More Videos:

Billboard Magazine Clueless On Pandora

Tickers in this article: P LYV
NEW YORK ( TheStreet) -- Union Square Ventures principal Fred Wilson maintains an excellent blog: AVC: musings of a VC in NYC If you invest, care about tech and enjoy learning, read Fred's blog. I do almost daily.

During a recent interview with Wilson, Bill Werde, editorial director at Billboard, gave the Internet radio royalty discussion, as it pertains to Pandora (P) , shockingly shallow treatment.

Wilson wrote about the exchange at his blog . He asks readers to skip to the 7:45 mark of a video that captured part one of the powwow.

I didn't think Billboard was a shill for the music industry, but after the way Werde not only disrespected, but blatantly mischaracterized Pandora, I have to wonder.

There's no excuse for this, particularly from a respected publication like Billboard that -- credibly and rightfully -- called Pandora co-founder Tim Westergren out for a blog post about how much his company compensates artists .

Werde compared Pandora to Live Nation (LYV) because the two firms have similar market capitalizations. I know. I don't understand why either.

Echoing what he calls popular sentiment in the music industry, Werde refers to Live Nation as the product of "10, 15, 20 years of work" by some of the greatest minds in the business. (Giggle). He then falsely states that Pandora came "along relatively recently."

It's incredible, but Werde got everything wrong inside of roughly 15 seconds.

Pandora may have just gone public, but it has been around, as a company, since its December 1999 founding. Westergren and Will Glaser came up with the Music Genome Project -- the proprietary technology that powers personalization and discovery on Pandora -- earlier that year.

Unfortunately, Fred Wilson makes the mistake of picking up Werde's weak argument and going with it.

Wilson continued to connect Pandora and Spotify's valuations to their requests for, as Werde called it, "relief" from hefty royalty rates. So, in other words, because these companies are overvalued, the music industry looks at the royalty fight and scoffs -- you have these massive valuations, your executives are getting rich and you want to pay us less. Give us a break!

Wilson was correct on one thing: Anything having to do with market cap distracts and keeps the two sides from reaching an agreement. True. And that's because one thing has nothing to do with the other.

Wilson also accurately pointed out that the music labels are out for themselves; they do not partner with artists as much as they enter into shrewd financial transactions with them. Very true.

High valuations might annoy industry executives, but they certainly would not back down from their positions if private equity and the public market undervalued Spotify and Pandora.

Usage of this site is governed by TheStreet's Terms of Use available here. Information collected on this site may be collected by TheStreet and OC Register. TheStreet's use of information collected on this site will be governed by TheStreet's privacy policy available here. OC Register's use of information collected on this site will be governed by OC Register's privacy policy available here. If either TheStreet's or OC Register's privacy policy have provisions that are more restrictive than the provisions of the other party's privacy policy, such more restrictive provisions shall not apply to such other party.

Copyright © 2012 Orange County Register Communications. All Rights Reserved.
Site Help | Site Map