September 15, 2016
Sony Music, Universal Music and Merlin Network, which represents 20,000 independents, have agreed to license songs to Pandora for its two new music services. Pandora plans to offer the advertising-free Pandora Plus and an on-demand service similar to Spotify. The company is also still in talks with Warner Music in an attempt to ink a deal with this third-largest music rights holder. Pandora hopes to launch both of its new services by the end of 2016. As of June 30, Pandora says it has 78.1 million active listeners.
Bloomberg notes that, with the new services, Pandora “hopes to attract listeners and prevent existing customers from defecting to competing products like YouTube and Spotify.” Over the last year, Spotify and Apple Music have gained “millions of new customers,” while Pandora has lost some of its listener base.
With regard to licensing, Pandora has “previously paid for recordings under statutory rates established by the Copyright Royalty Board.” The current licensing deals means the Oakland, California-based company now has “direct deals with its main suppliers, including more than 30 other independent labels and distributors.”
Warner Music is the only missing piece. “Obviously our intention and our desire is to launch with them,” said chief exec Tim Westergren. “That’s important to move on to do that. We’re having very constructive conversations and we certainly hope to have that done in time.”
Now that Pandora has succeeded in obtaining music rights in the U.S., the company says it has “established a framework that can be replicated in other countries,” and plans to “continue to operate in Australia and New Zealand as it weighs how to expand further outside the U.S.”
“We’re going to bring these products to market in the United States and really flush out our go-to-market strategy in the largest market in the world for music,” said CFO Mike Herring. “That sets us up well to expand internationally over time.”