theunderstatement by MICHAEL DEGUSTA

David Lowery’s “My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89" article has been picked up over and over and over, including by very respectable folks, often without comment.

This has left many readers with two impressions:

  1. Pandora only paid $16.89 for 1 million plays.1
  2. Pandora pays much lower royalty rates than Sirius XM and especially terrestrial AM/FM radio.
Music royalties are complex, but both of these are patently untrue.

WHAT DID PANDORA PAY & WHAT DID THE BAND GET?

Step 1. Lowery and his royalty reports clearly state he only owns 40% of the songwriting. As he says, this means the total fee to the songwriters was $16.89 x 2.5, or $42.23.

Step 2. Songwriters actually only get about 43.5% of the songwriting/publishing rights. The publisher and the songwriters split the fee 50/50 after the rights administrator’s (BMI in this case) operating expenses, which appears to be about 13%. So the full songwriting/publishing fee was in fact about $97.

Step 3. Pandora also pays a separate royalty for the performance itself, distinct from the songwriting. In 2012, that royalty was $0.0011 per streamed song.2 For 1,159,000 plays, that works out to a total performance royalty of $1,274.90.

After the administrator SoundExchange takes its fee of 5.3%, the performance royalty is split, with 50% going to the recording owner (i.e. record company), 45% to the band/performer, and 5% to any session/backup musicians. So the band in this case received $543.30 for their performance.

Conclusion. By this math:

  • Pandora paid a total of about $1,370.
  • The band received a total of about $585.
  • If Lowery received 40% of the performance royalty, “all he got” for the 1 million plays was in fact around $234.
Whatever one thinks of the fairness of those numbers, they’re all clearly far larger than $16.89.

HOW DOES THIS COMPARE TO SATELLITE & TERRESTRIAL RADIO?

The main issue here is that Lowery cites only dollar amounts for comparison:

  • "For frame of reference compare [sic] Sirius XM paid me $181"
  • "Terrestrial (FM/AM) radio US paid me $1,522"

This is quite simple: those sources paid him a lot more primarily because a lot more people heard his song via those sources.3 For example, AM/FM paid him $1,373.78 for 18,797 spins. That’s 7.3 cents per spin. If only 10,000 listeners heard each spin, terrestrial radio is in fact paying just half the songwriter fee Pandora paid him per listener. And of course it’s likely to have been far more than 10,000 – even the intentionally miniscule South Dakota radio station Pandora just bought manages to average 18,000 listeners.

Even more importantly, FM/AM paid him NOTHING for the performance of the song. Unlike most industrialized nations, terrestrial radio stations in the US have never paid performers anything.4 It’s hard to believe, but true: they can play John Coltrane’s version of “My Favorite Things” for decades and never pay him or his estate a single cent.

Lowery doesn’t disclose the Pandora performance royalty but he declares it “unsustainable.”5 This is a fascinating perspective: apparently in Lowery’s view a performance royalty of $1,275 is unsustainable but the AM/FM world of $0 is totally fine?

AM/FM radio royalty payments are contractually capped at just 1.5% of revenues, meaning a measly 0.7% of radio revenues go to the actual songwriters – and 0% to performers.6 Pandora would indeed love to get down to those much lower rates that competitors like iHeartRadio already get to pay because they’re owned by a terrestrial radio conglomerate. Strongly implying that Pandora’s royalty rates are already far worse than AM/FM seems just plain misguided.

A CONCLUDING THOUGHT

None of this means Pandora ought to pay less in royalties. On the contrary, it seems quite likely that others should be paying more. And perhaps the non-artists involved in the transaction shouldn’t be taking 53% of the total for their services. But attacking Pandora with intentionally misleading statistics just undermines the credibility of the argument.

If you’re aware of any errors or omissions in this analysis, definitely please let me know: email / Twitter.


  1. He does clarify in the footnotes that $16.89 is only for 40% of the songwriting and there is a separate performance royalty, but certainly the headline & coverage could leave many with the impression that $16.89 was everything.  

  2. Pandora’s current agreement with SoundExchange has it increasing $0.0001 per year. That may sound small, but it’s a 8% annual average increase, which doesn’t seem too bad in a world of 2% inflation.  

  3. There are admittedly other complexities, such as the “interactive” nature of Pandora.  

  4. Even worse, because the US doesn’t provide this right, other countries don’t have to pay US artists for foreign performance broadcasts.  

  5. He previously called the performance royalty “also quite lame”, but appears to have quietly edited the piece.  

  6. Obviously very different businesses, but 1.5% sure makes iTunes’ 70% of revenues to the music industry sound a bit better.  

Apple’s new Maps app is the very first item on their list of major new features in iOS 6, but for many iPhone and iPad users around the world those new maps are going to be a major disappointment.

In iOS 6, Apple no longer uses Google’s traffic, transit, or street view features, switching instead to their own traffic data, and adding turn-by-turn navigation and a 3D Flyover view. As a result, features will be lost in dozens of countries:

  • Transit: Removed from 51 countries with 4.9 billion people.
  • Traffic: Removed from 24 countries with 2.4 billion people.
  • Street View: Removed from 40 countries with 3 billion people.

In total, 63 countries with a combined population of 5 billion people will be without one or more of these features they previously had in iOS. Apple is risking upsetting 70% of the world’s population1, seemingly without much greater purpose than speeding the removal of their rival Google from iOS. Few consumers care about such battles though, nor should they have to.

Something In Exchange

On the plus side, at least people are getting turn-by-turn directions and Apple’s Flyover feature in exchange, right? Not so fast: 20 countries (population: 3.2 billion) are losing transit, traffic, or street view and getting neither turn-by-turn nor Flyover. The biggest losers are Brazil, India, Taiwan, and Thailand (population: 1.5 billion) which overnight will go from being countries with every maps feature (transit, traffic, and street view) to countries with none of those features, nor any of the new features either.

It gets worse. Even in countries where turn-by-turn and/or Flyover are available, the iPhone 3GS, iPhone 4, and the 4th generation iPod touch won’t support them. These devices are owned by tens of millions of users who may update over-the-air when prompted, only to find they’ve lost features and haven’t even gained any of the marquee Maps features in return.

Based on past data2, it’s likely that at least 200 million users will upgrade to iOS 6 in the next two weeks. Even if only 1 in 10 people are upset by these changes, Apple will have 20 million unhappy customers on their hands, roughly equivalent to the entire population of Australia.

A Temporary Blip?

Apple’s maps are clearly behind in some key areas, but they will presumably continue to improve over time. Google has committed to making their maps available everywhere, so it seems likely they will release their own iOS maps app soon, as they did with YouTube, which has similarly been removed from iOS 6.

Lost Feature Breakdown

Here are the countries that are losing at least one of the three big Google Maps features:

Google Maps vs. Apple Maps

Here’s the chart of all 77 countries affected by the iOS 6 changeover from Google’s maps to Apple’s:

* At least one city with unofficial Flyover views. Only the US officially has Flyover.

Bonus: iOS 6 Feature Availability

I also converted Apple’s iOS 6 features by country page into a country-by-country grid. Here it is as a rather long image or as an Excel spreadsheet.

Sources


  1. No, population doesn’t correlate to the number of iPhones used in a given country. See the next section regarding actual iOS users. Alternatively, please feel free to have Apple send me the country by country numbers. :)  

  2. At WWDC, Apple said 80% of 365 million iOS devices were on iOS 5. That’s 292M. At the iPhone 5 event, Apple said the installed base was 400 million through June, so that’s another 35 million iOS 5 devices for a total of 327 million. Add the iOS devices sold in Q3 - 46 million were sold in Q2 this year & last year saw a slight Q-on-Q increase, so even assume it’s a 10% downtick & we’re at roughly 370 million iOS 5 devices. Remove the iOS 6 incompatible iPad 1’s and iPod Touch 3’s, roughly 30 million, and that leaves 340 million users who could upgrade to iOS 6. 60% of users upgraded to 5.1 within 15 days.

  3. There is also Street View in Antarctica, but I opted not to include that in the chart.

I’ve written an article with associated charts for Technology Review, tracking the adoption rate of mobile phones and their inevitable replacement, smart phones, relative to other similar technologies.

It really has been quite an astounding 30 years:

In 1982, there were 4.6 billion people in the world, and not a single mobile-phone subscriber. Today, there are seven billion people in the world—and six billion mobile cellular-phone subscriptions.

Even countries where the average income is only $5 per day now have at least one mobile phone for every two people. For more, including the blazingly fast start of tablets, check out the full article and charts.

As is now well known, Mike Daisey’s “The Agony and the Ecstasy of Steve Jobs” has been performed since 2010 and covered by countless media outlets since, including This American Life which then retracted the story on the basis of reporting by Marketplace's Rob Schmitz. Contrary to some coverage of the retraction, Daisey’s fabrications actually extended far beyond whether he personally witnessed specific incidents, as Daring Fireball's John Gruber explains.

I could find four venues that had previously scheduled Mike Daisey to perform “The Agony and the Ecstasy of Steve Jobs” in the coming months.

  • All four are proceeding with all performances as planned.
  • All four have now made public statements essentially in defense of Daisey.
  • Three of the four have gone so far as to assert that the facts in Daisey’s show are true.
  • Only one has updated their show page to make any mention of the retraction.

Here are quotes from each of the venues:

Flynn Center - Burlngton, VT: 1 performance, 3/31
“The fascinating part of it is that both Ira Glass and reporters from Marketplace are saying the facts are correct.”
– Executive Director John Killacky, on Reluctant Habits.

HighTide Festival - Suffolk, UK: 2 performances, 5/5 - 5/6
“The facts themselves that he reports on, which news outlets and Apple’s own investigations have proven to be true.”
“I believe that Mike did not intend to mislead the public.”
– Artistic Director Steven Atkinson, on HighTide’s website.

Spoleto Festival - Charleston, SC: 4 performances, 5/31 - 6/5
“All we ask is that audiences wait until they see the piece before making up their minds.”
– Spoleto Festival on Facebook.

Woolly Mammoth Theatre Company - Washington, DC: 20 performances, 7/18 - 8/5
“All of the specific conditions he includes in his show have been corroborated by The New York Times and others.”
“We believe in the essential truth of Mike’s storytelling”
– Artistic Director Howard Shalwitz and Managing Director Jeff Herrmann
on Woolly Mammoth’s Blog.

Finally, in what appears to be pure serendipity, there is one other monologue scheduled ahead of Daisey’s at the Spoleto Festival: “Making Up The Truth”, by a This American Life contributor no less.

Tesla Motors has responded to my "It’s a Brick" post with a blog post of their own, “Plug It In”. I’m genuinely very glad to hear that the Model S and Model X are apparently going to be substantially less prone to “bricking” than the Roadster.

Unfortunately, the rest of Tesla’s response has been a somewhat bizarre mix of paranoia, smearing, “blame the customer”, and non-denial denials. It’s not clear to me why Tesla wouldn’t want to just be open and honest about a situation it is clearly working to improve, but that’s not how they decided to handle it.

In my opinion, Tesla is now facing at least five problems, all of which are of their own making:

1. Tesla is deceiving themselves, or us.

In their blog post, Tesla calls “bricking” an “unfounded rumor”. Yet here is a written letter from Tesla’s VP of Worldwide Service J. Joost de Vries where he states for a fact that a car had “complete discharge (and therefore complete failure) of your battery pack” and offers to “replace the complete battery pack at a price of around $40,000.”

So Tesla thinks bricking is an unfounded rumor, but one that definitely happens. How does that make any sense? I don’t know and I’m not sure they do either.

2. Tesla won’t disclose even basic information.

Why not say how many bricked Roadsters there’ve been? Tesla doesn’t even make this car anymore. They’ve made it clear their next cars will be better. Why not just disclose this so that customers, investors, partners, and other stakeholders can have peace of mind on the matter — “Only seven bricks? Well, that was just 0.3% of the cars after all, and they’ve made a lot of strides on the matter since then.”

The logical guess is either they’re being paranoid or the number is bigger than we think. I said in the article there were at least five Roadster bricks. Since then more information has rolled in. For example, a Tesla owner told me about another brick in a barn in Wyoming (despite having the automatic warning system Tesla mentioned), more details cropped up about the “Japan” brick (a used car buyer who ergo never got Tesla’s verbal warnings nor signed a disclosure form), and, intriguingly, former Napster Chairman & CEO John Fanning commented on a TechCrunch post saying that he too was aware of another Tesla Roadster brick:

Fanning wouldn’t confirm who he was talking about, but there’s definitely one person he knows who has a Forbes List friend who owned a Tesla Roadster.

3. Tesla tracks their customers’ location.

As mentioned in my original article, Tesla’s Service Manager stated that Tesla had activated a customer’s GPS in hopes of locating the customer’s vehicle before it bricked. That might be acceptable — except the service manager also stated Tesla doesn’t tell customers about this tracking. How is that acceptable? Hopefully customers sign a document that clearly gives Tesla authority to track them, but Tesla ought to disclose it, if it exists.

It has also come to my attention that Tesla logs contain GPS locations of a vehicle’s charging locations in many circumstances. Tesla ought to publicize its policies on what happens with this data, as there seems to be some confusion.

4. Tesla leaks their own customers’ private information.

Tesla inexplicably leaked the name of one of my sources1 – their own customer – and the email he sent Tesla CEO Elon Musk. The blogger they leaked it to then tried to portray my article as nothing more than a “shakedown” for warranty money, which Tesla in turn promoted on its Twitter feed:2

This is how Tesla treats its customer’s privacy? If you complain about Tesla, they feel entitled to leak your name and impugn your motives? It’s hard to imagine any other $3.5 billion company so backhandedly smearing an individual customer, regardless of what that customer had said or done.

5. Tesla expects more of their customers than they do of their CEO.

Ah, “Plug It In”. In other words, “RTFM”. Why in the world would anyone ever leave their car with less than 10% charge? Or ever use an extension cord? After all, this form they’ve had buyers sign3 so explicitly says not to do either of those. Every owner should know better than that, according to their post.

Well, watch as Tesla CEO Elon Musk tells Jay Leno that the Tesla Roadster “doesn’t actually care about the state of charge”, “you can leave it at 5%”, and if you ever want to plug it in, “you just need an extension cord” — exactly the kind of behavior Tesla would later say is unwarrantied “neglect”. Elon’s tips for voiding your warranty start just on the 3 minute mark.

When I look over all these self-inflicted problems, I’m left with the feeling that Tesla simply isn’t the mature, open, and honest company that ought to be leading the electric vehicle charge. Perhaps with one forthright interview by any journalist of their choosing, Tesla could put this all behind them and be stronger than ever. I hope they do that.


  1. It is verifiable from the email timestamps that it was Tesla’s copy of the email that ended up on the web.

  2. Tesla also later deleted its tweet, opting for a retweet of Green Car Reports instead. Subsequently, Green Car Reports retitled their post, though the URL still retains the “shakedown” title.

  3. It’s not clear when Tesla began having new Roadster buyers sign this form.

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