Just because a service doesn’t require a subscription fee doesn’t mean the music is free. Many streaming radio services are “free to the listener” (including Pandora) but listeners absolutely do pay. Just as with other ad-supported platforms outside the music industry, they give their time and attention to the goods and services advertised on the platform. It turns out that attention is very valuable, and for Pandora, extremely so, as we recently surpassed the $1.5 billion mark in all-time royalty payments to rights holders. Eighty percent of those payments were generated by revenue from our ad-supported business.
Source: Pandora’s CEO Explains Why ‘Free’ Music Is Worth So Much: Op-Ed | Billboard