Pandora boss urges 85% pay cut for musicians

Here's an example of what the new 'internet economy' really looks like, in practice. The leading backer of a bill passing through US Congress that will slash musicians' pay by 85 per cent, as well as effectively outlawing them from bargaining collectively with their paymasters, has been selling stock worth $1m in his own …

[Anonymous Coward]

The future

The only future for music which is beneficial to listeners and musicians is to cut out the fat cat record labels who take most of the profits. Something needs to be in place to stop internet delivery outlets getting the same monopoly though.

Nature would have taken its course already if it wasn't for greedy corporation lobbying.

[Turtle]

You need to understand the past before you understand "The future"

"The only future for music which is beneficial to listeners and musicians is to cut out the fat cat record labels who take most of the profits."

That's an exceedingly stupid comment because compared to what, in general, the internet offers musicians (and all content producers, in fact) the record labels begin to look like paragons of generosity.

Here's a nice, detailed post to explain it to you. It is entitled "Meet the New Boss, Worse Than The Old Boss?" Although it is somewhat lengthy, it should not be a problem - unless, of course, you have Attention Deficit Disorder or similar.

http://thetrichordist.wordpress.com/2012/04/15/meet-the-new-boss-worse-than-the-old-boss-full-post/

[Tapeador]

Re: The future

Let's see - so you're saying that whoever the artist has appointed as their agent (because the artist wants to spend time making art, rather than doing admin, marketing, HR, contracting, sound recording, record distribution, PR, mixing, catering, rights management, accountancy, sales, negotiation, and all the rest), is somehow not a legitimate choice of that artist to act on their behalf?

There are other record labels, you know, it's not like artists have no choice - they go with the label who offers them the best deal, the most support. These labels do compete with one another to support artists. What you call 'most of the profits' are merely the actual costs of doing business. You're not helping artists by stealing music and refusing to pay for it. That's money artists need to eat and labels need to pay them so they can do so.

[Anonymous Coward]

Actually, some of that is already happening

David Kershenbaum (he of many, many Grammys) is one of the drivers behind Eardish, who have a massive war chest. I personally don't like the company name, but the concept behind it is sound - and is *very* much focused on paying the artists. Sure, they make a tidy buck in the process, but not as a result of ripping off the artists.

Given the way that guy is connected I reckon that any other show he starts up with those principles may give the established record companies massive headaches.. And deservedly so..

[Anonymous Coward]

Re: The future

I bet the RIAA supports the pay cuts!

[El Presidente]

Surprised Face

Disgusting.

Freetards gonna hate but they can't argue with fact that their 'business' model is flawed.

"In the case of the Guardian, it's the staff and loyal readers of the newspaper who lose"

Torygraph is reporting that the Graun's trust is to close the print side of the Graun "to be able to stand alone as a digital-only publication, and was mixing its stable of traditional journalists with enthusiastic citizens who would work for free" [whilst some people are trousering in excess of a quarter of a million quid per year and in the case of one person in particular that's after tax]

So, left wing freetards who won't buy a copy of the newspaper will now become the Graun's Citizen Journalist Army, for free, providing live up-to-the minute, source checked and completely unbiased journalism.

[Chad H.]

Re: Surprised Face

Except they already do.... Comment is "Free".

[Anonymous Coward]

Comment is free...but facts are sacred.

Comment is Free is a repository for Comment pieces, not Free. Contributors are staffers, freelancers and outside contributors, many prominent, who may or may not be paid.

How is this citizen journalism?

[Frumious Bandersnatch]

Re: Surprised Face

Except they already do.... Comment is "Free"

I've been wondering when they're going to rebrand that "Talk is Cheap" ...

[kissingthecarpet]

Re: Surprised Face

The Torygraph is probably the least unbiased source for info concerning the Guardian, as they are the Grauniad's direct competitor. Its hard to see how the Telegraph will fare any better than any other paper - did the article describe what the Telegraph's plan's were for coping with inevitably shrinking circulation?

When people like my 81 year old Dad(who isn't a neophile silver surfer by a long chalk) are stopping buying newspapers( the Torygraph, funnily enough) because, for example, he says, "I get all the news etc. I want from the TV & Internet so I'm not wasting money on a paper when I read less than half of it anyway" then they obviously need a strategy quickly.

It doesn't sound like a paywall is one of the viable ones either.

[Anonymous Coward]

Re: Surprised Face

Since when has the Guardian provided "completely unbiased journalism"?

What the remaining readers of the Guardian are interested in is obviously not what you describe - what used to be known as "journalism".

What they want is a bunch of pundits with no expertise in anything endlessly parroting left-wing slogans.

The problem with this model is that the Guardian insists on paying these pundits 6 figure salaries.

The Huffington Post has found a very successful business model using the same product. The difference is that it has worked out the market value of it's contributors - nothing.

[J 3]

"The bill doesn't level the playing field up, but down: everyone must get poorer."

I suspect "everyone" is not an accurate term for here. I mean, in such situation, someone always makes a killing. And it's usually those who deserve the least.

[John Lilburne]

Greedy bleedin musicians ...

... all they do as they perform is calculating the price for each note they play. Chain em to the barrel organ and whip the buggers 'till they dance.

[Michael M]

Value for money

Reading this I see El Reg also "price their valuable product or service at what it's worth".

[Tom 35]

This is news?

How is this different then the execs of a company who stuff their pockets with millions while they fire staff left and right, and outsource everything to India / China.

It's not that it's "an internet company" it's just a company. The record companies have been doing their best to keep all the money since before the internet existed.

[Mephistro]

Re: This is news?

You beat me to it. The first sentence in the article should read "Here's an example of what the 'new economy' really looks like, in practice"

[Bradley Hardleigh-Hadderchance]

Most artists don't get paid

http://www.youtube.com/watch?v=fnJa5EmQvX8

[wowfood]

I know I'm no expert on this, far from it. But I really don't think musicians should have their pay cut even further. BUT I really wish their publishers / record labels would share a bigger part of the pie. I mean the music industry for the most part is slave labor.

Musicans make music and play performances, but 90% of the profit goes to the record label. I mean I know we're in a capitalist world, but come on, the music industry has to be one of the worst for this kind of behavior. Especially when you consider all the clauses and fine print on those contracts. Now a 60/40 split I can see as being fair, or perhaps a tapering split, where it starts out at 50/50, then 60/40 after so many sales, so many more its 70/30 etc etc.

[Anonymous Coward]

Just to advocate for Mephistopheles

I'm curious what the musicians who signed these contracts giving 90% to the label were thinking when they did so. Surely they could have insisted on better terms or simply walked away. After all, what good is a recording company if you have no one to record?

[arrbee]

Re: Just to advocate for Mephistopheles

Well its partly because the contract wont, of course, have been as clear as saying "you get 10%, we get the rest"; instead it will have left lots of room for the company to levy charges against various costs & expenses which they will then invent and inflate.

But mainly its because the record companies simply steal the money from their artists, which is pretty easy since they control the accounting processes involved.

This is why you see the occasional story about someone running an audit on their record label and claiming millions in unpaid royalties, etc. Of course the only artists who can afford to do this are those who have some money, which then leads to people complaining about undeserving musicians earning fortunes.

[Paul Sanders]

Under the compulsory licence 45% of the royalties go to the artists and 50% to the producer - usually a record label. Where an artist is self-released they get 95%. The other 5% goes into a fund for session musicians who have no copyrights but nevertheless contribute a lot to a recording. Check my facts but I believe this is true.

The producers have also contributed, usually by funding the recording, and often by applying a lot of expertise, experience, and coordination. It's not stupidity that leads artists to sign deals with labels. Music is so risky that you can't get funding from many other sources, and professional recording is bloody difficult without expert help. And the money advanced for recording, living expenses, and other professional development is - get this - not recoupable out of anything except income, and interest free!

[Naughtyhorse]

good post, but you went and fucked it all up with the last two words

interest free my arse! that is the very mechanism by which the 45/50 split turns into the 10/90.

we invested heavily in your record we want out money, plus interest, and we want at the earliest possible opportunity. when that's all payed off then 45/50 it is, but until then meet my friend 10/90.

the music industry was totally vertically integrated for years, and when that happens the suits take the piss - they cant help it, it's coded into suit dna. listen to any successful muso's take on the subject and they all say the same thing. when you are no one any deal looks great, when you have a career you see just how badly you got fucked to get there.

[arrbee]

But those figures are basically meaningless because the record label controls the base figure to which these percentages are applied. All their costs, including any advances, are recouped before royalties become payable (whether or not that is what it says in the contract).

Given the obfuscation of their accounting figures, late payments (as in years late), and mysterious charges, these companies are either dishonest or administratively incompetent. They take advantage of musicians because, quite simply, it has never occurred to them not to.

[Rob Crawford]

'The producers have also contributed, usually by funding the recording'

In which alternate universe?

Or do you mean the so called urban artists (who are only the meat puppet public image for the song writing / production teams) ?

Or the fucking Wombles if you want an older example

[Naughtyhorse]

hey man!

dont fuck with the wombles!

you'll have the rotting carcase of a 1973 cortina in your front garden before you can say 'uncle bulgaria'

[Anonymous Coward]

More fucking middlemen trying to legislate themselves into a profit from other's work. Artist --> customer directly and cut the bastards out of the equation, I say.

[Anonymous Coward]

The UK Musicians Union and Performing Rights Society

should buy som etickets and set up a stall in America. Here it's all - Is that a radio in the office - are you playing music to your staff? Have you got a licence?

What a difference

[jonfr]

I guess nobody is telling musicians about this change

I guess nobody has told musicians about this change. Since this is going to drop musicians income by huge amount.

I also want to see the laws he is backing to be stopped in the U.S. The biggest danger to musicians is not piracy. But the music industry as it is today.

[Slap]

The music is just an advert

For a long time I've considered the music simply to be an advert for the other products offered by the musician or band.

CDs, Vinyl, and gigs are the products, and they are tangible products, meaning you can physically hold them or attend them. Music in purely digital form has no value other than to promote the afformentioned items.

The biggest pirates are the major music labels that are snaffeling all the cash and giving the musicians the crumbs from the table. I find myself surprised that, in the current Internet world where a video of a deranged cat can go mega viral, the bands and musicians have for the most part failed to capitalise on that, and more importantly cut out the middle man.

[sabroni]

Re: The music is just an advert

Yeah, it's the same with paintings, the real products they're selling are canvas and pigments. Or sculpture, just an attempt to sell you a big block of marble with bits chopped off....

[I ain't Spartacus]

Re: The music is just an advert

Slap,

That's sounding horribly like a self-justificatory argument for pirating music... Even if what you say is reality, which I'd question, I'm not sure it counts as morality.

Anyway, the labels may take lots of the pie, but it's not as if they're not doing anything for it. They're also taking huge risks on any new artist - given the low chance of them ever making a profit on most of the acts they sign. They offer an awful lot of, very expensive, services to musicians - and most musicians will make a profit on their record deals, because otherwise they'd have made no money at all, or (more likely) lost money.

The big artists do lose out. They'll be on bad terms on their first deal, and lose lots of the unexpected profits. Then the profits from them are used to subsidise the unsuccessful artists, as well as to pad out the profits. Even so, most of them seem not to bother going independent. That I don't understand. Once you're Coldplay, you could easily sell all the stuff you want with virtually no marketing budget. But maybe they want to make music and enjoy their cash, rather than replicating a bunch of services they can get from the record companies already (for more cash admittedly). Or maybe they're even happy to sub the less successful acts, and the suits?

[Hugh McIntyre]

Re: The music is just an advert

Probably once you're a successful act signing your second contract, you can demand better terms. And you can negotiate with other labels until one of them offers good enough terms to accept. Didn't Madonna go to a different label, for example, presumably because the deal was better?

Unknown acts, on the other hand, are not in a strong position to get anything other than a default contract.

[Anonymous Coward]

Another fine example

...of the "redistribution of wealth" that Romney promises to guard against. Just not in this case, because it benefits a corporation, and the CEO is using that dirty money to buy congressmen.

[John Smith 19]

Fair pay for Musicians. Yes. fair pay for media companies. No

That sums up my view. Don't know about others.

[yally04]

not the end of the world - Pandora's looking for equality with US radio

Wow, plenty of snark in this article. As noted in the article, US radio stations don't pay musicians, and Pandora thinks it should have the same deal. Labels actually try to pay radio stations to play their music because it's great advertising. The practice is called payola, and it's illegal. Look it up on Wikipedia.

So on the one hand, the article is right that Pandroa is trying to lower payments to musicians, but Pandora is arguing that it should have the same standing (or nearly so) as radio. The fact that Pandora and other internet radio stations pay so much more than radio was a big controversy about five years ago. Look up "internet radio" on wikipedia, and check out the "US royalty controversy".

Aside from whether you think US radio is getting away with murder, this isn't actually about Web 2.0 economies and whatnot, it's about telecom and copyright regulations.

[Jean-Luc]

Re: not the end of the world - Pandora's looking for equality with US radio

I think you are missing a point here. Radio is broadcast. So, if I am a big Red Hot Chili Peppers fan and I want to listen to Californication, I _must_ wait till it plays on a radio, even an internet radio. Or I can buy the CD.

If Pandora (which I have never used much) allows me to search for & play Californication at any time of my choosing, then that is a very different case. Radios, even internet radios, have promotional value, yes, but they do not replace CDs.

Last, record companies are greedy pigs. We can all agree on it. But they do have a use - cutting out the middleman entirely leaves me in the dark about which bands to listen to (on the internet you won't know the band is a dog and too much choice is not entirely useful). So, there is some value in record companies promotion of bands, even if their terms are generally currently abusive to musicians, except ones that have massive leverage.

Pandora on the other hand? What value does it add to an artist who has to work as a waiter, as many do, to make ends meet? Greedier pig.

[Anonymous Coward]

Re: not the end of the world - Pandora's looking for equality with US radio

If the band is a dog, just click to the next track.

Pandora will never have equality with US radio, I don't think they can be that bad.

[yally04]

Re: not the end of the world - Pandora's looking for equality with US radio

Very good point, I hadn't thought about that. That said, Pandora is still closer to radio than, say, Spotify. On Pandora, you can start a station with Californication, but that song won't necessarily be played. Something by RHCP might come up, but as often as not that first song could be something musically similar that you didn't ask for.

Contrast that to Spotify, where you get what you want immediately, can rewind, restart, etc., if it's in their catalog. It's very different.

But again, good point about broadcast vs. whatever you'd call the "cloud playlist" alternative.

[Alan Brown]

One _could_ argue

That the Net-radio rates are vastly inflated - given the going royalty rate for netcasting was about 50 times higher than actual broadcasters last trime I looked.

However those rates were mostly being trousered by the USA's Performing Rights Organisations. Actual royalties divvied out to songwriters and performers (Copyright royalty and mechanical royalty) didn't change one iota.

Compare and contrast with APRA (The Australasian Performing Rights Association) which in the 1990s offered Australian and New Zealand ISPs licenses of AU$1 per user per year to allow users unlimited download access and made similar overtures to net radio stations.

[Chad H.]

Err....

Would this cut Muscians pay, or would this cut the amount Pandora, et al, pay to the recording companies (Who never pass it most of it on to the artist anyway)?

I smell a rat.... Has the RIAA bought El Reg?

[Anonymous Coward]

smell a rat...

In the pay of the RIAA? That is deeply stupid.

[Chad H.]

Re: smell a rat...

Maybe it is, but the choice of words here has clearly been selected in the most emotive way possible when there's no discussion on who actually gets the money anyway.

Presuming that the artists (and not the executive middlemen) get 100% of the licence fees seems pretty stupid to me.

[Jason]

The worst part is that the musicians have no option to remove their music from these channels, so they can be screwed into the ground.

Leave the commission as it is and given the musicians the right to have their music heard where they see fit.

[Anonymous Coward]

huh?

If a musician removes their music from the channel, they get zero. Name a musician, or anyone really, who wants to do something for nothing, over and over again.

[Battsman]

Hungry musicians...

make better music.

[Levente Szileszky]

An article born out of total lack of understanding...

...the story: Pandora is simply asking TO BE TREATED THE SAME AS A REGULAR RADIO, nothing else.

The recording industry (the dying breed of content dictators, whom Orlowski is always seem to be quick to defend) first tried to KILL online radio right in the bathtub. People revolted online and when Hollywood realized they cannot kill it right at birth then they have forced online radios into a SUICIDAL ROYALTY SCHEME - it's an impossible proposition:

...the MORE LISTENERS they get THE HIGHER THE REVENUE PERCENTAGE THEY PAY for "royalties" for STUDIOS thus they will NEVER turn a profit.

Yes, they pay the STUDIOS, NOT THE ARTISTS (another failure on the author's part to distinguish between them.)

Ars Technica just ran an excellent article about this impossible business model where they quote The Wall Street Journal:

"The WSJ notes that Pandora has yet to report a profit despite a revenue growth of 51 percent, largely because royalty costs for streaming music are so high."

So after reading this really badly written, even factually incorrect hatchet piece the question raises itself: just who's side is Orlowski on...?

[sabroni]

Re: whom Orlowski is always seem to be quick to defend

YES INDEED orlowski is definitely IN THE POCKET of BIG BUSINESS! And PANDORA is exactly the same as REGULAR RADIO!

You're right, random capitals do make it MORE TRUE!!!

[Levente Szileszky]

Re: whom Orlowski is always seem to be quick to defend

I HAVE to use BIG LETTERS AND BIG WORDS or I will not capture the attention of the more simplistic minds, I fear...

...eg the ones who are so hung up on the use of capitalized letter, naturally.

[Anonymous Coward]

"Here's an example of what the new 'internet economy' really looks like, in practice."

Sounds just like what the Scribes Guild would have said after the introduction of printing presses. Or the Horse & Cart brigade after the invention of cars.

It's called "change". Get over it.

The dinosaurs are extinct.

[Deadlock Victim]

Re: "Here's an example of what the new 'internet economy' really looks like, in practice."

This is not change, this is a company whose business model can't function in the current economy trying to alter the economy via legislation.

[Mark Pipes]

pandora is not a lot different than radio

Pandora is like a custom radio. I can not ask it to play a given song, all I do is give it a list of what I do and do not like. It then plays music it thinks i will like at random. Whenever a selection plays, I have the option to like or dislike the selection. That information is used to modify the search criterion.

Given that, the playing field needs to be level. Pandora should pay the same as Sirius/XM, or ,insert radio station here>.com

Given that I pay nothing here in the US to listen to radio over the air, I should not have to pay to listen online. That is what advertising is for. Having said that, I do pay for Sirius/XM, but, and this is a BIG *BUT*, Sirius/XM has no advertising.

[Anonymous Coward]

Re: pandora is not a lot different than radio

When did you last listen to your Sirius/XM? The last time I did, the announcer came on after a 15 second commercial...between every song. Not even the radio stations here in Atlanta do that.

[Herby]

Just remember...

The Artists/Songwriters get very little from the pie, something around 3-5% of the gross, which isn't much. If you are in the selling of CDs, which go for around $15 each (plus minus $5), the distribution channels get almost 50%, and the record labels get maybe 40%, and the crumbs left over (10%) gets divied up for those left over, which isn't very much AT ALL.

So the rate of royalties for artists can make a difference, since lots of the costs are eaten up by those who push the product. Production isn't cheap, nor is things like inventory and advertizing to get people to like/buy the product.

Oh, well. Live and learn.

[G2]

stock trades list - is this a slow fire sale or what's going on?

the actual URL in the article should be this one:

Westergren Timothy: Insider Trading and Stock Options:

http://www.secform4.com/insider-trading/1522489.htm

that shows the monthly trades much more clearly and by looking at what the other executives of the company are doing it seems this kind of slow fire sale ("under the radar") is "normal" for them:

.

Conrad Thomas:

http://www.secform4.com/insider-trading/1522484.htm

.

Costin Delida:

http://www.secform4.com/insider-trading/1522485.htm

.

Trimble John:

http://www.secform4.com/insider-trading/1522488.htm

.

CAKEBREAD STEVEN:

http://www.secform4.com/insider-trading/1254015.htm

.

KAVNER ROBERT M:

http://www.secform4.com/insider-trading/1195065.htm

.

anyone has any clue what's happening here? From what i know executives selling stock (and stock options) in the company they manage happens usually only once a year or so. Doing this monthly and in such high volumes smells weird to me.

[Levente Szileszky]

Re: stock trades list - is this a slow fire sale or what's going on?

Interesting, I agree... slowly getting out as much as they can, before shit hits the fan...?