Last year the music industry caused federal panel to double the per-song royalties charged to internet radio stations, and it’s going to drive them out of business.
This is a very short sighted decision on their part, the classic example of eating the goose that lays the golden egg. Internet radio stations such as Pandora (and more recent mimics such as Meemix) allow users to name a song or artist and then play songs with similar characteristics. The user can then rate songs so that the ‘good’ ones are played more often and the ‘bad’ ones never heard again on that station. Theoretically you can create the perfect radio station, playing only music that you like, and not pay a cent for the privilege. And it works well. It works so well that I’ve gotten really picky with some of my stations, eliminating songs that I have on my iPod playlists just because they aren’t as good as some of the other options. The best thing is that Pandora (which I, personally, like better than the other similar stations) pays no attention what so ever to the popularity of an artist. If it thinks you’ll like it, you’ll hear it. Thus listeners all over the world are introduced to new songs and artists.
Why does the music industry find this threatening? Pandora is particularly transparent about preventing abuse of its services; as soon as you create a station you’ll see a button with the question ‘Why isn’t this playing my song?’ The short version of the answer is: to prevent abuse. Thus these services cannot be used to select a song and play it over and over. Pandora won’t even allow you to skip more than a set number of songs per hour due to licensing agreements. So you can’t just ‘fast forward’ to the song you wanted to hear. Furthermore, just like conventional radio, Pandora in no way replaces owning a song. I have yet to meet someone who says ‘I love this song, but I’m not going to download it because I might be able to hear it on the radio occasionally.’ Instead, Pandora introduces new songs and artists to a select group of people- those most likely to purchase their material.
“The greatest threat to artists is not piracy, but obscurity.” And Pandora is free advertising for lesser known artists, sending listeners straight to either iTunes or Amazon to buy tracks they like. It would make more sense for the music industry to pay Pandora than the other way around. And, in fact, that’s what I would suggest if Pandora wasn’t perfectly happy to do it for free.
How to most people find out about music they like? Not being numerous enough by half to qualify as ‘most people’ I can only speculate, but the answer would likely be a combination of the media (MTV, radio, etc.) and word of mouth. The problem with this method is that the media tends to push a limited number of artists. This isn’t their fault- they have a very broad audience and therefore broadcast those with potential for mass appeal. While they can compartmentalize to some extent down to smaller audiences based on genre and location, this by no means covers the same breadth as Pandora. Instead of going to a ‘rock’ station you go to a ‘sounds like 3 Doors Down’ station and are exposed to music you would never otherwise encounter. Wild fan of 3 Doors Down that you are, you can appreciate music similar to them which your compadres who prefer Nine Inch Nails would never understand.
What does this direction to new artists cause? Increased revenue for the music industry. Sure, exorbitant royalties and fees might bring in more money for the short term, but when the people paying those fees go out of business, they stop paying. Whereas a continuation of internet radio means continued income for the music industry for the foreseeable future. It’s the smart long-term decision. And it makes your market happy. Why isn’t it that simple?