Pandora Media Inc (NYSE:P) reported recently that the U.S. Registrar of Copyrights opined that the Copyright Royalty Board (CRB) should consider direct license benchmarks while streaming the performance fees from the time period of 2016 to 2020. According to the CRB, these benchmarks should be stated in mid-December. The opinion of U.S. Registrar of Copyrights is of paramount importance for Pandora Media, which recently announced spending millions of dollars in the form of royalties. With this opinion, it will have to bring down its streaming fees.
Vital recommendations from the U.S. Registrar of Copyrights
Among the major recommendations was for CRB to keep in mind the former agreement of Pandora Media with Merlin. This is important because this agreement covers as many as 20,000 labels. The U.S. Registrar of Copyrights told CRB that this should be considered as a standard while deciding upon the rates for the time period of next 5 years. Pandora Media, in the meanwhile, seems satisfied with the opinion of the U.S. Registrar of Copyrights, even though their opinion is hardly a guarantee for CRB to give a nod to the lower royalties for artists.
Importance of the streaming performance fees
The streaming performance fees holds a lot of importance to the entertainment industry, especially the ones present online, this is so because they spend a huge amount of money on the costs of content acquisition. In the previous quarter, Pandora Media, for instance, spent an exuberant cost (46% of its revenue) on the same. This is the scenario when the cost is down from Q1 2015’s 55% and 51% of the quarter before that. But this is still considered as the sole huge expense of the company.
Despite all this, Pandora Media Inc (NYSE:P) reported that it incurred a net loss of $16.1 million. This was the amount that the company reported after factoring in all the expenses of operating cost. This indicates that by reducing the costs of content acquisition, the operating expenses could offset, thus resulting in narrow losses.