In a victory for artists and record labels, Internet radio service Pandora announced Thursday it would pay $90 million to settle a lawsuit over royalties for songs recorded before 1972. Due to a U.S. copyright loophole, Pandora has played these songs without compensating Warner, Sony, Universal and other labels that own the rights to the master recordings in recent years.
Pandora’s policy prompted a backlash among classic artists — Buddy Holly’s estate had called non-payments by Pandora and SiriusXM an “injustice,” and Stax soul guitarist Steve Cropper, who appeared on numerous Otis Redding and Sam and Dave hits, complained to Rolling Stone last year: “I’m part of a catalog of music from the Sixties that got re-released in the Seventies and Eighties, and some today, so I still get an income. But they just keep chipping away and chipping away.”
The Recording Industry Association, which represents the major labels, sued Pandora over the non-payments last year — shortly after Flo and Eddie of the Turtles filed suit on similar grounds. At the time, Pandora said in a statement, “The company is confident in its legal position.” Because the U.S. didn’t protect copyrights for sound recordings until February 15th, 1972, Pandora and SiriusXM claimed they were in the public domain and had the right to air them without distributing royalties. The RIAA called Pandora’s position “fundamentally unfair,” and earlier this year, the U.S. Copyright Office agreed, declaring “music creators should be fairly compensated for their contributions.”
In settling with the RIAA, Pandora did not officially license the songs in question, but it can continue playing them this year while negotiating new deals with the labels.
The settlement was not surprising, especially after SiriusXM agreed to pay the labels $210 million after a similar lawsuit in 2013. (The Turtles’ suit against Pandora is pending.) Although Pandora’s shares on the stock market fell almost 20 percent immediately after the ruling, Brian McAndrews, the company’s chief executive, was upbeat in a statement: “Pandora is excited to have found resolution with these record labels. Together we share a common objective to grow the music industry and support artists. We pursued this settlement in order to move the conversation forward and continue to foster a better, collaborative relationship with the labels.”