Katy Perry, other artists, in dispute with Pandora

By Bloomberg News The Star-Ledgeron November 14, 2012 at 3:31 PM, updated November 14, 2012 at 3:51 PM

Katy Perry Mark Thompson/Getty Images

Pandora Media stock fell to a record low after recording artists including Katy Perry criticized the online radio service for supporting a bill to reduce royalties.

Pandora, based in Oakland, Calif., lost 3.9 percent to $7.36. Earlier it fell to $7.19, the lowest since the company went public in June 2011. The stock had declined 23 percent this year as of yesterday.

Maroon 5, Kiss, Missy Elliott, Vince Gill and Hootie and The Blowfish joined 120 other artists in signing a letter published in Billboard magazine protesting The Internet Radio Fairness Act. The measure proposes equal royalties for music played on the web, satellite radio and pay TV, and would lower Pandoras costs. The stock is under pressure from the action, said Rich Greenfield, an analyst at BTIG LLC in New York.

Pandoras principal asset is the music, the letter reads. Why is the company asking Congress once again to step in and gut royalties that thousands of musicians rely upon? Thats not fair and thats not how partners work together.

If passed, the bill would reduce Pandoras royalty payments by as much as half, Rich Tullo, an analyst at Albert Fried & Co., wrote in September. The company sold 15.03 million shares at $16 each in its 2011 ini! tial offering, according to data compiled by Bloomberg.

Artists should be protesting, said Michael Pachter, an analyst at Wedbush Securities in Los Angeles who recommends the stock. Its essentially a wealth transfer from intellectual property owners to a commercial business.

The Billboard ad, A Musicians Perspective on Pandora, was sponsored by SoundExchange, which collects royalties for artists, and the advocacy group musicFIRST, the organizations said today in an e-mailed statement.

The music industry agreed to discounted royalties when Pandora started, according to the letter. The bill is also opposed by the NAACP and the AFL-CIO.

The legislation is backed by the Internet Radio Fairness Coalition, including Pandora, radio broadcasters Clear Channel Channel Communications Inc. and Salem Communications Corp., and the Consumer Electronics Association.

Pandora this month sued the American Society of Composers, Authors and Publishers, a group that represents songwriters and composers, to lower license fees for playing their songs.

Internet radio and the artists whose music is played and listened to on the Internet are indeed all in this together, Tim Westergren, Pandoras co-founder and chief strategy officer, said today in a statement. A sustainable Internet radio industry will benefit all artists, big and small.Bloomberg