Pandora will pay RIAA $90 million for playing pre-1972 songs
The maze of state copyright laws is an expensive headache for online music. — Internet radio company Pandora has agreed to pay the major US record labels $90 million over streaming of pre-1972 songs, which aren't covered …
Context & Ripple Effects
This settlement caps a brutal year of rising music costs for Pandora. Months earlier, a court ruled it should pay BMI 2.5% of revenue instead of 1.75%, and weeks later the copyright board raised its per-play royalty to 17 cents per 100 songs, up from 14 cents. The $90 million payment covers a gap federal law never addressed: pre-1972 recordings, governed by a patchwork of state copyright statutes.
Why it matters beyond the check: the labels' ability to enforce those state-law claims gives them leverage just as Pandora was reported to be in licensing talks with the majors for on-demand streaming. Clearing the legacy-catalog liability removes an obstacle on that path.
First-order effects
- Pandora hands the major US record labels $90 million and retires its legal exposure on pre-1972 recordings, which sit outside the federal statutory license its radio service relied on.
Second-order effects
- With the BMI rate hike and the higher per-play royalty already stacked on top, each incremental cost pushes Pandora closer to the negotiated direct deals with the majors for on-demand streaming rather than fighting for cheaper statutory rates.
Third-order effects
- If state-law claims keep proving enforceable against digital services, pre-1972 catalogs become a recurring bargaining chip for rights holders, accelerating a shift from fixed compulsory royalties toward individually negotiated licenses as the norm for online music.
The trend: Internet radio is migrating from statutory, government-set royalty schedules toward directly negotiated deals with labels, with legacy-catalog litigation acting as the accelerant.