Register of Copyrights Maria Pallante in an opinion backed Pandora’s position in a case setting rates for 2016 through 2020, and due to conclude in December. Pallante’s opinion dated Sept. 18 was e-mailed Monday by the rate-setting Copyright Royalty Board.
Bloomberg reports the stock jumped 5.8 percent to $20.84 at 12:53 p.m. in New York after rising to $22.60 for the biggest intraday increase in almost a year. Through Friday, the shares were up 10 percent this year.
Pandora Media has been battling record labels and other rights holders over how much it pays to play music. The ruling means Pandora can propose a lower rate based on an earlier deal as evidence of what a fair market value rate is, said Michael Pachter, an analyst with Wedbush Securities Inc.
Pallante agreed with Pandora that judges can consider its deal with Merlin, a global rights agency that represents more than 20,000 independent music labels and distributors. Pandora says those rates are reasonable and should be a benchmark. SoundExchange, the nonprofit that collects digital performance royalties and distributes them to artists, had argued the judges shouldn’t take into account the Merlin deal.
The decision will give Pandora executives and investors a clearer sense of the company’s expenses. Pandora has struggled to turn a profit in its 10 years of operation, due largely due to the cost of licensing music from record labels and publishers. Content costs represented 46 percent of the revenue in the second quarter.
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