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Pandora and Paul Williams: Lots of Bark, but How Much Bite?

Stocks in this article: P SIRI AAPL

NEW YORK ( TheStreet) -- The next time you're at a cocktail party and the conversation turns to Internet radio and music royalties, there's a sure-fire way to distinguish between the well informed and the hopelessly ignorant.

Do the discussants draw a distinction between performance royalties and songwriter/publisher royalties?

All else equal (particularly, forgetting the fact that AM/FM radio does not pay a performance royalty), entities that license music pay two royalties: A performance royalty and songwriter/publisher royalty. Michael DeGusta's blog post and attendant pie chart provide a sound illustration, using the 1,000,000-plus spins Cracker's Low received on Pandora (P):

Pandora pays its performance royalty to SoundExchange and its songwriting/publishing royalty to groups such as ASCAP and BMI. These groups keep some cash and distribute the rest to the performers, songwriters and such.

Earlier this month, I met with hall of fame singer/songwriter and ASCAP President and Board Chairman Paul Williams at the landmark Beverly Hilton hotel in Beverly Hills. Williams has been particularly critical of Pandora's stance and attendant moves in in the royalty dustup:

Pandora is trying every trick in the book to brazenly and unconscionably underpay and take advantage of the creative labor that produces the core offering of their business -- music written by individual songwriters and composers. ASCAP has an ethical obligation to serve and protect the hundreds of thousands of small and independent songwriters, composers and music publishers we represent to ensure that they receive fair compensation when their songs are performed on any technology platforms.

Strong rhetoric. But, and I mean this is in the most positive and glowing way possible, Paul Williams' bark is bigger than his bite.

This is a genuine guy with a genuine argument against a company he genuinely wants to see succeed. Either he duped me with his charm or I am as good as I think I am at assessing first impressions.

Because there's no question, Williams is a charming guy, grateful for his success.

As Williams riffed, he wrote a song for Elvis Presley in the early '70s and, here he is today, with two credits on Daft Punk's smash Random Access Memories.

How do you not come across as charming when you humbly relay the story of how you met Elvis in Liza Minnelli's Las Vegas Riviera Hotel and Casino dressing room?

Elvis walked in. His reason for not knowing which one of his records Paul Williams wrote: "I don't keep track of that sort of thing." When Williams informed Presley it was indeed Where Do I Go From Here?, Elvis said he liked performing that one and asked Williams which album it is on. Williams reply: "I don't keep track of that sort of thing."

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