Pandora co-founder talks artist payments, future of Internet radio

By on October 10, 2012, 11:00 AM

Pandora co-founder Tim Westergren has penned a blog post outlining the revenue potential his service offers. He uses some hard data to highlight the fact that Internet radio can have a serious and positive impact on the music industry, but only if Congress allows it to operate on a level playing field governed by the same rules and regulations as other forms of digital radio.

To help drive his point home, Westergren profiles three artists that you’ve probably never heard of: Donnie McClurkin, French Montana and Grupo Bryndis. This trio of relative unknowns account for Amazon sales ranks of 4,752, 17,000 and 183,187, respectively. They receive no mainstream broadcast radio play, no high profile slots on major tours and no front page placement in online retail.

But according to the co-founder, these artists all have one thing in common – a steady and healthy revenue stream from Pandora. Over the next 12 months, the streaming music service anticipates paying performance fees of $100,228, $138,567 and $114,192, respectively. Most Americans would be more than happy with this level of income which can make a huge impact in the life of a struggling musician.

That’s only one example, Pandora says. They expect to pay over $10,000 to more than 2,000 artists over the next year while some 800 musicians will earn over $50,000 in the same time period.

Established artists like Adele, Coldplay, Jason Aldean and Wiz Khalifa are already earning more than $1 million each. Chart-toppers Drake and Lil Wayne are quickly approaching the $3 million annual mark – additional revenue that would be tough for anyone to turn down.

Pandora hopes to continue building on this success but they need some help to do so. As Westergren points out in his post, a predatory licensing fee established more than 10 years ago by the RIAA and their lobbyists has devastated Internet radio. The streaming service is seeking to make performance fees fair for all Internet radio, a move that has the potential to grow the industry by leaps and bounds.

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