News & Opinion » Feature

The Tyranny of Free

The internet radio service Pandora pitches artists an escalator to financial viability in the digital age, but it's just a staircase painted like an escalator — with the steps missing.



Frank Portman hasn't had a steady day job since 1994, but he's navigated one struggling industry after another — first music, then books — to earn a living. And though the business of selling novels is notoriously beleaguered, he finds that it's now more financially viable than selling music.

Between 1986 and 2004, Portman fronted the East Bay pop punk band Mr. T Experience (MTX), which released nearly a dozen albums, and more singles and EPs. Then Portman shifted into young adult fiction. His acclaimed first novel, King Dork, appeared on an imprint of Random House in 2006. Andromeda Klein was released in 2009, and his third novel, King Dork Approximately, a follow-up to his debut, is due out this December.

Seated in a cafe in Oakland's Temescal district, a neighborhood in which he's lived for nearly three decades, Portman explained that he intends to release new music this year — but only to promote his book. "It's really unfortunate, but all of these market forces have combined to render music almost value-less," he explained.

MTX had enjoyed a booming era for CD sales — one that was bolstered especially for Portman by the superstar ascension of his regional peers and label-mates, Green Day. But then music consumption began shifting to the internet, and Portman recalled "you'd read articles by rock journalists hailing this brave new world of free content, with all of this free advertising for all of the bands."

At the time, Portman was skeptical. And not long after, the magazines paying those rock writers folded, as musicians began lamenting the collapse of their longstanding business model. A parade of web-based solutions for the music industry later ensued, each one accruing astronomical revenues, at least briefly, while largely failing to benefit the artists upon whom the services depend. In 2014, Portman observed, emerging artists belong to a generation that's conditioned to regard their creative output as financially worthless.

In 2012, Portman was already focused on a literary career when the official shuttering of his old label — Lookout! Records — thrust him back into the music business. The ownership of Mr. T. Experience's voluminous Lookout! catalog reverted to Portman. So, he started investigating how royalties work in the digital age.

He registered with SoundExchange, the federal government's designated collector of webcaster performance royalties, which is also responsible for distributing royalty payments to sound recording copyright owners and featured artists. Portman started receiving statements from SoundExchange with lists of his songs and their earnings in fractions of cents.

Brandishing one such statement in the cafe, Portman admitted that, like many musicians, he'd never scrutinized the statements very carefully, in part because the reported earnings on them were so meager. "The money amount just seems kind of disproportionate to the amount of paper," he said, wincing. "It's enough money that I wouldn't throw the check in the garbage — but it's pretty negligible."

Some simple calculations teased a few facts about his royalties. Most of them came from the Oakland-based internet radio service Pandora. As the featured artist and owner of the Mr. T Experience's catalog, Portman received $56.08 for about 45,000 plays on Pandora between March 1 and June 30 of this year. Pandora currently pays $0.0013 to SoundExchange for each time it streams one of the songs in Portman's catalog (Pandora pays another royalty, to songwriters and publishers, which Portman showed to be a pittance more.)

Portman acknowledged that touring would help his play count on Pandora, but more streams on the radio service still wouldn't amount to much. One million plays on Pandora would earn Portman less than $1,200. Put another way, if one physical album sale yields a gross income of $12, it would take Portman approximately 16,000 streams to earn the equivalent amount in performance royalties.

And Portman is fortunate to own his music. If it were still owned by a record label — as is the case for many artists — those small earnings would be halved.

Over the years, Pandora has vowed to help musicians such as Portman. But in reality, his puny earnings reflect the systematic, sustained, and, critics say, hypocritical campaign undertaken by Pandora to relieve its royalty obligation to artists. The company's founder, Tim Westergren, has often spoken dreamily of Pandora's mission to help indie artists and build a musician middle-class, but Pandora instead has steadily shown itself to be just the most recent member of a long lineage of opportunist companies that have siphoned money away from creators.

Pandora's growing interest in striking closed-door deals with music publishers has also undermined the Oakland company's much-touted Music Genome Project, a system that was supposed to maximize "discovery" — or to bring attention to lesser-known artists. In fact, as Pandora has striven in recent years to replicate broadcast radio's financial success, it has succumbed to the mass-pandering approach of traditional radio that it once condemned.

Westergren and other Pandora officials often argue that Pandora has pursued lower costs because it has yet to actually turn a profit. And although it's true that the company has never made more than it spends, Westergren's defense does not stand up to close scrutiny. Records show that, like many web companies, Pandora's top officials and privileged shareholders have been collecting millions from stock transactions despite Pandora's supposed unprofitability.

In short, Pandora has pitched artists on the idea that it represents an escalator to financial viability in the digital age, but, in truth, it's just a staircase painted like an escalator — with the steps missing.