In a ruling last week Pandora was ordered to pay ASCAP, a performance rights organization, 1.85% of its annual revenue. Pandora had hopes of a rate of 1.7% but, with ASCAP looking for a whopping 3.0%, the final agreed upon rate, which was at the top of their range, is being called a win.
Sony Music CEO Martin Bandier said, “This rate is a clear defeat for songwriters. This rate is woefully inadequate and further emphasizes of the need for reform in the rate court proceedings. Songwriters can’t live in a world where streaming services only pay 1.85% of their revenue. This is a loss, and not something we can live with.”
The songwriter’s loss is Pandora’s gain. And what did they do to celebrate this win? They decided to raise subscription prices.
The company made an announcement yesterday stating that, in the coming months, changes to the Pandora One subscription plan would be necessary to maintain the premium, ad free, experience. Since the company launched the $3.99 per month rate, SoundExchange rates have increased 53% and will increase another 9% in 2015.
For new subscribers the subscription price will change to $4.99 per month starting in May but, as a way of saying thank you to its earliest adopters (where is my thank you SiriusXM?), subscribers who remain active will continue to pay the old $3.99 rate.
In addition to rate change, Pandora is also dropping the $36 yearly plan but again, those old subscribers will be migrated to a discounted loyalty rate of $3.99 per month.
With 3.3 million subscribers, that is a lot of good grace Pandora is offering to keep those customers happy.
It should be noted that customers “will not experience a price increase at this time,” the article does not mention just how long those loyal customers will be locked in for.