Is a dream a lie if it don't come true/Or is it something worse
-Bruce Springsteen, "The River"NEW YORK ( TheStreet) -- At the end of this article, I embed an interview CNBC conducted with former Cracker frontman David Lowery. Lowery made headlines this week when he claimed Pandora ( P) only paid him $16.89 for over one million streams of Cracker's hit song "Low." Here's a link 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 A Pandora Blog Post You Must Read Right Now, 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 a lengthy blog post. 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 ASCAP President and Chairman Paul Williams.
@Rocco_TheStreet Looking forward to meeting tomorrow Rocco. We both seek "the highest good of all concerned!" Blessings. Paul #ascap— Paul Williams (@IMPaulWilliams) June 27, 2013I 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 (RIAA) and musicFIRST provide. 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.
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 -- Pandora must do more now 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.
@tconrad Absolutely, infinite potential: heat maps 4 touring, preference info tied 2 radio markets for radio promotion, everyone wins!— Danny_Murphy_Sports (@Murphy_Danny) June 26, 2013That's where it's at. It's not in Apple ( AAPL) 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 ASCAP and BMI -- 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. Follow @rocco_thestreet -- Written by Rocco Pendola in Santa Monica, Calif.