Pandora
Radio, according to sources
is in need of higher profitability as costs outpace revenue. Instead of raising
advertisement costs they have chosen to go after music creators pockets through
litigation and political action. The current bill titled Internet Radio
Fairness Act wants to set residual royalty payment to below market fair
value. What is the royalty rate right
now? Remember that the Digital Millennium Music Act set the value at “fair
market value” which is a value that is negotiated between licensing companies
(ASCAP, BMI…) and content provider companies (Pandora, Spotify…) currently
Pandora pays out 0.0011 cent per play. Even the most popular artist would be pressed
to get a living wage just off those revenues.
Do the math 16.4 million plays are required for 18k of revenue. All the
while Pandora is market cap is valued at 1.5
billion dollars. If they are losing
profitability due to rising costs of royalty payments is it the fault of the
industry or just a bad business model, which never could reach the intended
vision of the company. Pandora has further issues losing subscribers to
competition like Spotify and their stock has taken a hit with announcement of
iTunes Radio.
Let
us take a look at the proposed
act before Congress. At the core they are arguing that it is unfair for
digital streaming music to pay market rates when other broadcasters either pay
zero as with AM/FM radio or below market rate as with satellite or cable radio.
It is stated that it is unfair and restrict new technology development and
profitability. Well my opinion is that the entire system has a problem. Why
should we grant our copyrighted material to be used as a vehicle of profit for
a large corporation, while we as owners and creators are not compensated. A fair
bill to put forth would be to end the enacted laws that permit broadcasters to
obtain below market rates and or free content which in turn they make billions
through advertising.
The
following link will help generate a letter to your representatives and provides
more information on awareness for fair wages for artists:
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