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Pandora could launch on-demand service next month

By and | Published on Monday 22 August 2016


Pandora could launch its much anticipated new on-demand streaming service in the US as soon as next month, as it comes closer to securing deals with the major labels, reckons the Wall Street Journal. The shift into on-demand streaming is part of the digital firm’s much previously reported programme of diversification, which also includes that move into ticketing.

Launching a service that would compete more directly with Spotify and Apple Music is risky, but would allow the company to expand into more countries. Currently Pandora is only in three markets, and mainly the US, where a specific compulsory licence for online radio made licensing its current personalised radio set-up much easier to achieve at the outset. That compulsory licence doesn’t cover fully on-demand though.

This move to diversify – which isn’t universally backed by the firm’s investors – is in part driven by a slowdown in growth for the main Pandora service. Overall active users have stalled at around 80 million, while only around four million pay a monthly fee to remove adverts from their listening.

As previously reported, last November, Pandora bought the assets of on-demand service Rdio, and more recently it hired rights admin company Music Reports to navigate the tricky world of mechanical royalties in the US – something its never had to concern itself with before because of the way personalised radio is licensed on the music publishing side.

According to the WSJ, the deals for Pandora’s on-demand service are close to being signed. A potential sticking point that remains is the roll out of the personalised radio element in other territories.

Although the labels are generally more comfortable with personalised radio being free than with fully on-demand freemium Spotify-style – especially if it can then be used to upsell paid-for on-demand streams – under the US compulsory licence Pandora can include whatever it likes on the free level, whatever Taylor Swift or Adele may be thinking on any one day, or whatever exclusivity deals Frank Ocean has just done. Word has it that the labels want a little more control over the personalised radio catalogue outside the US.

Once those sticking points have been addressed, Pandora is expected to launch a two-tier on-demand set up, first in the US, and then elsewhere, initially in other English-speaking countries.

It’s worth noting that the Journal mentions only that Pandora is negotiating with the major labels ahead of its launch. Quite what that means for the indies isn’t clear, though one of the company’s first direct deals on personalised radio (ie circumventing the compulsory licence) was with indie-label repping Merlin, so hopefully they’re on the agenda somewhere.