It'll depend a lot on the deals being struck, I can only speculate on the structure. The weird rules stem from the US copyright laws, and are therefore are impossible for a company like ours to get changed. We benefit from lower rates because of this and can make a service which will survive long term, so its a tradeoff we believe is worth it. I would stipulate that by going outside of those rules, they will have to pay a larger chunk of revenue to the labels, and it'll increase the ad load and cut the revenue passed to DJ's. Ultimately we decided that wasn't the approach we wanted to take, and the trade off was a good one, we'll find out with time which way they went.
The structure smells very much like the YouTube deal major labels made when they’d had enough of PROs not negotiating high enough license rates for them.
Which, as an ex-PRO employee, makes me a bit sad to see.
“Performing Rights Organization” - so in the USA, ASCAP, BMI, SESAC. They offer what’s known as “collective licensing” for music rights - essentially an aggregation of a bunch of copyright owners, so that someone who wants to use music can negotiate with the PRO and get access to all its members rights rather than having to go and negotiate with thousands of individual music publishers, songwriters, etc.
