Pandora CFO Says This Fight is About Fairness.
In a wide-ranging interview with Joan Solsman of CNET, Pandora CFO Mike Herring, who joined the company earlier this year from Adobe, said the company is continuing its fight to make the rates paid across the many distribution channels more fair. Herring says in 2012 Pandora wrote a check for $250 million in performance royalties. "That's one fourth of all royalties paid to performers globally by radio. But we have only about 7 percent of the US radio market. The point we like to make, we are paying a pretty large amount to performers, even though it gets pitched often that we're underpaying or not paying our fair share." Pandora has been criticized for attempting to get government intervention to try to lower its rates just to fit its business model.
Herring tells Solsman it's not about lowering rates, it's about creating fair rates across lots of distribution channels. "We've put offers on the table where we commit to paying no less than we pay now in absolute dollars, and with increases on an annual basis. That hasn't gone anywhere because of a lack of trust. It has created a situation where meaningful conversations for positive outcomes are going to be hard-fought wins. It's going to take a long time to get there."
Pandora has also been very publicly criticised by several artists about their attempts to lower rates and Herring says he'd like to see artists get paid more. "We also understand the mistrust comes from a pretty tough decade-plus in the music industry. First you had the piracy issues, which are still rampant, mostly internationally but also domestically. And you had the download platforms, specifically iTunes, that disintermediated the entire CD business, which was detrimental. There's difficulty for people who have experienced these negative things to listen to reason."
Herring says Pandora is not asking to pay zero, as radio does. What he is asking for is a similarly calculated rate. "We are the only ones who pay on a per-track basis versus a percentage of revenue for satellite or zero in broadcast. The problem with the per-track rate is Pandora is really the only one who can be successful at that at any scale because the costs are so high. We have 70-plus percent Internet radio market share in part because we have a great product, and in part because it is incredibly, brutally hard to compete in this market where the costs are so high."
Read the entire Herring interview with CNET HERE
(10/26/2013 4:49:08 PM) |
AN2eR4 Awesome post.Really looking forward to read more. Really Cool.
(10/15/2013 4:00:46 PM) |
It's not about fairness, it's about money. Pandora knew the music streaming deal going in and so did their investors before the IPO. They all accepted the cost of doing business but would rather have over-the-air pay part of it. Awww.
|- Reed Kittredge|
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