Pandora, Others Will Pay More to Stream Music in 2016, Per Copyright Royalty Board


Digital streaming services like Pandora will have to pay a little more to bring customers music next year after a highly anticipated ruling from the Copyright Royalty Board. The board recently held that internet radio services would have to pay record labels a royalty of 17 cents per 100 plays of a song in 2016, up from 14 cents per 100 plays this year. The increase is less than the 25 cents some digital rights advocates had hoped for, but it was more than Pandora had asked for as well. The streaming service had actually asked for a decrease. The royalty board typically makes the changes every five years, but after this increase, it reserved the right to change rates more frequently and more accurately reflect the consumer price index.

These specific rates apply only to nonsubscribing users, which make up about 95 percent of Pandora’s total user base; the service had 80 million total users last month. So although the board actually decreased subscribing users’ royalty payout rates from 25 to 22 cents, the change was a comparably small victory. Given that the ruling could have ended up much worse for Pandora, however, the company seemed satisfied.

"This is a balanced rate that we can work with and grow from," said Brian McAndrews, Pandora’s chief executive officer. "This decision provides much-needed certainty for both Pandora and the music industry."

Although Pandora was the biggest service affected by the decision, other services such as iHeart Radio will also be affected by the rate hike. Other streaming services, more interactive ones such as Spotify and Apple Music, negotiate royalty payment rates with the record companies directly and thus were unaffected. With Pandora struggling to maintain profitability at current rates, however, these increases may eventually lead all internet radio services to eventually negotiate directly with the record companies as well.


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