What do you pay for when you pay for a subscription to an ad supported service like Spotify or Pandora? It stops being ad supported. So who benefits from that? Fans and artists who hate advertising. Artists who get a higher royalty rate.
Who doesn’t benefit?
Well, who do ya think? Here’s a risk factor from Pandora’s SEC filing that gives you a hint:
We rely upon an agreement with DoubleClick, which is owned by Google, for delivering and monitoring our ads. Failure to renew the agreement on favorable terms, or termination of the agreement, could adversely affect our business.
We use DoubleClick’s ad-serving platform to deliver and monitor ads for our service. There can be no assurance that our agreement with DoubleClick, which is owned by Google, will be extended or renewed upon expiration, that we will be able to extend or renew our agreement with DoubleClick on terms and conditions favorable to us or that we could identify another alternative vendor to take its place. Our agreement with DoubleClick also allows DoubleClick to terminate our relationship before the expiration of the agreement on the occurrence of certain events, including material breach of the agreement by us, and to suspend provision of the services if DoubleClick determines that our use of its service violates certain security, technology or content standards.
Here’s an excerpt from Spotify’s website:
– Google AdSense – Commission Junction – Adbrite – Widget Bucks – Kontera – Clickbank – Azoogle – Chitika – Linkshare – Amazon
Of course YouTube has ads exclusively by Google.
And what do these three companies have in common?
Spotify board member Google serving advertising. Who gets cut off if the ad supported platform goes away?
Gee, who could it be.
And by the way, it’s not just the money which has to be a drop in the bucket compared to Google’s overall revenues. It’s a loss of control, it’s the loss of Google’s ability to exert its monopoly power over the music industry.
The leading groups representing the crony capitalists and the special interests opposing artists and songwriters are all controlled to one degree or another by Google and Amazon, all of whom are making common cause with the National Association of Broadcasters. Here’s an example of the kind of inside the beltway event these people stage to influence lawmakers in Washington. (They do it at the state level, too–Google is currently suing Mississippi Attorney General Jim Hood to stop his investigation into Googles shady business practices on drugs and monopolist behavior.)
Inflaming artist, songwriter and major label opposition to ad supported music services plays right into the hands of the National Association of Broadcasters, too. The rumor is that there will be a performance rights bill introduced imminently in the U.S. Congress that would require broadcasters to pay artists for radio play for the first time in history.
Not surprisingly, the NAB is trying to conflate “free music” on Spotify, Pandora and YouTube with “free music” on radio. An inapt analogy to be sure, because at least Pandora, Spotify and YouTube pay artists something. But the NAB senses blood in the water, and so is trying to exploit that message through it’s “Free Radio Alliance.”
The NAB then lists all of its “Alliance Members” by state–but they just list the call letters. They don’t list the station owners.
It’s the usual suspects–mostly the same people who are simultaneously petitioning the FCC for a waiver on the payola rules.
So let’s not miss the point–piling on the artists and labels wanting to revisit the rates for ad supported music services just helps the crony capitalists and the special interests with over $2 trillion in market cap that are using their political clout to crush creators. It was revealed this week by the Wall Street Journal that Google averages one meeting per week at the White House.
Have you been to the White House lately?
Artists, labels and songwriters are exercising their property rights to negotiate the terms on which they license their works even though the government forces either artists or songwriters to license to all of these services. Let’s not lose sight of that.
The people who lose the most from cutting back ad supported music are the people who are supporting the ads.