The licensing agreement between Sony/ATV Music Publishing and Internet radio service Pandora, announced Nov. 4, marked a music industry rarity: Both sides came away happy. Not only did the publisher and the web radio service warm their relationship after years of discord, each got some of the concessions they wanted.
In a letter to Sony/ATV songwriters, chairman/CEO Martin Bandier said the deal will result in “a significant increase” in royalties and will pay songwriters directly — even if a publisher advance has not been recouped. Pandora, meanwhile, was able to lock in rates ahead of possible increases in the near future, while improving its icy relationship with the world’s largest music publisher.
A stronger union could ease the way for Pandora’s international expansion: The service is currently available only in the United States (the sole territory covered by the Sony/ATV deal, a source tells Billboard), Australia and New Zealand. To operate outside the States, Pandora would need licenses from the same rights-holders with whom it has clashed. The agreement also gives Pandora the ability “to add new flexibility to the company’s product offering over time,” although representatives for both companies declined to elaborate. This flexibility could be anything from interactive capabilities — though unlikely, given their high cost — to caching songs for offline listening.
While both sides decline to reveal the rate at which Pandora will pay songwriters, a look at some publicly unveiled deals with other major publishers suggest that the service will pay Sony/ATV and its EMI-administered portfolios its pro rata share of 8.5 percent to 10 percent of revenue.
Whatever the number, the current deal is seen as a grudging step in the right direction for publishers that long have believed streaming services pay too little in royalties. To wit, David Israelite, president/CEO of the National Music Publishers’ Association, while acknowledging it to be an improvement, adds, “It is far short of the ultimate goal of songwriters and music publishers being paid a free-market rate along with the right to make decisions about the use of their intellectual property.”