Have you heard of Donnie McClurkin, French Montana or Grupo Bryndis? If you haven’t you’re not alone. They are artists whose sales ranks on Amazon are 4,752, 17,000 and 183,187, respectively. These are all working artists who live well outside the mainstream – no steady rotation on broadcast radio, no high profile opening slots on major tours, no front page placement in online retail. What they also have in common is a steady income from Pandora. In the next twelve months Pandora is on track to pay performance fees of $100,228, $138,567 and $114,192, respectively, for the music we play to their large and fast-growing audiences on Pandora.

tim-map.jpgAnd that’s just the tip of the iceberg. For over two thousand artists Pandora will pay over $10,000 dollars each over the next 12 months (including one of my favorites, the late jazz pianist Oscar Peterson), and for more than 800 we’ll pay over $50,000, more than the income of the average American household. For top earners like Coldplay, Adele, Wiz Khalifa, Jason Aldean and others Pandora is already paying over $1 million each. Drake and Lil Wayne are fast approaching a $3 million annual rate each.

This revenue stream is meaningful. I remember the many years I spent in a band when earning an additional thousand dollars a month would have been the difference between making music an avocation and a hobby. We’re talking here about the very real possibility of creating, for the first time ever, an actual musicians middle class.

It’s hard to look at these numbers and not see that internet radio presents an incredible opportunity to build a better future for artists. Not only is it bringing tens of millions of listeners back to music, across hundreds of genres, but it is also enabling musicians to earn a living. It’s also hard to look at these numbers, knowing Pandora accounts for just 6.5% of radio listening in the U.S., and not come away thinking something is wrong.

Pandora was founded on the principle of supporting artists and we’re proud to pay performance fees. We think artists could and should ultimately earn even more. But all of this revenue is coming from a single company. A predatory licensing fee orchestrated over ten years ago by the RIAA and their lobbyists in Washington has devastated internet radio. Few now deem it worthy of major investment, including most notably, virtually every major broadcaster. After spending years building an audience, the original three largest webcasters (AOL, Yahoo! LaunchCast and MSN) fled the business after the last rate hike was imposed. This is not a recipe for a sustainable industry. It is a destructive stranglehold that is putting at risk a much larger reward for musicians everywhere.

I believe we can do better, both for artists and music fans. Driven almost entirely by our commitment to this business, internet radio is now the fastest growing form of music listening in the US. And even more encouragingly it has proven to have a positive effect on both music sales and the curtailing of music piracy. In fact, Russ Crupnick, senior vice president of industry analysis for The NPD Group, citing the annual Music Acquisition Monitor study, states, “Overall music purchasing was down in the last year, while the average Pandora listener purchased 29% more music during the second quarter of 2012 compared with last year. Additionally, Pandora listeners’ music acquisition came increasingly from legal purchases, while non-listeners showed a decline.”

Consumers have spoken, and they love personalized radio. It has earned its place in the music ecosystem. It is time to embrace progress and harness this innovation for artists.

Congress must stop the discrimination against internet radio and allow it to operate on a level playing field, under the same rules as other forms of digital radio.

Making performance fees fair for internet radio will drive massive investment in the space, accelerating the growth of the overall sector, and just as importantly accelerating the development of new technology that leverages the incredible power of the internet to build and activate new audiences. That’s where the great opportunity lies in the long run. The short-term reduction in revenue would be rapidly swamped by the overall growth of the sector. Imagine the impact on artists if this industry grew to become 25% or even 50% of radio listening.

Artists, this is your future. Own it.

Rascal Flatts ($670,351), Iron & Wine ($173,152), Bon Iver ($135,223), George Winston ($85,239), Zac Brown Band ($547,064), The Four Tops ($65,173), Ellie Goulding ($609,046), Mumford & Sons ($523,902)…

Tim
Founder, Pandora

Comments

  1. Alice
    December 07, 2012 at 7:45pm
    Good info. Lucky me I discovered your website by chance (stumbleupon). I have book-marked it for later!
    Reply
  2. girls
    December 23, 2012 at 6:56pm
    Can't believe my eyes. I arrived at this amazing web site and downloaded the app. Highly recommended folks!
    Reply
  3. ucak bileti
    December 26, 2012 at 8:32am
    This is a great post, and it sure sounds unfair to me (though I wonder whether it might be fair for Pandora to pay a bit more than traditional radio, because it's somewhere between traditional-format and music-on-demand )
    Reply
  4. rüya tabirleri
    February 17, 2013 at 2:00pm
    I love the service. I gladly pay for the service. I believe it is a great value for the money.'m Sure the good quality. The money to pay for his satisfaction. There is nothing better. Good service
    Reply
  5. Taylor
    February 23, 2013 at 2:27pm
    Great blog!
    Reply
  6. Suzanne McKenna
    April 09, 2013 at 5:29am
    And what about the people who actually WRITE the songs you play???? I hear SONGWRITERS are getting paid THOUSANDTHS of ONE CENT for each play of their songs... How do you explain that????!!!! That IS NOT RIGHT!!! Without the songwriters, there would be no music! They should be compensated more fairly! It's not just the artists who should be paid....
    Reply
  7. Rodney
    April 13, 2013 at 7:34am
    In my case, the artists and songwriters are making more money because of Pandora. When I hear a song on Pandora that I like, I usually purchase that cd. If I like the cd, then most of the time I end up purchasing all the music from that artist. I guess that is why my wife and I have purchased over 1200 cd's and over 15,000 mp3's. I don't listen to radio because of the commercials and very few stations carry the type of music we prefer. So Pandora is our source to hear new artists and their music.
    Reply
  8. Jan
    April 14, 2013 at 12:02pm
    I just wanted to take a minute and say "Thank you" for bringing me great music for a fantastic price. I think the payment I make to be a member of Pandora is the best investment I make every year. My kids tell me I can use it for free, but I think it is important to respect the artists while I listen to great music. Thanks for finding a wonderful way to enjoy the music I like and hearing new artists that I would never experiences without your venue. Jan
    Reply
  9. balayı
    May 16, 2013 at 2:26pm
    New and emerging artists are the ones who are using internet radio companies for exposure. This is in hopes of leading to online music purchases and other goodies that come with fame. I’d call them the middle-class artists.
    Reply
  10. balayı otelleri
    May 26, 2013 at 10:49pm
    great post and this topic thank you for effort
    Reply

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