That deafening, clunking sound is the other shoe dropping in the world of streaming. According to New York Post, Pandora is trying to lower the Artist Royalty percentage. The Artists are kicking back,. And they are both right.
Pandora just about broke even 2nd qtr, but take a peek at these numbers: they paid $136M in royalties on $274M gross revenue. Before you figure in anything else, 50% of gross is going back to the artists. That's insane. Nobody can run a business like that, the record companies never have had to. Just think of them returning 50% of PROFITS let alone Revenue to the musicians. It wouldn't happen.
The artists get paid 2 cents per listener per hour!!! AND THEY WANT TO CUT BACK FROM THAT!!!!! That's not even two cents per listen… What's the solution?
I don't have the slightest idea.
The bottom line is this: there isn't enough money to go around, the gameplan ain't working, something has to give. They can't both be right, but they are both right, and Pandora isn't making money and neither are the artists and I don't see how they can change this. As I write, 5% of all radio listeners are tuned into Pandora. An astounding figure when you think of the limitless options available to listeners nowadays. Sirius alone. But profit still appears to beyond them. Why? Because while 2 cents per hour mike not seem much it is 2 cents per hour more than everybody else. Over the air radio stations pay zero, nada, zibbide doo dah in royalties.
The problem is one of perception, with Pandora the connection between what the listener chooses to hear is more individually based. Ergo, they have to type in the artists name. Also, Pandora isn't really, really radio, it is really really on line streaming.
That means Pandora are screwed and royally. It also means the artists are screwed and royally. Until the recording business can find a way to make money on music, it is gonna get worse and worse.
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