Content isn’t free.

If your business model depends on forcing the people who provide your content to work for much less, how sustainable is your business model?

We’ve heard Pandora complain it pays too much in royalties to make a profit. (Of course, we also watched Pandora raise $235 million in its IPO and double its listeners in the last two years.) But a business that exists to deliver music can’t really complain that its biggest cost is music. You don’t hear grocery stores complain they have to pay for the food they sell. Netflix pays more for movies than Pandora pays for music, but they aren’t running to Congress for a bailout. Everyone deserves the right to be paid a fair market rate for their work, regardless of what their work entails.

While I’m no fan of record companies demanding their cut for doing nothing, I certainly believe that the people who actually create the music that Pandora is selling deserve to be paid a fair wage. I certainly don’t see Tim Westergren, CEO of Pandora, offering to take an 85% pay cut to save the company. Actually, it’s quite the opposite:

The MusicTechPolicy blog has also noticed something curious. Since January, Westergren has been selling 85,000 Pandora shares, worth around $1m, every month. Given that he has some 2 million shares, if he keeps to his selling pattern, he will have cashed out fully in two years’ time. This is hardly a vote of confidence in the long-term viability of his business.

Basically, he’s demanding that everyone else be forced to take a pay cut to make his business viable. But he has no interest in sharing the pain.

Leave a Reply