Judges hike rates for music streamers; Pandora shares jump

Brian McAndrews, Pandora chairman and CEO, said: “Importantly, the new structure is set at a level that allows us to aggressively invest in a vibrant and growing music ecosystem, and pursue our strategic plan to build the world’s most powerful music discovery platform as well as a strong business”.

Pandora Media Inc. shares rallied in the extended session Wednesday after a price hike on royalty rates for the streaming music service was less than feared.

As reported on MBW, the CRB set the ad-funded per-stream rate to be paid to recorded music rightsholders by the likes of Pandora at $0.0017 for 2016. “We will review the decision closely and consider all of our options”, explained the company.

The new rate removes significant uncertainty for Pandora, because it offers a certain benchmark for the company to drive profitable growth as monetization continues to improve.

Pandora lobbied to have the rate decreased to $0.11 per 100 songs while SoundExchange, a group that represents record labels, had petitioned for an increase to $0.25 per 100 songs played. Currently, the company pays $0.0014 per stream on its free, ad-supported service (and $0.0023 for songs streamed to paying premium users).

A year from now, Pandora may be paying out significantly more in artist royalties, but the service as we know it is likely to look very, very different.

A panel of federal judges ordered free internet radio services like Pandora to raise their royalty rates in a decision set to take effect next year, The New York Times reports.

“Music has tremendous value and is the core foundation of the webcasting industry.

Pandora said it’s a top priority to work collaboratively with partners across the music industry.

Pandora’s shares shot up 19.4% after hours last night as a result of the decision. 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.

Of late it has started doing direct deals, with indie-label repping Merlin on the recordings side, and Sony/ATV, Warner/Chappell, Songs and BMG in the publishing domain.