Blog Post
Petition Stonewalling Continues: A Question For Pandora

It took three days (whatever happened to the 24-hour news cycle?), but Pandora finally responded to Pink Floyd’s concerns about the IRFA pay cut. (Apparently they have decided to plead the fifth on Pink Floyd’s further concerns regarding the deceptive “artist petition,” which the statement does not mention.)

Pandora claims the band got “misleading information” regarding Pandora’s desire to cut artists’ pay by 85%. But, as the attached infographic shows, the information comes from IRFA’s sponsors and Pandora’s Tim Westergren himself.  The company said the idea behind IRFA is to remedy the difference between Internet radio royalties (50% of revenue) and satellite radio (8% of revenue).  Going from 50% to 8% is about an 85% cut. It’s simple math.

Of course, these are the same people who said a pay cut would be good for artists, so maybe math isn’t their strong suit. They’re the same people who see a market where 2,000 services pay a fair market rate and 3 grandfathered services pay a subsidy below market rate and think the fair solution is to drag everyone down to the subsidy rate (with the lost royalties all coming out of music creators’ pockets). So maybe economic justice isn’t a strong suit either.

Anyhow, it’s hard to know what the doubletalk about “no reduction in artist payouts” means, but I would like them to show us where that “guarantee” is in the bill the company is pushing. It’s not in there. 

My guess is it’s more shady parsing, like their phony petition. Maybe a promise not to reduce the total dollars they currently pay for recorded music? But that same fixed amount would be spread out among more and more creators as Internet radio grows.  The per-spin royalty would plummet – and individual artists would see their paychecks shrink – while Pandora’s “guaranteed” total “artist payouts” would stay the same. Like a boss who promises not to cut payroll, but hires more and more staff out of the same limited funds.  If you’re the one having your wages slashed, the fact that the boss’s total payout hasn’t shrunk isn’t much comfort.

Now that would be a pretty deceptive way of putting things and maybe we’ve misunderstood (although, after the artist petition scandal, maybe not).

After all, wasn’t it Tim Westergren himself who in describing the problem IRFA would address said “the problem is the rates”? It’s in their own words repeatedly.

Only Pandora really knows what they mean, of course.  Maybe someone should ask them . . .

[UPDATE: Since we posted this, we saw Pandora's statement in its entirety and it frankly raises even more questions:

More Questions for Pandora

So Pandora’s spokesperson is apparently sending out a statement about IRFA’s artist paycut:  “’85% artist pay cut.’ That is simply not true. We never, nor would we ever, support such a thing. In fact, Pandora has suggested solutions that would guarantee no reduction in artist payouts while also nurturing the growth of internet radio.” 

Let’s take a breath and remember how shady Pandora has been with numbers before.   Remember the artist payments blog they walked back?  When their CFO “mistweeted”?  

And read that statement again.   Are they saying (a) no pay cut at all or (b) that 85% is wrong?

Even more questions:

1.  Is Pandora really now claiming IRFA doesn't cut artists’ pay?   How do they square this with Pandora’s own prior acknowledgments that IRFA is designed to cut royalties to help Pandora survive and innovate.  For example:

2.  If Tim doesn’t know what rates IRFA would produce, how can Pandora say 85% “is simply not true”?  How can they “guarantee” no reduction in payments at all? What’s wrong with the numbers? They come from Pandora and IRFA supporters?   Here’s Tim Westergren using them again.   musicFIRST has showed it’s work  Will Pandora?

 3.  Even if granting for purposes of argument Pandora’s claim that the cut in pay would be temporary (and then outweighed by the big new payday that the new era would be), how big a pay cut and for how long would the bill create it?