Ad Claims Pandora Rips Off Musicians - Business Insider

Pandora founder Tim Westergren is going to hate this ad, taken out in Billboard magazine, in which dozens of artists -- from Cee Lo Green to the Dead Kennedys -- claim that it's time to end Pandora's "discount" royalty fees in favor of having the company pay full freight for the songs it plays.

Westergren has been lobbying Congress to pass the "Internet Radio Fairness Act (H.R. 6480 and S. 3609)," which will make the royalty rates Pandora pays even cheaper. The Billboard ad claims:

We are big fans of Pandora. That's why we helped give the company a discount on rates for the past decade.

... Why is the company asking Congress once again to step in and gut the royalties that thousands of musicians reply upon? That's not fair and that's not how partners work together.

I've argued for years that Pandora's business model has a fatal flaw: The royalty fees it pays make the company permanently unprofitable. Only by changing the law and reducing those fees can Pandora survive in the long run. Westergren's bill is a bet-the-company effort.

The ad, placed by performance rights groups Sound Exchange and MusicFirst, is embarrassing because it argues, in essence, that "you didn't build that." "Pandora's principle asset is the music," the ad says -- and that comes from artists not Pandora. Click to enlarge:

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Source: http://www.businessinsider.com/this-ad-claiming-pandora-rips-off-musicians-is-brutal-2012-11

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