Have you heard a lot of Internetular argle-bargle about Pandora's crazy-low royalty rates? How they compare unfavorably to satellite rates, and how the company's trying to cut them? You have? Me too. Turns out (unsurprisingly), it's RIAA lies. For example, the comparison to satellite streaming rates is pure spin -- it compares the rate of sending a song to every person turned into that satellite station to a single person listening to a Pandora stream. It would be pretty surprising if Pandora's per-listener rates weren't a fraction of the rates paid by satellite radio for a whole audience.
And the business about trying to cut royalties just isn't true, either:
The next issue concerns the publishing side. Historically, Pandora has paid essentially the same rate as all other forms of radio, a rate established unilaterally by the performing rights organizations, ASCAP and BMI, in the late 1990s. In November of last year, following a lengthy negotiation, Pandora agreed with ASCAP to a new rate, an increase over the prior amount, and shook hands with ASCAP management. Not only was our hand-shake agreement rejected by the ASCAP board, but shortly thereafter we were subjected to a steady stream of “withdrawals” by major publishers from ASCAP and BMI seeking to negotiate separate and higher rates with Pandora, and only Pandora. This move caused us to seek the protection of the rate, also recently negotiated, enjoyed by the online radio streams of broadcast radio companies. It’s important to note that these streams represent 96% of the Internet radio listening hours among the top 20 services outside of Pandora (talk about an un-level playing field). We did not enter this period looking for a lower rate – we agreed to a higher rate. But in a sad irony, the actions of a few small, but powerful publishers seeking to gain advantage for themselves has caused all songwriters’ royalties to go down. Any characterization of Pandora as being out to cut publishing rates flies in the face of the facts.
Pandora and Royalties
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