Pandora Media has partnered with a global rights agency representing thousands of independent artists and bands, such as Arcade Fire, Wilco and Lenny Kravitz, the online streaming music service has said.
The partnership with Merlin is the first for Pandora, meaning it will now have a direct relationship with more than 20,000 independent record labels and distributors that represent about 10 per cent of the worldwide music market.
Pandora licenses the rights to play recording artists through SoundExchange in the United States, using a rate established by the government.
"We see tremendous opportunity to work more closely with artists and the music community," Pandora Chief Executive Officer Brian McAndrews said in an interview.
The move is significant for Pandora, which has been in a public battle with artists and musicians over its push to change the regulation on how online streaming music services pay royalties.
Alan Galbraith, general manager of Wind-Up Records said the partnership is a "real statement from Pandora to the value of independent labels and artists."
As part of the partnership, Pandora will give those artists and labels access to data from its more than 75 million monthly active users. That data can help artists and bands pinpoint cities for tours, for example. Pandora will also offer customisable channels.
"This deal is hugely important opportunity enhance the exposure of our members," said Merlin CEO Charles Caldas.
Both executives declined to reveal the terms of the partnership, but Caldas said Merlin would only do a deal to "enhance royalties."
McAndrews said Pandora would continue to compensate Merlin artists through SoundExchange and that he did not expect the partnership to have a major impact on costs.
Shares of Pandora were up 1.6 per cent at $25.30 in afternoon trading.