At one point in time, Pandora Radio seemed like every music lover’s dream. A digital music streaming platform that was catered precisely to the listener’s tastes and that takes into account the listener’s positive and negative feedback to its own suggestions. It was like iTunes meets J.A.R.V.I.S. from the Iron Man movies.
However, that veil of awesomeness has now been rather tragically smashed by the hammer of commerce. As Digital Music News reports, documents filed by Pandora in US Congress and the Copyright Royalty Board have shed light on a re-tooled, finances-first ‘Music Genome’ — a complex music project of which Pandora were touted as “custodians” — algorithm.
Essentially, the papers describe how offering Pandora a lower royalty rate, i.e. the money that the service has to hand over to the labels, will see your music played a lot more on the platform. Pandora has dubbed this process of shifting playlists towards cheaper content, “steering”.
The primary beneficiary of steering is indie label representative body Merlin Network, who recently finalised a private deal with Pandora that dips below what is now required by US statute and just half of what performance rights group SoundExchange was requesting that Pandora and others pay in the future.
According to DMN, Pandora have been lobbying aggressively for years to lower their royalty commitments and have now taken to negotiating rates privately with label bodies. Indeed, US copyright law allows parties to construct royalty deals that eschew the federally-established rate.
Brad Hill of fellow label body RAIN, who first analyzed the filing, writes that while Pandora’s current statutory rate is $0.00130 (1.3-tenths of a penny), in their submission to the CRB, Pandora argue for new rates “within a range of $0.00110 to $0.00129“, or a micro-penny less than the current range.
But hey, Pandora may be paying less, but if those artists covered by the deal get more play, everything will balance out, right? Not so fast. Hypebot reports that according to the details of the deal, the more plays that Pandora steers, the lower the rate it has to pay.
“As Pandora ‘steers’ toward Merlin-label recordings and away from competing recordings — its effective rate drops. Pandora has precisely that ability to ‘steer’ towards or away from the music of particular record companies,” reads an excerpt from the filing.
Naturally, industry critics aren’t thrilled about the new agreement. Writing for The Trichordist, musician David Lowery opined, “If Pandora plays Merlin songs more often than everyone else. Isn’t that called payola?”
However, responding to another article in The Trichordist, which alleges that Merlin have “[sold] out all indie labels”, Hill insists it’s “not a ’50 percent rate cut'” but just “some kind of discount” applied to steered content.
“In most markets, most suppliers offer discounts to high-volume buyers,” he adds. “The discount amount is redacted from Pandora’s document. Also, you are pretending that SoundExchange’s proposed rates are the established rates. Nobody knows what the 2016-2020 rates will be.”
So what does this mean for listeners? Well, it means your Pandora suggestions aren’t as catered to your specific music tastes as you once hoped – you know, the one thing that was making Pandora so cool in the first place?
Or as DMN puts it, “You’ll be hearing a lot more of bands like Interpol, The National, The Offspring, and Vampire Weekend, and less up-and-coming or bigger-label acts that are not part of the ‘steering’ deal.”