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Pandora and Record Labels Reach $90M Deal

(CN) - Online streaming radio giant Pandora will pay $90 million to record labels to settle claims over unpaid royalties for the use of recordings made before 1972.

The terms of the settlement, which Pandora announced Thursday during a third-quarter earnings call with analysts and reporters, are confidential. The deal was later confirmed by the Record Industry Association of America.

Pandora stopped paying royalties on pre-1972 music after it concluded that the federal copyright law covering master recordings did not go into effect until Feb. 15, 1972, and was promptly sued by the RIAA in New York State Supreme Court in Manhattan.

In a complaint filed on behalf of Sony Music Entertainment, Capital Records, Warner Music Group, UMG Recordings, and ABKCO Music & Records conceded that the federal copyright law covers songs made after 1972, but argued that several states, including California continue to recognize the copyrights of older recordings.

According to the N.Y. Post, Pandora will pay $60 million for the use of the recordings through 2015, and another $30 million for their use through 2016. After that date, the only streaming service will have to negotiate a licensing deal with the RIAA.

In June, Sirius XM agreed to pay $210 million to settle similar claims, a deal that RIAA CEO Cary Sherman described as "a great step forward for all music creators."

"Music has tremendous value, whether it was made in 1970 or 2015," he said. "We hope others take note of this important agreement and follow Sirius XM's example."

The lawsuits followed the filing of a class action by Flo and Eddie of the Turtles against Sirius XM over the use of their 1960s hits -- songs like "Happy Together," "Eleanor," and "She Would Rather Be With Me" -- without paying them royalties.

Their case is pending. In July, they filed a motion to stop the $210 million settlement with RIAA, pressing for the money to be held in an account under the court's control until their case plays out. Their effort was unsuccessful.

"Pandora is excited to have found resolution with these record labels," Pandora CEO Brian McAndrew said in a statement. "Together we share a common objective to grow the music industry and support artists. We pursued this settlement in order to move the conversation forward and continue to foster a better, collaborative relationship with the labels."

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