilaity is contingent on their staying in the good graces of the government.
Also, just so you know, Pink Floyd is a band, not a person.
In any case, I don't think it's clear that government needs to be involved at all. While patronage might have been the realm of elites in the middle ages, in the modern era any group with enough members can easily become a patron with small cost to each for the sake of supporting any artist deemed worthy (obv. crowdfunding, etc.).
It might take government to tunnel under the English channel, but it doesn't take government for a bunch of neighbors to get together and pave their lane. And supporting artists is much more the later than the former.
If you get hired to create music, there's a fair chance nobody will ever hear it. (Other than your mum).
I can't see how we could possibly pay musicians up front.
Your first sentence betrays a similar lack of understanding about how royalties work.
And bridge-building.
And doors.
And to tomn's credit, the lyric is a bit more relevant than just some random line: The root poster thought Pink Floyd was a person not a band. Apparently that's a common enough misapprehension that they mentioned it in a song... thence the quoted lyric.
Royalties make sense for music, books, movies, and such because at the time they are produced we have no idea how much value they will provide. A song that is mildly popular and then disappears provides less value to the public than a song that becomes an enduring classic that is listened to for generations.
Please support that argument with evidence.
I need to act on the plan to go to the symphony more, while I still have the chance. Symphony orchestras would be in trouble even without the internet; they're very expensive, since they're collections of dozens of trained professionals who have ever-fewer daytime gigs.
Alas, recordings are nice but don't really do an orchestra full justice. Real instruments have real timbre. And, of course, even the recording would be lousy were it not for highly trained and rather expensive studio and mixing engineers.
How about poetry? Performance art? Pantomime? Dance? Standup comedy? Etc.
As for what which arts have value, I think the costs have little to do with that. There are art projects that cost millions that I think are shit, and there are street musicians who can barely buy a deli hero who I think should get million dollar record contracts.
Bridge engineers and architects are good economic substitutes for each other. You can put out an RFP and get competitive bids back.
I for one really like making something of value for people and continuing to get paid for it as long as people get value out of it.
[1]: http://www.petdance.com/actionpark/albini/the-problem-with-m...
Pink Floyd may have a point. But by conflating profit and revenue they lose credibility in their arguments. Why resort to lame rhetoric? Pandora can be growing as a business and still losing money. The fact they had an IPO and got more users doesn't change the fact that they are (as of last quarter) still losing plenty of money.
Edit:
It's obvious that the music industry has business model problems but in this case it's Pandora that has the business model problem. The industry doesn't need to lower it's prices - Pandora needs to figure out a way to pay them as they need the music more than the music industry needs them.
But I guess that takes the fuss away from their complaint. If you view it as Pandora's just losing money and likely to not survive then it makes people wonder why you're complaining in the first place.
If the bands aren't the rights holders then they really have no say. That's a whole other can of worms.
My personal anecdote is that bands are making far more money from me than they did before. I'm discovering bands I wouldn't have know about otherwise. That's the catch 22. The big, well known bands will always make money whether it be through sales or streaming. The smaller bands are much easier to discover through streaming but may not make much money through it.
The artists don't seem to understand that Pandora simply doesn't have the scope or reach of their other revenue sources.
The truth is that music is not a valuable commodity because so many people can produce good music. Being a musician is a blue-collar job, a technician (for the moment) is a white collar job.
How much does Pandora charge? How much do they pay in royalties? How much do artists make from radio royalties? How much did artists make in royalties from CD sales? How much have CD sales declined for Pink Floyd?