Pandora Agrees to $90 Million Settlement Over Royalties for Oldies Music

Pandora Media Inc. will now pay to play the oldies.

After more than a year of legal wrangling, the Internet radio giant has agreed to a $90 million settlement with record labels for its use of recordings made before 1972. Federal copyright law didn't start protecting sound recordings until 1972, so the copyrights of oldies tunes have been governed by a patchwork of state laws.

Several years ago Pandora stopped paying royalties on pre-1972 music, which the company has previously said accounts for around 5% of music the service plays. Last year the Recording Industry Association of America, the major labels' trade group, sued Pandora state court in New York, one of several states offering copyright protections.

The suit followed a similar one that the RIAA had filed against Sirius XM Radio Inc. in 2013 over pre-1972 recordings. SiriusXM settled the lawsuit in June for $210 million and agreed to negotiate new licenses with the record labels for the oldies tunes.

Among the music companies settling with Pandora are Vivendi SA's Universal Music Group, Sony Corp.'s Sony Music Entertainment, Access Industries' Warner Music Group and ABKCO Music & Records.

The settlement, which was negotiated over the past two weeks amounts to about 10% of Pandora's annual revenue.

The settlement is retroactive, covering Pandora's past plays of pre-1972 recordings, and prevents the parties from suing until the end of 2016. After that, Pandora will need to seek licenses to play the pre-1972 music.

But Pandora hasn't settled with individual oldies artists who own their master recordings, such as the founders of the '60s rock band the Turtles. They filed a class-action lawsuit against Pandora separately last year in California state court, after suing Sirius XM in three states.

"Pandora is still wildly exposed," said the Turtles' attorney, Harvey Geller.

Pandora remains confident in its legal position in the Turtles case, a company spokesman said, and expects that the settlement with the major labels will reduce the size of the class and the damages it seeks.

By Hannah Karp