Streaming Royalties Rise, but Not as High as Music Industry Wanted

A panel of federal judges increased the royalty that free Internet radio services like Pandora will pay record companies for the next five years, a decision that has been closely watched in the music industry and on Wall Street.

Pandora and other webcasters like it will have to pay record companies 17 cents for every 100 times they play a song when they stream music to listeners who do not pay for subscriptions. The current rate is 14 cents. The decision, which takes effect next year, means that Pandora — the largest Internet radio service, and the music industry’s primary antagonist over two years of litigation — will pay millions more in royalties to record labels and performing artists to use their songs. But the rate set by the judges was also much lower than what the music industry wanted. In filings in the case, SoundExchange, a nonprofit licensing agency that represented the record companies, had asked the judges to set a rate of 25 cents per 100 plays.