Untruth in Advertising: Pandora’s Misleading Plea To Listeners On Behalf Of The Internet Radio “Fairness” Act.

For those of you that have not been following closely.  The “Internet Fairness Rado Act” is a bill  that is being championed by Pandora Radio.  Pandora radio has been pushing it’s listeners to write their congressmen on behalf of Pandora and in support of this bill.

But Pandora has not honestly explained the bill to their listeners.  They portray the bill as a fix to “discrimination” that internet radio suffers in comparison to traditional broadcasters.  This is simply not true. In addition there are all kinds of nasty things  in this bill that don’t really have anything to do with Pandora.

Here’s how you know you aren’t being told the whole story: The bill is also backed by Clear Channel and other traditional broadcasters.  This is not poor little Pandora vs the other big broadcasters.  They are on the same side. It’s big media vs the artists.   Feel duped?  Write Pandora. Click Here.

So for a little bit of fun we have decided to make an honest and fair version of the Pandora’s plea on behalf of the Orwellian named Internet Radio Fairness Act.

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From the Pandora website

Their text is in black.  Our  more “truthy” text is in red.

INTERNET RADIO FAIRNESS ACT

An important piece of legislation has been introduced in Congress to help end the long-standing discrimination against internet radio fire the copyright royalty board judges.  These judges have made rulings that Pandora did not like in  the past.  This bill also muzzles any group that acts on behalf of  “rightsholders” (artists) by threatening prosecution under The Sherman act for “impeding” any direct licensing between broadcasters and record labels.  Direct licensing deals  often allow record labels to take artists performance royalties and apply it to un-recouped balances. As it stands now these royalties must be  paid directly to artists.  This effectively muzzles artists,songwriters and their unions. This bill infringes free speech!   We’re asking that you contact your representative today to urge them to NOT support the Internet Radio Fairness Act.

This bipartisan bill will  NOT end royalty rate discrimination against internet radio and bring greater fairness to our industry. Because such discrimination does not exist.  It may however keep Pandora’s stock price high while insiders sell  millions of dollars of shares amonth. Today, the discrimination disinformation is extraordinary. In 2011, Pandora paid over 50% of revenues in performance royalties, while SiriusXM paid less than 10%.  But comparing shares of revenue is extremely misleading.

This is because

1) Pandora chooses to play one commercial an hour whereas Sirius plays approximately 13.

 2) Sirius relies on subscription (lots of revenue) while Pandora relies more on advertising (much less revenue)

3) Sirius airs a lot of non music programming.  

Internet radio brings millions of listeners back to music, plays the songs of tens of thousands of promising working artists, enabling them to build their audience while receiving fair compensation. That’s why we want to pay artists 85% less. We would like artists to be unfairly compensated so we can profit more. 

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If you are a pandora listener,  and you received this very misleading communication from Pandora and you now feel duped?  Write Pandora and ask them some hard questions.  Ask them why they failed to mention the bill fires the copyright  judges.  Ask them why they failed to mention  the Sherman Act is in the bill?  Ask them why they failed to mention they want to muzzle artists groups during direct licensing negotiations? Ask them why they never mentioned that Clear Channel is also behind this bill.  Write them  Click here.

You can also write the congressmen and senators who introduced this bill:

Representatives Jason Chaffetz (R-UT) and Jared Polis (D-CO) along with Senator Ron Wyden (D-OR).

8 thoughts on “Untruth in Advertising: Pandora’s Misleading Plea To Listeners On Behalf Of The Internet Radio “Fairness” Act.

  1. Here’s the response I got from “Tim Westergren” after I wrote Pandora. Didn’t seem to answer my specifics…

    Thanks Trichordist!

    Re: Internet Radio Fairness Act
    Inbox
    x

    Tim Westergren tim.westergren@pandora.com
    3:53 PM (3 minutes ago)

    to me
    __________________________________
    Hi Ken,

    Thanks for taking the time to write. This is an issue I take very personally.

    I spent about 15 years of my life trying to make a living as a musician, so I am intimately familiar with the challenge of making ends meet, and I know that the digitization of our industry has made it doubly hard, as the CD has experienced such a steep decline. Supporting musicians is a central mission of Pandora and we pay royalties proudly.

    While at a glance Internet radio’s efforts to lower its royalty burden may seem like yet another setback for artists, we don’t believe that’s the case. In addition to a basic issue of fairness, we would contend that a more reasonable royalty for Internet radio will greatly accelerate its growth leading to much larger royalties.

    Currently, there is absolutely no question that Internet radio’s growth has been greatly slowed by the unequal royalty burden it shoulders. Those rates have pushed the three largest internet radio companies (AOL, Yahoo, MSN) essentially out of the business, and they have also precluded most broadcasters from entering the market place with any vigor.

    We’re not seeking the lowest possible royalty. We want something fair. And to us, fairness means allowing us to be governed by the most prevalent, long-accepted royalty standard (called the 801B standard) that has governed copyright administration for decades. In fact, record labels and songwriters have used and accepted this standard themselves in their own rate-setting processes. We don’t know what the outcome of a new standard would be, but the criteria under that standard strike us, and many before us, as reasonable and balanced.

    I hope this helps at least clarify our thinking. We think there is a win-win here, but it requires both sides taking the long view.

    Thanks again for writing in.
    Thanks again for writing in.

    Cheers,

    Tim

    Tim Westergren
    Founder, Pandora
    Internet Radio Fairness Act
    NOV 01, 2012 | 01:37PM PDT
    Original message
    Hi there,

    I am a pandora listener and a recording musician of many years. I have made my living from music via commercial and TV licensing in the past. Recently I have noticed that my possibilities for revenue for my hard efforts are far and slim. Yes, this is a tough business, but I’ve been noticing more and more web businesses springing up to sell me “opportunities” etc. I would like my next release to be on Pandora, and I would like to keep being a listener, but the recent plea from your CEO for internet payment “fairness” just seemed like the last straw for me, a content creator trying to find ways to get paid. So I started looking around as it just didn’t seem right.

    So, I found some great research that has been done from one of my favorite all time recording artists, who’s clear thinking lyrics have now been devoted to the plight that we musicians find ourselves in, namely getting kicked off the $$ bus, thrown under it and ground under its wheels. I have found that you CEO’s plea for fairness to be a smoke screen. I attach some information below I would love to have real answers to before I cancel my Pandora account.

    “But Pandora has not honestly explained the bill to their listeners. They portray the bill as a fix to “discrimination” that internet radio suffers in comparison to traditional broadcasters. This is simply not true. In addition there are all kinds of nasty things in this bill that don’t really have anything to do with Pandora.”

    “Here’s how you know you aren’t being told the whole story: The bill is also backed by Clear Channel and other traditional broadcasters. This is not poor little Pandora vs the other big broadcasters. They are on the same side. It’s big media vs the artists. Feel duped? ” (I do.)

    “This bipartisan bill will NOT end royalty rate discrimination against internet radio and bring greater fairness to our industry. Because such discrimination does not exist. It may however keep Pandora’s stock price high while insiders sell millions of dollars of shares amonth. Today, the discrimination disinformation is extraordinary. In 2011, Pandora paid over 50% of revenues in performance royalties, while SiriusXM paid less than 10%. But comparing shares of revenue is extremely misleading.”

    “This is because

    1) Pandora chooses to play one commercial an hour whereas Sirius plays approximately 13.

    2) Sirius relies on subscription (lots of revenue) while Pandora relies more on advertising (much less revenue)

    3) Sirius airs a lot of non music programming.

    Internet radio brings millions of listeners back to music, plays the songs of tens of thousands of promising working artists, enabling them to build their audience while receiving fair compensation. That’s why we want to pay artists 85% less. We would like artists to be unfairly compensated so we can profit more. ”

    So, I would like to ask you further, why did you fail to mention the bill fires the copyright judges? Why did you fail to mention the Sherman Act is in the bill? Why did you fail to mention you want to muzzle artists groups during direct licensing negotiations? Why did you never mention that Clear Channel is also behind this bill?

    What’s up Pandora? Now that you’re public and have to feed your shareholders the highest short term return on investment, is it just that you need more revenue? Off the backs of the musicians/content creators that drive your service? I’m very disappointed as I thought Pandora a good way to bring folks back into music. But I’ve seen lately some payout statements from Pandora vs Sirius to a moderately well know act, and the amount you paid them was pitiful. Simply pitiful.

    What’s up Pandora? Are you as slippery as Romney?

    Waiting with baited breath. Yours truly,
    Ken Adams

      • Actually, I can tell you exactly what happened here, as I used to answer mail like this at Pandora.
        First, the support folks realized that they were starting to get mail about the fact that Tim was involving himself personally in politics that affect the company. Then they realized that they didn’t know how to answer these questions. So they talked about it in a meeting, the manager then emailed the PR people, who wrote this message up, ran it by Tim, who approved or changed it, then they made it into a catch-all response for whenever people write in about this current political situation, and made a macro, probably called something like “fairness act”, and then made some keyword to have it fill in as a response.
        So they get your email, they type “fa” tab or something and hit send.

  2. The flash point for the debate is performance rates are one rate if you broadcast broadcast music on earth bound radio waves – that one is currently ZERO, another rate to broadcast on radio waves that rebound off of satellites, another rate to broadcast via coaxial cables strung up from Cable TV providers and yet another rate for broadcasting over the Internet – the highest rate, which curiously shares the same physical cable as the Cable TV system for many Internet users – the second or third highest rate.

    On top of that I have a device that lats me listen to music from two of these spectrum, and you can buy devices that let you listen on three of these spectrum’s. I listen to all of them through a single interface, my ears.

    Given all this it’s illogical to me that when your music is pushed through “a series of tubes” a different rate is paid depending on which tube it came down when I absorb it the same way. Your music brings value to our lives but I don’t feel it brings more value when it’s absorbed via one spectrum over another.

    It seems the rate structure needs adjusting across the board. Questioning Pandora’s business model isn’t relevant to me when applying the Internet rate to all spectrum’s would wreck public, college radio, commercial radio, satellite radio and cable radio. So it seems that number doesn’t work. On the other hand Zero isn’t the right number either.

    I think classifying rates by spectrum was a bad idea and the writing on the wall suggests it’s a paradigm that will die. It’s not a question of if but when. If I was an artist my first step would be to get laser focused on getting more parties to pay into the system at a rate that works because some don’t pay. That will greatly boost the revenue pool. Then negotiate rate increases as necessary once everyone was paying.

    • This is how you know this bill is bad. Mr Brandon is being just as dishonest as pandora.

      1. He financially benefits from passage of this bill as the owner of loudcaster. Yet is pretending to be a disinterested party. This is called shilling. shame.

      2. His argument about the different services paying different rates does not address the different functionality or revenue streams of each service.

      3. does not address the fact the bill fires the copyright judges and invokes the sherman act against rightsholders organizations.

      nice try. keep justifying the ripping off of musicians by billionaire tech moguls who can’t make their financial model work.

  3. All I was doing was pointing out the source of the whole problem. I don’t feel my previous comment was neither combative, judgmental or accusatory. Your response lands that way for me. That bums me out but I accept this is your house. I still respect you posted my comment and took the time to respond.

    1) I didn’t mention Loudcaster because I closed it about a month ago. That may have been about two or three weeks before I read about the proposed legislation. It was a hard call that I debated with myself for nearly a year. I just didn’t want to talk about it, at least not here. I don’t mind sharing a story outside of the blog though. I’m far from a tech mogul though. I started Loudcaster mostly my own money and built nearly every part of the service by myself. Entrepreneurship is difficult which you know first hand. I’m not complaining but I don’t feel the urge to try anything anything entrepreneurial in the online space again, regardless of which way the legislation lands.

    2) I see the functionality provided by a service as a separate topic from the broadcast medium.

    3) Your comment makes gives me the impression that legislation is advocating for a judge-less process. My understanding is the judges must meet certain qualifications and must be hired by the President instead of the Library of Congress. I don’t see the Sherman Act as being used to silence artists and record labels either. I understand it as organizations like SoundExchange can’t advocate for some things. They would stay on collecting royalty payments, distributing them and enforcing the law. Though others could lobby and negotiate, like the RIAA or A2IM. I’d like to know if I’m wrong.

    Fair is fair though. If the stated goal is fairness and there is anything in the legislation that puts one side at a disadvantage then it should be looked at.

    .

    • It doesn’t just put artists at a disadvantage, it ball gags them and throws them down a well.

      we are posting a section by section analysis of the bill. You should spend some time reading it. It’s gnarly. Don’t rely on what other people say. For instance section 5 is clearly directed at soundexchange. but it doesn’t name them. partly because sirius probably didn’t want people knowing they put this clause in. naming soundexchange would remind everyone “oh yeah sirius petulantly tried to sue soundexchange for just exercsing free speech”. But i’m sorry unless i woke up in the soviet union, no private company has any fucking right to tell another company or individual that they can’t speak even if they manage to buy congressmen and pass laws.

      Section 5 is an abomination. it threatens un named undefined groups of rightsholders that impede direct negotiations with prosecution under the sherman act. what is impede? what is meant by groups of rightholders? is that me and you cause we own some sound recordings saying hey I think sirius and clear channel are screwing you over with that direct licensing deal. Is it a band? that’s a group of rights holders. Is it our unions? cause that has been the wet dream of the far right forever. To revoke unions exemption from the Sherman act. this is serious shit. this is overreach. This section woudld apply to RIAA A2IM AFM AFTRA Any group of rightsholders.

      The thing about the judges is a masnick fake constitutional crisis. The issue with the copyright judges was already resolved. The DC circuit court fixed it and it’s done. basically masnick is running around saying that the library of congress is part of congressional branch. That’s not true. It does have congress in it’s name so as usual masnick is about 2.5% right. Librarian of congress is appointed by the president. As head of dept the Librarian of Congress can appt the judges. There was some small technical fix required by the courts, that had to do with whether they were superior or inferior officers. This is not a red herring it’s a dead horse.

      finally functionality is at the heart of this. When i type in cracker or camper van beethoven Pandora immediately plays a song from our catalogue. that’s not music discovery, that is taking the value of our name and brand and monetizing. The artist has a much larger value in that transaction. they deserve more. Spotify pays more because of this.

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