Pandora has inked its final direct-licensing deal with a major label in the US, with Warner Music Group yesterday joining Universal, Sony, Merlin and other indies on the company’s roster of agreements.
As with those previous agreements, WMG’s deal is US-only, with global agreements for Pandora’s expansion into on-demand music to follow.
There’s an interesting wrinkle to the deal, relating to Pandora’s existing ad-supported radio tier. “With respect to Pandora’s ad-supported webcasting service, we will distribute the artist share of the non-interactive per-play rate through SoundExchange, as if the service were statutory,” a spokesperson told MBW.
Chatter about what Pandora’s direct deal will mean for SoundExchange payouts – and thus the income for artists from free Pandora spins – has been bubbling in the background of this week’s licensing news.
(Also note Billboard’s suggestion that Pandora’s announcement of the other label deals earlier this week “thrilled few at Warner Music, which used the opportunity as leverage to negotiate a better deal, one aspect of which was improved streaming rates for its artists on Pandora’s ad-supported listening tier”.)
Pandora really does have all its ducks in a row now for the launch of its $9.99-a-month on-demand streaming service in the US before Christmas.
Yesterday saw another plank in its strategy fall into place though: the relaunch of the existing Pandora One subscription option as Pandora Plus. The $4.99 tier remains advertising-free, with new features including the ability to skip more songs and replay tracks in exchange for watching video ads.
There’s also an offline mode that when mobile listeners lose connectivity, will switch to one of their favourite stations including their ‘Thumbprint’ station of personal recommendations. Pandora’s theory is that it will be able to encourage listeners up its subscription ladder: from free to $4.99-a-month for Pandora Plus, and then ultimately (for some at least) on to $9.99-a-month for full on-demand.
As it said earlier this week, Pandora’s goal is 10 million paying subscribers out of 100 million active users by 2020, although it has not said how it expects those to be split between the $4.99 and $9.99 tiers.