Pandora recently signed a deal with global rights agency Merlin to pay a smaller royalty rate on songs that are performed by artists represented by the organization. The deal with the company — which represents labels such as the Beggars Group (4AD, Matador, Rough Trade), Epitaph, and Domino — was recently uncovered in a new report by NPR. According to them, Pandora struck a deal with the organization that says that they will recommend Merlin-affiliated artists in their internet radio algorithm before artists who are not affiliated with them. In exchange, Pandora gets to pay less money and artists represented by Merlin get more plays on their songs.
Some are likening the deal to payola, the old-time radio tactic that was banned in the 1960s after it was discovered that labels were paying DJs to play certain tracks in order to garner more popularity and sales. “If they were a terrestrial radio station and they were getting a discount on certain music as long as they played it more than other music, that would be considered illegal,” copyright lawyer Jim Burger told NPR.
The laws against payola only apply to terrestrial radio, however, and Pandora insists that their deal with Merlin doesn’t even fall under the category of payola. “Payola is where record labels pay radio stations to get airplay,” Pandora CEO Brian McAndrews said, “and the opposite is what happens today. As Pandora, we pay the record labels and the artist to allow airplay. So it’s completely different.” McAndrews also says that they are working on establishing similar relationships with other labels and organizations.