Pandora Inks Deals with Two Major Labels for Streaming Music Service

The streaming music wars are heating up, as Pandora inks deals with two major music labels along with more than 30 independent music labels

Subscription News: Pandora Inks Deals with Two Major Labels for Streaming Music Service

Source: Pandora

Earlier this week Pandora (NYSE: P) announced that it has signed direct licensing agreements with two major record labels – Sony Music and Universal Music Group – as well as Merlin Network, The Orchard and more than 30 independent labels and distributors. Previously, Pandora had signed agreements with ASCAP, BMI and more than 2,700 publishers to license their full catalogs for Pandora’s use in the U.S.

These agreements will help Pandora accelerate its plans to launch an on-demand streaming music service later this month. According to The Verge, the new streaming service will offer a $5 a month tier that will be ad-free and allow users to skip a certain number of tracks, and a $10 a month tier that will be more like Spotify and Apple Music.

Subscription News: Pandora Inks Deals with Two Major Labels for Streaming Music Service

Source: Pandora

“This was a truly collaborative attempt to find a solution that would support artists while profitably growing our respective businesses,” said Tim Westergren, founder and CEO of Pandora. “And that is exactly what we achieved. Working together, we can reshape the digital music market and grow a great business that provides tremendous value to the music industry for decades to come.”

Doug Morris, CEO of Sony Music, also commented on the newly inked deal.

“This partnership should be a very encouraging sign for the entire industry. Pandora is a company founded and run by a musician. We are naturally aligned and look forward to growing the music business together and collaborating to support our artists in the digital era,” said Morris.

The upcoming on-demand streaming music service will supplement Pandora’s current Internet radio stations and, hopefully, bring more paying subscribers and help the company slow astronomical losses. At the end of the second quarter of 2016, Pandora had 78.1 million total listeners but only 3.3 million paying subscribers, and it reported a net loss of $76.3 million for the quarter.

Subscription News: Pandora Inks Deals with Two Major Labels for Streaming Music Service

Source: Pandora

The return of founder Westergren earlier this year has helped Pandora rethink its offerings. This includes the pending launch of the on-demand service and the recent addition of podcasts including This American Life and Serial. In an announcement about the new music deals, Pandora said it will soon be able to deliver “the world’s most personal and complete music experience, while opening up the full power of the platform to connect artists with their fans at scale and leverage the promotional offerings of Pandora’s Artist Marketing Platform.

In related news, Spotify has added 10 million new subscribers for a total of 40 million paid subscribers, reports Macworld. Last week Apple Music reported that it now has 17 million subscribers, up from 11 million subscribers in February of this year. Not to be left out, Amazon is set to launch two new streaming music subscription services this month, hoping to get its share of subscribers with or without Amazon Prime.

Insider Take:

The streaming music wars are heating up as the big players get bigger and other competitors like Amazon enter the market with new offerings. It will be interesting to see how all this shakes out, especially in light of Apple’s proposal to the Copyright Royalty Board to change the formula in how streaming music royalties are to be paid.

In the name of fair competition, we’d prefer to see companies succeed at building their subscriber base by expanding their services, offering exclusive music and artists, and growing the artist-fan community and not trying to gain market share through legal maneuverings like Apple. Ultimately, the fans will decide who wins the streaming music wars.

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