Pandora Is Almost Finished Licensing Its $5 Spotify Competitor…

Founder Tim Westegren presenting Pandora in 2007.
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Founder Tim Westegren presenting Pandora in 2007.
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Pandora co-founder Tim Westergren presenting back in 2007 (Tara Hunt; CC by SA 2.0)

Licensing deals are expensive. Now, Pandora is paying a big price for a cheaper service.

Pandora announced today that they’ve reached a landmark deal with Merlin Network, Sony Music, and Universal Music Group, covering 2 of the big 3 major labels.  They’ve also reached a deal with The Orchard and over 30 different independent labels and distributors, all of which paves the way for an on-demand, Spotify-like competitor.

All of that paves the way for a groundbreaking, $5-a-month service, with a full blown, full-priced Spotify competitor also in the works.

These landmark deals create what some would call a “win-win” licensing partnership. The agreement allows Pandora and the music industry to open up new revenue streams for artists and labels, allowing Pandora at the same time to,

“bring new products to market that enable enhanced subscription services, fuel new advertising opportunities and deliver unprecedented flexibility and ease of use to listeners.”

One thing to note here is that these agreements only apply to Pandora’s business here in the States.

Speaking about the landmark agreement, founder and current CEO of Pandora, Tim Westergren, said, “This was a truly collaborative attempt to find a solution that would support artists while profitably growing our respective businesses.”

The recent partnerships comes after BMI, ASCAP, and around 2,700 publishers signed with the music streaming and personalized internet radio service back in December.

According to the press release, Pandora currently sports over 78 million users who listen over 24 hours per month on the service, boasting that this number is more than “twice the engagement of all other streaming services.” This deal also allows Pandora the ability to connect with their fans and leverage their Artists Marketing Platform, or AMP, promotional offerings.

Charles Caldes, CEO of Merlin Network, had the following to say about the agreement:

“We are very pleased to broaden our relationship with Pandora, and to see additional revenue opportunities being created for our members. Independent music has always been at the heart of Pandora’s experience, and we are confident that Pandora’s users will appreciate and enjoy the music from Merlin’s market-leading member labels and artists as a vital element of the newly enhanced experience.”

You can check out the press release here, along with statements from the CEOs of Sony Music and UMG.

4 Responses

  1. David Lowery

    I haven’t seen any sort of NOIs for the publishing. Wonder when they are gonna start on that?

  2. Niels Schroeter

    Will be interesting to see if Pandora listeners understand what on-demand is or if they’ll be content with background music interrupted every hour or so with a 30-second commercial.

  3. Ben Thinkin'

    Okay, let’s review:

    With the current streaming leaders charging $10 per month, the money has yet to trickle down to the artists. Pooling revenues means the price per stream is going down and down.

    So surely cutting that revenue in half will solve this problem correct? I wonder why nobody thought of this before? What am I missing here?