Unlike Spotify, Pandora Says They Will Not Launch New Streaming Service Without “Appropriate Licenses”

Pandora Licenses

In the wake of, count ’em, 2 class action law suits filed against Spotify in the past month, Pandora isn’t taking any chances.

+Why, Exactly, Is Spotify Being Sued And What Does This Mean?

The internet radio service acquired the interactive streaming service Rdio this past November.  Similar to how Apple acquired Beats which they relaunched and rebranded into Apple Music, Pandora hopes to do the same with Rdio’s technology.

+Pandora Is Paying $75 Million To Buy A Bankrupt Rdio

However, if they’ve learned anything from the recent Spotify debacle, Pandora isn’t taking any chances.

Pandora has contracted Music Reports to handle their mechanical licensing.  Spotify contracted Harry Fox Agency.  Clearly Music Reports is more careful than HFA.

Personally, I own 100% of my US publishing rights.  So technically for an interactive streaming service to launch with my compositions they need to send me a Notice of Intent (NOI).  55 of my compositions appear on Spotify, Apple Music, Amazon, Tidal, Deezer and the bunch.  Music Reports, to their credit, have sent me tons of NOIs (and penny checks – woohoo!) over the years on behalf of their clients.  I have yet to receive a single one from HFA.  In addition to Pandora, Music Reports represents clients such as Amazon, Soundcloud, SiriusXM, Verizon, iTunes, HBO and NBC.

HFA (which was purchased by SESAC last year) does the mechanical royalty accounting and reporting for Spotify (and Apple Music), but also represents nearly 50,000 publishing clients (to whom they report).  Conflict of interest?

In early December, Music Reports began sending out NOIs and inquiries attempting to track down info on the compositions in Rdio’s catalog for which they had incomplete information.

It seems Pandora is going to first ingest Rdio’s entire catalog into their Music Genome Project (and add all missing songs to Pandora radio) and then phase two will be to roll out Pandora’s interactive streaming service.  It’s rumored to launch later this year.  Curiously, Pandora has been quite selective about the songs they ingest when they are submitted by individual artists (many get rejected), but are going to ingest Rdio’s entire catalog to comprise Pandora’s “expanded service,” as they call it.  Similarly how Spotify, Apple Music and Tidal all have artist radio features within their interactive streaming platform, to merge Pandora and Rdio into one streaming (interactive and non-interactive) platform, Pandora will need to loosen their selection criteria to avoid inconsistencies and holes in functionality (i.e. an artist with an interactive streaming profile could not have a radio station created if they aren’t in Pandora’s Music Genome Project because they were rejected).

Pandora/Music Reports letter sent to publishers last month exclaimed:

“Pandora will not launch expanded service offerings without acquiring the appropriate licenses.” 

Even though Rdio may have obtained the necessary mechanical licenses for their catalog, it’s unclear if those licenses will transfer over to Pandora, or if the Pandora will need to directly negotiate new mechanical licenses or issue NOIs to publishers in advance of their interactive streaming service’s launch.  One thing is for certain, in the wake of Spotify’s multi-million dollar lawsuits, Pandora is going to be extra careful how they approach this.

Ari Herstand is a Los Angeles based singer/songwriter and the creator of the music biz advice blog Ari’s Take. Follow him on Twitter: @aristake

8 Responses

  1. musicpub

    Clearly you seem to either have something against HFA or you don’t understand music licensing (or both)

    HFA handles mechanical licenses for its members (not the entire music industry) so if a song is not registered to a HFA member then HFA cannot grant you a license. So independents who are not registered with HFA are not in their database.

    Music Reports is an independent third party and could handle HFA AND independent licensing requests. They are not a collective.

    What you are saying is like asking BMI for a license for a song registered by ASCAP and then blaming BMI for not being up to the task

    Reply
    • Anonymous

      Sorry to correct you here, but HFA’s role as administrator for services like Spotify does not limit them from licensing only their affiliated catalogue. They are hired in this capacity to provide clearances for all compositions on the platform, including those unaffiliated. with HFA for general mechanical licensing.

      Reply
      • musicpub

        I find it surprising that HFA would commit to acquiring licenses on compositions that it does not represent with such a guarantee. They simply do not have all that data to fill in the blanks on non-HFA repped publishers and writers. I also cannot imagine HFA committed to Spotify that they would take care of 100% of their licensing requests including those that HFA did not represent. Even if they did, the agreement in place between HFA and Spotify would have clearly stipulated that HFA would, only with its best ability, and with the information they had, reach out to publishers, rather than saying “we are responsible for ALL your mechanical licenses.”

        Reply
    • Ari Herstand
      Ari Herstand

      It gets a bit convoluted and confusing because HFA is kind of playing for both teams. They represent publishers, but they also represent clients like Spotify and Apple Music who are required to pay publishers. You are correct that if an artist or a label needed to obtain a mechanical license and they went to HFA to get it, if HFA didn’t rep the publisher who owns the song, HFA would not issue you a mechanical license.

      However, because HFA was hired on behalf of Spotify to calculate, report and distribute ALL mechanical royalties (and obtain ALL mechanical licenses), regardless if HFA reps the publisher or not, HFA needs to be figuring out who and how to pay out the proper mechanical royalties (and obtain the proper licenses) – not just for the publishers they rep.

      Reply
      • musicpub

        Again as I said before, no music publishing administration is going to commit to guaranteeing anything with regard to clearing or researching rights. The responsibility ultimately relies on the company to which the mechanical license is being applied for, i.e in this case Spotify.

        Its like compulsory licensing, if a publisher doesn’t want to give you a mechanical, they don’t have to. If a publisher doesn’t want to respond to your mechanical request, they don’t have to. If a publisher doesn’t want to be found and decides to not list themselves in any database, then they can do whatever they want.
        However all the above doesn’t warrant a “oh well we couldn’t find you so we just went ahead and used your song anyway.” Sorry, that old story doesn’t work anymore.

        Spotify would have gotten a “no license” list from whoever they asked to clear their mechanicals yet they still chose to ahead and release the song anyway on their platform.

        Reply
  2. Jeff Robinson

    When Rdio was still a standalone company, they provided NOIs through Music Reports to our artists/publishers. It should follow that Pandora would keep that relationship intact.

    Reply
    • Ari Herstand
      Ari Herstand

      Absolutely. Pandora enlisted Music Reports to handle this. The jury is still out on whether those mechanical licenses that Rdio (via Music Reports) obtained still stand or if they have to start over from scratch because Pandora is technically a different service than Rdio. I guarantee Music Reports’ and Pandora’s lawyers are debating this exact issue as we speak.

      Reply
      • musicpub

        is it that much of an issue if they just reapply with the new streaming service name? its a set rate so there wouldn’t be anything upfront unless they have a cashload to recoup in perhaps upfront advances on royalties (or if they acquired a reduced rate on mechanical in exchange for a per song advance). I agree its a lot of work but I imagine the license is specific to the service and the ISRC code of the song on that branded name service?

        Reply

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