A group of record labels will receive $90m from Pandora to settle a dispute over the use of recordings created before 1972.



The labels – ABKCO Music & Records, Capitol Records, Sony Music Entertainment, UMG Recordings and Warner Music Group – were represented by the Record Industry Association of America, and argued that Pandora was violating copyright laws in not paying royalties on music that was more than 43 years old.

Songs released after 1972 are protected by federal copyright laws, but the laws concerning music created prior to that vary state-to-state. The RIAA argued that states including California and New York recognize the copyrights of older recordings and that Pandora was in violation of those copyrights.

Brian McAndrews, Pandora’s CEO, said that the music streaming site was “excited to have found a resolution” with the record labels that filed their suit in April 2014. But the settlement only authorizes Pandora to use the songs through 2016. For the years beyond that, the streaming service will have to work out future deals with the labels, with whom McAndrews said Pandora hopes to “continue to foster a better, collaborative relationship”.

The settlement also negatively affected Pandora’s quarterly earnings. According to the Los Angeles Times, their shares fell by almost 20% in after-hours trading on Wall Street. This followed the company posting a third-quarter loss of $85.9m on revenue of $311.6m.

This agreement marks the latest in a debate over the use of older music. The 1960s band the Turtles are in the middle of a lawsuit against Pandora over use of their music. ABS Entertainment, the company that owns recordings by Al Green and others, is pressing charges against CBS Radio, iHeartMedia and Cumulus. And the same coalition of record labels that reached a settlement with Pandora, also received $210m from the satellite-radio company Sirius XM in June over the use of pre-1972 songs.

According to the RIAA chairman and CEO, Cary Sherman, both settlements ensure “that an iconic generation of artists and the labels that supported them will be paid for the use of their creative works”.

He added: “That is a significant milestone and a big win for the music community.”