In a recent op-ed piece for Business Insider, Pandora CEO Brian McAndrews speaks out against free streaming music, saying that free on-demand music services are driving down the intrinsic value of music, creating what he calls a “gray market.” People no longer see – or are willing to pay for – the artistry or value of music because we can get it for free, he says.

“An ever-growing number of listeners are happily lingering in music’s gray market, enjoying full access to all music without paying for the privilege and with little incentive or intention to convert to a full-paying subscription,” McAndrews says.

McAndrews’ column starts out with the story of a music executive who spoke to an undergrad class at a top university. Only a handful of the students said they listened to traditional radio, most listened to Internet radio, and virtually all listened to on-demand streaming music. But none of the students paid for their music. No one.

When he was a kid, McAndrews says, he would discover new artists or music he liked on the radio which was supported by advertisers and sponsors. If he wanted to hear more, he had to go to the record store to buy an album. Today’s listeners discover music in much the same way – but on Internet radio stations like Pandora and iHeartRadio and streaming music services like Spotify and Apple Music. [An Internet radio station is ad-supported and pre-programmed, while on-demand services allow users to select their own songs.]

According to McAndrews, the key difference is that listeners today never have to buy music, or pay for a subscription, to hear old favorites or discover new music. They can get it for free, all the time. This is where the problem lies, says McAndrews.

“Defenders of free on-demand music will surely counter by reminding us every song they play is paid for with royalties. I also expect some will argue that free on-demand is an essential on-ramp to a sustainable subscription business. And both of these statements may well be true.  But I would argue that an on-demand on-ramp is one thing; a permanent, free on-demand highway is another. The first is good for the long-term health of the music industry. The second is not,” McAndrews says.

“This gray market is unsustainable. If consumers can legally listen to free on-demand music permanently without converting to paying models, the value of music will continue to spiral downward to the benefit of no one,” he adds.

McAndrews’ solution? Limit free on-demand music to a trial basis. By doing so, ad-supported radio can still lead to exposure and discovery, while on-demand services can convert a subset of listeners into subscribers, stopping the gray market to “revalue” music as it deserves. However, doing so is up to the owners of the music services and the content rights holders to make meaningful changes, explains PYMTS.com. Easier said than done.

To clarify, services like Pandora, Spotify and now YouTube Red offer an ad-supported free-listening option as well as subscription plans. Others like Tidal and Apple Music offer a free trial before listeners must subscribe. McAndrews is lumping all of the services – whether Internet radio or on-demand streaming – into one category, but they are each a little different with different payment options.

Insider Take:

Why the diatribe? News outlets like Digital Trends would argue that Pandora is fighting for its life with Spotify and Apple Music as serious competitors, who could easily cut into Pandora’s subscriber base. McAndrews’ rant might be an attempt to tarnish his competitors’ reputation, though we doubt that will be successful. In spite of criticism and stock prices, Pandora’s revenue was up 30% in every category in the third quarter of this year.

So what’s really going on here? We think there is some merit to what McAndrews is saying, especially that the music industry is currently undervalued. The music industry has, indeed, experienced significant changes with the subscription business model and as different types of music services have entered the market. Much of it is driven by technology, but the shift in the industry is just as much a function of market demand and the subscription economy.

While we agree with some of McAndrews’ points, we don’t think the issue can be simplified – or solved – by getting Internet radio stations and on-demand streaming services to all agree to the same business model. First, we don’t think that is likely to happen. Second, this is a complex issue with many players, different objectives and varying roles. Third, the beauty of the free marketplace is that it can be flexible and fluid and can adapt to an industry’s changing needs. The market is changing, and we must accept that.

We also find it ironic that McAndrews is concerned about the devaluing of music when Pandora is among the companies that pays low royalties to the artists, “pennies per stream,” according to Digital Trends. It seems like that’s a big part of the problem.

We don’t know the answer, but we know it isn’t as simple as McAndrews would like it to be.