How much has your digital music startup paid to artists, labels, and publishers? Well, since 2007, Pandora has paid well over $100 million to SoundExchange and various publishers, according to financial details emerging afternoon. And, that number would have been much higher had it not been for negotiated, retroactive rate reductions affecting the years 2006-2010.
More specifically, for the period running through October, 2010, royalties have topped $100.5 million - most of which has gone to SoundExchange and its represented labels and various artists. That is, on aggregated Pandora revenues of $178.9 million (click image to enlarge). And that doesn't even count the last three months, probably the best period yet for the company.
In fact, Pandora paid just over half (50.4%) of its year-2010 revenues for content licensing. The disclosure, part of a more detailed IPO registration filing, shows that during the first nine months of 2010, "content acquisition" costs topped $45.4 million, on topline revenues of $90.1 million. Overall, Pandora lost $328,000 for the period, a vast improvement over year-2009 losses of $22.5 million.
That is quite a financial turnaround, one that also includes some respectable ($12 million) non-advertising revenue streams. So maybe they can afford it? During the nine-month period, revenues nearly tripled, and fourth-quarter figures put the company at breakeven according to earlier statements by founder Tim Westergren.
Still, in year-2009, Pandora was drowning in content-related costs, most likely because of softened advertising revenues. And ongoing, doubts remain over whether Pandora can achieve a reasonable profit margin, especially if non-advertising revenue streams fail to ramp.
Here are some other stats from the filing. Pandora now has (as of January, 2011)...
Comments Closed
An Indie Sunday, February 13, 2011
"...most of which has gone to SoundExchange and its represented labels" AND ARTISTS (including backing musicians), Paul.
SoundExchange royalties are split 50/50 between artists and master copyright owners (most often labels, but for many artists that own their own masters the full 100% of SoundExchange royalties go to artists). Artists receive their royalties directly from SoundExchange, not through their labels - no recoupment chargebacks!
I applaud Pandora but I also applaud the SoundExchange board of directors for setting aside the rates set by the Copyright Royalty Board to reach negotiated, reduced rates that allowed Pandora to thrive while also fairly compensating artists and labels.
presnikoff Sunday, February 13, 2011
An Indie,
That was implied, though of course it's always a bit more complicated isn't it?
/pr
An Indie Sunday, February 13, 2011
Fair enough but I just think it cannot be stressed enough that SoundExchange is the single example of performing artists get paid directly for their work because part of why there is such a large sum of money sitting at SoundExchange waiting to be paid out is because artists (and their managers and/or financial advisors) just don't know that they need to sign up to collect.
Thanks.
presnikoff Monday, February 14, 2011
@An Indie
Actually that point has been debated, though there's certainly a lot of merit to what you're saying. But I've learned a great deal just reading through all of the opinions on this matter (of which there are many). And, among them there's a feeling that SoundExchange seems determined to blame everyone on the outside for its payout problems: artists not registering, stations not submitting proper metadata, etc. Honestly I think the answer is somewhere in the middle, though I hope you'll weigh the different sides on this.
/pr
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