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Merlin and Pandora announce partnership

By | Published on Thursday 7 August 2014


Indie label digital rights body Merlin has announced a new deal with Pandora, which will result in the US streaming service’s first direct alliances with record labels.

In America, ‘internet radio’ style streaming services like Pandora can license all the sound recording rights via collective licensing set-up SoundExchange, with rates set by a statutory body called the Copyright Royalty Board, so no direct deals with the labels have been necessary. SoundExchange will still be involved under the new indie label arrangement, but with rates set via the Merlin deal rather than the Board. Though the partnership is actually less about royalties and more about the other benefits Merlin-member labels will receive.

The agreement, both sides say, will allow Merlin’s members to boost their audience and listening hours on the service. To facilitate this, Pandora will work with labels to identify tracks to push harder in its playlists. Meanwhile Merlin member artists and labels will be given access to customised data and insights, as well as being given their own communication channels to engage fans on the service.

Talking up the partnership, Merlin CEO Charles Caldas said: “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. For the thousands of labels Merlin represents, this agreement with Pandora provides a real best of both worlds scenario: a hugely important opportunity to increase our members’ revenues and access unparalleled opportunities for exposure, whilst continuing to support a collective licensing framework”.

Of course, on the music publishing side, Pandora is currently working hard to argue that Universal and Sony/ATV should not be able to withdraw their digital rights from the ASCAP/BMI collective licensing system. Both majors believe that by withdrawing and dealing direct with the streaming service, they would be able to secure better royalty arrangements.

But, fortunately for Pandora, which doesn’t want to pay higher royalties to the publishers, the US courts have said that – under the current rules – publishers cannot just withdraw their digital rights from ASCAP and BMI, while continuing to licence broadcasters and live events via the societies. Though all of that is currently being reviewed by the US government.

On the recordings side, Apple’s Pandora rival iTunes Radio did direct deals rather than going with SoundExchange, reportedly receiving better rates on the back of the existing dominance of the iTunes download store.

Pandora has mainly resisted direct dealing with the labels so far, expecting to face bigger royalty charges if it did, though the Merlin deal possibly shows that there is a middle ground. And for Pandora, which has taken a lot of stick over royalties in the music community in recent years, it’s good to show there is room for compromise. And, in the credibility stakes, even better to do that deal with the indies first.

“This is an important step to advance Pandora’s ongoing commitment to build a vibrant and sustainable music industry”, said Pandora CEO Brian McAndrews of the Merlin deal. “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”.