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Westergren: Creating a Sustainable Music Ecosystem

Pandora’s founder offers a more complete explanation of the company’s position on streaming music royalties

The back and forth between recording artists, backed by the RIAA, and Pandora has increased, however there’s a report that preliminary talks have been held over streamed music royalties.

Pandora Founder Tim Westergren offers a more complete explanation of his company’s position on streaming music royalties. He emphasizes in a blogthat the artists who have spoken out on the issue are “brave” and well-intentioned, however they’re being misled by the RIAA.

Pandora tried to avoid debating its streaming music royalty in the media, he states, however it’s unavoidable now. “ The volume of misinformation has reached a level where I feel it’s important to set the record straight — not only for Pandora, but also for the artists themselves as they consider what, if any role, to play in shaping the policy around royalties in the coming months and years.”

“There is a window of opportunity here to create a healthy and sustainable music ecosystem, but that won’t happen if the discussion is dominated and controlled by entrenched incumbents,” notes Westergren, who reemphasizes that Pandora is not seeking to reduce its artist royalties by 85%. He lays that at the feet of the RIAA and adds that many artists “have a completely different perspective from the RIAA on what’s right for them.”

The RIAA-backed musicFirst, meanwhile, stands by the 85% figure and say it is not misleading artists. Pandora is lobbying “to remedy the difference between Internet radio royalties (50% of revenue) and satellite radio (8% of revenue). Going from 50% to 8% is about an 85% cut. It’s simple math,” according to a musicFirst spokeswoman in a statement sent to Radio World.

Westergren also clarifies that each “spin” played on Pandora reaches a single person, compared to a play on AM/FM that reaches potentially millions. “In other words, a million spins on Pandora might be equivalent to a single play on a large FM station. How much would we pay in royalties for a million spins? About $1,370,” according to the Pandora executive.

Aside from all the public rhetoric, the parties are talking in the background, according to The Verge, citing unnamed sources who say those talks are expected to soon morph into formal discussions. If true, that would mean what has been heard this week is preliminary positioning.