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Band Aid | To the Rescue

September 1, 2008
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Photo: Courtesy Pandora

Photo: Courtesy Pandora

I first picked up the piano when I was about 8 years old and have been deeply involved with music ever since. I studied jazz and classical theory, as well as recording and sound-creation technology in college. Following graduation I spent the next 10 years trying to make a living as a musician — from playing piano in a Holiday Inn lounge and extensive touring in indie-rock bands to spending four years as a film composer. Along the way, I developed a deep appreciation for the challenges musicians face in establishing professional and financial stability. I founded Pandora because I wanted to help musicians solve the exposure riddle. I feel that my experience with Pandora has given me a bird's-eye view of the digital landscape. I interact regularly with every link in the music industry chain — listeners, labels, services and everything in between. I believe this has given me a solid holistic sense of the entire ecosystem.

What is the current state of Internet radio?

Musicians need to understand this issue because it is critically important to their future. At the core of the battle is the fate of the statutory licensing system first established in 1998 under the Digital Millennium Copyright Act (DMCA). This centralized, federal mechanism is vital to musicians for two reasons. First, it enables independent musicians to be included in services like Pandora by making it easy for us to get the right to play their music. We sign one piece of paper and can play anything that we want. Without the statutory system, we simply would not be able to afford the cost of tracking down and directly licensing the volumes of independent artists in our collection. Second, the statutory system ensures that 50 percent of the revenue goes directly to the performers. By law, half the revenue we pay every month to SoundExchange (the digital version of ASCAP and BMI) must go the artists. By contrast, in direct deals, the artist sees only a small fraction of the revenue, and only after recoupment. It's vital that artists insist that their representative organizations (SoundExchange, A2iM, AFM, etc.) support the statutory system that is currently under assault by recording companies that want to render it unusable by driving the fees up too high. Higher licensing fees may sound good, but if they are too high, the statutory system will no longer be usable. That would be disastrous for musicians. What's needed is a reasonable rate that fairly compensates musicians but also allows these symbiotic businesses to thrive.

What is the value of online radio to musicians?

Forty percent of Pandora listeners say they are buying more music since they started using the service, and only one percent is buying less. Online radio is a tremendous promotional mechanism for artists, particularly the legions of working musicians that are excluded from most broadcast playlists. It also has the added advantage of being one click away from direct action from listeners — such as purchasing, joining a mailing list, looking up concert dates, etc. Online radio has the potential to dramatically increase the immediate and tangible impact of listening on an artist's fate — no more, “What was the song I heard on the drive home?”

How can musicians submit to the stations?

Pandora will consider any music. There are no prerequisites for inclusion. It just needs to do what it does well. A substantial percentage of the Music Genome Project, Pandora's collection, is music from artists without any public audience — even hobbyists. Information on submission is available at Pandora.com. Virtually every service has a mechanism for direct submission.

How does the royalty structure work for online radio?

Royalty revenue from Webcasters and a whole variety of online services (including AOL Radio, Yahoo! Launchcast, Live365, etc.) is paid directly to SoundExchange, which in turn distributes the money: 50 percent to the performers, 50 percent to the label. Any artist is able to register, provided they are the legal holders of the rights to the recording. Artists that are not registered will not get the money. SoundExchange will keep it.

The rate is determined by the DMCA and is currently about a tenth of a penny per spin. Webcasters keep track of every song play and pay monthly according to the playlist. In addition, Webcasters pay approximately 4 percent of their revenue as a publishing fee. This money is paid to the composers via ASCAP, BMI and SESAC. Once again, you must be registered with one of these organizations to receive your checks.

How can musicians get involved to preserve a fair statutory royalty system?

First, start by getting educated on the topic. I suggest you visit Savenetradio.org. More than 7,000 musicians have already joined the movement to preserve the statutory system. I also encourage you to contact A2iM (A2im.org) and AFM (Afm.org). You'll hear different opinions about the situation, but it will at least allow you to come to your own conclusion and be heard on a topic that is so central to your future.

What are common mistakes musicians/artists make?

This is easy for me because I've made them all!

  1. Get a good sound system and sound person for every show — if you don't sound good, nothing else matters.

  2. Don't try to make a living at music right from the start. Get a part-time job so you don't burn out. This isn't a sprint; it's a long-distance race. You need to create a sustainable life.

  3. Learn how to use multitrack recording software. Then record, record, record. Most people will hear you recorded, not live. It takes years to master the studio.

  4. Develop your live show, but don't overdo it. Be strategic about how often and where you play.

  5. Add a member to your band who is your digital guru and will take care of your digital business — online promotions, marketing, MySpace, Facebook, band Web page, online fulfillment, inclusion in services like online radios, contest entries, etc.

  6. Work on your band's internal culture. Most bands split because they can't get along.

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