Pandora, SONGS Music Publishing Agree to Multi-Year Deal

Taylor Jewell
Matt Pincus photographed in 2015.

Publishers have had an especially contentious relationship with Pandora. Now they're successfully negotiating for better royalties.

Pandora has inked a multi-year licensing deal with SONGS Music Publishing, continuing a trend of direct deals between the Internet radio service and rights holders in the United States. The agreement follows Pandora's licensing deal with one of the major publishing companies, Sony/ATV Music, a month ago.

Music publishers have long complained about the discrepancy between Internet radio royalties paid to publishers, typically through performing rights organizations, and record labels. Royalties received for the performance of sound recordings have been about 12 times higher than those paid for the performance of their underlying musical works. But the chilly relationship between publishers and Pandora is changing since Pandora CEO Brian McAndrews changed course and started making friends with rights owners.

"Now is the time to move past the over-regulation of songwriter rights and towards a market-based approach to streaming music,” said SONGS founder and CEO Matt Pincus in a statement. “This agreement is a big step forward in a long conversation about fair and equitable compensation for all songwriters and publishers. I value Pandora's commitment to treating all songwriters and publishers equally and look forward to a new chapter with them." Terms of the deal were not made public, but given Pincus's stance on equitable treatment of all publishers (read his Billboard op-ed that calls for "most favored nation" clauses that ensure equal royalties for large and small publishers) and his statement about this deal, it's likely SONGS is being paid the same rate as Sony/ATV.

SONGS has the largest market share of independent publishers. In Billboard's Publishers Quarter for the third quarter, SONGS had the largest co-publisher share and ranked sixth in share of Top 100 songs. Its roster includes Lorde, Diplo, The Weekend, Nelly and DJ Mustard. Led by The Weeknd, the New York-based publisher racked up 15 Grammy nominations on Monday.

Pandora is touting the benefit from greater rate certainty, also a benefit of the Sony/ATV deal. A number of events are on the horizon that could change the amounts Pandora pays for content: the Copyright Royalty Board's announcement, expected next week, of performance royalties for sound recordings; the Department of Justice's review of the ASCAP and BMI consent decrees; and the possibility that future legislation will affect royalties paid by streaming services.  

And as with the Sony/ATV deal, Tuesday's announcement stated the deal provides Pandora with "new flexibility" to its product offering. One interpretation of the vague statement is the agreement covers the on-demand service Pandora is planning to launch in 2016 following its $75 million acquisition of some assets of bankrupt on-demand service Rdio.