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Pandora Groupthink. (look it up)

June 27, 2013 Comments off

Jonathan Segel

(All links are to articles preceding this one.)

Several of my former workmates at Pandora seem to be drinking the Kool Aid. I’m seeing posts claiming that David Lowery and Pink Floyd are talking ‘trash’.  Yes, I worked at Pandora. You can read all about that here. I also play in a band with David Lowery, it’s called Camper Van Beethoven (not the band with the song in question here.) He and I don’t necessarily agree on everything, but I’m totally backing him up on this one.

Yet, some people I respect are referring to this article by Michael Degusta as if this explains where “the artists” are wrong in claiming that Pandora is not paying enough in royalties. Because we know that pie charts are data, and data is true. (The chart is “estimated”. Also note that no comments are allowed to refute his findings.)

Additionally, invoking op-ed like…

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Arithmetic on the Internet: Incumbent “Million-a-Month” Tim Westergren Plays his Thimblerig

June 27, 2013 2 comments

No proposition Euclid wrote,
No formulae the text-books know,
Will turn the bullet from your coat,
Or ward the tulwar’s downward blow
Strike hard who cares–shoot straight who can–
The odds are on the cheaper man.

Arithmetic on the Frontier, by Rudyard Kipling

I don’t know how much Pandora’s stockholders are paying for the company’s latest PR campaign to prove that the Sun really does rise in the West, but after watching David Lowery on CNBC yesterday, I’d say that it’s a waste of money.

But the real slight of hand was in Tim Westergren’s blog post which quoted some utter drivel–pitiable, actually.

Here’s the basic rundown–in order to get away from the abysmal numbers that Pandora pays songwriters Pandora has to include the royalty they pay to artists–who coincidentally happen to be artists in the case of David Lowery and his co-writing band.  Of course–Lowery was talking about just the songwriters, but don’t let that stop anyone.  (Remember–two copyrights in each sound recording, the song and the recording of the song.  Songs and recordings can be, and usually are, created and/or owned by different people.  Pandora gets a blanket license for songs and a separate and substantively different compulsory license for sound recordings.  Songwriters can opt out of blanket licenses because it’s a contract that permits opting out, artists cannot opt out of a statutory compulsory license that is a law that does not permit opting out.)

That’s really all there is to it–I wish it were something more sophisticated, but that’s essentially what Tim Westergren is saying–wrapped in a lot of San Francisco-style sensitivity about “I know what it’s like to be a musician”.  Why doesn’t he just say it–“I love you, man!’

In case you haven’t heard, Tim Westergren is personally taking down $1,000,000 a month from selling his stock in Pandora.  Every time he can get that stock price up, it’s more money for his monthly allowance.  I’m happy for his wealth, that’s capitalism at work.  But don’t turn around and say he tours a mile in the shoes of a working artist because that is just pure unadulterated BS.

The point that Lowery was making on CNBC is a point about songwriters–people who just write songs and are not also recording artists.  So Westergren’s response was to pretend David was talking about something else–artists who write some of their own songs. I have an apple–well, let me tell you about why you’re wrong about oranges.

Why?  Probably because Westergren has not so good memories of the songwriters who performed last November on Capitol Hill before the IP Subcommittee’s hearing on the Internet Radio Fairness Act that boomeranged on Pandora.  The writers were Lee Miller performing his song “You’re Gonna Miss This” (as recorded by Trace Adkins), Kara DioGuardi performing ”Sober” (as recorded by Pink), BC Jean performing “If I Were a Boy” (as recorded by Beyoncé), Desmond Child performing his song “Livin’ on a Prayer” (as recorded by Bon Jovi), and Linda Perry performing her song “Beautiful” (as recorded by Christina Aguilera).

The combined Pandora earnings for these songwriters in the first quarter of 2012 was $587.39.  For over 33 million combined spins.  Apples to apples.  In other words–they were making essentially the same point as David Lowery.  These were songwriters, not artists, so no amount of thimblerig by Tim Westergren will change that.  See a trend here?

But the most absurd part of Tim’s “let’s pretend” blog post was the bit about how a spin on Pandora reaches a bigger audience than a spin anywhere else so it is actually more valuable to artists (not to songwriters who just write songs, though, although–it’s kind of hard to tell).  I have to admit I kind of lost the page in all these analogies.  But let’s get something clear about that.  You know what else is more valuable?  A three legged bear standing on his nose in Times Square on a Tuesday is nowhere near the value of a pot bellied pig doing jumping jacks on a Wednesday while wearing a pink tutu and blowing sunshine out of his ass in the middle of Piccadilly.  (And it’s not true that they got thrown out of Sean Parker’s wedding with the satyr they rode in on.)

Here’s a point that Tim didn’t mention:  The benefit to Pandora of being able to play a song that was a hit 20 years ago but still generates millions of plays.  Who’s benefiting whom here?

Tim reminded us that Pandora has been around for 13 years–I’d forgotten that.  That may explain why they are the incumbent resisting creative disruption and also explains why they are resisting getting off the crack pipe of deeply discounted royalty rates that artists and songwriters agreed to give them to help them get started, thus proving again that no good deed goes unpunished.

Pandora is a public company now and the insiders are making serious bank.

They’re big boys now, time to pay the adult fare to ride the train.

This is just about money, folks.  They got a break until they got on their feet.  They’re on their feet.  No more breaks.

And they’d rather spend the money to buy radio stations, litigate and lobby than pay it to the people who create the music.

Pandora Responds to Lowery with Another Riddle Wrapped in an Enigma

June 26, 2013 Comments off

According to Venture Beat, Pandora has responded to David Lowery’s highly factual post about his share of songwriter earnings from “Low” with this statement:

“Mr. Lowery’s calculations grossly understate Pandora’s payments to songwriters. In truth, Pandora paid many times more in songwriter royalties to play the song referenced in his article. The post also neglects to mention that the rates Pandora pays were set by the very organizations that represent songwriters and publishers. These organizations – BMI and ASCAP – are the very same groups that recently agreed to a long-term licensing agreement with the terrestrial radio industry to pay songwriters significantly less than Pandora.”

Look again at the first two sentences.  First sentence “Mr. Lowery’s calculations grossly understate Pandora’s payments to songwriters.”  What does that even mean?  Lowery can’t read his own royalty statement?  This makes no sense.

But the second sentence is where the truly crafty deception comes in: “In truth, Pandora paid many times more in songwriter royalties to play the song referenced in his article.”  That is an odd choice of words.  If what they meant was Lowery can’t read his statements, why not say that?  If they meant they paid more to BMI on a prorata basis than Lowery was paid by BMI, why not say that?  They didn’t.

When you first read that second sentence, or if you read it quickly, you might think it meant that Pandora paid many times more than David received for the song at issue, that is, for “Low”.  But that’s not what the sentence actually says.  It says Pandora paid many times more in songwriter royalties to play the song.  That is, for the right to play the song.  And how would they get that right?  Since all the writers of “Low” are BMI members, Pandora would have to have a blanket performance license with BMI.

So read the sentence again: “In truth, Pandora paid many times more [than what Lowery was paid] in songwriter royalties [to BMI in total in order to have the right] to play the song referenced in his article.”

Well no kidding.

These people either can’t speak English or they are truly desperate.

You decide.

But whatever they are trying to say, what they want is to pay songwriters even less than the current rates.  That is a fact and it is not disputed.

Trust, But Verify: If Pandora Really Wants to Negotiate, Here’s Five Things They Could Do To Start Regaining Trust

June 26, 2013 Comments off

It is easier to fool people than to convince them they have been fooled.

Mark Twain

No surprise here–press reports have surfaced that “Pandora, the web’s top radio service, has held preliminary discussions with groups representing music artists as well as indie and major labels about ending an increasingly aggressive feud over music royalties, multiple sources familiar with the talks told The Verge.”  (This from the reliably first Greg Sandoval, the best in the business.)

What’s interesting about this is that the government has handed Pandora two really huge reasons to never talk to the people who create their product:  compulsory licenses and ancient anti-trust decrees that produced the rate courts. You remember antitrust law, that’s the thing that doesn’t apply to Google.

In other words, Pandora comes to “negotiate” with a state-sponsored gun to our heads and an icepick up our noses.  Oh, and millions of stockholder money in the bank to fund litigation and lobbying.  It should be obvious that the true anomaly produced by government intervention is the belief in the Internet Radio Fairness Coalition and the Digital Media Association that their negotiations all occur with lawyers in litigation and lobbyists in Washington–and not with the artists and songwriters who they can outspend.

If Pandora still believes that after getting their heads handed to them in the DOA Internet Radio Fairness Act legislation (aka IRFA)–which must have pleased stockholders to no end after it knocked their share price nearly in half–then they have an even bigger problem that we thought.

Silicon Valley’s Trust Problem

As Alexis Tsotsis writes in “No Sympathy for the Devil“:

Welcome to the Summer of 2013. Welcome to the summer when you’re not quite sure which of your Internet activities are being tracked. When you want to start Snapchatting everyone because at least then data “disappears.” Except when it doesn’t?

This is the summer when, despite the machinations being clearly reported last year and even over a decade ago, revelations of the NSA doing some sort of link and factor analysis, or at the very least metadata collection, on our Facebook and Google+ profiles has caused us to reach peak tech fear.

So in case they didn’t get the memo, Pandora needs to be doing it better and cleaner than the next guy.  That doesn’t mean treating songwriters and artists like…well, like users.

But just in the hope that there’s actually a desire to negotiate and produce a win-win for everyone as opposed to a scorched earth zero sum litigation game, Pandora have to realize they need to rebuild trust.  If Pandora could actually get songwriters and artists to trust them–all songwriters and artists–it would be a big first step toward solving their problems.  It could also be a bigger first step toward building trust with Silicon Valley companies generally.

It’s a golden opportunity–why not at least try?

Let’s Make Nice

Here’s five things Pandora could do right now to start building trust that they can be a reliable negotiation partner and “start making sense”.

1.  Stop the Deceptive “Grass Roots” Campaign:  As we have reported at MTP and as Pink Floyd complained of, Pandora has been trying to counter artist and songwriter opposition to their scorched earth campaign with a very odd email campaign to Pandora artists.  The campaign wraps up participation in Pandora’s proposed indie artist promotion tools with signing on to a lobbying letter supporting Pandora.  Do one or the other–offer the tools or lobby, but not both.  It’s insulting and underhanded.  And frankly–its beneath the brand that Pandora claims to be and that the Pandora employees think that they work for.

2.  Since When Did A Million of Anything Cost 16 Bucks?  David Lowery has published a viral post disclosing his songwriter royalties–a million plays of his song “Low” on Pandora paid him $16 for his 40% share of the song.  This is atrocious.  Rather than poor mouthing to songwriters and artists while Pandora executives cash out in a big way,  just admit that the current royalty rates for Pandora were negotiated when Pandora really was a start up.  The songwriters and artists gave the company a special deal to help Pandora and the entire webcasting and satellite radio industry get started.  At least as far as Pandora, Sirius and the National Association of Broadcasters is concerned, the tough times are long gone, Pandora is public and Sirius’s CEO said the company has a billion in free cash flow.  It’s time for these companies to play fair with the songwriters and artists.  In Pandora’s case, the workers who make their single product.

3.  Sell the Radio Station:  I don’t know whose idea it was to buy a radio station in South Dakota, but that is just a stunt.  In fact, if we needed a reminder that media consolidation has destroyed local radio, Pandora gave us a reminder.  Pandora doesn’t care about South Dakota!  These are Silicon Valley types, not steak and potatoes middle Americans.  Not only are they cultural outsiders in South Dakota, but Pandora actually admitted–crowed, would be more accurate–that they bought the radio station solely to try to pay lower royalties under tortured logic I am not smart enough to follow.  This is absurd, and nobody believes they bought that station for reasons other than a desire to screw the songwriters, especially, but the artists, too.  Give it up.

4.  Drop the Tech Trade Associations from the Internet Radio Fairness Coalition:  As part of their push to pass IRFA, Pandora formed a trade association called the Internet Radio Fairness Coalition.  That website is down at the moment, but the members of the coalition included the Consumer Electronics Association and the Computer and Communications Industry Association.

5.  Stop Threatening World War Z:  Pandora executives seem to have fond memories of the heady days of 2007 when they roiled up their users (or some-botties) into an attack on Washington.  Here’s a newsflash:  Washington has more important things to do.  Chairman Sensenbrenner made that abundantly clear to soon-to-be-former Pandora CEO Joe Kennedy at the IRFA hearings last November.  A SOPA style World War Z declared on the House Judiciary Committee may very well back fire.  Want to find out, kitty cat?  And let’s say it doesn’t.  Where will that leave Pandora?  Really no friends, really hostile “partners” then, and a Congress that in large part grinds the teeth at the mere mention of the name.

Doing these things will be clear demonstrations of good faith and won’t cost much.

Extra Points

If Pandora really wants to go the extra mile, they could do some of the following, which would cost, but I think in the long run would be worth it.

1.  Lobbying is Not the First Option: Commit to Chairman Goodlatte that Pandora will seek negotiation and will only come to Congress as a last resort.  Pandora could say that they are appreciative of the extraordinary benefit that the music industry and the Congress have given the company in the form of a compulsory license and they don’t want to abuse it.

2.  Dismiss their Rate Court Case with Leave to File in the Future:  If you’re going to be at the table, be at the table.  Check your guns at the door.

3.  Ask the Congress to Give ASCAP and BMI Relief from the Consent Decrees:  If you really want to negotiate, you will recognize the absurdity of a regime that imposes an antitrust burden on songwriters but not on Google.

My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89, Less Than What I Make From a Single T-Shirt Sale!

June 24, 2013 Comments off

And since David was the artist, too, Pandora paid him the 2 Tshirt equivalent!

The Trichordist

Pandora less than t-shirt sale

As a songwriter Pandora paid me $16.89* for 1,159,000 play of “Low” last quarter.  Less than I make from a single T-shirt sale.  Okay that’s a slight  exaggeration.  That’s only the premium multi-color long sleeve shirts and that’s only at venues that don’t take commission.  But still.

Soon you will be hearing from Pandora how they need Congress to change the way royalties are calculated so that they can pay much much less to songwriters and performers. For you civilians webcasting rates are “compulsory” rates. They are set by the government (crazy, right?). Further since they are compulsory royalties, artists can not “opt out” of a service like Pandora even if they think Pandora doesn’t pay them enough. The majority of songwriters have their rates set by the government, too, in the form of the ASCAP and BMI rate courts–a single judge gets to decide the fate of songwriters (technically not…

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Update: Pandora Lobbyist’s Letter to Artists, Now with Even More Astroturf, Now with Even More Deviousness!

June 22, 2013 1 comment

In case you missed it, Pandora has been sending out unsolicited emails to artists soliciting participation in a solicitation for artists to sign a lobbying letter supporting Pandora’s efforts to…support Pandora by cutting artist royalties.  No problem with that, but the lobbying letter was cleverly wrapped around–some might say disguised as–an indie artist promotion campaign further wrapped around a rather weak effort at data sharing.

But wait!  There’s more!

How can you get someone to sign a letter supporting legislation without telling them–clearly–what they are supporting and without a hint of a quid pro quo?

The New Bait and Switch

That may have recently dawned on Pandora.  MTP readers will recall an unsolicited email sent by Pandora’s astroturf operation that twisted up participation in a promotional effort by Pandora with the artists signing on to a letter supporting Pandora’s lobbying efforts to…screw artists (not to mention the songwriters).  The company’s “grass roots lobbyist” Nancy Tarr (and probably others) recently sent out a second email blast offering artists a chance to remove their names from the letter.  All with that special “Hey, idiot!” tone we have come to expect from those who Marc Ribot referred to as the “Masters of the Internet“:

Dear <firstname>

I’m writing to give you the opportunity to remove your name from the letter of support being sent to members of Congress.

I know that may surprise you, but since we began this effort, there has been a very concerted attempt on the part of various large industry organizations to drive a wedge between Pandora and artists. The campaign, orchestrated by a well known “dark arts” PR firm in Washington DC, uses personal attacks and some shocking misinformation to influence lawmakers. The most egregious claim is that Pandora wants to lower rates by 85% which is simply a lie – we’re actually committed to a solution that won’t see ANY reduction in overall payments. [Emphasis mine–we’ll come back to this.]

The last thing we want is to put any of you in an uncomfortable position, and will completely understand if you’d rather steer clear of it. We continue to believe that a brighter, more collaborative future will eventually come to this industry, and we don’t want you to feel like a pawn in any of this.

We’re going to turn our full attention to the product and the ambitious plans we’re laying out for “Pandora for Artists.”  The opportunity is huge, and there’s no time to waste.

The feedback on the artist deck has been fantastic, and is already being eagerly digested by our software engineers. There were two suggestions that were the clear top vote-getters:

1. Give listeners opportunities to share their email addresses with the bands

2. Create a targeted “alert” system to let local fans know when a show is coming in their area (that will be HUGE!) [Fans would have to sign up for this–as it is done by the other services that do the same thing–or it sounds like spam]

[The next paragraphs doesn’t make much sense given the first part of the email]

The I Am Internet Campaign is progressing along nicely, thank you for your willingness to join!   If you have any questions, please let me know.

We’ll follow soon with a more comprehensive list of your suggestions.

Thanks again, and please keep sending us your music. [The Bait.] We’ll keep you posted on our progress.  [The Switch.]

Best regards,

Nancy [Tarr]

The Darker Arts

First of all, Ms. Tarr’s Linkedin profile clearly states that she is a consultant for Qorvis Communications, the controversial Washington, DC lobby and spin shop that represents Saudi Arabia, Bahrain (home to the US Navy 5th Fleet–read military-industrial complex), AIG and many other big fish–including the famous buddy of both the National Security Agency and Pandora–Google.  (Google is a member of several organizations that are members of the Internet Radio Fairness Coalition.)

So when it comes to Pandora criticizing an unnamed “dark arts” PR firm, this sounds like a house of glass.

But the truly deceptive part of this email is this sentence:

The most egregious claim is that Pandora wants to lower rates by 85% which is simply a lie – we’re actually committed to a solution that won’t see ANY reduction in overall payments.

What Pandora is not disclosing is that there has been no actual rate proposal yet in this Congress–so whether they want to lower rates by 1%, 85% or 82.5% cannot be confirmed.  Judging by the “Internet Radio Fairness Act” rates from the last Congress, 85% could well be the right number.

But what cannot be disputed is that Pandora wants to lower royalty rates for all artists and songwriters.

However, note well the use of the phrase “reduction in overall payments“.

Then take a good look in the mirror and decide if you really do look like the idiot Pandora seems to take you to be.

A Bigger Piece of a Smaller Pie

One thing we are expecting to see in any new legislation is a fiddling with the current statutory splits of 50% to artists and 50% to sound recording owners.  The pennies produced by this split is the “overall payment” to artists.

Recall this exchange between Representative Jason Chaffetz (the author of IRFA) and Jimmy Jam at the IRFA hearing last November:

Mr. CHAFFETZ

Mr. Jam, as you know, currently the amount SoundExchange receives for any given recording played by an Internet radio station, generally 50 percent goes to the copyright holder, which is usually the record label [aside from the majority of tracks that are owned by the artists]; 45 percent goes to the artist; and 5 percent is set aside for background and session musicians. Do you think that the majority [50% is a majority?] of that should go to the copyright holder, essentially the record label, or should the artist get more?

Mr. JAM

Well, let me hit my button here. Sorry about that. I guess I feel that, first of all, 50 percent for the compulsory rate is fair because it–

Mr. CHAFFETZ [Didn’t like that answer…]

So you are not suggesting that artists should get the majority of the revenue. [Objection, leading…]

Mr. JAM

I don’t think I am suggesting anything yet because I had only started talking. I believe that the 50 percent is the correct-as the rate the court has set, that is the correct way to go.

Mr. CHAFFETZ

I am sorry, I only have got 5 minutes. I have to keep going. If you like the way the rates are set, I accept that, and let me move on.

What Mr. Chaffetz was referring to was the idea floated by Public Knowledge (funded by Google) that the splits be changed to give artists a bigger piece of a smaller pie.  And I suspect that it is this dodge that Ms. Tarr referrs to by “overall payments”.

Time will tell–unfortunately, the truth will come out only after Pandora has gotten their artist support letter signed.

It is also worth noting in passing that MTP first identified in a February 25, 2013 blog post an “opt in” email list signup button as the one thing that Pandora could do if they really wanted to add value for independent artists (or really any artists).  This was, of course, inspired by Zoë Keating’s ideas about data sharing, and was the subject of a subsequent recommendation I made in an in-depth conversation I had with Ian Rogers of Daisy about how best to serve the needs of independent artists with data sharing.

The idea we proposed was that the service (like Pandora) would not get in the middle of the sign up referral and would not charge for it.  The sign up opportunity would be completely outside of the referring service–a thank you for being able to play the artist’s music.

Suddenly, the email signup appears in a Pandora “grassroots” lobbying letter.

Well, better late than never.  And we’ll see if they charge for it–they’re already at least implying a quid pro quo.

However–if the reason that Pandora is offering artists the ability to remove their names from the lobbying letter is because they (a) spammed them in the first place, or (b) deceived them into signing it, then the real solution is not to offer the artist a chance to withdraw, particularly when it’s not just a pure “we screwed up, do you want to withdraw” message instead of wrapping the withdrawal offer in yet another semblance of a quid pro quo.

What Pandora needs to do is start all over again and try to get it right this time.  Any names they’ve acquired so far are tainted.

If Pandora restarts their “grassroots lobbying” the right way and the same artists sign up, then that’s Pandora’s benefit.

But absent a complete reset on a level playing field, this effort will be forever tainted.

Rick Carnes, Eddie Schwartz and Fair Trade Music Project Speaks Out for Silenced Songwriters–Please sign the petition!

June 20, 2013 2 comments

The Music Creators North America (spearheading the Fair Trade Music Project) took another step toward defending the rights of creators.

In comments this week Eddie Schwartz of the Songwriters Association of Canada (SAC) and Rick Carnes of the Songwriters Guild of America (SGA) discussed the alarming trend of the recent imprisonment of songwriters throughout the world.

“Freedom of expression is the life blood of all creators. There is a disturbing trend in many parts of the world to snuff out political opposition by denying songwriters the ability
to express themselves through their songs. This is why the Fair Trade Music Project adopted protection of free speech as one of its five principles. Without basic freedom of
expression it’s not just music that suffers… people suffer as well,” said Carnes.

The group’s fifth guiding principle reads, “Music creators must be free to speak, write and communicate without fear of censorship, retaliation or repression in a manner consistent with basic human rights and constitutional principles.”  Carnes’ statement refers to the announcement last week that two Tibetan songwriters (Pema Trinlay and Chakdor) were
sentenced to prison terms for releasing an album (The Pain of an Unhealed Wound) which contains songs praising the Dalai Lama and Tibetansagainst Chinese occupation. Other recent imprisonments include:

Prominent Iranian songwriter, Roozbeh Bemani, arrested in Tehran last week for illegal production and distribution of underground music

Russian band members of Pussy Riot over their protest of Russian leader Vladimir Putin and church-state affiliations

Poet Zhu Yufu of China, given a long-term prison sentence for his poem “It’s Time”

Hoang Nhat Thong and Viet Khang, imprisoned in Viet Nam for writing songs deemed to be anti-government propaganda

“The silencing of these songwriters is proof that music has the power to move cultures forward. The importance of what we do is made clear by the risk these songwriters take in speaking their mind. The consequences they suffer strengthen our resolve to continue to work with other international songwriting groups to fight for the rights of creators everywhere,” said Schwartz.

If you would like to help, please sign the petition:

http://www.ipetitions.com/petition/freedomforvietkhang/

For more information visit Amnesty USA:

http://takeaction.amnestyusa.org/c.6oJCLQPAJiJUG/b.8465995/k.6D0D/Pussy_Riot__Writeathon/siteapps/advocacy/ActionItem.aspx

Contact:

for Music Creators North America

Rick Carnes, 615-500-5573
rickcarnes@songwritersguild.com

or

Eddie Schwartz, 615-294-6372
eddie@songwriters.ca

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