Here is an interview our own Dom Tucci did with Tim Wesetergen of Pandora. A great read on the qualms of loving music and running a business that involved profiting from it while maintaining sustainability. -ed.
Dom: Pandora provides an extremely artist friendly service
and the founders and staff really come across as true music lovers. Obviously it must have been a struggle
recently during the negotiations with performance rights organization SoundExchange and others for artist royalties since if they came in too high, you wouldn’t be able to
operate your business. What were some of the thoughts and decisions that had to
be made in that negotiation process?
Tim: After two years of negotiations, and after the request
of congress, we finally got a decision.
The decision was made between the PRO’s and the Internet streaming
companies to settle at the new streaming rate of two (2) cents (US $) per hour. Previously the rate was just a fraction
of one (1) cent per hour. The PRO’s
goal was to reach closer to a three (3) cent per hour rate. A lot of pressure was put on us over
the negotiation process because the music publishers were not able to support
us fully and we had to wait and hold on until the new rate was settled.
Dom: What are some things that may disqualify a band from
getting added to Pandora’s Genome even if they have completed all the details
and paperwork necessary for proper consideration?
Tim: If their music is not available for sale on
Amazon.com, if the music submitted is not good quality in the departments of sound,
presentation, and song composition.The question we ask is if an audience will like it or not.The decision making process, for categorizing music into the Genome, that we use
has over 400 attributes that we measure on a 1- 10 scale. For example, we will
rate the Vibrato on the Vocals down to the Tonality on the Crash Cymbals. The data we store helps Pandora users
find new music.
Dom: I personally find online radio with recommendations
based on your personal tastes to be one of the best ways for fans to discover
new music and I feel that artists who don’t try to submit and participate in
your service are missing out.
Since you enable such a thing to happen I wonder if there is anything
you see that artists should be doing in addition to submitting to the Genome in
order to get the word out about their music?
Tim: You want to get your music in any place that will have
you. I believe that every band,
musician, group, etc. should hire someone for full time online promotion, like
a band member, to maximize exposure, and get a full cut of band income. The ultimate goal is to have
people hear and connect with your music.
Dom: Pandora has an exclusive partnership with Amazon.com
which includes direct links, provided for the artists included in the Pandora
Genome, to the music that these artists have for sale on Amazon.com from the
artist’s various launch point locations on Pandora.com. In addition, Pandora pulls the artist’s
album art graphics directly from their Amazon.com listing in an effort to make
the artist’s Genome profile setups go smoothly and efficiently. However, I have had a lot of artist’s,
who are already included in the Genome, describe to me the issues of getting
their actual correct album artwork displayed on Pandora.com. Labels and management companies or
artists themselves have all expressed to me the same issues of getting their
album art displaying correctly on Pandora via Amazon.The problem is that Amazon.com is a free marketplace where
anyone can sell your album without yours or anyone’s permission or
consent. This fact leaves the door
open to many kinds of errors in listings from people who do not have the
correct details of your release. These errors are very difficult to have corrected.
At the end of the day, it is the artist or management’s
responsibility to contact Amazon about the errors and then hope that they have
them corrected.I have dealt with
this issue myself directly a few times and to no avail. Try contacting Amazon.com, one of the
largest e-commerce sites in the world, and ask them to have the artwork and
details replaced in a listing for your album that someone else listed
incorrectly. The biggest problem is that Pandora can only extract the artwork
from an Amazon listing that has the correct UPC and coinciding Amazon ASM
number. If someone other than
yourself or your management lists your album first with your correct UPC then
they control the details to your album and there isn’t much you can do about
it. Amazon will feed you a lot of
steps that have no correct end result. Fixing the details to someone else’s Amazon listing is not as easy a
feat to accomplish as one might think and even if it does get corrected it is
not a permanent fix.It is just
fixed until someone re-lists it again incorrectly. Then, after dealing with Amazon, it is your responsibility
to inform Pandora about the changes made at Amazon and hope that someone
re-extracts the correct artwork from the fully corrected listing. If the details of the Amazon listing
change, then so does the details connected to your Pandora listing
details. Many times this issue
will never get corrected and you can stand to have your album included in the
Genome appearing with the wrong album art forever. There has got to be a more efficient way to correct this
issue. One would imagine this issue would get higher priority for large
“household name” artists but since Pandora accepts quality artists that
sometimes have no label or management to help them how can they also get this
issue resolved with the same urgency as the biggest artist might and to
preserve continuity across the board at Pandora.com.
Dom: What, if anything, has
been done to address this and is there a way to get around it?
Tim: There isn’t any special treatment for any submitted music
after it has been accepted into the Gnome.We operate strictly in a Democratic fashion and everyone’s
submitted and accepted music gets treated equally.
Dom: Pandora also has an exclusive partnership with AllMusicGuide.com where artists included in the Pandora Genome have their
official biographies and articles extracted from the biography and article
sections of their profiles on All Music Guide and added to their Pandora
profiles. Are there any new or
developing partnerships since the ones with Amazon and AMG, and are there other
companies that Pandora would like to partner up with in the future?
Tim: Yes there are. I cannot get specific with everything but there are certain mobile media
companies, consumer electronics companies, and automobile companies that we are
in negotiations with. For example,
Ford Motor Company has been working on the next version of Sync, which they
want to have come standard in every car they produce. Also, we have an advanced
mobile application for free Pandora Internet radio available on all Android Mobile Phones.
Dom: How important to sales has been Pandora’s insertion
into the mobile market via the iPhone application, etc.?
Tim: It has been huge.
Over half of Pandora registrations are now currently via mobile. The future is now and mobile means more
and more people using the Internet and conversely, Pandora on the move, away
from a computer of any size that doesn’t fit in a pocket on your person. It means people accessing Pandora in
ways from being on their mobile smart phones doing anything from waiting for
the train to going for a jog. It
means that every automobile will eventually have Internet for many things
including Internet radio, which currently looks as if it will eventually trump
any form of satellite radio.
Dom: Some people might simply wonder how Pandora is
profitable when they provide such a great service like free Internet
radio. I noticed an increase in
advertising on the site but is that the only form of income? Does Pandora get a
cut from exclusive partnerships with Amazon, iTunes, AMG, etc?
Tim: Pandora’s principal revenue stream is advertising which
generates over 40 million dollars annually. We then have 7-8% of our users who pay $3 per month to use
Pandora who wish to go over the 100 hours free per month limit. Commissions from Amazon.com sales that
sourced at click through links from Pandora.com round out our third place
Dom: I read in an article recently about how Pandora informed
it’s users about an Aimee Mann concert that lived within a short drive of the
concert location and that it was a successful turnout in attendance directly
because of the information sent. Have there been plans to continue these efforts and how can Pandora be profitable for this kind of service?
Tim: Right now this is just a service that we provide. It
has definitely been an incredibly effective service that we are going to
continue to offer and find ways capitalize on.
Dom: A few dedicated Pandora users that I know have told me
that they have found the gnome selections to sometimes be repetitive and that
they feel that more songs need to be added to the Genome.
people like that there are repeats once in a while. We have ten thousand new
songs being added to the Genome per month. Good things come in time. The
selection and classification process does take a little extra time but it is
what makes Pandora so unique.