Report: Pandora Forecasts Music Costs to Shrink

Pandora Media Inc., grappling with rising music costs, expects the royalties it pays to artists and record labels to decline to 40 percent of revenue from about 60 percent now, Chief Financial Officer Mike Herring said.

According to Bloomberg, the company, the biggest Internet radio provider, expects to reach that target over the next few years, Herring said today at an investor conference sponsored by Roth Capital Partners in Dana Point, California.

The company is tackling royalty rates and seeking to boost the revenue it gets from advertising. With targeted ads and interactive features, Pandora is able to levy a premium over radio spots, Herring said. The company is working to close the gap between its ad revenue, now at about 1 percent of the radio industry’s total, and its 8.5 percent listener share, he said.

“It’s a long road,” Herring said.

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