11/01

MusicFIRST, but MusiciansLAST?

MusicFIRST really needs to have their heads examined.

They’re in a tizzy because, allegedly, Pandora executives have done what executives at companies post-IPO do – cash out some shares.  And since these folks own a lot of shares, that can add up to a lot of money.

But what does this have to do with the central question of onerous music royalty rates and the Internet radio industry’s long-term ability to profit in the face of them?

Forgive the Econ 101 lecture, MusicFIRST, but the value of shares for a public company is a reflection of the market’s expectation of future profitability, not a pat-on-the-back to the music industry for a job well done.  And wrapped up in that future profitability is an expectation of what the costs of doing business will be in the future, and that remains uncertain.

In addition, the personal financial decisions made by executives (with, no doubt, advice from personal financial managers) have no bearing on the question at hand, which is how much should music cost for Internet radio companies like Pandora who are on the ground floor of what could be a burgeoning industry?

To be sure, no matter how many shares Pandora executives sell they still own a heck of a lot of shares and have tremendous interest in the success of their company and their mission.  It is, after all, how they spend their every waking work hour.

What’s “breathless, disingenuous, and patently unfair” to me, is the notion that an organization, MusicFIRST, representing the interests of a massive music-industrial complex, has the “brass” to suggest in any way that the interests of Pandora are somehow less pure than those of the music industry, an industry whose tagline should be “exploiting artists profitably for generations.”

Should we hunt down music industry executives who have have cashed out shares?  I wonder how many we’ll find?

Perhaps MusicFIRST would argue on facts if more of them were in their favor.

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  • blyons

    And it’s on. Another round of bitter haggling about valuation. One expects some posturing, but major labels getting the vapors about Pandora execs cashing out some options, imputing ethical lapses? I agree Mark, it’s overhand rock throwing in a glass house.
    And if Westergreen is, in fact, methodically liquidating his entire stake, as Chris Castle suggests, there are less sinister explanations than “pump and dump”. After 14 years of taking this from Idea to 58 million active listeners, perhaps he just wants out. That doesn’t mean there aren’t plans and plenty of new talent in the company’s future.
    blyons