The legally embattled Pandora, the leading US online music radio service, is ready to take on the fast-growing global streaming music market in 2016.
Numerous acquisitions and strategy developments have made the company a much safer bet should it be approached by potential buyers.
So while Pandora has not publicly made any declarations to sell, this is the year in which it needs to prove to investors it can take on any of the growing number of competitors in the US and globally.
In addition to facing unrelenting formidable rivals, including Spotify, Apple Music and Deezer, Pandora needs the support of a highly critical music industry. Music labels, publishers and artists insist none of the streaming services pays enough royalties to compensate for their copyright and artist talent.
Paying dues and royalties
Pandora’s US-based CFO Mike Herring (pictured) says the company understands why rights owners have a beef with 21st century digital services playing music protected by centuries’ old copyright law.
But, he tells TechMutiny: “We’re paying a lot of money in royalties. We’ve already paid more than US$1.5bn to rights owners and we’re the only radio service that has done that. I don’t think it is fully understood how unique that is (in the US).”
He is referring to the fact that US copyright law obliges Pandora (and other digital music platforms) to compensate labels, performers, songwriters and publishers, while the dominant FM radio stations remunerate only publishers and songwriters. It is a complex matter that has led to numerous lawsuits against Pandora.
But with fans’ consumption of music via online and mobile streaming growing fast, while CDs and download sales decline, 2016 must be the year when hatchets need to be buried, Herring asserts.
“The industry needs to work together and figure out how to bring new revenues to bear,” he adds. “The royalties from Pandora are not going to be the whole solution to the problem (of slow music sales). It is also about live music, finding new revenue sources.”
Streaming out loud
Streaming technology is creating opportunities the music sector has never seen before, Herring states. “In the past, it used to be a panel in a room that decided which recordings to release next. With streaming, more artists are finding their own audience. It is changing the music industry in the way recordings are released. Artists are using the medium to build careers.”
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