Music streaming service Pandroa recently changed from paying compulsory licenses for music to a direct license with record labels. The move caused the royalty payouts (and SoundExchange’s revenue/distributions) to drop.
The royalty collection company (SoundExchange) announced their distributions dropped $225 million last year. The drop was a little over 26% totaling $652 million. Pandora’s new deal allows them to directly pay 50 different major and independent labels they have a partnership with.
According to Digital Music News:
However, Pandora says they’re still paying SoundExchange for artist royalties — but only the artist’s share (50%) of its ad-supported radio tier.
Pandora has 3 tiers, one ad-supported free tier and then two subscription based tiers. Artists are only being paid on Tier 1, meaning less money is going to the creatives. The move by Pandora was largely unannounced, catching many artists by surprise.