In a New Year’s message, Pandora’s CEO called 2014 the “year of the working artist on Pandora. ” However, the validity of this statement has recently been called into question by David Israelite, head of the National Music Publishers’ Association. Israelite points out that, while recording artists receive 50% of Pandora’s revenue, songwriters only receive about 4%. Why are songwriters paid so much less than recording artists from streaming? By law, non-interactive streaming services (such as Pandora) are granted a compulsory license, meaning that songwriter consent is not required and Pandora unilaterally sets its fees. In short, songwriters have no bargaining power regarding their royalty rates.
Pandora justifies its position, claiming that the publicity its platform provides is well worth the low songwriter payments. However, this statement is highly disputed. Critics of Pandora argue that publicity needs to translate into record sales to be worthwhile. On this point, Israelite notes that “Ironically, Pandora is competing with and overtaking the actual purchasing of music, while claiming it spurs sales.” Furthermore, a recent study conducted by Pandora on the supposed “Pandora Effect” revealed both artists and songwriters featured on their platform typically see little to no increase in sales.
Israelite states that while Pandora may claim to support artists and songwriters, they’re actually fighting to keep “archaic government regulations in place in order to pay them less and less.” He concludes with the hope that Pandora will “actually do something good by starting to pay them fairly.”
See the full Digital Music News article here.