Pandora may not be flavour of the month (decade?) with all publishers and artists over its royalty rates, but it has just struck a direct licensing deal with Merlin, representing the independent label sector.
This is the first direct label deal that Pandora has done and Merlin claims the labels it represents collectively account for 10% of the US streaming market, ideally making this a key plank in growing their share further. (It emerged at the start of the year that Universal Music Publishing Group had signed a direct deal with Pandora in the US in December.)
Merlin CEO Charles Caldas says, “For the independent sector, internet radio is an increasingly important part of the digital market and we want to see it continue to grow – and grow fast.” He adds that the deal is “a hugely important opportunity to increase our members’ revenues and access unparalleled opportunities for exposure, whilst continuing to support a collective licensing framework”.
What that means in practice is that Pandora will “accelerate the discovery of new music” by combining its Music Genome project data with the expertise of the Merlin-affiliated labels. Those labels will also get customised data/insights around Pandora’s 75m+ monthly active users as well as access to communication channels for artists on the platform so they can more directly engage with their listeners.
“It’s a true partnership that will grow our collective businesses, help artists reach larger audiences and give our listeners an even better music discovery experience personalised to their tastes,” added Brian McAndrews, CEO of Pandora.
Financial terms were not disclosed but Merlin claims the labels included in the deal “will see their royalty payments increase significantly”. This deal is, for now, US-only and does not include Australia (the only other market where Pandora is currently live). Merlin has told Music Ally that it will not preclude future expansion at a future date. It will also appoint SoundExchange to distribute artist royalties, saying it “supports collective licensing and the efficiencies that SoundExchange can achieve for the whole music industry”.
Earlier this week it emerged that Pandora was mulling a move into non-music content (such as news and sport) but it has not set a date for when that could be. The company stated last month that it had paid out over $1bn in royalties in its lifetime and that its listening hours in the last quarter were up 29% year-on-year to just over 5bn. Revenue was up 43% year-on-year to $218.9m but net losses stood at $11.7m in the last quarter compared to $6.9m in Q2 2013.
The arrival of iTunes Radio and Samsung’s Milk Music has done little to dent Pandora’s preeminence in the US. But, even with direct deals in place with Merlin and UMPG, it is still fielding growing criticism from others in the rights business – especially after its senior executives cashed in millions of dollars in shares immediately after its IPO in 2011 – so it has a long way to go to get the entire music business on its side.