Gawker: valleywag, soundexchange

Pandora throws temper tantrum over music rates

Jackson West — Mon, 18 Aug 2008 20:00:00 EDT

The days of marveling over online music service Pandora's ability to know that you hella heart Oakland's own Digital Underground may soon be over. A court decision adored by the recording industry doubled the royalties Web broadcasters have to pay. Radio stations pay nothing to for rebroadcast rights to recordings, but do pay publishers a royalty. Satellite broadcasters pay nearly half what online music providers are charged. Pandora reports that the charges, payable to royalty collector SoundExchange, will amount to $17.5 million of their $25 million in annual revenue. Which would permanently mangle the company's business model, according to CEO Tim Westergren. The flip, convenient thing to do here is to blog about the evils of the rapacious music industry. Sure, SoundExchange is notorious for its long list of artists it can't find in order to pay, while it naturally collects royalties regardless. But after Muxtape's run in with the RIAA today, one has to think there's blame to spread around. What did these music entrepreneurs expect?

Let's not forget: Apple pays a similar percentage to music labels for sales through iTunes, and yet it manages to stay in business. For that matter, Google pays publishers the bulk of advertising revenues it collects on ads it places on their websites. Oh, and how much of Wal-Mart's revenues get shipped straight to its suppliers in China? It's not like it's impossible to make a living in a business where most of your revenues go to the people who make the business possible. Perhaps this is Pandora's problem, not the music industry's.

One way Pandora could boost revenue and curry favor with the RIAA is through good old-fashioned payola. Why not strike a deal to waive royalties on tracks the industry would like to see promoted and mixed into playlists just a little more heavily than usual? Users would still have a "commercial-free" listening experience, and Pandora could provide the thumbs-up, thumbs-down data back to promotions and marketing departments with contextual data like related songs as chosen by listeners to boot.

Or Pandora could cater to the hipster avant-garde. Why not broaden affiliate sales to vinyl? LP sales jumped over 33 percent from 2006 to 2007. Let me program "only if available for online purchase on vinyl" into my Pandora listening schedule. If I could click-to-buy a 12" of Pushin' On by the Quantic Soul Orchestra, I'm sold on the record and even $10 a year for the filter feature and a few others besides.

(Photo by Steven Toomey)

Stop the music! Record industry lobby group actually lobbies

Mary Jane Irwin — Mon, 06 Aug 2007 16:40:51 EDT

Executives at SoundExchange, the much-hated collectors of digital-music royalties, have been caught doing something naughty . Much to the delight of Internet radio stations fighting higher online-music fees, a federal appeals court slapped their wrists for supporting special interest group MusicFirst Coalition. The supposed "coalition," actually an industry front, is lobbying to levy performance royalties on terrestrial radio stations — much like SoundExchange's own mission to collect billions of dollars from Internet radio.

The big beef is SoundExchange's nonprofit status prohibits it from spending money on anything besides the administering and settling of disputes from the collection, distribution and calculation of royalties. Supporting groups like MusicFirst doesn't make the cut — despite SoundExchange's claims to the contrary.

Wired's Eliot Van Buskirk, always a friend to the digital music industry, hectors SoundExchange about any appearance of a conflict of interest: "With more power would come greater status and bigger paychecks for its officers and directors. Even if the agency were only acting in the interests of artists and labels, it would appear to have a direct stake in the fight." How tiresome. He ought to be lecturing, instead, the Internet radio industry: Take a lesson from SoundExchange and, if you actually care about lowering your royalties, hire some ball-busting, rule-breaking, down-and-dirty lobbyists of your own. Sheesh.

"The rumors of my death have been greatly exaggerated"

Tim Faulkner — Fri, 13 Jul 2007 19:10:39 EDT

Today, the Internet radio industry, imperiled by a new plan for music-webcasting fees, received a temporary "reprieve". An onerous schedule of royalty payments proposed by SoundExchange, the music industry's Web-licensing arm and okayed by a compliant Congress, is still in place. Basically, nothing has changed. And despite the stalling, nothing really will. Despite widespread claims of the imminent death of Internet radio, both music websites and record labels will soldier on. This is not a war of utter annihilation: It is Spy vs. Spy. Both sides will be around to throw new bombs in each other's direction tomorrow and forever, no matter how dastardly and deadly their assassination attempts are today. The music industry will eventually compromise at some rate that falls short of bankrupting webcasters, and Internet sites will, eventually, turn their attentions away from whining about the rates and toward finding ways to make money. No one ever really dies, but they sure make a lot of noise.