The latest step in the music industry’s slow-motion revolution over licensing came on Thursday, when Pandora Media announced that it had struck a direct deal for music rights with BMG, the world’s fourth-largest music publisher.
BMG’s deal with Pandora is for the portions of its catalog that have been represented by Ascap and BMI, the two giant licensing groups that have long handled the performing rights — the royalty payments for whenever music is played on the radio, online or in concert — for millions of songs in the United States.
Even though BMG remains a part of Ascap and BMI, it bypassed them by making the direct deal with Pandora, for what analysts believe is a higher royalty rate than those organizations — which are governed by decades-old federal regulation — are able to obtain on their own. In exchange, the deal gives BMG and its songwriters unspecified “marketing and business benefits,” according to a statement issued Thursday by Pandora.
BMG’s large roster includes songwriters who have written hits for performers like Adele, One Direction, Beyoncé and Frank Sinatra. The company is part of Bertelsmann, the German media conglomerate.
As the music industry goes digital, and listeners flock to streaming services like Pandora, YouTube and Spotify, its biggest powers have grown increasingly dissatisfied with its old licensing system. Ascap and BMI are asking the Justice Department to update their consent decrees, and some record labels and artists have been making special deals with online outlets to get higher royalty rates or other benefits.Continue reading the main story