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Pandora, Musicians Seek Amicable Solution to Royalty War

A public feud has erupted over fees paid to labels and artists


PandoraUnnamed insider sources tell TheVerge that Pandora (P) is in the early stages of talks with music labels and artists about a possible settlement to a dispute over licensing fees.

Shares of Pandora surged more than 7% in Wednesday morning trading.

Pandora Moves to Stream Radio to TVs
Pandora Moves to Stream Radio to TVs

The Internet radio service provoked a bitter public battle with musicians after it backed legislation before Congress that would have cut music royalties. Pandora contends that it is forced to pay higher royalties compared to traditional radio broadcasters. Under rules set by congress, Pandora will see the fees it pays per song rise every year.

Pandora claims that licensing fees consumer 60% of its overall revenue. That compares to just 7.5% for satellite radio providers like Sirius XM (SIRI).

Music labels claim that Pandora has failed to develop its own revenue streams, which would reduce the fraction of revenue it pays in fees.

The clash between the Internet radio service and musicians included a recent editorial that appeared in USA TODAY written by members of the iconic rock group Pink Floyd that accused Pandora of trying to advance its business by taking “directly at the expense of artists’ paychecks.”

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