The US Department of Justice has now tentatively approved a
plan that would allow publishers to directly negotiate their
catalogs for digital usage, including online
radio (ie, ‘non-interactive streaming’).
According to details emerging this morning
from Billboard, the DOJ is highly likely to approve a new
system would replace 1940s government ‘consent decrees’ that
fix the royalty rates paid by streaming music companies.
That includes Pandora, which has so far enjoyed a low, per-play
statutory rate to publishers and has ardently protested and
lobbied against direct licensing. If the DOJ’s
recommendations pass, expect every major publisher to
immediately start demanding more money, and/or pulling their
Major publishers have been trying to get this done for years,
especially given the meteoric rise of Pandora. As part of
the consent decrees, publishers are forbidden from selectively
removing their catalogs from performance rights organizations
(PROs) ASCAP and BMI, who administer the rights licensing
across all performances. With the change, publishers can
now strike separate deals, and receive a far higher ‘penny
rate’ from digital services, including digital
This change would have an immediate and dramatic impact on
Pandora, a company that remains unprofitable and saddled with
massive royalty expenses. Under the new plan, major
publishers are almost guaranteed to (a) force Pandora to pay
dramatically higher rates on their catalogs, or (b) remove
their catalogs if they don’t receive those rates.
More as it develops.
Wednesday, April 8, 2015
Pandora destroyed Pandora’s business model when they
started the company