This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Best Take Yet on Pandora's Decision to Buy an FM Station

NEW YORK ( TheStreet) -- While I'm fascinated by the soap opera-like drama, I wish the childish back and forth between Pandora (P - Get Report) and the music industrial complex would end.

I study each move closely so, with each day, I know the story better than the back of my hand. But, let's face it, I can't dig too much into the minutia of the legal posturing between Pandora and ASCAP or Pandora and BMI or the ins and outs of The Internet Radio Fairness Act or The Copyright Royalty Board for fear of putting my enormous (snark, snark) audience to sleep.

Plus, why should we ( me and you) have to concern ourselves with this inane fight? It's the type of pissing contest that deserves about as much attention as contract negotiations between a sports franchise and their superstar holdout. Sports fan just want to watch sports. And music fans just want to experience, see, listen to and interact with music and musicians.

That experience would be a heck of a lot richer if sanity would prevail throughout the music industry, Internet radio, broadcast radio and SiriusXM (SIRI - Get Report) satellite radio.

Folks on both sides of the issue will call my one-size-fits-all solution to the royalty mess "too simple" or "not possible," but that's just another way of saying we do not have the will or we're too afraid of what real change might look like. Which is just code for we can't swallow our pride, set aside our egos and work together for the better of the industry at the expense of our perceived self-interest.

But that aside, what will all of these disparate lawsuits accomplish other than making an already confusing situation even more scattered and chaotic?

One thing is certain -- the system is busted.

In the best explanation we have seen yet for Why Internet Radio Royalties Led Pandora to Buy an FM Radio Station, Jodie Griffin of Public Knowledge first draws the distinction between the two types of royalties so many are obsessing over:
The real reason for Pandora's purchase of an FM radio station is Pandora's royalty rate for musical compositions on its internet radio service. Note: this is a separate legal issue from the licensing Pandora pays for its use of sound recordings. The underlying musical composition gets its own copyright, and must be licensed in addition to the sound recording rights.

It's important to point that out from time to time, the distinction between the two different types of royalties. Just like it's important to articulate the difference between the compulsory rate Pandora chooses to pay for the use of sound recordings vs. the direct licensing deals services such as Spotify go with.

I mean I was arguing with a guy the other day who actually publishes articles on this topic and it became clear he had no clue whatsoever as it pertains to these important nuances. A basic understanding of facts you really have to have before getting into the opinion business.

But what Griffin says from there about the Pandora FM radio purchase/publishing dispute applies across issues:
This is a perfect example of the twisted incentives and strange results we get from a music licensing system that is based on who wants a license instead of just what they want to do with the music they're using. This makes no sense. The law should treat like uses alike. Regardless of how high or low you think performance royalty rates for webcasting should ultimately be, there is no logical reason to give preferential rates to certain companies just because they arrived at the negotiation table first.
... But most importantly, treating the same uses differently to give preference to older technologies and dominant companies will only ensure that upstarts and new competitors won't be able to successfully enter the market. This means that the incumbent companies will feel no pressure to become more responsive to listeners or to artists, because neither group will have any other alternative path to reach each other. As a result, individual musicians and music fans will continue to be little more than an afterthought among the dominant rights holders and distributors.

Man. If I wasn't married I would hit one knee and propose to Griffin over Skype. So very well-stated.

-- Written by Rocco Pendola in Santa Monica, Calif.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
P $21.84 1.40%
SIRI $3.86 0.91%
AAPL $110.53 0.14%
FB $93.83 1.90%
GOOG $638.45 1.80%


Chart of I:DJI
DOW 16,729.58 +257.21 1.56%
S&P 500 1,979.29 +27.93 1.43%
NASDAQ 4,758.5140 +50.7390 1.08%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs