Wilson was correct on one thing: Anything having to do with market cap distracts and keeps the two sides from reaching an agreement. True. And that's because one thing has nothing to do with the other. Wilson also accurately pointed out that the music labels are out for themselves; they do not partner with artists as much as they enter into shrewd financial transactions with them. Very true. High valuations might annoy industry executives, but they certainly would not back down from their positions if private equity and the public market undervalued Spotify and Pandora. But, let's not get too far ahead of ourselves like Wilson and Werde did. In a recent article on royalty rates, I made it clear that Pandora and Spotify play by different rules. I think Wilson and Werde know this, however, they both kept comparing apples and oranges. Pandora pays compulsory license fees set by the Copyright Royalty Board. Spotify does licensing deals directly with individual music labels. I explain that in the above-linked article. When Pandora asks for "relief," it does so through formal channels when negotiations come in 2014 or, as it is now, via the legislative process. Spotify negotiates with content owners, just like Netflix ( NFLX) does. On the surface, it sounds like Wilson gets the entire music royalty flap, but I'm not certain he does. He argues that it comes down to how much revenue Pandora keeps versus how much it pays the music industry and how much revenue Spotify keeps versus how much it pays the music industry. Sounds great. And that's the headline, but, at day's end, it's not the fundamental issue. The deeper issue involves the aforementioned notion of compulsory versus direct licensing. That's where the meat of the battle, at least intellectually, gets fought. Not just how much, but how should Internet radio compensate labels and artists. Compulsory or direct. That's the conversation to have. Valuation should never enter the dialogue. We all know Pandora and Spotify are overvalued, but, as Wilson ends up saying himself, these valuations are not real; when the dust settles, they mean nothing. Companies will end up being worth what the highest bidder is willing to pay for them. As such, valuation should never enter the music royalty debate.