By Jeff Price (@TuneCoreJeff), Co-Founder of Audiam and Founder and Former CEO of TuneCore.
For those artists not aware, Pandora has taken the gloves off completely and is out to beat the crap out of you to make more money.
Pandora is an Internet streaming radio service that makes money just like AM/FM radio, through advertising. It's also a publicly traded company. All of its investors and shareholders want to make a lot more then they already have.
They have a few ways they can do this. One is to be more innovative and valuable to advertisers allowing them to increase ad rates – you know, like YouTube did. The other is to screw the artists and find ways to pay them less and less and less and less and less lowering Pandora's expenses increasing the companies revenue.
Between these two options, Pandora has chosen to try to pay less for music. To that end, it put together a multi-million dollar lobbyist budget. These lobbyists sole job is to convince the US government to pass a law giving Pandora a "compulsory" license to use artist's music at a "statutory" rate that is as low as possible.
In other words: artists can't say no to Pandora and can't negotiate how much they get paid when Pandora uses their music. If Pandora has its way, the meager table scraps this multi-billion dollar company is paying artists will go down even more.
Fortunately, this plan has not been working too well. Realizing this, Panodra took advantage of an unintended legal loophole that lets them pay even less money than they are now if they own an AM/FM radio station. They bought one in South Dakota to piggyback off the royalty rates this tiny station in the one of the least populated states in the country has to pay.
Let's be clear, this is a no holds barred fight between artists and Pandora. Pandora is going for the jugular. They will do anything to drive down the cost of using the music, including strangling the artists income stream to the point of killing them. In Pandora's world, there is no artist choice; you all MUST let them use your music at the cheapest possible rate possible (and yes, Pandora has tried to have the music be free to use).
Pandora's usual response to driving down rates is whining that other entities get to pay less then they do.
Frankly, I don't care. This conversation is about Pandora. If Pandora wants to use the music, pay for it. If you don't want to pay for it, make your own music. Oh wait, you can't make your own "Hotel California"? Then I guess the music artists make has value. Pay for it.
Artists need to step up and fight back. They were not put on the planet so Pandora can have a 20 billion dollar market cap at their expense.
Here's what artists can do:
Pandora needs two copyrights to play a song on Pandora.
1) The Recording: (For example, Arista Records hired Whitney Houston to sing the song "I Will Always Love You". When they are done, the recording of that song is owned by Arista Records.)
2) The "Composition": (aka the lyrics and melody). (For example, Dolly Parton wrote the song "I Will Always Love You" that Whitney Houston sang.)
Each entity – Arista Records and Dolly – gets paid a separate royalty each time Pandora plays the Arista Records' recording of Dolly's song.
Right now there is a law that allows Pandora to use the recording of the song and pay a government set royalty rate to Arista Records regardless of if Arista Records wants them to.
However, there is no law that forces Dolly Parton to let Pandora use her Composition AND no government set royalty rate if they do.
If Pandora does not have the license to the Composition, they can't play the song – be it Arista Records' recoding of it or anyone elses.
Typically, Pandora gets this Dolly Parton right – called the right of Public Performance - from ASCAP, BMI and other entities like them around the world.
Here's where the artist can fight back.
If an artist wrote the lyrics and melody of a song (the Composition) and the song they wrote is being played on Pandora, the artist can contact ASCAP or BMI and withdraw the right of Public Performance for Pandora from ASCAP/BMI.
With the right withdrawn, the artist/publishers can then contact Pandora and tell them it no longer has the right to play that song unless they pay more money.
This is exactly what Marty Bandier at SonyATV Music publishing has done.
And it's exactly what BMI President and CEO Del Bryant states you can do in his February, 2013 letter:
"Some BMI publishers have stated in the press that the main driver in their desire to withdraw their works for specific digital uses is to set their own pricing. Publishers have always had the right to directly license. In the case of withdrawal, they believe they may obtain higher royalty rates from this market if they negotiate their own agreements outside of BMI's regulatory framework. By withdrawing works from BMI, publishers become the only entities that can license those works and therefore can deny permission to perform their works if they do not come to agreement on rates and terms."
Once you withdraw your rights, and you have notified Pandora, and they still play your song, they are not only doing so without a license, but are also willfully infringing on the artist's copyright. This means the artist can sue Pandora for copyright infringement for higher damages.
In the meantime, tell Pandora you are not going to let them play your song until the money they pay for artists, songwriters, publishers, labels and composer goes up.
Imagine if the entities that control the rights to the songs by Metallica, Lady Gaga, Arcade Fire, Taylor Swift and the million other members of ASCAP and BMI stood together.
Pandora's strategy of paying artist less would be stopped. It would have to innovate or die. It would also have to pay a fair royalty for something it did not create – the music.
It's important to draw a line in the sand now and take on these entities. Artists do have the power to do so. They just need access to the information and knowledge to fight for their rights.
With this information and unity, the artists can put Pandora back in its box.