Pandora Westergren Speaks For DiMA Before Congress

OAKLAND, CA (Hypebot) – Pandora founder Tim Westergren testified today on behalf of the

Digital Music Asscoiation before the Senate Committee on Commerce,

Science and Transportation. Westergren emphasized the range of radio

on the net and noted that independent musicians are benefiting from

services like Pandora that promote diverse playlists and enable

immediate purchase of music or concert tickets.

Westergren’s testimony also focused on the threat facing Pandora and

all of net radio as a result of the Copyright Royalty Board's

decision to raise sound recording royalties 30%. This rate – which

effectively requires some internet radio so pay royalties equaling

50-300% of revenue – is unsustainable for most webcasters and is in

contrast to royalties paid by broadcast radio (no sound recording

royalties), satellite radio (less than 3% of revenue), and cable

radio (7.25% of revenue).

Hearing on “The Future of Radio”

Testimony of Tim Westergren

Founder and Chief Strategy Officer Pandora Media

On behalf of the Digital Media Association

Chairman Inouye, Vice Chairman Stevens, and Members of the

Committee:

My name is Tim Westergren. I am the Founder and Chief Strategy

Officer of Pandora, and it is my pleasure today to speak with you on

behalf of my company and the Digital Media Association (“DiMA”),

about the radio industry, and particularly about innovation and the

future of radio.

What is Pandora?

Pandora is an Internet radio service that listeners enjoy on their

personal computers, through home entertainment products and on

mobile phones. Pandora is powered by a very unique musical taxonomy,

called the Music Genome Project, developed by our team of

university-degreed musicologists. Our team has identified hundreds

of musical attributes and they assign values to each attribute in

each song. When applied across a repertoire of hundreds of thousands

of songs, the Music Genome Project literally connects the dots

between songs and artists that have something – often quite subtle

things – in common. This is the foundation that enables Pandora to

offer listeners – quickly and easily – radio stations that play

music that matches their taste if the listener simply tells us the

name of a favorite song or artist.

The result is remarkable in many ways. More than 8.5

million registered Pandora listeners enjoy a better radio

experience, and they are passionate about our service. They listen

to more music, they re-engage with their music, and they find new

artists whose recordings they purchase and whose performances they

attend. Pandora is a bit of a phenom – in only two years since our

launch we have become the third largest Internet radio service in

America

  • But the real winners are music fans, artists, record companies,

    songwriters and music publishers.

    Something unique about Pandora is that all music, once analyzed by

    our musicologists and entered into our database, wins and loses

    audience in the purest of democratic processes. If listeners vote

    “thumbs up” a song and artist are electronically added to more

    station playlists, the exposure is greater, and more people can

    offer opinions about that music. If listeners consistently vote

    “thumbs down” then the song is performed and heard less. Not even my

    musical tastes or the CEO’s favorites can modify the purity of how

    our musical taxonomy determines all Pandora radio performances.

    Equally unique is the breadth of our playlist. Pandora musicologists

    will review any CD that is delivered to us, and in most cases enter

    it into our database and make it available for our millions of

    listeners to hear. Pandora’s collection includes hundreds of

    thousands of songs across the genres of Pop, Rock, Jazz,

    Electronica, Hip Hop, Country, Blues, R&B, Latin and in just a few

    weeks, Classical. These recordings range from the most popular

    artists to the completely obscure, and each month our nearly fifty

    musicologists analyze and add roughly 14,000 new songs to the

    catalogue – a very deliberate process that requires between 15 and

    30 minutes per song.

    There are no prerequisites for inclusion in the Music Genome

    Project. Indeed, it is quite common for us to add amateur homemade

    CDs to the service. As a card-carrying independent musician I am

    proud to report that fully 70% of the sound recordings in our

    collection, representing over 35,000 artists, are recordings of

    artists who are not affiliated with a major record label. Most

    important, because we rely only on musical relevance to connect

    songs and create radio playlists, all artists are treated equally in

    the playlist selection process and as a result independent music is

    likely heard more on Pandora then perhaps any other popular radio

    service. More than 50 percent of Pandora radio performances are from

    independent musicians, compared to less than 10 percent on broadcast

    radio.

    What qualities are unique about “new media” radio, and what benefits

    are associated with those qualities?

    In one sense multimedia convergence has already blurred the line

    between traditional ‘terrestrial radio’, Internet radio, mobile

    radio, cable radio, satellite radio and even community radio. For

    example:

  • Your mobile phone today can transmit a “webcast”, and with a $2

    adaptor you can listen to that Internet radio through your car

    stereo.

  • You can start a “community” radio station on the Internet

    and while content is focused locally, an audience is available

    (and may actually listen) globally.

  • Your car stereo today comes pre-loaded with AM/FM and perhaps

    XM, but in only a few years cars will have WiMAX broadband access

    and you will be able to enjoy Internet radio directly and throw away

    the adaptor I just spoke of.

    To a listener who is hearing a single station at a given time, it is

    just radio and their choices are amazing – which content do I want

    to hear, when do I want to hear it, and on what device?

    But in another sense, Internet radio is uniquely different from

    broadcast, satellite and even low-power FM radio, because on the web

    there are virtually no spectrum limitations and therefore no

    capacity or scarcity issues. As a result, Internet radio offers

    almost unlimited “stations” which results in unlimited content

    diversity.

    For music fans, Internet radio means no longer being

    confined to local or even satellite stations playing homogenous

    music for broad audiences of thousands or tens of thousands of

    listeners. Instead, individuals can hear the types of music they

    enjoy and simultaneously discover new songs and artists that would

    otherwise be literally invisible to them. Unconstrained by spectrum

    limitations, webcasting has created a genuine explosion of

    accessible musical diversity. Lute music, classic country, jazz,

    klezmer, dixie, gospel, Latin and Hawaiian music – you name it and

    you can find it – every kind and color of music has found a home and

    connected with its audience, no matter how small, on the Internet.

    Another unique feature of Internet radio is click-to-buy purchasing

    opportunities, and immediate access to artist information, including

    the artist’s promotional website and tour schedule. Pandora is a

    powerful platform for recording companies and artists during this

    tumultuous period for recorded music. An August 2007

    Nielsen/NetRatings research study concluded that Pandora listeners

    are three to five times more likely to have purchased music in the

    last 90 days than the average American. Similarly, Pandora is one of

    the top referral sites for music purchasing from both Amazon.com and

    the iTunes Music Store. Other studies have documented that Internet

    radio listeners are generally more engaged with music, they talk

    about it more and attend more performances, and they inevitably

    promote artists and music through word-of-mouth marketing.

    Finally, of course, there is the issue of royalties to performers

    and recording companies. As you know, traditional broadcasters do

    not pay royalties but the rest of us – cable, satellite and Internet

    radio – do pay. You may not be aware that Internet radio has the

    smallest of all radio revenue streams, but we pay proportionately

    the highest royalties.

  • Related Post