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Pandora seeks lower royalties for musicians

Sally Herships Aug 30, 2012
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CORRECTION: The original version of this story incorrectly stated how Sirius XM, the satellite radio provider, pays performers and songwriters. Sirius XM pays performers. The text has been corrected.

Kai Ryssdal: The music streaming service Pandora has something to hum about today. It reported better-than-expected quarterly revenues this morning. But the musicians whose music gets streamed are singing a different song. And it’s a sad one.

They say Pandora is trying to push legislation through Congress that would let companies pay performers less in royalties. Sally Herships has more.


Sally Herships: There is one thing Pandora and musicians agree on.

Tim Westergren: There’s a fundamental unfairness right now in the world of radio.

Tim Westergren is the founder of Pandora.

Tim Westergren: Which is that Internet radio is held to a very, very different standard when it comes to rate-setting for royalties than any other form of radio.

And that’s where it ends. Last year, Pandora spent $137 million on royalties — about half its revenues. Traditional radio: AM and FM — only have to pay songwriters. Pandora also has to pay performers.

Jack Lerner teaches Internet and technology law at the University of Southern California.

Jack Lerner: The deal is actually structured so that the more Pandora makes and the more listeners they have, the more they pay.

Lerner says Pandora’s future may not be sustainable. So the company is pushing for new legislation that it says will allow it to pay the same royalties everyone else does.

Ted Kalo: The way to correct that isn’t to lower everyone’s payments and pick the pockets of artists.

Ted Kalo is executive director of the Music First Coalition. He says he’s happy with the royalties Pandora is currently paying.

Ted Kalo: The way to correct that is by requiring terrestrial radio to make those payments and also requiring anyone who is at a rate below Pandora to pay the rate that Pandora pays.

USC’s Jack Lerner says Pandora is paying too much in royalties. But at the same time, thousands of artists are getting their work aired.

In New York, I’m Sally Herships for Marketplace. 

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