Editor’s note:  The Internet Radio “Fairness” Coalition Launched yesterday and as we predicted this is just old line radio broadcasters (including Clear Channel) cross-dressing as Internet Radio Broadcasters in attempt to trick public into supporting this bad bill. 

Hey music  business journalists.  Hear that?  It’s the wake the fuck up alarm.  And it’s telling you that The Trichordist was right all along: Pandora is simply bearding for Clear Channel. It says so right here.

This is not about making rates “fair” for Pandora. Pandora already has fair rates, it’s not musicians problem they don’t want to sell more advertising. Pandora plays 1 minute of advertising per hour compared to satellites 13 minutes an hour.

If this bill were really about Pandora getting fair rates why the fuck would  both Pandora and Clear Channel  be supporting this bill?  Do you really think Clear Channel wants to help Pandora steal more audience share from them?  No of course not.    That’s why, by every measure (including wordcount) ,90% of this bill is serious special interest bullshit. Things like:

*Fires Current Copyright Judges

*Mandates what new judges can consider as “evidence”.

*Judges can’t consider previous rulings.  Or as we prefer to call it “the Orwellian He who controls the past controls the future clause.”

*Eliminates requirements judges have experience in copyright or economics.

* Stands the anti-monopoly Sherman Act on it’s head by using it to limit free speech  of performing rights organizations, industry associations, artists guilds even unions.

This bill is so shitty it may achieve the impossible: Bipartisan consensus.

Conservatives hate it cause it’s crony capitalism.  Silicon valley asking the US government to fix their business model.  Most real businesses outside  profitless-innovation-land  (Silicon Valley) negotiate with their suppliers instead of running to the Nanny State to fix their business model.   It’s 2012 Silicon Valley, grow up!

Liberals hate it cause it’s Agency Capture.  These large corporations couldn’t get their way with  the CRB so now they are trying to dismantle the board and remake it in their image.

We ask Tim Westergren to come clean. Quit pretending this fight is about his “cool” internet radio broadcaster being treated unfairly by “uncool” corporate broadcasters like Clear Channel.  You guys are on the same side!  No more bullshit.

The Internet Radio Fairness website was registered way back in June 2012. This has been planned for a while.   “Tim you go first, then we’ll launch this site later”  The contacts are all in Richardson TX. Pandora is not based in Texas.. which of these members of the coalition are based in Texas?.. .hmm.

Let me state this up front.  I have no problem with any broadcaster making a profit whether it’s Pandora, Sirius or Clear Channel. Even a lot of profit.  They have their financial interests and duty to their shareholders.  They have a financial interest in the IRFA bill. And I have my own financial interest in stopping this bill as it is written. In this case our interests are opposed.   On some level you can see this as a labor dispute or even a complex negotiation between buyers and suppliers. This is not my objection.

My objection is to how this is being done.  I object to Pandora’s attempt to “opt out” of the free market and instead ask Congress to step in and fix its financial model.  This is an abuse of the legislative process and deserves the description “crony capitalism”.  I  also strongly object to the campaign of disinformation which has accompanied this bill.

But if that was all there was to this bill this would be one blog post. 500 words max.  But it’s not.  This bill being pushed by Pandora Founder Tim Westergren must be seen in its historical and financial context. Further it helps to understand why an artist like me decides to do battle with this bill and the individuals and institutions that will profit from passage of this bill.

(I approach this with some trepidation as any one of these companies that I criticize could choose to be vindictive and harm me and either of my two ensembles by reducing airplay.  But I feel I must.)

As an artist that benefitted from a system which valued content and artists’ contributions, I feel obliged to make sure the next generation of artists (which include my  sons) have the same opportunities that I had. Many of my musician friends in the business fail to understand this.  We often see quotes from some of our older legacy artists endorsing illegal file sharing as “the new radio”.

Or they praise semi-legitimate tech schemes that suck value from artists’ songs or recordings while sharing the tiniest bit of revenue with artists.  I don’t think they are bad people but  they fail to see what is really happening here. And what will happen to the next generation.  They are severely limiting the next generation of musicians’ financial options.  And dooming them to exploitation at the hands of large corporations.

For even free music is not “free”.  Plenty of people are profiting off “free” music. Illegal sites run by sketchy (or worse) groups profit by selling ads.  Online advertising networks owned by Google, Microsoft, Yahoo and others profit by serving ads to these sites. Madison Avenue advertising firms profit by designing these online campaigns.  Mastercard, Visa, American Express and Paypal profit by providing payment processing to these illegal sites.  And the bittorrent ecosystem is not any different.  uTorrent™  insiders report  they make millions just from the advertising on their conduit toolbar.

Music is not free in the digital age.  It’s just that artists are too often not getting any  of the revenue that their music generates.

These legacy artists had the choice to decide how to monetize their music.  For example, the Grateful Dead chose to sell their recorded studio albums but chose to freely share their live performances as long as no one made any money off of sharing activities.  Indeed I have done exactly this my entire career with Camper Van Beethoven and Cracker.  We have over 4 thousand tracks on the internet music archive.  But I am fully aware that it is our duty as successful artists to protect the rights of the next generation of musicians. We should do our part to protect their ability to monetize their music if they so chose. Successful musicians need to understand that it is hypocritical to let the door close on the next generation of musicians.

The big picture here is that since the dawn of the digital age there has been unrelenting pressure from the tech industry and its lobbyists to devalue, even demonetize, recorded music (-ed note: and all intellectual property. Your job is next!).  This Pandora bill is just one battle in a long running war.

The reason I am criticizing Tim Westergren personally is because he has chosen to be the public face of this bill.  Further  as a musician he understands that this is the battle.  Indeed he was once  firmly on the side of musicians, advocating that Congress force terrestrial broadcasters  to pay a royalty to performers.  Here in 2009 he states that clearly!  He advocates that AM and FM radio do the right  thing and pay royalties to performers and support HR848 the Performance Rights Act. Now as Tim Westergren emerges from his IPO cocoon we see not a beautiful artist friendly butterfly but an ugly Wall Street moth advocating a race to the bottom. Fuck it, other people aren’t paying artists fairly, why should we? 

Nice. A beautiful display of Silicon Valley iEthics.™

But it’s much worse than that. Much of this bill appears to be written by or at the behest of Sirius XM and the National Association of Broadcasters. That would be  Clear Channel and other non-cool broadcasters.  The clauses in this bill that advocated firing of judges; what evidence the judges could consider; attempts to stand The Sherman Act on its head (and use it to muzzle PROs and artist groups) seemed bizarre coming from Tim “I’m a musician too” Westergren.

At least it seemed bizarre until I considered this horrible possibility:

Tim Westergren is a beard for Clear Channel, Sirius and The NAB!  

Indeed much of this bill does what  another similarly named bill does.  Flash back to the 2007 and the  National Association of Broadcasters sponsored Internet Radio Equality Act.  This act often shares similar concepts.  This bill of course fell flat on it’s face because consumers are not gonna write their congressmen on behalf of Clear Channel!

It looks to me as if someone somewhere just reheated this 2007 bill and got Tim Westergren to lead the charge.  After the Anti-SOPA Silicon Valley corporate counterrevolution of 2012 many people learned that if you just stick “freedom”,”fair” and “internet” on the front of your cause most people won’t bother to read  the ugly Orwellian details.  The tl/dr generation happily click, like, share and tweet the corporate agenda all the while (incorrectly) thinking that they are doing something vaguely revolutionary. Sad.

But the real Orwellian touch is falsely framing the debate as the cool internet broadcaster Pandora vs the uncool traditional broadcasters.  While not-so-secretly larding the bill with all kinds of goodies that help those uncool traditional broadcasters.

If my analysis is correct I just have to say “Touché, Tim,  you’ve actually harnessed the consumers dislike of traditional broadcasters to financially benefit those same broadcasters.”

And I also have to say, as I’ve done all week  “Screw You.”

Cause in reality this is Wall Street,  Silicon Valley and National Association of Broadcaster teaming up to screw over artists.   This is not hip internet radio broadcaster vs The Man.  It’s Pandora selling out to The Man.

“Screw You” cause you’re participating in the devaluing of the labor of your fellow musicians.  And not this generation but the generations to come.

Finally “Screw You Tim” cause you’re directly profiting from this  little charade.  By dangling the shiny object of lower royalty rates in front of investors it appears that investors see Pandora’s stock as potentially more valuable. Look at the headline on the  financial website www.Trefis.com after this bill was misrepresented to the public:

“Pandora’s Value Could Double If The Internet Radio Fairness Act Passes

Meanwhile Tim Westergren continues to sell an average of  a million dollars of Pandora stock a month.

By the sound of it you’d think that Pandora pays a lot of money to artists compared to something like Sirius XM radio.   Pandora keeps comparing the percentage paid to artists (50%) to satellite radio (10%).  And they keep crying out for “fairness”.

This is really manipulative.  Pandora is largely an ad supported model.   Sirius/XM is subscription supported.  As a result Sirius has much better revenues.  It doesn’t make sense to compare percentages.

Let’s look at what the two services really pay!

So for the 3rd quarter of 2012

Sirius paid Camper Van Beethoven  $2,213.70

Pandora Paid Camper Van Beethoven $91.07

And terrestrial radio?  Or what civilians call normal local FM/AM?

well… let’s just say they  paid me A LOT more than either of these services.

Now wait a minute!!  Pandora supporters say  that terrestrial radio doesn’t pay any royalties to performers.  That’s true, but only technically true.   Because of a quirk in the laws  terrestrial radio pays THE SONGWRITERS not the performers.  Often times they are the same.  sometimes not. But terrestrial radio is paying royalties.  Pandora is purposely distorting the facts.

Shareholders:  what other facts might they be distorting?

As you may or may not know Pandora is trying to push a bill through congress  (Internet Radio Fairness Act) that would slash payments to artists by as much as 85%.   By “pushing through congress” we  actually mean paying-oops er we mean being a “top contributor” to Rep. Chaffetz according to Open Secrets, and then Chaffetz magically sponsors the IRFA bill which will pretty much just benefit Pandora.    Pandora pays hundreds of thousands of dollars to lobbyists including a former legislative director of a leading member of the House Judiciary Committee.  It will let Pandora get around agreements it made with artists and copyright holders. This is like Delta Airlines going to congress and asking them to pass a law to force  their pilots and fuel suppliers into accepting an 85%  cut.  We don’t do this in this country.  Screw these guys.

So every day this week we are gonna highlight something that we particularly offensive about Pandora and this bill.

Tell Congress: Don’t Slash Music Creators’ Pay

http://musicfirst-coalition.rallycongress.com/7986/tell-congress-dont-slash-music-creators-pay/

#4  The Free Market Argument Against the Pandora Sponsored Bill.

Very simply this is the ultimate in Crony Capitalism.

This is Pandora asking the U.S government to bail out a public corporation.  Never mind that the bail out money is coming from artists.  This is still a government mandated transfer of wealth from artists to a publicly traded  silicon valley company.

And why?  Cause Pandora’s  business model is apparently not profitable.  So what?  Cut expenses, trim salaries, negotiate with your suppliers, raise prices, add more commercials.  Do what your average small business owners do everyday  all across America.    Why does Pandora think they are so special that they get to run to congress for a handout?

If Pandora can’t make it let em fail.

Consumers and musicians have plenty of other options for streaming music. Pandora isn’t the only internet radio service you know.  Let a smaller more nimble company take their place.    Shit, artists could  stream their own music off their own websites if they wanted.  It is technically quite easy. What is the emergency here?

But perhaps the most outrageous thing about this bill from a libertarian perspective is that this is a Statutory License they are messing with.  This means that artists would not be able to opt out of this.  We couldn’t pull our music from Pandora even if we didn’t like the new lower royalty rates.   Can you imagine if the government told you at what price and to whom you were to sell your services?    Why does Pandora get to do this to performers?

Yeah so we musicians and performers are not the most sympathetic characters.  We do stupid stuff and wear sunglasses inside. Some people say we get what we deserve. But still I ask you to pay attention to this for a very good reason:

If they can do this to us, they can do this to you too.

As you may or may not know Pandora is trying to push a bill through congress that would slash payments to artists by as much as 85%.   By “pushing through congress” we  actually mean paying-oops er we mean being a “top contributor” to Rep. Chaffetz according to Open Secrets, and then Chaffetz magically sponsors the IRFA bill which will pretty much just benefit Pandora.    Pandora pays hundreds of thousands of dollars to lobbyists including a former legislative director of a leading member of the House Judiciary Committee.  It will let Pandora get around agreements it made with artists unions and copyright holders. This is like Delta Airlines going to congress and asking them to pass a law to force  their pilots union and fuel vendors into accepting an 85% cut.  We don’t do this in this country.  Screw these guys.

So every day this week we are gonna highlight something that we particularly offensive about Pandora and this bill.

Tell Congress: Don’t Slash Music Creators’ Pay

http://musicfirst-coalition.rallycongress.com/7986/tell-congress-dont-slash-music-creators-pay/

#3.  Pandora’s  Kangaroo Court and Fake Judges.

Hyperbole?  Not really.  What else would you call it when a bill designed to benefit a private corporation demands the dissolution of one court and replacement with another court but the judges aren’t allowed to consider “facts” that the bills backers find inconvenient?

No you didn’t wake up in some 1970s third world kleptocracy.  Nope this is really happening.  The  Tim “I’m- a-friend-of-musicians-but-their-unions-should-be-prosecuted-under-the-sherman-act” Westergren backed Internet Radio Fairness Act would do exactly that.

By cleverly switching who appoints these judges from the (non-partisan) Librarian of Congress to the President with Senate approval,  the current un-Pandora™-approved judges will be let go.

(a) Appointment.— The Librarian of Congress President of the United States, by and with the advice and consent of the Senate shall appoint 3 full-time Copyright Royalty Judges, and shall appoint 1 of the 3 as the Chief Copyright Royalty Judge. The Librarian shall make appointments to such positions after consultation with the Register of Copyrights.

Next the Pandora sponsored bill would makes sure the new judges couldn’t rule unfavorably for Pandora by restricting what facts they are allowed to consider.   For instance the judges are REQUIRED to consider the rates that non interactive radio stations pay (read broadcaster Sirius/XM), but the section that requires the judges consider the rates other interactive broadcasters pay is removed from the Law.  What’s more it expressly  FORBIDS the judges from considering the previous interactive rates set in other agreements and the  rulings and decisions of the previous judges!!  He who controls the past controls the future?!!!  This is fucking Orwellian.

You don’t understand?  Pandora and Spotify are more like jukeboxes then radio.   Spotify plays artists on demand and Pandora plays artists near on demand.  The performers provide a large share of the “value”  in this transaction.  In traditional broadcast the radio station can be seen to be “promoting” the performer. Further unless you get on a request line they don’t play exactly the artist you want.  Thus royalties for webcasters  like Pandora  have always been higher than for traditional broadcast radio because of the higher value provided by the artists.  But this rewriting of the law  forces the judges to ignore the differences between a normal broadcaster like Sirius/XM and near on demand Pandora when setting rates. It doesn’t allow the judges to consider the other interactive services so their only choice is to set rates the same as XM/Sirius.

It’s really quite shitty.  Yes there are judges in the process but the outcome is predetermined.  That’s why I say “fake judges”.  They aren’t really allowed to judge anything.

added language:

(B) …….under this paragraph, the Copyright Royalty Judges shall apply the objectives set forth in section 801(b)(1) and may also consider the rates and terms for noninteractive digital audio transmission services under voluntary license agreements described in subparagraph (A). that were entered into under competitive market circumstances. In any proceeding under this subsection, the burden of proof shall be on the copyright owners of sound recordings to establish that the fees and terms that they seek satisfy the requirements of this subsection, and do not exceed the fees to which most copyright owners and users would agree under competitive market circumstances.

added language

(v) shall not take into account either the rates and terms provided in licenses for interactive services or the determinations rendered by the Copyright Royalty Judges prior to the enactment of the Internet Radio Fairness Act of 2012.

Screw you too Pandora.

As you may or may not know Pandora is trying to push a bill through congress that would slash payments to artists by as much as 85%.   By “pushing through congress” we  actually mean paying-oops er we mean being a “top contributor” to Rep. Chaffetz according to Open Secrets, and then Chaffetz magically sponsors the IRFA bill which will pretty much just benefit Pandora.    Pandora pays hundreds of thousands of dollars to lobbyists including a former legislative director of a leading member of the House Judiciary Committee.  It will let Pandora get around agreements it made with artists unions and copyright holders. This is like Delta Airlines going to congress and asking them to pass a law to force  their pilots and flight attendants into accepting an 85% pay cut.  We don’t do this in this country.  Screw these guys.

So every day this week we are gonna highlight something that we particularly offensive about Pandora and this bill.

Tell Congress: Don’t Slash Music Creators’ Pay

http://musicfirst-coalition.rallycongress.com/7986/tell-congress-dont-slash-music-creators-pay/

#2 The IPO Problem.

First consider this.  Did Pandora mislead investors in the months leading up to its successful IPO in June 2011?   I mean they convinced investors that they had a sound business model, that they would be profitable, and this must have included paying the rates to artists that they had agreed upon in 2009 that would be in effect until 2015.

Did Pandora tell prospective nvestors that Pandora would need to renegotiate the rates they agreed to pay to artists in order to become sufficiently profitable to justify their IPO share price?   Did they tell investors that after their IPO they wanted to go to Congress and lobby to pass a law to make their business sufficiently profitable to justify their share price?

No.

And I can’t imagine that they only just discovered that they wanted to change this rate.  I bet they’ve been planning this for a long time. I mean you don’t just cook up a bill for Congress overnight.   So  all we need is ONE former employee or associate of Pandora that knows of any talk before the IPO of planning to change this rate after the IPO  and Pandora is Toast. (email us!)

Look at their chart:

With mostly institutional investors,  I bet there is someone out there with resources  that feels like they got burned on their Pandora stock.   Shareholder problems?

OR perhaps Pandora didn’t mislead investors leading up to the IPO.  Which is most likely how they will respond.  If that is the case consider the following:

Pandora is perfectly capable of becoming profitable with the current artists royalty rates.

This means Pandora is just plain old greedy.  Greedy and just like every other corporation in the 1% because they are using their lobbying power to ask Congress to change the law to lower the agreed-upon royalty rates simply benefit their bottom line.   And all of this at the expense of musicians over whom they have absolute power.  And you know what they say about absolute power.

Screw you too, Pandora.