Pandora says new music royalty rates ‘balanced,’ shares jump

The Copyright Royalty Board’s decision sets rates for non-interactive services like Pandora, iHeart Radio and Sirius XM for the next five years.

Despite the increase, Pandora’s stock is up in after-hours trading. Until now, it had been paying roughly 14 cents for every 100 songs that customers streamed.

Pandora had wanted the rate to be reduced to 11 cents but voiced confidence that the decision would still allow investment toward a “thriving and vibrant future for music”.

The rate, however, is well under the 25 cents sought by SoundExchange, the royalty collection body established by major labels, which argued that digital music has become so mainstream that Pandora no longer needed any helping hand. In their terrestrial business they do not pay a dime for the recordings they use and now this $17B industry will receive an additional huge subsidy on the music they use in webcasting.

SoundExchange voiced disappointment, saying its proposed rate was in line with deals reached on the market.

SoundExchange repeated the industry’s decades-long complaints that terrestrial-based USA radio stations are not required to pay artists anything at all.

The rates for the period 2017 through 2020 for both subscription and nonsubscription services shall be adjusted to the inflation rate, which introduces a level of uncertainty for both services and rights holders about the level of royalties to be paid or collected.

“We look forward to working very closely with artists and our partners at the record labels to continue bringing their music to our audiences on whatever platform they want to use”.

Unlike the newer services, Pandora does not let users select specific songs, limiting its functionality. The company lost $86 million last quarter. It purchased Ticketfly to try and make money off live events and acquired a big part of Rdio to create an on demand streaming music service.