Leaving Millions on the Table: Pandora and Canadian Music

Pandora, the popular U.S. online music service filed for an initial public offering last week, provided new insight into hugely popular company that spends millions of dollars in copyright royalties. Pandora users listened to a billion hours of music in the last three months of 2010. Given U.S. laws, the Pandora prospectus notes that it paid for the privilege of having its users do so, with the company spending just over half of its revenue on copyright fees – $45 million in the first nine months of 2010.

The numbers are striking since it points to a growing source of revenue that is largely being missed in Canada. Millions of dollars are now generated from online streaming royalties in the U.S., yet many companies are avoiding the Canadian market. The reason, as Pandora explained last year, are the royalty demands of the major record labels. As Tim Westergren stated last fall, “as long as rights societies take this approach, they will prevent Pandora from launching to Canadian users.” While CRIA tried to claim that the decision to avoid the market was a function of Canadian copyright law, Pandora indicated that it is the fee demands, not the laws that are the stumbling block. With millions now being paid for streaming music in the U.S., it is notable that Canadian interests would seemingly prefer to receive nothing rather than the millions that could potentially be on the table.


  1. Want more so I’ll take none instead?
    For it’s brief sojourn in Canada, I quite enjoyed listening to Pandora. As a matter of fact I discovered my current favorite artist and have purchased the full set of their works.

    It is a shame that with all the complaints of people using torrents and other less savory means to discover music, that this legal and effective vehicle is being shut out by those very complainers.

  2. Yup our artists are missing out due to the greedy ‘middle men’
    I was an avid Pandora listener and also purchased a significant amount of new music I would otherwise have not been very likely to discover. Such a shame new business models are being held back by folks that just don’t get it.

  3. The CRIA would prefer Canadians to enjoy Pandora via VPN to the US, rather than see the money themselves. Sigh.

  4. Of course they priced themselves out of the market
    The CRIA member companies want to claim that music sharing is responsible for a big drop in their revenues… Well, signing up with companies like Pandora would show that their business model is busted as the revenues generated there would show the way that the consumer wants to buy.

    On a side note, do any of the CRIA members own companies that produce the blank CDs, or the raw materials that go into them (lets call them the blanks companies)? Embracing the online model would, in effect, seriously impact the revenues of one part of the company at the expense of another; in particular if they are looking to sell the blanks companies in the near future. Reducing the revenues of the blanks companies would reduce how much money they could ask for them.

  5. Greed!
    GREED! Gimme!

  6. Jim R said:
    “The CRIA would prefer Canadians to enjoy Pandora via VPN to the US, rather than see the money themselves. Sigh.”

    Agreed. They are so behind the technology as are most in Canada!!! I’ve discoved many new bands on Pandora. Sadly, I haven’t had time to listen lately. A legal alternative for discovering new music is YouTube…another site I’m sure the CRIA and others in the Canadian entertainment industry would love to block out!!

    What’s up with ReCaptcha lately? It’s getting silly.

    Captcha: tedri msW msY 410

  7. IamME
    A question for you : the Australian copyright ‘artists collective’ that, for a while, caused us a bit of bother, is very skewed towards a 60+ age group( and very clueless to boot)– Would the same be true of the Canadian collectives age group?

  8. Royalty Fees are a Red Herring
    If the CRIA is right that labels are refusing such services due to Canada’s copyright laws then it’s quite twisted to be reporting “lost opportunities” due to piracy and demanding copyright laws be changed. After all, the same withholding of services could be done for any law and claim that not changing it is causing “lost opportunities”.

    The record labels are free to miss any opportunity they like, however that shouldn’t necessitate action on the part of our government.

  9. Canadian Consumer says:

    These people want the world to change for them, they do not want to cope with existing change in paradigms that technology brings. Rather than competing in this much more efficient delivery model. They want to legislate rules so that they can keep their old perch in the new way of doing things. If these guys have not figured out how to use the internet to their benefit now, than legislating and subsiding them now is only going to keep these uncompetitive dinosaurs stepping over the real talent.

    The margins have collapsed in the deliver of their product, not just for them but for the consumer. We can’t afford to subsidies companies that cant evolve with the times. There are lots of industries that are facing the realities of this economy, but only one seems to be able to afford an army of lawyers that consistently want to burden the tax payer with the expense of policing the
    unpoliceable policies.

    The main question is why do people insist on circumventing these rules? Well, they hear the track on the radio, for free… royalties are paid and everyone is happy, the consumer may not understand the difference between the radio being able to play it for free, or a internet distributor or an internet site. The obscurity between these choices is so fine that the average person cannot be expected to always know if the source is paying royalties through ads or not.
    Also lets face it, we need to hear it in order to know if we want to buy it. The fundamental distribution model for music is about pushing it out for free, lots of air play, vibe and then reaping the benefits of familialization. The model itself tells you to taste it first. There are musicians out there that do not sell records, that have their music on the net and cant get the hits even for free. Hence the only time someone feels done wrong is when they get fame, when they do not have it, they are begging for their rights. What is funny is that the ones that are in the position to fight for infringement are the ones that are also in the position that are already making the most money from existing opportunities. This is not a fight for the artist on the corner. Don’t let these people deceive you… they need you to get hooked on the music first. So if you get hooked on a free track, they will sign the artist and then enforce their rights. So I think there is a lot fundamental deception in the payment model, and a lot of carrot dangling.
    What needs to happen is clarity. Also these agencies can’t strut around acing like Rambo’s walking over families and people of poor resources to make their point. This does not garner any sympathy from me. The payment model needs to change to reflect the easier access to the consumer. If it does not, like rushing water, it will always go around the pillar. Make it reasonable and you win. The consumer ultimately sets the price. If he or she rationalizes theft over paying for the rights, this means that that divide for the compensation of those rights is extreme.