Pandora Buys A Radio Station, Songwriters' Group Calls It A 'Stunt' | WAMU 88.5 - American University Radio
Filed Under:

Pandora Buys A Radio Station, Songwriters' Group Calls It A 'Stunt'

Play associated audio

This week, the Internet radio broadcaster Pandora made what seems like a backward move — technologically speaking. Pandora purchased a local radio station in Rapid City, S.D. The company says it's aiming to get the more favorable royalty rates given to terrestrial broadcasters, but the move has songwriters and composers up in arms.

Blake Morgan is an independent musician whose "Better Angels" was among a number of his songs that got some 28,000 plays on Pandora. "The song earned $1.62 in royalties over a 90-day period on Pandora," he says, "which is a very typical rate."

If his song were played over iHeart Radio — a streaming service owned by Clear Channel — he would get paid even less. That's because Clear Channel, which owns hundreds of terrestrial radio stations — pays the same amount in royalties for online streaming that it does for broadcasting the same songs. Pandora attorney Christopher Harrison says that's not fair.

"Pandora shouldn't be discriminated against simply because we don't own a radio station," he says. So, this week Pandora purchased KXMZ, a small adult contemporary station on the main street in Rapid City — population 70,000 — in an effort to get the rate enjoyed by iHeart Radio.

Royalty rates are negotiated mostly with rights organizations like ASCAP and BMI, which represent hundreds of thousands of songwriters and music publishers. Back when rates were established, playing a song on the radio was considered a free advertisement for a record. Since rights holders were getting money from record sales, they got less from radio royalties. Paul Williams, the president of ASCAP, says broadcasters pay the same in royalties for radio and streaming because those streams account for a tiny portion of their audience.

"The fact is," he says, "they're very, very different models. Internet radio and terrestrial radio use music and generate revenue in different ways."

He says Pandora's purchase of KXMZ isn't going to reduce its rates. "This is what I would refer to as a stunt — a way to do an end run to reduce the price of what they pay just one more little notch."

It should be said that ASCAP and Pandora are already in court battling over what the Internet radio service claims are unfair business practices.

Pandora, which is the No. 1 Internet radio service, saw more than $125 million last quarter in revenues — 55 percent more than the year before. But the company still isn't profitable, in part because it pays over 60 percent of its revenues to acquire music. Harrison says if Pandora gets into the radio business it should pay the same rate as Clear Channel does for its iHeart Radio.

"From our perspective, what we're trying to do is make sure that we operate at parity with our biggest competitors," he says. "If iHeart Radio's personalized Internet radio service pays a particular rate, we think we're entitled to operate under that same rate."

But the future is clearly in Internet radio services like Pandora. According to a survey by the NPD Group, people under 35 spent a quarter of their listening time on the Internet in 2012 — up 17 percent from the year before. Time spent listening to radio went down 2 percent.

At the same time, people are buying less music. Musician Blake Morgan says the only way for him to make a living going forward is for streaming services to pay a fair rate.

"I have a new record coming out — most people have new records coming out," he says. "These are things that we've worked on for months, if not years, and we're not looking to be paid unfairly. We're simply looking for a fair working wage for the music that we make."

Pandora co-founder Tim Westergren sent out emails to musicians trying to get them behind Pandora's attempts to even the rates between terrestrial and Internet radio. Morgan wrote back to Westegren furious: "He cashes in a million dollars of stock every month on the first of the month and he's done so over the same 14-month period that recording artists like me earned $15.75."

That's not likely to change anytime soon. The issue of Internet radio royalty rates will almost certainly wind up in court.

Copyright 2013 NPR. To see more, visit


Kids' Films And Stories Share A Dark Theme: Dead Mothers

Why do so many animated movies star motherless kids? Sarah Boxer, a graphic novelist, cartoon-lover and mother, talks to NPR's Kelly McEvers about the phenomenon and the message it sends to children.

What If The World Cup Were Awarded For Saving Trees And Drinking Soda?

We thought you'd get a kick out of seeing how the four teams in the final World Cup matches stack up in global health and development.

What Will Become Of Obama's Request For Immigration Relief Funds?

NPR's Arun Rath talks to political correspondent Mara Liasson about the chances of a political agreement over how to handle the migration of thousands of Central American children.

Looking For Free Sperm, Women May Turn To Online Forums

Bypassing commercial sperm banks, thousands are logging on to websites where women can connect with men at no cost. Anecdotes abound, but the scope of the unregulated activity is unclear.

Leave a Comment

Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.