This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Pandora's Deal With Thousands of Indie Labels Changes the Game

NEW YORK (TheStreet) -- If you haven't heard about it yet, TheStreet has details right here. But, longish story short, Pandora (P - Get Report) signed a direct deal with Merlin, a group that represents thousands of independent record labels.

There's not much to say about the agreement that hasn't already been said. It's a good deal for both Pandora and the labels/artists. I would be surprised if others didn't follow suit, signing similar deals with Pandora. From my perspective the most important aspect of the pact is that it represents Pandora's first wide-scale sharing of data with musicians and their labels. This will help artists make better decisions with respect to touring and other activities, which should help them cultivate revenue beyond royalties.

There's something else equally as interesting ... something that makes me think others -- even major record labels -- could follow Merlin's lead.

Pandora has always claimed it's not a "taste maker" or an "arbiter of taste." In other words, it doesn't tell listeners what they should be listening to, rather it lets the Music Genome Project do the work based on the actions of individual listeners. So it's not going to favor one song or artist over another; it's an objective process driven by data and user preference. But this Merlin deal appears to change that.

The way I read it, Merlin artists will receive at least some type of preferential treatment on Pandora. Here's a blurb from the official press release:

Pandora will accelerate the discovery of new music by combining the expertise of Merlin’s participating labels with Pandora’s data from the Music Genome Project to identify select tracks for additional exposure on Pandora’s playlists targeted to the right listeners.

In the past, the musical attributes of a song were the primary driver for the selection of "tracks for additional exposure on Pandora's playlists targeted to the right listeners." That's part of what made/makes the Music Genome Project so great; it introduces you to music there's a good chance you'll like on the basis of other music Pandora knows you like. But now, another variable enters the fray at least some of the time under some circumstances -- is the artist backed by Merlin?

That said, the MGP is smart enough to not serve you an Arcade Fire song (they're under the Merlin umbrella) if you don't show a reasonable propensity for potentially liking Arcade Fire. However, if the MGP has to choose between a Merlin artist and a non-Merlin artist as it plays songs for you that are in close proximity to one another -- musically -- it appears the Merlin artist has an edge over the non-Merlin artist. At least at this point.

This isn't necessarily a bad thing. It just represents a departure from something Pandora has said it would not do -- taste make. And it's not like there isn't precedent for the behavior. It's basically payola without the illegal financial aspect. So, to stress, it's perfectly legal. Clear Channel has been signing similar deals for some time now.

Ultimately, as Pandora enters the arena of taste making it puts pressure on labels, label associations and individual artists who don't like Pandora to swallow their pride and do business with Pandora, particularly if you're an indie. Because one of the things that has always made Pandora great -- whether you have an official deal with them or not -- is something else the company included in its PR on this Merlin deal:

Pandora’s founder Tim Westergren added, “We are deeply committed to harnessing the great potential of internet radio to help musicians of all career stages build their audiences. Independent music has always held a special place at Pandora. These are hardworking artists – many of whom have never received promotion or airtime on terrestrial radio – and their music deserves to be heard" (bold emphasis added)

This deal levels the playing field at the same time as unleveling it. Indies have always received more exposure on Pandora and Internet radio than they have on terrestrial. But now, if your label has a deal with Pandora, your chances presumably increase to receive additional exposure.

It's funny how the more things change they really do stay the same.

--Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola writes for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Rocco's Tweets

Select the service that is right for you!

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
Real Money Pro

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Trifecta Stocks

Trifecta Stocks analyzes over 4,000 equities weekly to find the elite 1% of stocks that pass rigorous quantitative, fundamental and technical tests.

Product Features:
  • Model portfolio
  • Trade alerts
  • Recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Growth Seeker

Chris Versace, using sophisticated stock screening and fundamental research, identifies potentially explosive small and mid-cap stocks.

Product Features:
  • Model portfolio
  • Small-cap and mid-cap focus
  • Intraday trade alerts
  • Weekly roundups
Daily Swing Trade

Master swing trader Alan Farley uses his sophisticated software screens to review thousands of stocks each day for you, to find just the handful that meet his demanding criteria.

Product Features:
  • Daily commentary and coaching on swing trading
  • Technical charts and analysis
Top Rated Stocks Top Rated Funds Top Rated ETFs