For some time now, there's been this interesting dynamic with the music-streaming company Pandora. Revenue has been steady but active subscribers are decreasing, yet the company responds by limiting free listening time. Then the company's CEO resigns amidst a very strong fourth quarter, leading to more confusion. But now, another positive move for Pandora happened this week as the company signed a huge deal with BMG, the distribution group that owns the rights to everyone's music from Jay-Z to Billy Idol.
Lately, Pandora has been at war with the music labels, much like Spotify, in order to try and reduce the payouts of royalties. It's been a largely unsuccessful endeavor, however this new deal solidifies the first step in the right direction as CFO of Pandora, Mike Herring, said that Pandora "ensured a royalty structure that works better for both of us."
So what's included in this new licensing package? Pandora will now pickup rights to BMG's collection of music from BMI and the American Society of Composers, and both have a pretty extensive catalog of pieces. No terms of the deal have been disclosed but sources close to the matter report both parties are pleased with the outcome.
This ties in to Pandora's mission to keep growing, despite having some pretty rough times with its music curation. With just under 75 million active users, according to Pandora, the company said it wants to reach 100 million in the next year or two. While having a lot of music will certainly help, the program's selection process still needs a lot of refinement. The same songs will constantly show up, or songs that have nothing to do with each other will play on the same station, just because they were composed by the same producer. In order to get that next 25 million, some hard work and effort will have to go into the actual service, otherwise people will stay attracted to alternative platforms.