Hey Pandora, how about playing a little “Celebration” by Kool & The Gang?
Pandora Media shares jumped 20% in after-hours trading Wednesday after the Internet radio service received a favorable ruling on the royalties it’s required to pay record labels.
The U.S. Copyright Royalty Board said Pandora must pay 17 cents per 100 streams between 2016 and 2020. The rate is 15% higher than Pandora is currently paying, and more than it had proposed. But it is much lower than the 25 to 29 cents requested by rights-holders.
“This is a balanced rate that we can work with and grow from,” said chief executive Brian McAndrews. “The new rate structure will enable continued investment by Pandora to drive forward a thriving and vibrant future for music.”
Pandora has struggled to maintain its relevance among younger listeners, as Spotify and Apple Music have surpassed it in terms of number of customers and available songs.
Unlike the newer services, Pandora does not let users select specific songs, limiting its functionality.
In October, Pandora agreed to a $90 million settlement with record labels and posted a very disappointing outlook. The company lost $86 million last quarter.
Pandora shares are down roughly 25% this year, although they stand to regain much of that ground when markets open Thursday.
