Pandora strikes deal with indie rights group Merlin, allowing direct negotiation with labels
While YouTube has been screwing over -- then back-pedaling on screwing over -- indie artists, Pandora has just struck a massive deal with an independent rights group that represents 20,000 labels and distributors -- or about ten percent of the total US market.
Today, the Internet radio giant announced a partnership with indie rights group Merlin that will allow Pandora to negotiate royalty rates directly with labels, just like Spotify does, as opposed to paying according to rates determined by the US Copyright Royalty Board. This gives both Pandora and labels more freedom in controlling their destinies.
That's particularly good news for Pandora which, as its executives detailed in a recent PandoMonthly interview, had to spend an inordinate amount of time in Washington lobbying to merely stay alive as a company. And while, like Spotify's and Rdio's rates, the specific financials behind the deals will not be disclosed, Merlin CEO Charles Celdas tells Billboard that the terms will be no worse than the government-set statutory rates.
"We wouldn't do any deal where there was any risk we were going to get paid less," Celdas told the outlet.
Of course, it doesn't sound as if the rates will be much better, either. "We don't expect the deal to have a major impact on costs," Pandora CEO Brian Andrews told Billboard. Pandora has already paid $111 million in royalties in 2014, amounting to about half of its total revenue.
In addition to the change in how rates are set, the deal will give artists and labels access to much of the geographic data behind which users are listening to what tracks, and which tracks are most likely to receive thumbs up or thumbs down votes. Spotify launched a similar feature late last year that offers detailed analytics to artists about how listeners are consuming their music. By including thumbs-up data, Pandora's analytics stand to offer even more value -- if users in Milwaukee regularly down-vote a particular track, for example, maybe the band should leave that song off the setlist next time it comes to town.
In turn, Pandora says it will leverage the "expertise" of people at Merlin's labels to create targeted playlists for users. This is a bit new for Pandora, which has always lived and died by the power of its Music Genome algorithm. From Rdio's acquisition of TastemakerX to Google's Songza purchase, the integration of human-based curation into song recommendations is part of a rising trend across music streaming services, so it makes sense for Pandora to jump on the bandwagon.
Pandora believes that, by bringing labels directly to the negotiation table and by sharing data and expertise to bring the right music to the right people, artists' royalty payments will rise. In theory, that makes sense. But if we've learned anything from the past hundred years or so of the modern music industry, labels have never been eager to pass extra cash along to artists. Being a musician has always been a losing business prospect, and this deal won't change that.
But from Pandora's perspective, the deal is a huge win. The company gets more control over its destiny, not to mention an influx of human music expertise without having to make an acquisition like Songza or Rdio. And perhaps most importantly, from an optics perspective, it makes Pandora look like a bigger supporter of independent bands. Amid a streaming music landscape that is inherently disadvantageous to smaller artists, and in the wake of YouTube's monumental fuck-up in its own negotiations with indie artists, Pandora suddenly looks like your friendly neighborhood tech giant.
[Illustration by Hallie Bateman]