By Tom Taylor
The following article comes from Tom Taylor’s newsletter, Taylor on Radio-Info.
As Pandora’s underwriters price the Initial Public Offering that could come next week, it’s worth remembering just how much of Pandora’s revenues go to pay for the music – straight to SoundExchange. SX also collects money from Sirius XM Radio (NASDAQ:SIRI) and other digital and cable services. But Kurt Hanson’s RAIN Newsletter picks up this headline from Jennifer Lane’s Audio4Cast – that “Cha-ching! Pandora’s payments are 23% of Sound Exchange’s total revenues.”
We knew that SoundExchange collected a bit more than $263 million last year, and now Live365 attorney Angus MacDonald estimates that Pandora paid about $62 million. That’s figuring that Pandora paid SoundEx at the rate of 45% of revenue. Though MacDonald picks up the fact from Pandora’s revised S-1 filing that in the first quarter of this year, Pandora paid something like 53% of its revenues for music. What does it mean? Pandora must keep pushing advertising sales. Because its cost of music will inexorably rise as those 94 million registered users plug in their headphones.
Tom Taylor is the Executive News Editor at Radio-Info.com.
Contact the Author: tom@in3media.com
Seems only right for Pandora to pay so much, there is lot of free unpaid usage to make up for, the artists don’t care as long as they get paid for the use of their creations. Literally paying the piper!