Business News Deals Labels & Publishers

Pandora becomes best mates with BMI an ASCAP, new deals announced

By | Published on Wednesday 23 December 2015


Pandora may be busy doing direct deals with the US music publishers – thus relying less and less on the country’s collecting societies to license song rights – but it’s nevertheless decided that the time has come to play nice with performing rights organisations BMI and ASCAP too. It’s almost as if Pandora has plans to not be the most hated streaming service in the American music community next year.

As previously reported, until recently Pandora licensed its personalised radio service pretty much exclusively through the collective licensing system in the US. It exploited the SoundExchange compulsory licence on the recordings side, and had licences from BMI and ASCAP on the songs side, because the big publishers were told they couldn’t pull their digital rights from those societies without abandoning collective licensing across the board.

Pandora got a bad rep in the music community because it invested so much time in playing the collective licensing system in a bid to cut its royalty obligations, lobbying hard the Copyright Royalty Board that sets SoundExchange rates, while fighting BMG and ASCAP in the rate courts which ultimately set fees for the song rights.

More recently Pandora has become more conciliatory, starting to opt to do direct deals with labels and publishers even if that means paying slightly more. There are various reasons for this move. A reform of US collective licensing rules will likely allow the publishers to pull digital rights from BMI and ASCAP and force Pandora into direct deals anyway, so the service is pre-empting the inevitable. But also, the digital firm’s plans to launch in new territories, and to move into fully on-demand streaming, will require a more consolatory approach.

It is the latter that is presumably behind Pandora’s decision to enter into voluntary agreements with BMI and ASCAP, bringing to an end the firm’s ‘see you in the rate courts’ approach to dealing with the societies. As part of the deal, Pandora specifically agrees to not appeal the rate court ruling that actually went in BMI’s favour back in May.

Confirming the deals, the societies say that the new arrangements “create business benefits for Pandora, while modernising compensation in the US for ASCAP and BMI songwriters and publishers”.

ASCAP CEO Elizabeth Matthews added: “This agreement is good news for music fans and music creators, who are the heart and soul of ASCAP, and a sign of progress in our ongoing push for improved streaming payments for songwriters, composers and music publishers that reflect the immense value of our members’ creative contributions”.

BMI boss Mike O’Neill commented: “We’re extremely pleased to reach this deal with Pandora that benefits the songwriters, composers and publishers we are privileged to represent. Not only is our new agreement comparable to the other direct deals in the marketplace, but it also allows us to amicably conclude our lengthy rate court litigation and focus on what drives each of our businesses – the music”.

And finally, Pandora chief Brian McAndrews said: “At Pandora we are delivering on our commitment to ensure that music thrives. These collaborative efforts with the leading performance rights organisations, as well as our recent direct deals with several music publishers, demonstrate our progress in working together to grow the music ecosystem”.