Pandora Runs to the Government to Screw Songwriters Again
Good news: Pandora is scheduled to come to the stock market with a “secondary offering”, meaning the company is essentially having a second IPO. According to the Wall Street Journal:
The Internet radio company and its venture-capital backer Crosslink Capital Inc. are slated to offer 14 million shares late Thursday[, i.e., tomorrow], a stake that was worth $336 million when it was announced after Monday’s close.
So music is good business, right? It sure is–for everyone but the songwriters and artists.
In case any songwriter wondered, Pandora has more money than you and they intend to use it to screw you as hard as they possibly can to enrich themselves. Today Pandora won a truly Pandora-style “victory” in the ASCAP rate court by getting a federal judge to rule that Pandora–a monopolist in webcasting–can use the out of date ASCAP antitrust consent decree to force songwriters to license to them.
And make no mistake–this is a very important case to Pandora because the one way that songwriters have of getting out of the trap inside Pandora’s house of cards is to say no and refuse to license to Pandora. And “no” is the one thing that Pandora can’t have you say because their only product is music. The government granted them an effective monopoly on webcasting and Pandora intends to keep it that way.
The artists can’t say no because the government forces artists to accept the compulsory license for sound recordings, so there’s no way to block recordings. When Pandora doesn’t like the royalty rates they have to pay to artists, they use their lobbying power to run to the Congress to give them a better deal.
Now it appears for the moment that songwriters can’t say no to Pandora, either, and why? The monopolist webcaster runs to the antitrust law for protection. Why? Because Pandora wants to pay songwriters even less than they already do (see David Lowery’s viral post My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89, Less Than What I Make From a Single T-Shirt Sale!)
Of course, Pandora contorts itself to try to explain how it’s not actually screwing songwriters and not actually screwing artists either–and just makes itself look even more evil.
And why would Pandora be taking this scorched earth attack on creators? Here’s one reason: On September 16, Pandora insiders made $1,899,378 in stock sales. On September 12, Pandora Chief Revenue Officer John Trimble made $1,860,800 in a single day. Which doesn’t count the $559,140 Trimble made on September 3.
And of course, on September 3, Tim Westergren, the “musician’s friend,” made his usual monthly walking around money: $1,584,494.
Yes, the Pandora insiders who are behind the litigation and lobbying are doing just fine selling their only product–music. And Pandora stock.
If you are concerned about this turn of events, please see our “Take Action” tab and write to your Member of Congress. The real problem underlying Pandora’s continued efforts and exploiting artists is the compulsory license for sound recordings–where the government forces you to let Pandora use your recordings followed closely by the rate court proceeding to force ASCAP and BMI songwriters to license to Pandora (which essentially sets the market rate for all songwriters, including ex-US songwriters).
This sets up the spectacle of the government creating an effective monopolist for webcasting in Pandora and then giving Pandora protection from a level playing field while the company essentially prints money and enriches its insiders based on one product–music.
But the good news is that House Judiciary Committee Chairman Bob Goodlatte is holding hearings about possible changes in the law–and one change in the law that would help this situation is to give Pandora the level playing field they have been lobbying for.
Take away the compulsory license and the rate court and let them negotiate at arms length. Once Pandora can stopping running to the nanny state to protect them from the market, we’ll see how much they really like the market after all.
Like most recipients of corporate welfare–my bet is not so much.
Update: ASCAP has a couple different ways to show support for their songwriter members.
#Standwithsongwriters: Click here for the Twitter Thunderclap campaign
Petition to support ASCAP Songwriters: Click here to sign the petition