Warner Music Group has, two days later than its rivals, inked a direct US-only licensing agreement with Pandora for the platform’s new run of on-demand services.
MBW sources tell us that Warner’s demands over revenue share have been satisfied, and it has officially joined UMG, Sony Music and Merlin in permitting the use of its catalogue on the platform.
Earlier today, Pandora announced a new, more interactive free tier, which allows users to skip ‘radio’ tracks forward and backwards so long as they opt-in to watching video advertising.
Pandora also unveiled a fresh $4.99-per-month offering, enabling users to revert to a ‘predictive offline’ mode when their mobile or WiFi signal cuts out.
In addition, the company confirmed it would introduce a fully on-demand $9.99-per-month product to rival Spotify and Apple Music by the end of 2016.
As MBW has previously noted, the increase in interactivity on Pandora’s free tier has called into question how artists will be paid their recording royalties from the service.
Currently, Pandora pays the US statutory webcasting rate for a non-interactive platform: $0.0017 per play for non-subscription and $0.0022 per play for subscription – money which goes through SoundExchange.
SoundExchange splits this money between labels and acts, paying artists directly. The big bonus for performers: their share hits their bank accounts in its entirety, remaining undiminished by debts left by previous label advances.
“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.”
If Pandora ‘free’ was now deemed too interactive for the US statutory rate to apply, its payouts would only be subject to conditions of private deals struck with labels… meaning the majors could potentially keep hold of artist royalties to recoup advances.
In a major announcement, Warner has today committed to continuing to keep its hands off artist cash from Pandora’s free tier – and stick with the current SoundExchange system.
A WMG spokesperson told MBW: “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.”
“Warner has been a tremendous partner to Pandora and we’re thrilled to expand the relationship in a way that truly supports both of our businesses and the artists we serve,” said Tim Westergren, founder and CEO of Pandora.
“With this agreement, we’re on a path to launch the world’s most personal and complete music experience that our listeners will love.”
“Pandora has built a huge audience with a compelling product and we’re looking forward to new and enhanced subscription services for music fans and improved monetization for our artists,” said Ron Wilcox, Executive Counsel for Business Affairs, Strategic and Digital Initiatives, Warner Music Group.
Pandora’s active monthly listener count fell in the three months to end of June, down 1.3m to 78.1m, compared to 79.4m in the same period of 2015.Music Business Worldwide