Is Pandora's founder the new Hilary Rosen?July 18, 2013: 6:47 AM ET
The fight over whether music streamers like Pandora should pay less in royalties is really a debate over who in the music industry should suffer most.
In researching the question, I came across a more entertaining comparison: Westergren is becoming the new Chairman Mao. Or anyway, as the founder and chief strategy officer of Pandora (P), he's a top executive in an industry -- music streaming -- that is creating "a kind of Maoist environment where nobody really owns anything," according to David Lowery, the founder of the bands Cracker and Camper Van Beethoven and a lecturer in the music business program at the University of Georgia. Lowery has targeted Westergren and Pandora for trying to get the music royalties it pays lowered. His Mao quote was shared approvingly by Jonathan Blum, who interviewed him for his Digital Skeptic column at TheStreet.com.
Certainly, Westergren's image has taken a dive recently, at least among those who believe that artists are getting screwed by music-streaming services, and Pandora in particular. But the situation is very different from that of Hilary Rosen, who headed the Recording Industry Association of America during the height of the recording industry's war on its own customers. Pandora, after all, is fighting the RIAA to get what it believes would be a fair share of industry revenues. It pays more in performance royalties than other forms of radio do, including satellite, cable, and terrestrial.
Lots of musicians, as well as the record labels represented by the RIAA, have come down hard on Westergren because of his public defenses of Pandora's efforts to reduce its royalty payments. The Maoist label is actually among the least insulting epithets hurled at him, especially when you take Twitter and comments sections into account.
But unlike Hilary Rosen (or for that matter, Mao) Westergren's stance is actually defensible. He has a case. The only question is whether it's a good enough case. His company has plenty of defenders too, many of them disinterested, independent parties. Just about every forum where the issue is discussed includes passionate people on both sides.
That the government is ultimately responsible for deciding how royalties are distributed, it's no surprise that the debates carry a certain political tinge. Music royalties are insanely complicated, and only more so when it comes to the ascendant streaming services. With the market price of music low and still diving, somebody -- maybe everybody -- in the music business has to suffer. The fights we're watching may seem like debates over right and wrong, but are really just arguments over who should suffer the most.
Even Lowery said as much in his interview with Blum. Immediately after accusing the streaming industry of waving the red flag, he uttered a pair of sentences that characterize the situation much more accurately: "Considering how lean the total spend on music is by consumers, your choices as a business become very limited. "Is it really a surprise that our industry is struggling?"