Pandora Royalties Hit $1.5 Billion Milestone As Streaming Radio Payouts Accelerate

It took Pandora nine years to pay out its first $1 billion in artist royalties -- and just one year to pay out the next $500 million. The streaming radio service announced Wednesday that it has paid out $1.5 billion to artists and rights holders, calling the moment a milestone.

“I am proud of our enormous royalty contributions, and our progress on building on a broader vision for the future of music,” Pandora CEO Brian McAndrews said in a statement. “We are very passionate about our mission to help artists find their audience and help listeners find their music -- music they love, that moves them, that they personally connect with -- and we are achieving significant momentum.”

Since its launch more than a decade ago, Pandora has grown into one of the most popular apps in the United States. The company boasts more than 80 million monthly active users, who use the service on average for about 20 hours per month. Yet as it’s grown, Pandora has faced charges from a number of music industry figures that the royalty rates it pays are inadequate. The overwhelming majority of listeners use its free, ad-supported tier, which pays a song's performers $0.0014 each time a listener hears that recording. That rate is statutory, meaning they are determined by the Copyright Royalty Board, a federally appointed panel. The Copyright Royalty Board is set to issue a new royalty rate in the next few months.

By comparison, Spotify, which offers both on-demand and radio-style streaming experiences, and which has come in for no small amount of criticism over its own royalty payouts, said in June that it has paid out $3 billion in royalties since launching in 2008. That announcement came less than eight months after founder Daniel Ek published a blog post announcing that Spotify had paid out $2 billion. Spotify negotiates its royalty rates directly with labels.