Pandora's Fed Up With The Lies The RIAA Has Been Spreading About It: Presents Some Facts

from the let's-rethink-this dept

We've pointed out that, recently, the RIAA and various front groups and attack-for-hire firms that it funds have been really turning up the attacks on Pandora, the hugely successful internet service that already pays significantly more in royalties than pretty much anyone else out there. This strategy is very much in the RIAA's tradition of attacking any successful internet company in the belief that 100% of the benefits of any successful internet company should flow to the RIAA.

In this case, the RIAA and its front groups have done a masterful job of misleading a group of artists into parroting RIAA talking points pretending that Pandora's royalties are too low, not too high. Most of these claims are based on a either base ignorance, or conscious deception, often focused on comparing apples to oranges. In some cases, this involves comparing totally different businesses (like Pandora to retailers), or, at times, it means comparing Pandora's "per play" royalties to the "per play" royalties of other services like terrestrial radio or satellite radio. Of course, that's insanely misleading, because the real metric is never "per play," but per listener. With Pandora, a single play is to a single listener (or, possibly a few people in a room or a car). But, terrestrial and satellite radio plays are broadcast, meaning that they usually have tens or even hundreds of thousands of listeners per play. Comparing "per play" rates is just a really dumb metric. There's a separate issue in terms of how some have misrepresented the various payments, implying that Pandora's payments are much, much lower than they really are -- something that an eager media picked up on without even the slightest bit of fact checking.

It would appear that Pandora has finally had enough of the smear campaign and the attacks and has posted a detailed response to these attacks, highlighting how wrong almost every talking point has been concerning Pandora, and how this level of dialogue has done a lot more harm than good.

The first falsehood being disseminated is that Pandora is seeking to reduce artist royalties by 85%. That is a lie manufactured by the RIAA and promoted by their hired guns to mislead and agitate the artist community. We have never, nor would we ever advocate such a thing. I challenge the RIAA to identify a statement from Pandora that says we seek to reduce royalties by 85%. On the contrary, all of the key principals including Cary Sherman (the head of the RIAA) and Mike Huppe (the head of SoundExchange) know that we have been advocating for solutions that would grow total payments to artists. The 85% sound bite preys upon the natural suspicions of the artist community, but it is simply untrue. And although we compete directly with AM/FM radio, which pays zero performance royalties, we have always supported fair compensation to artists.

It has also hit back on the claim that Pandora has been seeking to cut songwriter fees, explaining that it had come to a direct agreement with ASCAP on higher fees, and then ASCAP went back on the agreement and started playing games -- such as withdrawing tracks, but refusing to tell Pandora which tracks, such that it risked huge statutory fines if it played the wrong tracks. For all of ASCAP's claims that it is protecting artists, the reality looks like it was harming artists' best interests in trying to kill Pandora:

The next issue concerns the publishing side. Historically, Pandora has paid essentially the same rate as all other forms of radio, a rate established unilaterally by the performing rights organizations, ASCAP and BMI, in the late 1990s. In November of last year, following a lengthy negotiation, Pandora agreed with ASCAP to a new rate, an increase over the prior amount, and shook hands with ASCAP management. Not only was our hand-shake agreement rejected by the ASCAP board, but shortly thereafter we were subjected to a steady stream of “withdrawals” by major publishers from ASCAP and BMI seeking to negotiate separate and higher rates with Pandora, and only Pandora. This move caused us to seek the protection of the rate, also recently negotiated, enjoyed by the online radio streams of broadcast radio companies. It’s important to note that these streams represent 96% of the Internet radio listening hours among the top 20 services outside of Pandora (talk about an un-level playing field). We did not enter this period looking for a lower rate – we agreed to a higher rate. But in a sad irony, the actions of a few small, but powerful publishers seeking to gain advantage for themselves has caused all songwriters’ royalties to go down. Any characterization of Pandora as being out to cut publishing rates flies in the face of the facts.

And, amazingly, the RIAA and others have been successful in spinning this, falsely, into saying that Pandora was looking to cut back on what it paid songwriters.

The depths to which the RIAA has sunk in its attacks on Pandora are really quite despicable, but it's par for the course for them. Anything successful in the music space created "outside" the record labels is bad and somehow "building on the backs of our copyrights." They won't rest until they've killed each off. The past decade and a half are littered with the remains of internet and tech companies who built great products in the music space that fans loved, each one systematically killed by the major record labels and the RIAA, who demand ever higher royalties.