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TheStreet Open House

The Market's Most Exciting Company Not Named Apple

In response to a Tweet from Pandora CTO Tom Conrad, Nashville-based music industry expert and observer Danny Murphy hit the nail on the head. He hit it so squarely that Westergren himself later retweeted Murphy's comment:

That's where it's at. It's not in Apple (AAPL) paying more than Pandora for music because it can. While taking Apple's money makes perfect sense, it's a short-term fix to the royalty problem. A royalty problem that will never take care of itself. There likely will always be a few haves and a whole bunch of have-nots caught in an unjust set of schemes, even if we improve upon them.

That's why -- starting now -- the conversation must include more than short-sighted squawking about royalties. This isn't about protecting the millions Bruce Springsteen and Taylor Swift make. It's about finding a way to leverage Internet radio -- all of that engagement, all of that interaction, all of that precise targeting, all of that data -- to make sure all artists, particularly independents, grab a larger piece of a pie that includes more slices, slices beyond royalties.

We'll see if the music industrial complex actually cares about the interests of independent artists. We already know the major record labels and broadcast radio stations don't. They have no reason to. But the songwriting and composition side -- the folks at ASCAP and BMI -- they do. Which brings up another conundrum.

How do we compensate songwriters and composers for the content they create when it gets spun on Pandora and similar digital platforms? They do not have nearly as many options to make a buck outside of royalties.

Sharing ad revenue makes sense. Apple stepped up the game in that regard. As Pandora grows its ad business, I'm sure it will have room and will to negotiate. At the beginning of the CNBC video, you'll hear a Wall Street analyst indicate that, "over time," Pandora will increase the number of commercials it plays per hour from the present two to seven.

Pandora is doing its part, but not at the expense of sacrificing its business. The music industrial complex needs to make more good faith attempts to do the same; if it doesn't, it will continue to sacrifice its best possible future.

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

Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.
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