BMI vs. Pandora: The Future of the Music Industry

It’s been a busy week in the music world. Last week, the New York Rate Court sided with BMI in a case against Pandora to raise the rate at which songwriters and artists were being paid for having their work streamed over the service. Pandora had initially claimed that a rate of “1.85% of total revenue” was a fair amount to pay artists but the court decision means Pandora will now have to pay BMI-registered artists a minimum of 2.5% total revenue.

Yes, Pandora is fighting to pay musicians less than 2% of the money they make, think about that for a moment. This is a model that values the delivery platform 49 times more than the actual CONTENT such a platform is designed to deliver. Wut?

 To compound issues, the other biggest PRO, ASCAP, fought a similar legal battle in the same court but received the exact opposite ruling with another judge (who strangely chose to ignore deals with the major labels as “relevant benchmarks,” a key point of this trial). Of course, the case will be appealed so there are surely many years to come in this battle but it still strikes a promising tone for both artists and the music industry as a whole by establishing a minimum rate comparable to deals struck with the three major labels.

David Israelite, the president of BMI had this to say about the victory:

“It is a positive first step to the entire publishing and songwriting community that Judge Stanton ruled in favor of BMI, requiring Pandora to pay them a higher percentage of its revenue… While still a small fraction of what music creators deserve, this decision sends a clear message that Pandora cannot continue to get away with growing its business on the backs of struggling songwriters — who deserve to be paid fair market value for their work.”

Which brings up the greater question that has yet to be truly answered… what is fair market value for music? For most of us, music has always been valued based upon the medium on which its recorded… but with intellectually consumable goods like books, movies and music making their way onto “the cloud,” we’ve been having a very hard time figuring out exactly what this abstract, intangible intellectual property is worth. So what do we do? What’s comfortable– we pay for the medium… Spotify, Pandora, Tidal (pick your poison)… and rent the content. You never own those songs, only the ability to listen to them. This is dangerous because it allows these obviously conflicted companies to control the intrinsic value of music… it’s gotten so bad that commercial licensing, once referred to as selling out has not only become common, its become celebrated.

I’ll make a prediction: if things continue down the course they’re on now, the musical landscape will shift drastically. The average age of producers will drop drastically and there will be a spike in the number of kids age 11-17 in the mainstream, more albums will be mixed like that last Tyler The Creator album, and the lyrics will invoke the depth of emotions brought on by the poetry of Justin Beiber. Touring will represent 90% of artists’ income and ticketing/venue holding companies (like Livenation and AEG) will step in for the now-defunct record labels and sign artists to exclusive performance contracts that will have artists working too much for too little (this is already happening).

We are clearly at a crossroads in the music industry and it looks like it will be up to listeners, not artists or labels, what happens next. Next time you go to pay that streaming subscription bill,  I suggest you ask yourself, “What’s more important? good music or available music? Do I want to give my money to an artist or a businessman?”

Businessmen are usually worse at making music… but hey, I could be wrong (maybe the Fortune 500 is actually a music chart?)

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[Billboard]

BMI vs. Pandora: The Future of the Music Industry