The ruling which was released earlier this week, calls for free music companies like Pandora to pay 17 cents per 100 plays of a song, a number which is up from the current 14 cents they now pay. The price will remain set at 17 cents through 2020. This new rate will also apply to traditional radio platforms like iHeartRadio, who have been paying 25 cents per 100 plays.
Pandora quickly released a statement after the ruling came down saying it supported the Copy Right Board’s findings. “This is a balanced rate that we can work with and grow from,” Brian McAndrews, chief executive of Pandora, said in the statement. “This decision provides much-needed certainty for both Pandora and the music industry.”
While Pandora seemed pleased with new the fee, critics were disappointed the ruling didn’t do more to protect artist’s music rights. “We believe the rates set by the CRB do not reflect a market price for music and will erode the value of music in our economy,” read an official statement from SoundExchange, the music rights organization advocating for record labels. “We will review the decision closely and consider all of our options.”
Opponents of the decision were quick to point out that the three-cent increase only applies to non-subscription members. The fee for subscribers to Pandora and other similar services actually decreased, the new rate being 22 cents per 100 plays down from a flat quarter. SoundExchange and other artists rights groups had hoped the 25 cents per 100 plays that subscribers were paying would have remained the same and the non-subscriber fee would have been raised to a quarter as well.
Despite the displeasure of record labels and artists, those who follow the industry closely are hailing the deal as a step in the right direction. “Wednesday’s decision is a key development in a long series of disputes over how much music companies and artists make from online streaming services,” wrote the LA Times reporter, Ryan Faughnder. “It represents a partial victory for record labels and artists who have long grumbled about paltry payments from music streaming services.”
While Faughnder praised the ruling as a partial victory for the music industry, the clear winner is Pandora, who saw stock prices rise following the ruling. “Pandora Media Inc. shares jumped 20 per cent in after-hours trading following the decision to $16.10 US,” The CBC reported.
The CRB decision does not apply to music streaming companies like Spotify and Apple Music who have independent deals with record labels. Uri Fleming, an entertainment lawyer and copyright law expert based in the U.S., thinks the ruling will inspire Pandora to seek out the same strategies as the popular music streaming services. “Now Pandora has the option of making deals directly with the record labels,” Fleming told the LA Times. “When the parties discuss directly, they can reach a number that’s suitable for both of them.”
The time couldn’t be better for Pandora to reach out to the music industry, the company has plans to launch its own streaming service and recently purchased TicketFly for $450 million.
