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Super Bowl Halftime Show Flap Proves Pandora's Impact, Music Industry's Ineptitude

By: Rocco Pendola | 08/24/14 - 09:00 AM EDT

Stocks in this article: P

NEW YORK (TheStreet) -- The revelation that the National Football League would like this season's Super Bowl halftime performer to pay to play further illustrates Pandora's (P) profound impact on the music industry.

To a considerable extent, Pandora has managed to popularize -- or at least normalize -- the notion that artists should accept exposure in lieu of meaningful amounts of cash. And, of course, the NFL, which provides exposure via more than 100 million viewers during its halftime, is more than happy to the embrace the concept. For goodness sake, even Rolling Stone tilts the scheme toward all-around fair proposition:

When reaching out to artists, league representatives asked some acts if they would exchange a headlining slot for a portion of their post-Super Bowl tour earnings, or make another type of financial contribution to the NFL ...
... Considering the Halftime Show has only grown more popular in recent years — this year's performance with Bruno Mars and the Red Hot Chili Peppers drew 115.3 million viewers, compared to the 112.2 million who watched the game — it makes sense they'd want a piece of the pie ( bold emphasis added).

Of course. Makes complete sense ... for the NFL.

Rolling Stone goes on to further justify the league's cash grab:

The artists themselves do tend to capitalize on the exposure of such a performance ...

First, the NFL wants to make more money. Plain and shameful. Not paying the halftime performer reduces an expense. In theory, this increases profits. Pretty straightforward. But how did this notion of "exposure" catch on? I'm convinced we have, at least in part, Pandora to thank.

A cornerstone of practically every argument Pandora makes in favor of itself vis-a-vis royalties is exposure. Pandora argues artists receive such valuable exposure they wouldn't otherwise receive via its platform that they should not focus so obsessively on the royalties they receive -- or lack thereof. In some instances, I agree with Pandora here.

When Pandora plays music by an artist that would never see the light of day on other mediums (e.g., broadcast radio) it is generating airplay that would not have happened without Pandora. While this doesn't justify paying too low a royalty or no royalty at all, it lends to the exposure argument. Musicians should be able (or at least try) to leverage this exposure into revenue outside of and beyond royalties. This even applies to more established names, including the ones bandied about for the 2015 halftime -- Katy Perry, Rihanna and Coldplay. But only to a limited extent.

The exposure argument loses its luster -- especially when it's being used to try to get megastars for free -- when you consider the marketing power of music.

Without music, the NFL doesn't have a halftime show. At least not one that would pull in more viewers than the game. Of course, it could conceive of something (like maybe playing all of the broadcast's commercials in succession at halftime), but, as far as I know, it has nothing ready to roll to match the power of music if music went away. So if Katy Perry, Rihanna and Coldplay are smart (and they are), they'll turn the exposure argument back on the NFL.

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Rocco Pendola writes for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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