Guest Post: With Merger in the Rearview, Former EMI CEO Roger Faxon Thinks the Future of Music Is Pandora

Since he stepped down as EMI CEO in September 2012, in the wake of the company's sale to Universal Music Group, Roger Faxon has been non-executive chairman of the advertising firm Mirriad, but has largely been on the sidelines of the music industry. All of that changed today, as Faxon announced that he's joining the board of Pandora -- a company that's seen no shortage of criticism from publishers and labels. Here, the 18-year veteran of EMI explains the rationale behind his move.  

To start, let’s just put it on the table: I’m joining Pandora’s board of directors.

You are asking yourself: how does one of the most passionate advocates for the creators of music decide to join with one of the most passionate advocates of ad-supported streaming radio? Well, because I do not see those two in conflict – quite the contrary. Music’s future does not lie in little bits of plastic or even their digital counterpart. It lies in being integral to the lives of as many people as possible. Erecting barriers to access music is precisely the wrong strategy. We need to be all-encompassing, reaching consumers and fans in every way we can.

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The other day I was reminded how small the music business has become. The IFPI had just put out its annual estimate of world-wide revenue for recorded music. It totaled less than $15 billion!! Not too long ago it was double that even without the dubious accounting that pumped up the numbers. Every time we think that we have hit a plateau, we drop again. And every time it drops, fewer and fewer creators of music can make a decent living. It doesn’t take a genius to understand that. And it doesn’t take a genius to understand that for revenue to grow again, we need to increase the audience for music – and yes – I do mean a revenue generating audience.

Pandora has created a path that engages approximately 80 million people every month with our music. Many of these are people that we in the music industry have long ignored. They hardly bought a record or went to a concert. Their involvement with music was likely to be limited to listening to their car radio or at their workplace to repetitious playlists – talk about passive listening. Pandora has changed all that. It has built a path for these consumers to become engaged with music and to do so in a way that is intuitive and easy. They discover music that they likely would never have heard before and rediscover music they had long forgotten.

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In doing so, Pandora has created a new revenue source that is truly incremental. Some may not be happy that the revenue isn’t larger, that the value per play isn’t greater, but we should all be happy that we have it and that it is growing (by more than 40 percent last year to approximately $450 million). And for every point of market share that Pandora takes from terrestrial radio, that’s about another $50 million in incremental royalties.

So, yes, I do think Pandora is part of the solution. Admittedly, it is only one part of a solution to ensuring that the creators of music have the resources they need and deserve. There is much more that Pandora and the entire music industry can and should do. From my new perch on the board of Pandora, I look forward to contributing in every way I can.