Pandora’s chief financial officer Mike Herring has given a long interview on the company’s strategy, approach to artists and view of competitors like Apple’s iTunes Radio.
Starting with the latter: “Don’t get us wrong, we take them very seriously and do see them as a credible threat. Keep in mind there have been lots of credible threats over the years, from startups to Microsoft to Google, to Apple and Twitter this year,” he tells CNET.
“We absolutely see iTunes as a competitive option out there, but we think we are a great service that does this better than anybody else.”
Herring also says there is “nothing short-term for an international opportunity” beyond Australia and New Zealand for Pandora, and jabs at suggestions Pandora is having problems competing with on-demand services like Spotify whose direct licensing deals enable them to launch Pandora-like features everywhere they’re live.
“People who have direct deals that are operating internationally are not doing well. Go pull Spotify’s financials from last year. It’s not pretty.”
But really it’s the royalty payments and artist criticism that’s clearly on Herring and Pandora’s mind most. “One of the arguments against Pandora is that we’re trying to pay artists less money. We’d like to see artists get paid more,” says Herring, before suggesting that piracy and iTunes’ disruption of the CD business has created a negative environment for debate. “There’s difficulty for people who have experienced these negative things to listen to reason,” he says.
“We write a big royalty check every year to performers; last year we wrote one for $250m, in performance royalties. That’s one fourth of all royalties paid to performers globally by radio,” he says, before painting a surprisingly gloomy perspective of Pandora’s current progress towards a better royalties deal.
“We’re in the second inning, but we’re down 10-nothing. That’s the bad news. It’s early, but we’ve gotten off on the wrong foot… One of the opportunities in the next few innings is to hopefully rise above the legal wrangling and make it a business conversation around fair compensation.”
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The business is getting more and more competitive and only an insensitive organization will ignore artist grievances. The time is now.