Business

Sony/ATV gets 25 percent increase in Pandora royalties

Pandora’s costs are likely to rise.

Music publisher Sony/ATV has wrangled a 25 percent increase in royalties from the Oakland, Calif.-based Internet radio player, The Post has learned.

The agreement may come as a surprise to some as the 6-year-old streaming upstart, which has roughly 60 million users, has been vocal about demanding decreases in the fees it pays to the music business and artists.

Sony/ATV, a joint venture between Sony Corp. and the Michael Jackson estate, secured the big jump up after it pulled digital rights from two associations effective Jan. 1, industry insiders told The Post.

Pandora executives have been huddling with Sony/ATV management to hash out a new deal that is said to run for the next 12 months — given the rapid rate of change in online radio.

Sony/ATV declined to comment on the terms of any new deal, but CEO Martin Bandier, told The Post: “At the end of the day, we got a terrific deal for our songwriters. Our thinking has been vindicated. Hopefully it’s the first of many.”

The firm will now seek better deals from other digital music players.

Pandora didn’t comment on the new deal.

Pandora, which faced financial trouble in the not too distant past, has a market cap of $1.8 billion. Its shares, which closed yesterday at $10.85, are up 18.2 percent over the past 12 months.

The new agreement could spark a domino effect as other music publishing firms weigh negotiating their own digital music rights outside of collective deals struck by ASCAP and BMI collecting on behalf of publishers and song writers.

Those royalty agencies collect around 4 percent of Pandora’s total gross revenue on behalf of copyright holders. Pandora’s gross revenue was $274.3 million in 2012.

SoundExchange, a separate royalty body commissioned by the US government, collects on behalf of artists and record labels and takes the vast majority of fees from Pandora, which has been fighting the increases and sued ASCAP in November arguing there was little negotiation in its talks.

The Internet radio player said on Jan. 7 that listener hours in December jumped 54 percent to 1.39 billion from the prior year.

Pandora claims its share of total US radio listening for the month rose to 7.2 percent from 4.7 percent. Active listeners also increased 41 percent.