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The Rambler by Graham Henderson: Pandora opens the box

Graham_headphones3Blog ThumbnailThe Rambler is a column by Graham Henderson, President of Music Canada. Graham writes from time to time about developments in the music industry, new trends or just about music! Let’s face it, Graham has been around for a long time and has a lot to ramble on about.

It is not time to yet celebrate the trashing of Tim Westergren’s embarrassing bout of Congressional panhandling…but we are getting close. I can’t imagine that anyone in our industry is unaware that rather than update its business model, Pandora sided with entrenched media and Internet companies and went to Congress in an effort to force a reduction in royalty rates paid to performers. Separately, Pandora has sued ASCAP to lower royalty rates paid to songwriters — just for good measure.

Pandora’s Tim Westergren and Joe Kennedy complained to Congress that Pandora pays a high proportion of revenues in royalties. The problem with this argument is that Pandora CREATED the profit squeeze they complain of by adopting a business model that artificially limited advertising to a single minute every hour. Had Pandora adjusted their model by airing one minute more, Pandora’s profits would dramatically improve.

As David Lowery relates in the Trichordist, the Committee opened up a can of whup-ass on Pandora. Tim Westergren, who just a week or so ago happily showed up at the Future of Music conference (with tousled hair and a hoodie), dodged the Congressional lion’s den altogether. #Coward. Instead, Pandora sent its CEO, Joe Kennedy, to the slaughter.

And a slaughter it was. From all sides of the spectrum abuse was heaped on the idea that Congressional lawmakers should get involved in a private dispute over the payment of royalties–at rates that Westergren himself crowed only a few short years ago was a fine solution for Pandora. In fact, the entire event pinwheeled out of control when lawmakers started asking inconvenient questions about why performers were not receiving royalties when their music was performed on terrestrial radio. This plum presented itself to lawmakers because, inexplicably, Pandora had enlisted lobbying support from terrestrial broadcasters. Of course, terrestrial radio in the US does not pay a performance royalty for sound recordings played on their air. No one knows this better than the Members of the very Congressional subcommittee holding yesterday’s hearing. Rep. Sensenbrenner told Pandora that the subcommittee has devoted more time to this issue than any other in his long service. So for Pandora to throw in their lot with the broadcasters was a very odd choice of bedfellows that put the lack of a performance royalty for US terrestrial radio squarely on display – Member, after Member, after Member raised this issue.

As far as Pandora’s issue with rates–the Subcommittee members nearly unanimously asked “when is a deal a deal” and recited back to Pandora Tim Westergren’s own words from three years ago in which he had celebrated the end of the “royalty crisis!”

It is also worth noting that Rep. Jason Chaffetz, the bill’s author, got little or no support from his co-sponsors. Only one co-sponsor spoke and had little to say in defense of the bill. After sitting through an hour and a half of uniformly negative statements by his colleagues, Rep. Chaffetz became so agitated that he actually insulted the mother of the head of SoundExchange in an extraordinary breach of Congressional decorum. Moms are sacrosanct…even in the bear pit that is Congress. Stay classy, Congressman.

I have always thought Pandora’s choice of name might come back to haunt them. Those of you with even a passing familiarity with the classics will recall that the Titan Epimetheus (brother of the more famous fire-stealer, Prometheus) was given a “gift” by Zeus – it was the beautiful, god-crafted Pandora. Now his brother Prometheus had warned him NEVER to accept gifts from Zeus (the two were not exactly on good terms since Prometheus had been chained by Zeus to a rock for all eternity while his liver was repeatedly eaten out by a Vulture.)

Epimetheus forgot his brother’s advice. He accepted Pandora from Zeus and he was even more delighted when he saw that with Pandora came an unusual, sealed chest.

He was told NOT to open it under any circumstances. One day when her husband was away, Pandora, consumed with curiosity (a fatal flaw “programmed” into her by Zeus himself), was unable to resist her impulses – she opened the chest. The moment she did, out flew a ghostly parade of demonic forms that represented every evil Zeus had wished to visit upon mankind. Men and Women had, for example, been free from work – they lolled around living off the largesse of heaven and the gods. After the chest was open, they were condemned to actually WORK for a living.

Well, Westergren, it appears, has opened his own version of this chest….and what demon has he unleashed. It looks Pandora is going to have to WORK to adapt their business model to the market…there will be no heavenly handouts from the congressional gods. But he can hope: Pandora did.

Graham Henderson is the President of Music Canada. He also writes on an eclectic range of topics on his personal blog at www.grahamhenderson.ca.

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