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Pandora signs direct deal with Warner/Chappell

By | Published on Wednesday 16 December 2015


While Pandora still awaits the ruling that will decide what it pays the labels via the collective licensing system in the US for the next five years (that decision is now due later today), the personalised radio service has done another one of those direct deals with a publisher, meaning it is even less reliant on collective licensing when it comes to the songs side of the equation. The latest deal is with Warner/Chappell.

As much previously reported, until recently Pandora was fully licensed via the collective licensing system in the US. Sound recordings are covered by the compulsory license that applies to personalised radio in America, so it pays royalties to labels and artists via SoundExchange at rates set by the Copyright Royalty Board. The song rights are licensed via the performing rights organisations like BMI and ASCAP, with rates ultimately set in the rate courts.

The digital firm’s relationship with the music industry has been generally fractious, because Pandora has put a lot of effort into trying to persuade the CRB and the rate courts to reduce its royalty payments. It should find out later today whether its latest efforts to persuade the CRB to cut its royalty commitments to SoundExchange have been successful. SoundExchange – repping the labels – wants the royalty rates increased. A swing either way could have big money consequences over the next five years.

But at the same time as all that, Pandora has started reaching out to labels and publishers direct, circumventing the collective licensing system – as the digital services are allowed to do Stateside – and negotiating direct deals. This is partly because Pandora has ambitions to expand into new territories where there is no compulsory licence on the recordings side, and to move into fully on-demand streaming, where the SoundExchange licence doesn’t apply even in the US.

Meanwhile on the publishing side, there is the consensus that the current review of collective licensing rules in America – of the so called ‘consent decrees’ that govern BMI and ASCAP – will allow the publishers to pull their digital rights from the societies while still licensing radio, live and other public performance collectively. So Pandora could be forced into direct deals with the publishers in the near future.

Which is possibly why, of late, most of the streaming service’s direct deals have been with publishers rather than labels, with the Warner/Chappell tie-up following recent alliances with Sony/ATV and Songs Publishing, and its deal last year with BMG.

Confirming the latest deal, Warner/Chappell CEO Jon Platt told reporters: “It is Warner/Chappell’s top priority to make sure our songwriters are prospering both creatively and commercially, and that the value of their music is properly recognised. We look forward to seeing our songwriters benefit from this new agreement with Pandora”.

Pandora CEO Brian McAndrews, meanwhile, was predictably “thrilled” about this latest direct deal. “We are thrilled to partner with Warner/Chappell Music, which has represented many of the most talented songwriters for over 200 years”, he said. “Pandora is proud to be part of their tradition of maximising the value of music publishing and talent”.

Pandora’s latest deal-making follows the news that the service is adding a new feature called Thumbprint Radio, which is a personalised playlist specifically based on all the music a user has ever liked (so, given the thumbs up) on the platform over the years. The feed will include both the thumbed-up tracks themselves, and other songs the system thinks a user will like. So, it’s basically the standard Pandora system but, we are told, more tightly personalised to the user’s preferences.

So, that’s lovely isn’t it? Though, depending on how today’s CRB ruling on SoundExchange rates turns out, Team Pandora may be needing a playlist of exclusively celebratory songs, or possibly something much more sombre.