"A good flatterer doesn't lie, but tells his victim selective truths (what a nice color your eyes are). Good PR firms use the same strategy: they give reporters stories that are true, but whose truth favors their clients."
I have no idea if David Lowery's original post about making only $16.89 for 1 million plays was distributed by a PR firm, but it sure feels like it.
PG's thoughts on PR are spot on, and I love referencing his article to both discern truth from half-truth in the news, and, of course, to push my own PR efforts:
I imagine the minority here is aware that Pandora now owns a radio station, and their goal is to use the radio station to get more favorable terms for licensing. (wsj story: http://online.wsj.com/article/SB1000142412788732490400457853... ) I interpret these stories and their timings as a prelude to undermine Pandora's bargaining position. It's clearly PR to extract 'higher' payments, even though Pandora already pays among the highest per-listener rates in the US across all mediums. The blog author and parent are spot-on.
Yea, the Pink Floyd article suspiciously came out at the same time yesterday in USA Today. And with legislation coming up in congress you know the lobbying pressure is ramping up.
This makes sense. Another way to back into the figure:
Pandora spent $82M on content according to the most recent 10Q, with 4.18B listener hours. That implies a cost of $0.02 cents per listener hour. A million plays is roughly 62500 listener hours, which implies a content cost of $1250.
Based on their cost of $0.02 cents per listener hour, I wanted to calculate how many hours per day my $36 yearly payment equates to (ignoring their operational costs):
Its easy to complain about the low pandora royalties, but these artists are essentially trying to kill the golden goose. Pandora currently spends > 50% of revenue on royalties. Any increases would almost certainly lead to the end of the company. $0 is a lot less than $1,300 for 1 million plays.
What I think is missing from this whole discussion is the ability to make a living. Sure the industry is opaque to outsiders, and some of the established practices are weird (radio paying only songwriters, not performers), and now it's all being disrupted.
But forget about the numbers for one song. Let's say a guy like the OP of the other article works full time as a singer song-writer. He writes a few songs, performs some of them, has others (more popular artists) perform some of them, and maybe he plays a few gigs himself (either as a musician in someone's band, or good enough to do his own shows). Let's say he's median successful. One or two of his songs (either recorded by him or someone else) is close to charting. People are listening to it online and radios are playing it. Other songs are getting played but not getting the same traction. He works 50-60 hours a week on music, either writing, recording, or performing. What kind of living can he make?
a) 20K and lives off of another job?
b) 40K and struggles to pay rent?
c) 60K and can survive?
d) 80K and considered successful?
e) 100K and lives comfortably doing what he loves?
f) More and can live in expensive parts of the country (NY-SF-LA)?
How was it in the old system of labels and DJs? How has it changed with Pandora and iTunes?
I wonder what the performers/songrwriters think of the fact that I purchased (used) Aerosmith's Hits CD about five years ago for $3.00. I've probably listened (in various formats) to that CD about a hundred+ times in the last five years. There are 10 tracks, so, 1,000 plays for which everyone (Songwriters, Publishers, Performers, Distributes) - all received $0.00.
Multiply that by 1,000 Aerosmith fan's who bough a used CD, and you have 1 Million plays that generate $0.00 for the music industry.
I wonder if the Music industry feels that they are being treated unfairly by the Used CD Marketplace? Or how they feel about people just purchasing $4-$5 CDs used (S&H included) off of Amazon - the combination of low cost + convenience.
Ironically - in the last year, I signed up for iTunes Match ($25/year), so in theory, every time I listen to this CD the various contributors are once again receiving revenue.
As a performer/songwriter, I don't have a problem with that used cd bit conceptually. All those cds were originally sold full price, generating full revenue.
The original purchaser bought it for full price, and assuming I'm a major artist like Aerosmith, that's big money in the aggregate. A cd isn't rent, it means you get to enjoy that stuff for as long as you own it. If the original purchaser wanted to transfer that ability to someone else even for free, I don't have a problem with it. I don't see cds as somehow being linked to the original person's lifespan, or a time-value of how long he's likely to listen to it. It's the existence of the cd, period. The fact that he got three bucks for it, more power to him.
Now, if he instead ripped the cd to continue his enjoyment and then sold or gave it away, to me that's the same as keeping the cd and letting you rip it (either for free, or for three bucks). That's not okay. He clearly liked it enough to "keep" it, so he should have kept it. In which case (if everyone else acted the same way), you would have bought a new copy, which means more money for the artist.
At any rate, you, by purchasing a used cd, did nothing "wrong" from any perspective in my book, because it can't be on you to ensure that the seller will no longer listen to or enjoy the music. But people that sell their used cds, technically they're stealing if they keep their rips after they sell it. Or at least "stealing", in the sense that it's the same as letting someone else rip/burn their copy.
On some days, I wish companies like Pandora, Spotify, and Rdio would just voluntarily shut down. If the music industry thinks streaming companies are ripping them off, the music industry is welcome to build their own streaming business and show everyone how it's done.
Musicians were complaining about royalties and payment long before the internet was invented and they'll be complaining long after we're all gone. Keep that in mind when they act like streaming is the new scourge of music.
Actually, I think that if you want to live off of making music you should think like an artist and plan on making most of your money by actually playing music instead of hoping that you can make a living off of music you played decades ago. Intellectual property and royalties were only invented less than 200 years ago and there's no guarantee that people will be able to depend on that as a source of income in the future.
> 20 years ago that and thousands of others songs wouldn't even have been played anywhere and definitely not a million times.
Ironically that song was a hit exactly 20 years ago... so no, it managed to do just fine without a streaming service.
But yeah, I would never go back to the old model of radio and music only being on physical media. In fact, we can't at this point.
> Playing music is a joy, something you can enjoy whether you make money or not from it.
Other than an on average greater passion than in other professions, music sometimes has the potential to be "just a job". You might dream of coding the next greatest physics engine, but you are stuck making the same boring apps in a domain you don't care about. Similarly, you might dream of composing and playing rock operas but you are stuck doing crummy session work for R n B artists. It's not that R n B is bad, but not every musician is necessarily a person that has passion for all kinds of music and all kinds of gigs in the music industry.
But yeah, making a living from it is not a right, just like any profession.
Exactly. If I'm not mistaken sometimes terrestrial radio stations are PAID by the labels to promote certain shitty pop songs. Why do you think they play the same ones every hour?
Here's another thing I don't get thought. I listen to albums every day on Spotify. I also bought a few on iTunes. How much of that $9.99 does the artist get for my unlimited usage?
Pandora didn't advertise the product. They delivered the product. The product is the MUSIC YOU ARE LISTENING TO. The experience of listening to music. If you don't understand that, you shouldn't even participate in the conversation.
If I told you there was an e-commerce company without a profitable year in over a decade of existence despite federally-mandated price ceilings placed on their suppliers, you'd be incredulous. If I then added that the same company was lobbying in Washington to get the price ceiling lowered, the pitchforks would be out.
But then mention it's a company selling music, and people shrug, "Oh, well music should be free anyway... The artists should be happy they get anything."
Not if the price ceiling were selectively enforced against only one type of radio station. In your analogy this would be the e-commerce company has to buy twinkies from their supplier at 8x the price everyone else pays by government mandate.
If an e-commerce company and Walmart both paid federally-mandated price ceilings, except Walmart enjoyed a much lower ceiling, there may well be pitchforks. But not on the side that you seem to think.
Well, the suppliers may face a federally-mandated price ceiling, but they also have a federally-mandated monopoly on their own product (copyright).
It's not like you have a natural right to prevent people from copying your stuff - we grant that right as a society, subject to very definitive limitations.
The real issue here is piracy -- if Pandora didn't have to compete with free, they could raise their prices and this whole issue would go away. As long as piracy exists, the price of music will be driven down. You can't blame Pandora for that.
1 million plays on Pandora is like one play on FM radio with an audience of 1 million, or 10 plays with an audience of 100,000. Either way, their royalties are more expensive than ones of radio stations.
If I learned anything from reading this article, music royalties are an extremely hard and complicated thing. Hat tip to them for even attempting to do business in this kind of insane environment.
Considering that I have bought several CDs because I heard them on Pandora, I am sure everyone is getting money, but it usually is never enough. I don't know what exactly the cost of running a Pandora company means financially, but with all the upgraded, changes, improvements I expect from it, they definitely need money to pay the developers, so that we, the listener can love the music and buy the albums, which I would think is what the artist ultimately wants.
The graph is funny. Pandora agrees it is roughly accurate.
So, a payout (revenue; before expenses) of $1372 for 1,159,000 plays.
Well, let's look at it in terms of an album where all songs are played equally. In reality, some songs will be played more than others. Assume an album of 10 songs.
Okay, that's $1372 for 115,900 complete album plays.
Well, you can sell an album for $10. More, actually, but let's say $10 since that's the digital rate. And you hope for repeat listens out of an album... ten listens? 100 would be pretty great, actually, maybe that's a true fan.
Well, 115,900 complete album plays for $1372... at ten bucks apiece, that's akin to each purchase being played 1,000 times.
In other words - ignoring other benefits of Pandora - you don't want to use Pandora to "sell" your music unless you have reason to believe that album purchasers would listen to your album 1,000 times or more. Only at that time would Pandora be worth it.
That of course doesn't take Pandora's discovery benefit. I don't know if that would be enough to knock the numbers down to 100 or 10 album listens, but I suspect people often overestimate Pandora's discovery benefit. Just because a listener might discover a lot of new music doesn't mean that an artist gets a lot of new fans from Pandora.
I should offer my own counterpoint here. That analysis ignores the question of whether Pandora plays "rob" from anything else. But since Pandora songs aren't available upon request, it doesn't rob album sales. It's basically gravy.
Now, someone who makes a lot of money off of radio plays, and sees radio plays shrink as Pandora plays increase, they might still feel they have a beef due to the lower songwriter royalty rates.
Spotify, on the other hand, is different. Spotify does rob album sales.
It seems the biggest problem is the metric used to establish royalties. Broadcast mediums like radio can't accurately account for how many listeners they have, and so their licensing terms are based on plays. Pandora on the other hand knows exactly how many listeners it had, because the stream is per individual, nit broadcast. Neither medium accounts for inactive listeners, but I would expect the distribution would be similar. The bottom line is that Pandora is closer to every individual having their own radio station and so of course you cannot evaluate their worth the same way, despite what the original article was trying to do.
Pandora's model actually works better for the artists, since there is metadata that could be used to spy on American citizens... whoops, wrong story; that could be used to connect to fans in markets the artist may not have had access to previously. Maybe Pandora should be selling that information to the artists and labels, although I don't know that they don't do that already.
Both radio and Pandora are more appropriately described as advertisement. Playback restrictions of both formats means that listening to something is not purely selective in the part of the listener. I can't request that Pandora play Cracker's Low, anymore than I can shout that request to my radio. However both give me exposure to music that I might not otherwise hear. Extra credit goes to Pandora for giving me easy access to the Artist, Album, and Song Title, as well as up sell links whereby I can purchase the music I'm listening to.
Pandora provides much more value than terrestrial broadcast - value for which the music industry should probably be paying Pandora. I fully appreciate the positron Pandora finds themselves in, but they aren't in a fair fight, and the artists that should be supporting them don't seem to understand that distinction for their own good.
From the original post: "I am also paid a seperate royalty for being the performer of the song. It’s higher but also what I would regard as unsustainable. I’ll post that later this week."
Footnote from this post: "He does clarify in the footnotes that $16.89 is only for 40% of the songwriting and there is a separate performance royalty, but certainly the headline & coverage could leave many with the impression that $16.89 was everything."
I'm not defending Lowery—he clearly wrote that post in an effort to draw negative attention to Pandora's practices—but he stated that the documents he threw online were outlining songwriting revenue—he made that delineation in the very first line of the post.
> "On the contrary, it seems quite likely that others should be paying more."
Not that have knowledge of royalty proportionality, but it also seems unfair to have royalty costs dwarf any other business costs. I have no idea how much it costs Pandora to stream a song, but if it's a fraction of the ~$0.0012/listen they seem to pay in royalties, it seems like the royalty is disproportionate and unfair. On the other hand, if the royalty is more than ~2 orders of magnitude less than cost to stream a song, then maybe there is an argument that it's too low.
(of course the above is assuming you agree with royalties at all.)
I'm sorry, but what you are writing here is incoherent. If what you were suggesting made any sense, as Pandora lowers their infrastructure costs and overhead, so too would the royalty payment go down, and all the profit would go to Pandora only. The one has nothing to do with the other.
I think it's a sign of efficiency that a large portion of the money goes to content creators. Content creation will get cheaper as technology improves, sure, but in fields like music and writing, content creators struggle to make a decent wage. Therefore as content distribution technology improves, the percentage of money given to content creators should increase.
You seem to be under the impression that being an entertainer is easy, or that they shouldn't make a living wage, or be able to profit from their work...
Everyone's gotta eat. What we're seeing now is the natural give and take within the industry adapting to new norms and business plans. From a higher level view, it's fascinating.
So http://masswerk.at/404 just got 1,017,260 hits this month generating no revenues at all ... (as of June 26, partly thanks to a post on HN earlier this month)
Meaning: all this "1 million of anything must be worth tons" isn't really what everything should be all about.
[+] [-] aresant|12 years ago|reply
I have no idea if David Lowery's original post about making only $16.89 for 1 million plays was distributed by a PR firm, but it sure feels like it.
PG's thoughts on PR are spot on, and I love referencing his article to both discern truth from half-truth in the news, and, of course, to push my own PR efforts:
http://www.paulgraham.com/submarine.html
[+] [-] yajoe|12 years ago|reply
[+] [-] guelo|12 years ago|reply
[+] [-] jcampbell1|12 years ago|reply
Pandora spent $82M on content according to the most recent 10Q, with 4.18B listener hours. That implies a cost of $0.02 cents per listener hour. A million plays is roughly 62500 listener hours, which implies a content cost of $1250.
[+] [-] arantius|12 years ago|reply
"$0.02 cents"? Do you mean "$0.02", or "2 cents" or two hundredths of one cent, or something else?
Is this Verizon writing? ( http://verizonmath.blogspot.com/2006/12/verizon-doesnt-know-... )
[+] [-] hohead|12 years ago|reply
Based on their cost of $0.02 cents per listener hour, I wanted to calculate how many hours per day my $36 yearly payment equates to (ignoring their operational costs):
($36 / $0.02) = 1800 hours per year
1800 hours per year = 4.93 hours per day
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] Afforess|12 years ago|reply
[+] [-] 205guy|12 years ago|reply
But forget about the numbers for one song. Let's say a guy like the OP of the other article works full time as a singer song-writer. He writes a few songs, performs some of them, has others (more popular artists) perform some of them, and maybe he plays a few gigs himself (either as a musician in someone's band, or good enough to do his own shows). Let's say he's median successful. One or two of his songs (either recorded by him or someone else) is close to charting. People are listening to it online and radios are playing it. Other songs are getting played but not getting the same traction. He works 50-60 hours a week on music, either writing, recording, or performing. What kind of living can he make?
a) 20K and lives off of another job? b) 40K and struggles to pay rent? c) 60K and can survive? d) 80K and considered successful? e) 100K and lives comfortably doing what he loves? f) More and can live in expensive parts of the country (NY-SF-LA)?
How was it in the old system of labels and DJs? How has it changed with Pandora and iTunes?
[+] [-] ghshephard|12 years ago|reply
Multiply that by 1,000 Aerosmith fan's who bough a used CD, and you have 1 Million plays that generate $0.00 for the music industry.
I wonder if the Music industry feels that they are being treated unfairly by the Used CD Marketplace? Or how they feel about people just purchasing $4-$5 CDs used (S&H included) off of Amazon - the combination of low cost + convenience.
Ironically - in the last year, I signed up for iTunes Match ($25/year), so in theory, every time I listen to this CD the various contributors are once again receiving revenue.
[+] [-] tunesmith|12 years ago|reply
The original purchaser bought it for full price, and assuming I'm a major artist like Aerosmith, that's big money in the aggregate. A cd isn't rent, it means you get to enjoy that stuff for as long as you own it. If the original purchaser wanted to transfer that ability to someone else even for free, I don't have a problem with it. I don't see cds as somehow being linked to the original person's lifespan, or a time-value of how long he's likely to listen to it. It's the existence of the cd, period. The fact that he got three bucks for it, more power to him.
Now, if he instead ripped the cd to continue his enjoyment and then sold or gave it away, to me that's the same as keeping the cd and letting you rip it (either for free, or for three bucks). That's not okay. He clearly liked it enough to "keep" it, so he should have kept it. In which case (if everyone else acted the same way), you would have bought a new copy, which means more money for the artist.
At any rate, you, by purchasing a used cd, did nothing "wrong" from any perspective in my book, because it can't be on you to ensure that the seller will no longer listen to or enjoy the music. But people that sell their used cds, technically they're stealing if they keep their rips after they sell it. Or at least "stealing", in the sense that it's the same as letting someone else rip/burn their copy.
[+] [-] RexRollman|12 years ago|reply
http://www.wired.com/listening_post/2007/05/used_cd_sales_l/
[+] [-] hexis|12 years ago|reply
Musicians were complaining about royalties and payment long before the internet was invented and they'll be complaining long after we're all gone. Keep that in mind when they act like streaming is the new scourge of music.
[+] [-] RKoutnik|12 years ago|reply
[0] Not including salary.
[+] [-] ThomPete|12 years ago|reply
20 years ago that and thousands of others songs wouldn't even have been played anywhere and definitely not a million times.
If you want to live off of making music or as an author or anything else you have to think like a publisher not an artist.
Playing music is a joy, something you can enjoy whether you make money or not from it.
Living from making music is an opportunity not a right.
[+] [-] jccalhoun|12 years ago|reply
[+] [-] Dewie|12 years ago|reply
Ironically that song was a hit exactly 20 years ago... so no, it managed to do just fine without a streaming service.
But yeah, I would never go back to the old model of radio and music only being on physical media. In fact, we can't at this point.
> Playing music is a joy, something you can enjoy whether you make money or not from it.
Other than an on average greater passion than in other professions, music sometimes has the potential to be "just a job". You might dream of coding the next greatest physics engine, but you are stuck making the same boring apps in a domain you don't care about. Similarly, you might dream of composing and playing rock operas but you are stuck doing crummy session work for R n B artists. It's not that R n B is bad, but not every musician is necessarily a person that has passion for all kinds of music and all kinds of gigs in the music industry.
But yeah, making a living from it is not a right, just like any profession.
[+] [-] blhack|12 years ago|reply
[+] [-] wmf|12 years ago|reply
[+] [-] johnward|12 years ago|reply
Here's another thing I don't get thought. I listen to albums every day on Spotify. I also bought a few on iTunes. How much of that $9.99 does the artist get for my unlimited usage?
[+] [-] whiddershins|12 years ago|reply
[+] [-] mikeash|12 years ago|reply
[+] [-] aston|12 years ago|reply
But then mention it's a company selling music, and people shrug, "Oh, well music should be free anyway... The artists should be happy they get anything."
[+] [-] encoderer|12 years ago|reply
[+] [-] winterchil|12 years ago|reply
[+] [-] bjustin|12 years ago|reply
[+] [-] emmett|12 years ago|reply
It's not like you have a natural right to prevent people from copying your stuff - we grant that right as a society, subject to very definitive limitations.
The real issue here is piracy -- if Pandora didn't have to compete with free, they could raise their prices and this whole issue would go away. As long as piracy exists, the price of music will be driven down. You can't blame Pandora for that.
[+] [-] notatoad|12 years ago|reply
[+] [-] alphamale3000|12 years ago|reply
Pandora just bought an FM radio station in an effort to reduce its royalty rates. http://www.engadget.com/2013/06/11/pandora-buys-fm-radio-sta...
[+] [-] arange|12 years ago|reply
[+] [-] thehme|12 years ago|reply
[+] [-] tunesmith|12 years ago|reply
So, a payout (revenue; before expenses) of $1372 for 1,159,000 plays.
Well, let's look at it in terms of an album where all songs are played equally. In reality, some songs will be played more than others. Assume an album of 10 songs.
Okay, that's $1372 for 115,900 complete album plays.
Well, you can sell an album for $10. More, actually, but let's say $10 since that's the digital rate. And you hope for repeat listens out of an album... ten listens? 100 would be pretty great, actually, maybe that's a true fan.
Well, 115,900 complete album plays for $1372... at ten bucks apiece, that's akin to each purchase being played 1,000 times.
In other words - ignoring other benefits of Pandora - you don't want to use Pandora to "sell" your music unless you have reason to believe that album purchasers would listen to your album 1,000 times or more. Only at that time would Pandora be worth it.
That of course doesn't take Pandora's discovery benefit. I don't know if that would be enough to knock the numbers down to 100 or 10 album listens, but I suspect people often overestimate Pandora's discovery benefit. Just because a listener might discover a lot of new music doesn't mean that an artist gets a lot of new fans from Pandora.
[+] [-] tunesmith|12 years ago|reply
Now, someone who makes a lot of money off of radio plays, and sees radio plays shrink as Pandora plays increase, they might still feel they have a beef due to the lower songwriter royalty rates.
Spotify, on the other hand, is different. Spotify does rob album sales.
[+] [-] chinpokomon|12 years ago|reply
Pandora's model actually works better for the artists, since there is metadata that could be used to spy on American citizens... whoops, wrong story; that could be used to connect to fans in markets the artist may not have had access to previously. Maybe Pandora should be selling that information to the artists and labels, although I don't know that they don't do that already.
Both radio and Pandora are more appropriately described as advertisement. Playback restrictions of both formats means that listening to something is not purely selective in the part of the listener. I can't request that Pandora play Cracker's Low, anymore than I can shout that request to my radio. However both give me exposure to music that I might not otherwise hear. Extra credit goes to Pandora for giving me easy access to the Artist, Album, and Song Title, as well as up sell links whereby I can purchase the music I'm listening to.
Pandora provides much more value than terrestrial broadcast - value for which the music industry should probably be paying Pandora. I fully appreciate the positron Pandora finds themselves in, but they aren't in a fair fight, and the artists that should be supporting them don't seem to understand that distinction for their own good.
[+] [-] mech4bg|12 years ago|reply
Does anyone have information on what a radio station pays for one play of a song, when they have an audience of, say, 100,000?
Edit: ah, I should have finished reading the original link, they make the latter point well.
[+] [-] shortformblog|12 years ago|reply
Footnote from this post: "He does clarify in the footnotes that $16.89 is only for 40% of the songwriting and there is a separate performance royalty, but certainly the headline & coverage could leave many with the impression that $16.89 was everything."
I'm not defending Lowery—he clearly wrote that post in an effort to draw negative attention to Pandora's practices—but he stated that the documents he threw online were outlining songwriting revenue—he made that delineation in the very first line of the post.
[+] [-] wmf|12 years ago|reply
[+] [-] Glyptodon|12 years ago|reply
Not that have knowledge of royalty proportionality, but it also seems unfair to have royalty costs dwarf any other business costs. I have no idea how much it costs Pandora to stream a song, but if it's a fraction of the ~$0.0012/listen they seem to pay in royalties, it seems like the royalty is disproportionate and unfair. On the other hand, if the royalty is more than ~2 orders of magnitude less than cost to stream a song, then maybe there is an argument that it's too low.
(of course the above is assuming you agree with royalties at all.)
[+] [-] dillona|12 years ago|reply
Why? Their business model is to take other people's work and distribute it to subscribers.
It seems to me that acquisition of the actual product should be the majority of their cost.
[+] [-] whiddershins|12 years ago|reply
[+] [-] klodolph|12 years ago|reply
(I realize that this is more complicated than "70%", see https://kdp.amazon.com/self-publishing/help?topicId=A29FL26O...)
I think it's a sign of efficiency that a large portion of the money goes to content creators. Content creation will get cheaper as technology improves, sure, but in fields like music and writing, content creators struggle to make a decent wage. Therefore as content distribution technology improves, the percentage of money given to content creators should increase.
[+] [-] ianterrell|12 years ago|reply
[+] [-] chaz|12 years ago|reply
[+] [-] samspenc|12 years ago|reply
[+] [-] gems|12 years ago|reply
[+] [-] mbreese|12 years ago|reply
Everyone's gotta eat. What we're seeing now is the natural give and take within the industry adapting to new norms and business plans. From a higher level view, it's fascinating.
[+] [-] wmf|12 years ago|reply
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] nikatwork|12 years ago|reply
"Why do programmers feel so entitled to high payment? Why is this even a story?"
[+] [-] masswerk|12 years ago|reply
Meaning: all this "1 million of anything must be worth tons" isn't really what everything should be all about.