Legendary rockers Pink Floyd reunited over the weekend – not to perform a concert, but to pen a scathing op-ed piece in USA Today decrying streaming music service Pandora (NYSE:P) for supporting a bill that would cut royalties to artists.
“It’s a matter of principle for us,” write surviving members Roger Waters, David Gilmour and Nick Mason. “We hope that many online and mobile music services can give fans and artists the music they want, when they want it, at price points that work. But those same services should fairly pay the artists and creators who make the music at the core of their businesses. For almost all working musicians, it's also a question of economic survival.”
The crux of their argument is centered on the Internet Radio Fairness Act, a bill in Congress that the band says would slash artist royalties from Internet radio by 85 percent.
Pandora supports the bill, and claims it is trying to fight for a more reasonable royalty rate for Internet radio. Congress has not caught up with the rapidly expanding technology of digital radio the way it has in years past with other forms of transmission, such as satellite and cable. The result, Pandora says on its website, is that satellite pays about 7.5 percent of revenues in royalties and cable pays about 15 percent, while Pandora pays more than half.
Pandora and its founder Tim Westergren have recently asked musicians to sign a “letter of support” for Internet radio and the “fair treatment of artists,” in an effort to gain momentum for the bill.
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“Of course, this letter doesn't say anything about an 85 percent artist pay cut,” writes Pink Floyd. “That would probably turn off most musicians who might consider signing on. … And the only hint of Pandora's real agenda is the innocent sounding line, 'We are also fervent supporters of Internet radio and want more than anything for it to grow.' The petition doesn't mention that Pandora is pushing the growth of its business directly at the expense of artists' paychecks.”
In response to Pandora’s claim that the royalty rate is unfair for digital radio, Pink Floyd writes: “A business that exists to deliver music can't really complain that its biggest cost is music. You don't hear grocery stores complain they have to pay for the food they sell. Netflix pays more for movies than Pandora pays for music, but they aren't running to Congress for a bailout.”
As Rolling Stone points out, this isn’t the first time the Internet Radio Fairness Act has been introduced in Congress. Last year, Pandora supported a similar measure which failed. An open letter signed by Pink Floyd, Billy Joel, Rihanna and 122 other artists at the time underscores the same argument.
As other streaming services such as Spotify, Rdio, Slacker and iHeartRadio explode in popularity, the contentious issue of royalty payments is here to stay. It remains to be seen if a compromise can be reached between Internet radio and the artists it relies upon.