Business News Deals Digital Labels & Publishers Top Stories

BMG does direct deal with Pandora

By | Published on Friday 12 September 2014


BMG yesterday announced that it had entered into a direct deal with American streaming service Pandora covering its catalogue of songs that are otherwise repped by US collecting societies ASCAP and BMI.

It means that those songs will now be licensed to Pandora directly by the music rights company, rather than via the collective licensing system. The arrangement, BMG told reporters, “creates marketing and business benefits for Pandora, BMG and the songwriters it represents”.

Now, those of you paying close attention to your CMU Daily (that’s all of you, right?) might at this point say, “but haven’t the American publishers been told that they can’t withdraw their digital rights from the collective licensing system, without pulling out of BMI and ASCAP completely and having to licence every radio station, café and bar directly too?”

Well, yes they have. A quick recap: while the record labels have, in the main, chosen to licence digital services directly, the music publishers initially licensed most digital platforms through their collecting societies, in the same way they have always licensed radio. But in recent years some publishers have started to think they should follow the labels’ lead and licence directly (first with their so called ‘mechanical rights’, and more recently with ‘performing rights’).

But this plan hit a wall in the US when the majors tried to withdraw from the collective licensing system in the digital domain, because the American courts ruled that, under the ‘consent decrees’ that regulate collective licensing in the States, publishers are either all in or all out. They can’t licence FM radio collectively, but Pandora-type services directly. As previously reported, this has led to a review of the consent decrees, with the publishers lobbying for a rewrite that would enable partial withdrawal.

Though, here’s the key point: under the current rules, music publishers can actually do direct deals with Pandora-type services, because BMI/ASCAP have never been given exclusive rights to represent their members in this domain. But the point is, the publishers can’t oblige Pandora to licence directly. Unless the consent decrees are rewritten, Pandora always has the option to walk away from the negotiating table and say to any one publisher “well, we’ll licence via the societies instead, where ultimately a judge can set the rate”. Which it is prone to do.

But in the case of the BMG deal, both the publisher and the digital service have agreed that this option is preferable to the collective licensing route. Which means that BMG is not reliant on any consent decree change to start working with Pandora directly.

Confirming the deal, Pandora chief Brian McAndrews told reporters: “Millions of Pandora’s listeners have long enjoyed the great music from BMG’s songwriters. Our agreement with BMG ensures that we can continue expanding the audience for one of the world’s most storied music catalogues and demonstrates that collaboration between the music industry and Pandora creates opportunities and value for publishers and songwriters”.

BMG’s President of Marketing & Creative in the US, Laurent Hubert, also talked up the new alliance, though at the same time insisted his firm remained on good terms with BMI and ASCAP. He said in a statement: “BMG looks forward to a prosperous relationship with Pandora in which our songwriters can benefit from their platform. We also want to take this opportunity to emphasise our strong, continuing relationship with the US performing rights organisations as they play a vital role for songwriters and music publishers alike”.