July 6, 2013

I Made More From Selling A T-Shirt

We’ve heard the same stories over and over again from Pandora, that their costs of running business are much higher than any of the more traditional ways of listening to music.  For the most part, this is true.  Pandora is not a satellite radio service, and they aren’t a local radio service either.  Radio stations have operating costs, but many of these are paid for by the large corporations who dictate what kind of music they can play.  They also have commercial breaks that can last five minutes long in between sets of music.  Pandora doesn’t have that.  Pandora has to pay royalties to each company and artist each time they play a song, so how is it even possible that they make money?

The answer is simple, the burn the artist.  Strange as it may seem, since the artist is the one who provide the original content, the artist is not the one who makes bank off of the content.  Most of the money is paid to the record labels and of course, to Pandora themselves.  Compared to other services who pay up thousands of dollars to each Artist , Pandora may only offer them a few pennies on the dollar.