This Day On The Street
Continue to site
ADVERTISEMENT
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 Deal: A Royalties Pain on the Air

NEW YORK ( TheStreet) -- Pandora Media (P - Get Report) is spending just $600,000 to buy an obscure radio station in Box Elder, S.D. That six-figure investment, announced in June, continues to reverberate far beyond the Badlands, FM radio and streaming music services, of which Pandora is the biggest player.

Pandora admitted its expansion into terrestrial radio is designed to alter revenue sharing agreements with songwriters and publishers. It's part of an effort to bend or change standards Pandora believes harms its bottom line. That approach, in turn, has triggered multiple lawsuits and other legal maneuvering by publishers and their agents.

Litigation isn't only directed at Pandora, when it comes to digital streaming and music royalty disputes. On Monday, SoundExchange Inc., the organization charged with collecting and distributing digital royalties, filed suit in the U.S. District Court for the District of Columbia, against satellite radio service Sirius XM Radio Inc., alleging systematic underpayment of royalties.

But Pandora is attracting the most attention these days, and some of the most impassioned vitriol. Despite large jumps in revenue and more than 70 million listeners, there's both an in-your-face attitude and a whiff of desperation about Pandora's acquisition of a radio station. Pandora, which went public in June 2011, continues to lose money despite more and more advertising sales. Last week, the company reversed course on limiting listening hours for those mobile users who don't pay money to subscribe. That foreshadows a direct challenge to Pandora's current supremacy, when, next month, Apple Inc. is scheduled to launch its long-awaited iTunes Radio.

The transfer of the radio station license is pending with the Federal Communications Commission, according to a Pandora spokesperson.

Pandora's attempted move to terrestrial radio helps shed light as well on much larger issues related to the music industry, where rapidly changing technology and fickle consumer tastes clash with revenue sharing determined by legislative or administrative fiat. This kind of price determination shapes the value of an individual song and, by extension, music companies.

"In this supposed bastion of capitalism, there's price-fixing, as if this was World War II and we're rationing sugar and nylons," said David Lowery, an outspoken musician and lecturer in music business at the University of Georgia.

1 of 4

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
Submit an article to us!
SYM TRADE IT LAST %CHG
P $18.17 0.28%
AAPL $126.58 -1.60%
FB $77.48 -1.70%
GOOG $534.19 -1.20%
TSLA $231.86 0.59%

Markets

DOW 18,004.14 -66.26 -0.37%
S&P 500 2,102.13 -12.36 -0.58%
NASDAQ 4,963.2020 -53.7270 -1.07%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs