One after another, Pandora Media (P) is doing deals.
Fresh off a favorable ruling a week ago from the U.S. Copyright Royalty Board, the Internet radio operator Pandora has secured a flurry of multi-year licensing agreements with songwriter rights groups that should give the Oakland, Calif.-based company, and its investors, more clarity about its future expenses.
The recent spate of songwriter agreement should also allow Pandora, the world's largest Internet radio service, to negotiate direct licensing deals with the world's major record labels: the so-called Big Three -- Sony (SNE - Get Report) Music, Warner Music and Universal Music, a division of Paris-based Vivendi (VIVHY) -- as well as the world's largest independent labels, many of whom are represented by the Merlin Network.
Securing those deals is essential if Pandora is to succeed in both expanding internationally and launching an on-demand service to complement its curated radio platform. The absence of an on-demand service arguably hurts Apple when a legendary band such as the Beatles announces that it's music will be made available on streaming services.
Of course, Pandora already plays Beatles music as its platform operates under similar rules as any radio station. But if someone wants to hear a particular Beatles song when they want it, they may simply choose an on-demand platform such as Spotify or Apple Music. The Beatles said on their website that its music would be available on streaming platforms at midnight on Christmas Eve, Dec. 24.
"Pandora is now playing the long game," said Russ Crupnick, founder and managing partner of MusicWatch. "The CRB decision has allowed it to focus on what it wants to be, and that increasingly looks like an on-demand music company."
Shares of Pandora have gained 9.2% over the past month, trimming its 2015 decline to 20%.
On Tuesday, Pandora said it had secured an agreement with ASCAP and BMI, clearinghouses that hold the songwriting rights to the combined catalogs of more than 20 million musical works. Those deals followed similar compensation agreements on Monday with Downtown Music Publishing, and on Dec. 15 with Warner/Chappell Music, the global music publishing company of Warner Music Group.
The ASCAP and BMI deals were particularly important considering that the two sides have clashed repeatedly over the past few years, both in and out of court. Pandora, in a statement, said that because of the ASCAP and BMI deals it "will benefit from greater rate certainty and the ability to add new flexibility to the company's product offering over time."
The succession of performance rights agreements came shortly after the Internet radio streaming service won a favorable ruling from the three-judge royalty board. After more than a year of testimony and lobbying, the royalty board on Dec. 17 set a rate of 17 cents per 100 streamed songs for 2016, an increase from the current level of 14 cents, but far below the 25 cents to 29 cents rate that record labels had requested.
With the royalty board ruling out of the way, the music industry, and artists in particular, will be watching closely to see what kind of deals Pandora is able to secure with the major music labels.
"Pandora is a customer, so there shouldn't be any reason the labels won't be open to having another distribution option for on-demand licensing," Crupnick said. "I suspect no one is going to be totally happy with the CRB, but it's in everyone's best interest when talking about on-demand to have a wider agreement."