The numbers say Pandora pays as well as AMFM SiriusXM
Just two days ago, Geek reported on a growing controversy over Pandora’s royalty system and levels of payment.It was sparked by a blog post from David Lowery, a guitarist and songwriter with Cracker, Camper Van Beethoven, and solo projects. His post claimed that the online radio service pays exceedingly low royalties to artists, and as proof he posted scans of his earnings statements. Pandora, he claimed with the help of a large red circle, paid him just $16.89 for 1,159,000 plays. A provocative claim, especially given that he also claims he’d have made more from the sale of a single t-shirt.Now, tech-blogger Michael Degusta says if you crunch the numbers, Lowery’s claims are both incorrect and misleading. He points out Lowery’s income is only a small fraction of what Pandora paid out for the song — just 40% of the songwriting fee, which itself only accounts for 43.5% of the publishing rights. This means that the full payment to publishers and songwriters was actually $97, not $16.89.This fact does not itself unmake Lowery’s point, since the songwriter can’t pay bills with other people’s money — at the end of the day, he was complaining about the amount of money he actually made, not what was paid out in total. Still, his numbers were used to justify attacks on Pandora’s overall royalty system.Much more problematic is the fact that the writing and publishing royalties only account for a small minority of what Pandora paid out overall. Pandora’s “performance fee” is $0.0011 per play, or $1274.90 for the total play-count in this case. After the record company and any backup performers take their cut, the band would in this case end up with $543.50 for the plays.Degusta’s chart of how Pandora’s royalty payments are ultimately divided.In Degusta’s words: “If Lowery received 40% of the performance royalty, ‘all he got’ for the 1 million plays was in fact around $234.” Lowery’s accounting of his income notably mentions the performance fee, but dismisses it as “unsustainable” without mentioning concrete dollar amounts.I think Lowery’s mistake in the original post was lack of specificity. Unless it later comes out that the CFO of Pandora ran over his dog last week, there are few conceivable reasons for him to be intentionally dishonest in biting the hand that (to some extent) feeds him.Lowery took to the comments section of his post to clarify a bit later on: “We are talking here about songwriting royalties. Not Performers. Songwriters and performers are often two different things. some [sic] of the best songwriters weren’t actually performers.” Given the strident language used in the original post, a sentence or two making this clear would seem necessary. To publish the post without being clear about the scope of its claims is to invite the sort of justified criticism he’s received.Additionally, if the point of contention is the woe of the modern songwriter, why single out Pandora as a culprit? Neither online streaming in general nor Pandora in particular is responsible for the way funds are divvied up between the various artists involved in creating a song. As Degusta points out, terrestrial radio paid out far less per-listen than Pandora — but more of the money ended up with Lowery, as a songwriter.From a purely self-interested perspective, this makes his argument sound like he wants more money for songwriters, and terrestrial radio gives more of the money it pays out to songwriters. Again, the lack of specificity makes an argument over who deserves the money into one of how much money ought to be paid out. One might justify an attack on Pandora or another provider, the other does not.The much larger problem seems to be the cut taken, at every level of the royalty calculations, by the record company. When it comes to Pandora in particular, which does its promotion primarily through algorithms, Lowery might do well to direct his ire elsewhere.