The once secret deal that Pandora made with the digital rights organization Merlin on behalf of 20,000+ independent record labels and distributors has recently been revealed.
Pandora filed documents with the U.S. Copyright Royalty Board (CRB) that revealed a rate less than is now required by U.S. statute…and half of what SoundExchange was requesting that Pandora and others pay in the future.
Merlin’s contract was signed in August and includes Beggars, Domino, Epitaph, Yep Roc and many other high profile indie labels.
The government-set rate (Pandora’s statutory rate) per song stream is 1.3 tenths of a penny ($.00130). In Pandora’s recent submission to the CRB they argue for new rates within a range of $.00110 to $.00129. An important note here is the high end of that range which would apply in 2020 is a micro-penny less than Pandora’s current rate.
The CRB submission from the organization that collects and distributes streaming royalties for artists and labels (SoundExchange) proposes higher rates of $.0025 to $.0029
A popular question raised after knowing the details of the Pandora deal is…Why Did Merlin Agree to Lower Rates?
The answer may be that Pandora promised to “steer” more listeners toward their independent label members. This would potentially drive more revenue in theory, but according to the details of the deal…the more plays that Pandora steers, the lower the rate it has to pay.
How this ultimately impacts the truly independent artists will also be an important question to address.