- Cullman, Alabama


April 4, 2013

Pandora, Co-Founder Tim Westergren Take On Music Industry's Elite in Royalty Fight



Pandora lifted the cap in 2011 but reinstated it this year for mobile users. This time, it has more than legions of users to satisfy. It also has stockholders. The company went public with a $230 million stock offering in late 2011, a decision that left Westergren — even with his diminished stake — with stock worth more than $20 million.

Wall Street analysts don't love the stock; scan the headlines and you'd assume "troubled" or "struggling" were part of Pandora's trademarked name. Like many tech companies, Pandora is finding it tougher to make ad dollars on mobile devices than desktop computers.

Last fall, the Chicago civil rights crusader and Democratic congressman Bobby Rush hosted a Congressional Black Caucus Foundation panel discussion with a provocative title: "Unsung, Unshaken, and Uncompensated: The Plight of African American Musicians."

Rush clapped when Westergren, who was sitting by his side, told the audience that Pandora pays half its gross revenue in royalties that are split between performers and recording companies. By comparison, the satellite radio company SiriusXM is obligated to pay only 8 percent, and AM/FM stations, which pay royalties to songwriters, pay nothing to artists.

Four seats to Westergren's right, another panelist, Ted Kalo, fumed. Kalo, the director of a group called MusicFirst that represents a coalition of artists and the recording industry, knew that a Pandora-backed bill that would cut the company's royalties had been introduced in Congress that morning. Kalo considered the bill a betrayal of their previous deal. Later, in an interview, Kalo blasted the "audacity" of Westergren for not at least mentioning it before leaving the panel early to catch a flight home.

Two Democrats — Sen. Ron Wyden of Oregon and Rep. Jared Polis of Colorado — and Republican Rep. Jason Chaffetz of Utah introduced the Internet Radio Fairness Act. They popped the bill on Congress's last day in session before breaking for the run-up to the presidential election. It had all the hallmarks of a move intended to stimulate public debate — and, perhaps, to flush out the opposition — since the chances of passing a complex bill in a single day are nil.

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