Pandora is offering musicians more data, not money
Bands say they want detailed information on their fans — along with higher royalties
The Colorado jam band Leftover Salmon sat in a conference room at Pandora’s Oakland headquarters as a screen projected a torrent of data — which of their songs were most popular on the Internet radio service, how many times their songs were “spun” over the past month, the number people who created Leftover Salmon “stations.”
One data set mapped the regions of the country in which the band was most popular.
“Wow, that’s crazy,” said bassist Greg Garrison.
Leftover Salmon, a group that formed in 1989 and invented a subgenre they call “Polyethnic Cajun Slamgrass,” already had a pretty good idea of who was into their music. Still, the band was impressed.
Employees like to say Pandora is as much a data company as it is a music streaming service. Its huge data trove helps the company determine which song to play for which listener. That data, Pandora believes, is what gives the company its edge over competitors like Spotify and iTunes Radio.
Leftover Salmon was there to hear about ways the band could harness Pandora’s data.
In October, Pandora started offering data to musicians in a program dubbed the Artist Marketing Platform.
It was intended as a peace offering of sorts.
Pandora has grown into the largest Internet radio service, commanding more than 75 million active users, but recent growth has been sluggish . One hurdle has been its battle with the music industry over royalties — musicians, including Pink Floyd’s Roger Waters, have threatened to pull their music from the service and industry groups have sued it.
Pandora’s success requires cooperation from the industry — the company already spends more than half its revenue on royalties and has a music catalog a fraction of the size of most competitors’. But before its new data offering, it had never marketed itself as a tool that could help artists.
“Pandora never focused on leveraging the asset of artists or letting artists leverage Pandora,” said Lars Murray, a former Columbia Records executive hired by Pandora in July to be the company’s first vice president of industry rela-
tions. “That Pandora got as big as it is without getting artists on board is kind of astonishing.”
Pandora hopes musicians will view the company as more than just another source of revenue, but also as a place to market their bands and interact with fans. To attract more users, the company needs more musicians on board, and it needs those musicians to bring their fans (and maybe even their marketing budgets) with them.
“Pandora is a platform that connects musicians with fans, and help fans find music they love,” said Pandora’s new chief strategy officer Sara Clemens. “That equation only works if musicians understand the benefit of platform. It’s just an essential part of our business.”
Olive branch
So far, few musicians have been wooed by Pandora’s olive branch.
At Pandora headquarters this month, Leftover Salmon guitarist Vince Herman wanted to know how the band could improve its Pandora numbers.
Leftover Salmon has had a good relationship with Pandora. The company often trumpets the exposure that Pandora brings to artists, since an algorithm selects what its 75 million listeners hear, rather than the listeners themselves. Leftover Salmon isn’t a band that has radio hits — but it has more than 400,000 monthly listeners on Pandora.
At first, Herman was enticed by the data. He even opened a show for Pandora employees with a data joke. “This is a little bit different than our demographic,” he said. “You should really be 70 percent male. We’re making progress already.”
“Pandora is a platform that connects musicians with fans, and help fans find music they love. That equation only works if musicians understand the benefit of platform. It’s just an essential part of our business.” Sara Clemens, Pandora’s new chief strategy officer
But a few days later, he came to reconsider the value of the numbers. They mostly confirmed what the band already knew about its fans. They weren’t detailed enough to provide greater insight.
Bottom line
And they didn’t change the band’s core concern — that Internet music streaming companies simply don’t pay artists enough.
“You go to the bank to check your bank account, and maybe they give you a free cup of coffee or let you open a savings account for free, but there’s still just $3 in the account,” he said. “It doesn’t change the bottom line. Pandora should be paying musicians more for what they built their company on.”
Exposure, after all, doesn’t pay the bills.
Pandora, which makes money through advertising and subscriptions, paid about $340 million in royalties last year to recording artists, songwriters, record labels and music publishers. But for each stakeholder in a song, that amounts to a fraction of a penny per play.
Pandora, which has argued that it pays more royalties than both satellite and terrestrial radio, would like to pay less (a little more than one-tenth of a cent per stream, 27 percent less than it pays now) according to recent Copyright Royalty Board filings. The music industry, struggling to stay afloat with the economics of digital music consumption, would like Pandora to pay more (a quarter of a cent per stream).
Last year, musician and activist David Lowery posted a widely shared royalty statement showing that more than 1 million plays of one of his songs on Pandora netted him just $16.89 in songwriting royalties (he owns only 40 percent of the song, and the amount was for only songwriting royalties, not performance).
Maria Schneider, a composer and Big Band leader, said that data can be extremely useful to artists trying to squeeze profit from the shrinking margins of the industry, allowing them to better plan tours, set strategy for album releases and connect with fans. But the information provided by Pandora, she said, is useless.
“If Pandora wanted to help, they’d reveal exactly who those fans are, so that the music creator could develop direct relationships with their fans,” she said, rather than giving the artists just basic information like a fan’s age and where they live.
‘Artist exposure’
Pandora said that it continues to work with artists to refine the data it makes available. In September, it began a branding campaign focused on Pandora’s role as a conduit between artists and fans. It invited musicians to participate, with one gimmick in which listeners who pressed “thumbs-up” on an artist’s music were treated to a surprise, live performance by that artist.
Pandora founder Tim Westergren wrote last year that “just as we must honor and value the role artists play in providing the music for the service, so the artist community must also value the years of effort, investment and expertise that has made Pandora such a massive driver of artist exposure in the music ecosystem.”
As Pandora tries to reposition itself as the musician-friendly streaming service, the company is spending on industry relations. Murray, the company’s liaison to the industry, and chief strategy officer Clemens, a Microsoft and LinkedIn alum, lead a music industry group with 20 employees.
Platform’s reach
But the biggest success of Pandora’s data-sharing experiment may be impressing upon artists the reach of Pandora’s platform.
Mark Jourdian, a digital marketing manager for Nettwerk Music Group, which handles bands such as Fun, Dispatch and Guster and was a beta tester for the Artist Marketing Platform, said that there was was little “actionable data.”
But he did learn that Guster receives about 1 million plays each month on Pandora. In the past 30 days, Fun got almost 6 million.
“The biggest takeaway for us was seeing how many people are actually using Pandora,” he said. “That’s data I couldn’t get any other way.”
His company now buys advertisements for its bands on Pandora.