Pandora & Copyright – Profitability vs. Royalties

The purpose of copyright is to protect intellectual property, and ensure the creators are not ripped off purely because their creation is (often) intangible. The instant an original song is written or recorded, it is automatically copyrighted. This is in place in order to protect artists, ensure their avenue for revenue isn’t jeopardised and give them power over how their song is used.

assets-newsletter-copyrightlarge

(Photo credit.)

Generally, there are two copyrights involved when a song is broadcast. Copyright controlled by the creator and copyright controlled by the owner of the master recording of the song (usually held by a label). When a song is played on the radio, broadcasters pay royalties to both of these agencies.

However, illegal sharing of music online is now one of the most contested areas of copyright. This is because peer-to-peer file sharing allows different computers to be connected through the internet, making file transfers much easier. This is convenient for the user, but not for the copyright owners. Most files traded are copyrighted works and aren’t authorised to be transferred in this manner, denying artists and labels royalties they are owed.

pto1

(Photo credit.)

Solution! Online radio services that pay artists in royalties, make their money through advertising, and stream music to users for free (or for a very small subscription fee). Seems like the perfect answer, but for Pandora, profitability is getting in the way – finishing last year with a loss of $16.7 million.

According to the founder Westergren, although the revenue has been increasing, the company has struggled to stay profitable. They have even sued ASCAP in an effort to pay lower royalty rates, a necessity in order to keep their company growing. However, this has been met with tension from the artists who feature on Pandora (such as Katy Perry and Brittany Spears).

Clearly, copyright is a contentious issue and one that Pandora is suffering because of.

References 

Howard, G 2012, ‘3 Things You Need to Know About the Pandora Fight’, TuneCore, viewed 24 March 2014,
http://www.tunecore.com/blog/2012/11/3-things-you-need-to-know-about-the-pandora-fight.html>

Lewis, R 2012, ‘Musicians oppose Pandora radio’s effort to cut payments’, Los Angles Times, viewed 24 March 2014,
http://articles.latimes.com/2012/nov/14/entertainment/la-et-ms-pandora-congress-irfa-musicians-letter-protest-20121114>

Martinez, J 2012, ‘Pandora founder rejects criticism of Internet royalty bill’, The Hill, viewed 24 March 2014,
http://thehill.com/blogs/hillicon-valley/technology/267521-pandora-founder-pushes-back-against-internet-royalty-bill-critics>

Moser, D. J. 2006, Moser on Music Copyright, Course Technology/Cengage Learning, Boston.

Peoples, G 2012, ‘Pandora Sues ASCAP for Lower Rates’, Billboard, viewed 24 march 2014,

http://www.billboard.com/biz/articles/news/1083144/pandora-sues-ascap-for-lower-rates>

Price, J 2012, ‘Intro: The Six Exclusive Copyright That Drive The Entire Music Business!’, TuneCore,
http://www.tunecore.com/guides/sixrights>

2011, ‘Pandora hopes IPO a path to profit, The Sydney Morning Herald, viewed 24 March 2014,

http://news.smh.com.au/breaking-news-technology/pandora-hopes-ipo-a-path-to-profit-20110213-1armp.html>

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s