Pandora Acquires KXMZ-FM to Cut Songwriter Licensing Costs

Pandora recently purchased radio station KXMZ-FM in Rapid City, South Dakota, in a bid to lower the licensing fees it pays songwriters and composers for public performances of their work. Pandora says this will help music creators and listeners, but the facts tell a much different story. PANDORA MAKES A HUGE PROFIT OFF OF SONGWRITERS:ASCAP is a nonprofit membership organization that collects and distributes royalties to the more than 460,000 independent songwriters, composers and music publishers it represents.

Every 1,000 plays of a song on Pandora is worth about 8 cents in performance rights for the songwriters and composers ($0.00008 per stream). To put that in context, Miranda Lambert’s hit song “The House that Built Me” was streamed on Pandora nearly 22 million times, earning its songwriters and publishers roughly $1,788.48. Co-writer Allen Shamblin received only $894.14.

Lady Antebellum’s 2011 Grammy-winning Song of the Year “Need You Now” was streamed nearly 72 million times on Pandora, earning its four songwriters and publishers $5,918.28. Co-writer Josh Kear received only $1,479.57. In 2012, Pandora founder Tim Westergren cashed out $9.9 million in stock options ” more than the $7.6 million the company paid in total licensing fees split among all ASCAP members that same year.

PANDORA USES MORE MUSIC THAN TRADITIONAL RADIO:Internet radio and terrestrial radio use music and generate revenue in very different ways. Over 70 million people listen to Pandora’s Internet radio service every month. In contrast, KXMZ has an average listenership of 18,000.

The Radio Music Licensing Committee (RMLC) license was designed for businesses that earn more than 95% of revenue from terrestrial radio. That’s a far cry from Pandora’s business model, which is wall-to-wall, user-influenced online music. By 10am every morning, Pandora has already performed 200 million songs, as compared to the hundreds of songs played by the average radio station in an entire day.

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Even with the purchase of KXMZ, Pandora will earn virtually all its revenue from the Internet, so the Internet licensing rate should apply.