Is a dream a lie if it don't come true/Or is it something worse
-Bruce Springsteen, "The River"
NEW YORK (
) -- At the end of this article, I embed an interview
conducted with former
frontman David Lowery.
Lowery made headlines this week when he claimed
only paid him $16.89 for over one million streams of Cracker's hit song "Low."
to Lowery's original blog post that a pathetically uncritical music, tech and financial media spread like a cancer, further misinforming readers.
Then, tech blogger Michael DeGusta came along, adding quantitative bite to my ongoing qualitative punch. On Wednesday in
, I give DeGusta fist pumps and chest bumps for exposing Lowery's claims for what they are -- misleading, without context and, at times, just flat inaccurate.
Then, in the CNBC interview, Lowery, "to be fair," provided a bit of the context he conveniently left out of his original attack on Pandora. But it's not nearly enough. Not even close.
Later in the day, Pandora co-founder Tim Westergren went a long way toward setting the record straight in
. It's well worth your time.
What a crazy day in another crazy week in what has been a crazy series of months in this chaotic story. We have a new most exciting company on the stock market and it's name is Pandora.
And, for me, it should get even more interesting Thursday afternoon when I meet with
President and Chairman Paul Williams.
I hope a discussion with the legendary and visionary Williams will help bring meaning to some of the more vexing questions I continue to consider.
For example, Lowery sidestepped a question Scott Wapner asked on CNBC. Wapner wanted to know what the royalty situation looked like prior to Pandora entering the scene. Lowery didn't have an answer. Or he just didn't want to answer because the correct response is not on the list of talking points groups such as
The Recording Industry Association of America
There's a straightforward answer to Wapner's query. Pandora did not come along and break a well-oiled machine. The royalty structure, by and large, has never worked for a majority of artists. It's ineffective, bloated and oppressive.
If there's anybody to blame for the situation the music industry is in -- slumping sales, uncertainty over how to monetize streaming and royalty payments making only a select few musicians rich -- it's the music industry. The music industrial complex, broadly speaking, sleepwalked into the digital age. It never genuinely or fully embraced it. It didn't come to the table, ahead of the curve, with fresh rules to govern this fundamentally different, dynamic and tech/data-driven assembly of platforms.
And now everybody from the major labels to the big publishers attempt to compensate for their inaction by putting it all on Pandora.
In much the same way
disrupted retail with its ever-evolving e-commerce ecosystem, Pandora disrupted an industry that attempted to hang on to the past -- broadcast radio. As such, it created a whole new market for consumption catching the music industry off guard.
The industry's solution -- like retail's response to Amazon -- punish Pandora for innovating. Amazon left brick-and-mortar retailers in the dust. Physical retail's answer -- make Amazon collect state sales tax across the country. Similarly the music industry's fix for its own ineptitude is to open an all-out assault, packed with lies and no context, on Pandora. To make the company pay what amount to reparations. To subsidize debt-ridden broadcasters who couldn't afford to pay a performance royalty even if they wanted to.
So, the system does suck. Nobody is disputing that, but it's not Pandora's fault.
The royalty situation -- across delivery mediums -- needs to be taken care of. Pandora will continue to be a part of this discussion. One that hopefully takes place
That said, the discussion needs to open up, shifting focus away from the singular issue of royalties. As Westergren explained in his "eloquent" blog post:
Regardless of the math, the truth remains that any way you cut it, when it comes to Internet radio "x spins pays y dollars in performance fees" is always going to sound like a small number. The total is huge and growing (over $250 million last year alone), but the per spin number is small. Which leads me to the next, and perhaps more important point. The value of a spin on Pandora is about much more than royalties. Over 350 labels actively service Pandora with new releases. And we get thousands of unsolicited submissions from artists. Why? Because radio has, and will always be THE primary means of promotion for artists. Spins means audience, and developing an audience of patrons is THE key to long-term sustainability for artists. Furthermore, in an Internet-connected world, the ability of a service like Pandora to activate fans is extraordinary - far beyond anything broadcast radio has ever been able to offer. We have already begun developing and testing those capabilities, and the artists who have participated in these programs have been blown away by the results.
There's no question --
to, as Westergren put it, "activate fans." But, before Pandora can act most effectively, the music industry -- the groups presently in attack mode -- need to embrace the reality that we live in different times. Times where the data Pandora collects can be used to promote artists of all flavors and sizes.
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
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
-- 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
Director of Social Media. Pendola's daily contributions to
frequently appear on
and at various top online properties, such as