It is easier to fool people than to convince them they have been fooled.

Mark Twain

No surprise here–press reports have surfaced that “Pandora, the web’s top radio service, has held preliminary discussions with groups representing music artists as well as indie and major labels about ending an increasingly aggressive feud over music royalties, multiple sources familiar with the talks told The Verge.” (This from the reliably first Greg Sandoval, the best in the business.)

What’s interesting about this is that the government has handed Pandora two really huge reasons to never talk to the people who create their product: compulsory licenses and ancient anti-trust decrees that produced the rate courts. You remember antitrust law, that’s the thing that doesn’t apply to Google.

In other words, Pandora comes to “negotiate” with a state-sponsored gun to our heads and an icepick up our noses. Oh, and millions of stockholder money in the bank to fund litigation and lobbying. It should be obvious that the true anomaly produced by government intervention is the belief in the Internet Radio Fairness Coalition and the Digital Media Association that their negotiations all occur with lawyers in litigation and lobbyists in Washington–and not with the artists and songwriters who they can outspend.

If Pandora still believes that after getting their heads handed to them in the DOA Internet Radio Fairness Act legislation (aka IRFA)–which must have pleased stockholders to no end after it knocked their share price nearly in half–then they have an even bigger problem that we thought.

Silicon Valley’s Trust Problem

As Alexis Tsotsis writes in “No Sympathy for the Devil“:

Welcome to the Summer of 2013. Welcome to the summer when you’re not quite sure which of your Internet activities are being tracked. When you want to start Snapchatting everyone because at least then data “disappears.” Except when it doesn’t? This is the summer when, despite the machinations being clearly reported last year and even over a decade ago, revelations of the NSA doing some sort of link and factor analysis, or at the very least metadata collection, on our Facebook and Google+ profiles has caused us to reach peak tech fear.

So in case they didn’t get the memo, Pandora needs to be doing it better and cleaner than the next guy. That doesn’t mean treating songwriters and artists like…well, like users.

But just in the hope that there’s actually a desire to negotiate and produce a win-win for everyone as opposed to a scorched earth zero sum litigation game, Pandora have to realize they need to rebuild trust. If Pandora could actually get songwriters and artists to trust them–all songwriters and artists–it would be a big first step toward solving their problems. It could also be a bigger first step toward building trust with Silicon Valley companies generally.

It’s a golden opportunity–why not at least try?

Let’s Make Nice

Here’s five things Pandora could do right now to start building trust that they can be a reliable negotiation partner and “start making sense”.

1. Stop the Deceptive “Grass Roots” Campaign: As we have reported at MTP and as Pink Floyd complained of, Pandora has been trying to counter artist and songwriter opposition to their scorched earth campaign with a very odd email campaign to Pandora artists. The campaign wraps up participation in Pandora’s proposed indie artist promotion tools with signing on to a lobbying letter supporting Pandora. Do one or the other–offer the tools or lobby, but not both. It’s insulting and underhanded. And frankly–its beneath the brand that Pandora claims to be and that the Pandora employees think that they work for.

2. Since When Did A Million of Anything Cost 16 Bucks? David Lowery has published a viral post disclosing his songwriter royalties–a million plays of his song “Low” on Pandora paid him $16 for his 40% share of the song. This is atrocious. Rather than poor mouthing to songwriters and artists while Pandora executives cash out in a big way, just admit that the current royalty rates for Pandora were negotiated when Pandora really was a start up. The songwriters and artists gave the company a special deal to help Pandora and the entire webcasting and satellite radio industry get started. At least as far as Pandora, Sirius and the National Association of Broadcasters is concerned, the tough times are long gone, Pandora is public and Sirius’s CEO said the company has a billion in free cash flow. It’s time for these companies to play fair with the songwriters and artists. In Pandora’s case, the workers who make their single product.

3. Sell the Radio Station: I don’t know whose idea it was to buy a radio station in South Dakota, but that is just a stunt. In fact, if we needed a reminder that media consolidation has destroyed local radio, Pandora gave us a reminder. Pandora doesn’t care about South Dakota! These are Silicon Valley types, not steak and potatoes middle Americans. Not only are they cultural outsiders in South Dakota, but Pandora actually admitted–crowed, would be more accurate–that they bought the radio station solely to try to pay lower royalties under tortured logic I am not smart enough to follow. This is absurd, and nobody believes they bought that station for reasons other than a desire to screw the songwriters, especially, but the artists, too. Give it up.

4. Drop the Tech Trade Associations from the Internet Radio Fairness Coalition: As part of their push to pass IRFA, Pandora formed a trade association called the Internet Radio Fairness Coalition. That website is down at the moment, but the members of the coalition included the Consumer Electronics Association and the Computer and Communications Industry Association.

5. Stop Threatening World War Z: Pandora executives seem to have fond memories of the heady days of 2007 when they roiled up their users (or some-botties) into an attack on Washington. Here’s a newsflash: Washington has more important things to do. Chairman Sensenbrenner made that abundantly clear to soon-to-be-former Pandora CEO Joe Kennedy at the IRFA hearings last November. A SOPA style World War Z declared on the House Judiciary Committee may very well back fire. Want to find out, kitty cat? And let’s say it doesn’t. Where will that leave Pandora? Really no friends, really hostile “partners” then, and a Congress that in large part grinds the teeth at the mere mention of the name.

Doing these things will be clear demonstrations of good faith and won’t cost much.

Extra Points

If Pandora really wants to go the extra mile, they could do some of the following, which would cost, but I think in the long run would be worth it.

1. Lobbying is Not the First Option: Commit to Chairman Goodlatte that Pandora will seek negotiation and will only come to Congress as a last resort. Pandora could say that they are appreciative of the extraordinary benefit that the music industry and the Congress have given the company in the form of a compulsory license and they don’t want to abuse it.

2. Dismiss their Rate Court Case with Leave to File in the Future: If you’re going to be at the table, be at the table. Check your guns at the door.

3. Ask the Congress to Give ASCAP and BMI Relief from the Consent Decrees: If you really want to negotiate, you will recognize the absurdity of a regime that imposes an antitrust burden on songwriters but not on Google.