Key takeaway: Now, with the broad rollout of Pandora Premium, there are three tiers, three ways for artists and labels to connect with listeners and earn royalties, and a few different ways royalties get to artists and labels.
Now that Pandora Premium has been given a broad rollout — you may have seen the marketing campaign — people in the music industry may be wondering how Pandora’s royalties are being paid to artists and labels. The direct licensing agreements Pandora has reached with labels has brought some changes to how royalties are paid for all three tiers: the familiar ad-supported radio service; Pandora Plus, an update of the ad-free, subscription radio tier Pandora One; and the new Premium tier.
The short version is all parties get paid regardless of the tier or the type of license. Not all royalties take the same route to their end recipient, however, and some of those routes have changed recently.
The two subscription services, Plus and Premium, pay royalties directly to labels. Both tiers follow the norms of subscription services covered by direct licensing deals between service and rights holders. The ad-supported tier pays the artist share through SoundExchange but pays labels directly.
Premium is Pandora’s new $9.99-per-month, premium service with on-demand features. When a direct deal is in place, a track’s Premium royalties are distributed directly to record labels. (Tracks not licensed directly are streamed on non-interactive radio. More on that below.) Artists receive their royalties from their labels, not from Pandora or SoundExchange.
Post by Glenn Peoples (Music Insights and Analytics), read more on Medium.