Is Pandora Hurting Artists, or Is It Paying Them Too Much?

The following video is from Friday's installment of The Motley Fool's Weekly Tech Review, in which host Chris Hill and analysts Eric Bleeker and Jason Moser look at the biggest stories driving the tech sector this week.

Streaming Internet radio provider Pandora (NYSE: P  ) has been clashing with artists recently over the amount it pays them to use their content. Artists such as Pink Floyd have penned widely read editorials criticizing the size of the paychecks artists are receiving for the millions of streams of their songs on Pandora. The company has fired back, noting the wide disparity in the percent of revenue it pays to artists relative to terrestrial radio or Sirius XM  (NASDAQ: SIRI  ) . Currently, Pandora pays roughly half of its revenue in song royalties while terrestrial radio pays out closer to 1.7% of its revenues. Convoluting matters is that the recent announcement of iTunes Radio included per-song rates that were slightly higher than what Pandora plays. 

In this segment, Jason and Eric discuss Pandora, whether or not its payments to artists are unfair, and what the endgame is for Pandora as it aims to stay competitive against new streaming services, such as the one Apple (NASDAQ: AAPL  ) is launching.

The full video is available here.

The biggest threat to Pandora is similar to that of other smaller tech companies: the fear that the dominant tech companies of today, such as Apple, will create services that compete with them. However, between Apple and the other tech giants of today, it's extremely tough to tell who has the upper hand at any moment. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged among the five kings of tech. Click here to keep reading.

The relevant video segment can be found between 4:46 and 8:10.

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  • Report this Comment On June 30, 2013, at 2:31 PM, zukerman wrote:

    The answer to your question is yes and no. They take the product they didn't make and use it to make money they never worked for. Sirius makes it's money from a whole host of content other than music and doesn't pay a premium for that reasoning. Apple couldn't swing a better deal because it launched with music only, for now. Pandora is doomed to go the way of the Dodo because they never had scalability in the first place.

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