Pandora: ‘Direct label deals don’t work internationally’

Pandora CFO Mike Herring has said securing direct deals with labels for services that operate internationally doesn’t work, in an interview with CNET. iTunes Radio, unlike Pandora, struck direct deals with the labels that will let it expand across the globe. Apple’s service notched up more than 11 million unique listeners in its first five days after launching.

However, Herring said “people who have direct deals that are operating internationally are not doing well” and Pandora has no plans to do the same.

Pandora pays lower rates to the music labels than Apple because they pay according to government statute and had 72.7 million active users last month.

Taking the service outside of the US for the first time, Pandora launched in Australia and New Zealand last year and Herring said it’s a chance to prove the company’s viability.

“What we’re trying to do in Australia and New Zealand is not just open up a market that has a lot of potential, but prove to the world that Pandora’s entrance into the market with the right rates structures is incredibly positive for the music industry in that region,” he explained.

“If we can prove that in the laboratory that is Australia and New Zealand, I think we have a great case study to take to other locations.”

Source: Music Week