Business

Is Pandora Finally Playing Nice with the Industry -- or Just Paying Lip Service?

Kristen Ulve

The Internet radio giant moves from Capitol Hill to the coasts as it tries a different approach: listening.

For the longest time, digital media executive Lars Murray didn’t know what to do with Pandora. As vp marketing at Columbia Records, he recognized that it was the top streaming radio service in the United States (84 million monthly listeners in August 2014, per comScore) and accounted for nearly half of SoundExchange’s $650 million in 2013 payouts. But Murray, who became Pandora’s vp industry relations in July, says, “It was a black box; we knew it was significant, but didn’t have much of a dialogue.”

Now, Murray is one of the key executives hosting that dialogue with the industry, joining a list of recent hires from different corners of the music business. Together, they’re leading a charm offensive designed to put a fresh face on a company that just a year ago was better known for battling Capitol Hill over royalty rates than for cheering artists or their industry advocates (publishers have long balked at receiving only 4 percent of the company’s revenue).

It was a perception Brian McAndrews sought to change when he was named CEO in September 2013 after a brief stint at Microsoft. “The second he walked in here, he wanted to listen to the industry and put more resources into working together,” says Tommy Page, Pandora head of music partnerships (he was previously publisher of Billboard?). That has meant hiring the likes of Rolling Stone vet Mike Spinella and former Epitaph vp digital strategy Jason Feinberg in senior roles. An aggressive live-event strategy also helped Pandora attract marquee acts like Iggy Azalea, Celine Dion and Magic for exclusive, free concerts based on geo-targeted listening data -- the company expects to put on 79 of these in 2014 alone.

And there’s the company’s recent direct licensing deals with indie-label collective Merlin and publisher BMG, the first to negotiate rates outside the statutory licensing framework. Those moves, coupled with McAndrews’ cease-fire with Congress, have marked what RIAA senior executive vp Mitch Glazier dubs a “turning point” in Pandora’s evolution. “They’ve unleashed a plan to increase their advertising force, which will help monetize their service better [and] by definition increase the revenue for artists and labels,” says Glazier. He adds, “But these things will take time to implement.”

As Pandora transitions into a more user-friendly company for labels and artists (in meetings with artists like Gavin Rossdale and Kiesza, Pandora has offered to open up its extensive listener data as a potential routing tool), the “P” word remains a sensitive one in certain industry sectors. One prominent indie-label boss says Pandora’s pre-McAndrews dealings still leave a foul taste. “They were awful and arrogant,” says the exec. “They wanted their stock price to go up.” Adds another, “Their campaign to get artists to take lower rates? That was not cool. [But] they’ve seen the error of their ways.”

David Israelite, CEO of the National Music Publishers’ Association, takes a harder stance on Pandora’s relative progress, calling the industry relations hires “lip service.” The company’s stance to pay less-than-statutory rates to ASCAP and BMI are ongoing, and the songwriting community still doubts the platform’s friendliness. “They’ve done nothing differently to address the actual reason they’re so unpopular in the music industry,” says Israelite flatly.

Page remains optimistic of Pandora’s progress, based on early conversations he has been having for upcoming events like a planned reteaming with Anheuser-Busch for a 2015 Super Bowl weekend concert (Imagine Dragons played this year’s fete). “Rome was not built in a day, but the skyline’s starting to appear.”

This article first appeared in the Oct. 11 issue of Billboard.

--Additional reporting by Harley Brown & Megan Buerger