Pandora to pay out $90 million in licensing dispute

The lawsuit arose from a copyright quirk surrounding pre-1972 recordings

Streaming company Pandora has agreed to pay out $90 million to record labels in settlement of a dispute over licenses to music published before 1972.

A suit was filed against the company – which does not currently operate in the UK – in April 2014. Sony Music Entertainment, Universal Music Group, Warner Music Group, Capitol Records and ABKCO Music & Records got together to pursue the case.

Pandora is not the first streaming service to face such a challenge, according to the LA Times, who say that Sirius XM – a radio provider – agreed to pay out $210 million in a similar case in 2013. CBS, iHeartMedia and Cumulus are also currently facing similar cases.

The dispute exists because pre-1972 recordings are not covered under the same copyright conditions as music made after that time in the US. While post-February 1972 recordings are covered under federal law, recordings from before that time fall under state law, which in certain cases allowed artists to negotiate their own agreements for use. Pandora didn’t secure those seperate agreements.


Brian McAndrews, CEO of Pandora, commented on the result, saying:

“We pursued this settlement in order to move the conversation forward and continue to foster a better, collaborative relationship with the labels.”

The agreement gives Pandora leeway to negotiation of a deal over the older tracks into 2016, but doesn’t settle future royalty payments.

The service has had a tough few months, reporting losses of $85.9 million for the third quarter of 2015, and facing increasing competition from the likes of Spotify, Apple Music and Tidal. Share prices for Pandora fell by around 20% in after-hours trading following the announcement of the $90 million agreement.

Pandora no longer exists in the UK due to licensing constraints, but rumours over the summer suggested a return might be a possibility.

At present, the site greets UK visitors with the message:

“We are deeply, deeply sorry to say that due to licensing constraints, we can no longer allow access to Pandora for listeners located outside of the U.S., Australia and New Zealand. We will continue to work diligently to realize the vision of a truly global Pandora, but for the time being we are required to restrict its use. We are very sad to have to do this, but there is no other alternative.”