(image courtesy Southpark)

In 1998 Southpark presciently lampooned the entire Dot Bomb bubble in an episode  called The Gnomes.  Essentially the Gnomes had a business plan:

Step One: Collect Underpants.

Step Two: ?

Step Three: Profit.

The excellent Seeking Alpha writer Stephen Faulkner last year  pointed out the similarities between Pandora’s business strategy and the Underpants Gnome’s business model.

However Pandora did eventually come up with a step 2.  It’s called the Internet Radio Fairness Act.   Basically this bill would ask the government to step in and mandate lower royalties to artists.   Essentially a bill that would largely benefit  ONE publicly traded company: Pandora  (although curiously Pandora terrestrial radio competitor Clear Channel is signed onto the bill along with Google,  what’s that about?,  Here is a wild guess. Pandora is for sale.)

So basically this is the Pandora Underpants Business Model:

Step 1 Collect Users

Step 2  Ask Congress to pass a bill that benefits a single private company , by mandating lower royalties to artists for Pandora.   Or perhaps more accurately Artists are forced by government  to subsidize Pandoras bad business model.

Step 3 Profit.   ( Stockholders cash out in sale to Clear Channel or Google?).

++++++++++++++++++++++++++++++

But here’s the thing.  The so called Internet Radio Fairness Act was shot down in Congress, largely due to grassroots efforts by artists.   But the rumour is the bill is coming back.   And I’m gonna make a fairly educated guess as to what changes are gonna be in the bill.

While at a social event in Washington DC a rather transparent aparatchik of the telecommunications industry suggested a couple changes to the bill that might possibly meet the approval of the artists.   Essentially it was this:

Why not lower Pandora’s royalties but give a larger percentage to the artists and less to the record labels.

Okay, so yeah I fucking fell off the turnip truck yesterday and that sounds like a really good deal! Sign me up!!

1).  If IRFA passed, royalties from Pandora could be cut 85%.  Even if artists got 100% of the royalties  and record labels got zero we’d still take a whopping paycut of 70%.

2) Like most artists nowadays I own my own “masters” .  That is,  essentially I am the record company.   Most independent artists are their own record labels.  Therefore for the vast majority of artists this is exactly the same paycut and  amounts to the  Internet Radio Fairness Coalition saying “Artists are stupid and they’ll never catch on”.

(Ladies/Guys: after surviving in the music business for 30 years it should be a assumed that I have a finely tuned bullshit detector.)

So I’m gonna take a wild guess here:

The Internet Radio Fairness Act comes back next month with exactly this change.  They think they are gonna be able to divide us from record labels. Not realizing that most artists are the record labels. A divide and conquer strategy. Let’s hope I’m not right. But just in case.  Be ready.