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. Dudley
    October 10, 2012 at 11:36am
    As musicians who started our own label in 1979, we have watched the sale of our music decline with the advent of Pandora where our fans can listen our channel and never have to buy another CD or download. We have been very grateful lately for the increase in royalty income through Sound Exchange and much of that is coming from Pandora. As artists under the current system, we very much appreciate Pandora. If the bill under consideration goes through, we will be back to the same old artist's struggle of not being paid fairly for our music. Land-based radio stations play music randomly which may promote the artist but not take away from their sales. We hope that people who read this blog will contact their congressional representatives to OPPOSE Internet Radio Fairness Act, Bill Number 6480.
    Reply
  2. Carlton
    October 10, 2012 at 11:40am
    Have you guys tried Songza? Wayyy better.
    Reply
  3. name
    October 10, 2012 at 11:43am
    For the first three artists you mention, you are talking about performance royalties. But for the others in the next paragraph and at the end of the entry, it's not clear if you're talking about performance royalties only, or also songwriter royalties. I personally believe terrestrial radio should pay performance royalties - that's what they do in other countries, and their radio stations haven't dried up.
    Reply
  4. Peggy Dold
    October 10, 2012 at 12:03pm
    I always find it amusing when people who work in the "General Market" consider Latin Music artists "well outside of the mainstream." Grupo Bryndis are an extremely well-known and respected band in their genre. Given that the Hispanic population represents the largest emerging market in the U.S. (which happens to be the #1 Spanish language entertainment market in the world), perhaps it is advisable to recognize another 'mainstream'. Although the Spanish language market may not be on your radar (I'm not being critical -- I understand the obvious reasons why it's not), it is, nevertheless, very, very real, and not at all "well outside of the mainstream."
    Reply
  5. dean
    October 10, 2012 at 1:25pm
    I think it's tasteless and invasive to publicly announce what specific artists are compensated. What an artist makes is private and shouldn't be blasted for all to see.
    Reply
  6. Billy D
    October 10, 2012 at 7:22pm
    @Reid Foster: per yer "Lefsetz is right. Tim Westergren is on the wrong side of this issue." Lefsetz is a major tool in every sense of the word. A bloviating loudmouth has been shill for the Labels that no one really wants at their party.
    Reply
  7. Lelala
    October 10, 2012 at 11:44pm
    Wow, thanks for that insightful post. Obviously, it is in fact possible to make a good living out of Pandora. I didn't expect that much to got pay'd off to the stars :-)
    Reply
  8. Oelsen
    October 11, 2012 at 5:52am
    Hm, there is still a mainstream? I thought that one died around 1999.
    Reply
  9. Jon
    October 11, 2012 at 10:03am
    This makes no sense. Yes, artists are getting paid, but now they will paid even less... Yet Pandora will now make even more? Please explain. In addition, why shouldn't Pandora pay a fair rate? After all, Pandora is making money. Why should Pandora make more money than the artists and labels it is piggy backing off of? Without the content, there would be no Pandora....
    Reply
  10. j-lon
    October 11, 2012 at 3:26pm
    Last time I checked an "avocation" and a "hobby" were the same thing. I think you meant the difference between a "vocation" and a "hobby".
    Reply

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