Tim Westergren wants to be part of the solution to what ails the music industry.
But instead of a saviour, the 48-year-old American and the company he co-founded, Pandora Media, is seen by many in the industry as a big part of the problem.
Still reeling from the effects of the migration from CDs to digital downloads, the industry is now facing a new wave of disruption as music streaming services such such as Pandora, Spotify, iTunes Music, Rdio and Google Play gain ground with consumers.
Creating a rising tide: Tim Westergren, co-founder of Pandora. Photo: Lidia Nikonova
The bottom line is that royalties derived from these services are a fraction of what they were in the days of physical sales of albums and singles.
Speaking during a visit to Sydney, Mr Westergren shot down the criticism arguing that much of it was based on “misinformation”.
“All this focusing in on an absolute royalty [payment] number is just out of context,” he said.
He also revealed that California-based Pandora has been working on a stealth project that will put recording artists both big and small back in control of their destinies.
Pandora is “beta testing” the platform with a number of bands, including a few from Australia, and it will be launched this year, he said.
“We have 120,000 artists on Pandora, we’d love to have them all use it. We are trying to create a rising tide that lifts all boats.”
The service will allow recording artists to manage their archives on Pandora and check the metrics (who listened to what, when and for how long). It will also enable them to talk to and market directly to their fans, selling concert tickets and merchandise.
Mr Westergren rejected the description of the new platform as a niche social networking opportunity. “That is more of a passive play,” he said. “This is going to be more transactional by nature.”
Music selected by algorithm
Pandora earns revenue from tailoring ads to users of its streaming service. Users can create up to 100 personalised stations based on favourite songs, artists or genres.
An algorithm called the Music Genome Project will then recommend playlists based on an analysis of some 400 individual traits on songs from Pandora’s library.
Unlike some streaming services, such as Spotify, Pandora users cannot select specific tracks on their stations. But they can fine-tune their preferences by giving songs the thumbs up or down, the Pandora equivalent of a Facebook "like".
By marrying gender, age and postcode data provided by the user, Pandora is able to build a highly accurate profile of the user. So much so that Mr Westergren said that in the US it is possible to determine a listener’s political leanings.
Since the company was listed on the stock exchange in 2011 Pandora's registered users have more than doubled to 200 million, 76 million of whom are classified as active.
In Australia and New Zealand - the only area outside the US where Pandora operates - the company has 1.6 million registered users and about 1000 local artists on its books.
While most users access Pandora’s service on mobile phones, the company is broadening the base of connected devices on which the service is available. Car audio systems are the big growth market, and at least one refrigerator and a hot tub can stream music through Pandora.
The former keyboard player for ‘90s indie band YellowWood Junction said that, despite the recent upheavals, there was a big future for professional musicians but only if they understood how to operate in the new environment.
“Starting out now, every [under-resourced working] band should consider adding a member to do the marketing,” Mr Westergren said. “And cut them in on the money as equal partners.”
Even now there was so much that could be done harnessing what was available on the web that even an “energetic college kid” could accomplish a lot, he said.
Mr Westergren, who eschews the corporate uniform of a jacket and tie in favour of faded jeans and a fleece, is not your typical get-rich-quick Californian entrepreneur.
He had to batter down many venture capitalists’ doors before securing the funding for his start-up and for many years hovered on the brink of bankruptcy. He owns a small but still valuable stake in a company with a market capitalisation of $US5 billion ($5.3 billion).
A 'dying corpse'
Pandora continues to face heavy criticism for waging a war through the courts to keep the lid on royalty payments which musicians and publishers claim is putting them on the fast-track to penury.
One by one, big names in the recording industry have been lining up to thwack Pandora and other players in the music streaming business.
A tweet launched by songstress Bette Midler last week captured the sense of frustration that many in the industry are now feeling.
Her sentiments have been echoed by the likes of David Byrne, Aerosmith’s Steven Tyler, hip-hop group Wu-Tang Clan and Radiohead’s Thom Yorke who colourfully described the state of the music business as akin to “the last desperate fart of a dying corpse".
And it’s not just the big names. Mathematician turned indie musician David Lowery posted copies of his royalty payments online last year under the headline: “My Song Got Played On Pandora 1 Million Times and All I Got Was $16.89, Less Than What I Make From a Single T-Shirt Sale!”
The US National Music Publishers' Association has also chimed in. Last month it described a court decision which handed partial victory to Pandora in the royalties stoush as “a slap in the face” to musicians and publishers.