With Half Of Its Revenues Spent On Royalties, Pandora Looks To Put Off New Music Deal
July 13, 2011 at 3:55 AM (PT)
PANDORA MEDIA took a hit on WALL STREET YESTERDAY (7/12), dropping nearly 4% after the company said it will not renegotiate royalty fees paid to music companies until 2014. At PANDORA's "Analyst Day," the news was released that, "It would start negotiating in 2014 for new music royalty rates that would take effect in 2016," reports REUTERS.
"We believe it will be an economically rational rate," said PANDORA CEO JOE KENNEDY, noting that royalties currently cost PANDORA more than half of the company's revenue.
PANDORA "hopes to offset those expenses with revenue growth from new markets," wrote REUTERS, adding KENNEDY, "said the company saw growth coming from mobile devices, where it is seeing success on benchmarks such as the number of consumers downloading its mobile applications. But growth from the car market will not ramp up significantly for another few years as it will take time for automakers to get PANDORA onto their dashboards, and for consumers to replace existing cars."
PANDORA closed down 3.6% at $18.56 YESTERDAY. PANDORA common stock trades on the NEW YORK STOCK EXCHANGE under the symbol "P."
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