SONY Sony Group Corporation

Pandora Media Inc. has signed direct licensing agreements with major record labels, in a move seen pushing the streaming music provider closer to offering an on-demand service.

Pandora on Tuesday said it reached deals with Sony Corp.'s Sony Music, Vivendi SA's Universal Music Group and Merlin Network, a digital rights agency for independent labels.

Until now, the 16-year-old outfit hasn't had to secure permission from individual record labels to use their music because it doesn't let users listen to particular tunes on demand, instead paying fixed rates set by the federal Copyright Royalty Board.

However, as Pandora works to compete with fast-growing on-demand streaming service from Spotify AB and Apple Inc.'s Apple Music, direct licensing agreements could potentially allow for Pandora to launch its own on-demand tier.

Pandora shares rose 3.9% to $14.85 in premarket trading.

Details of the new agreements weren't immediately disclosed, but The Wall Street Journal last month reported that Pandora was close to reaching deals with record companies to allow it to launch a new on-demand music streaming paid tier in both the U.S. and internationally.

However, the deals announced Tuesday only apply to U.S.-based listening. Currently, Pandora is limited to the U.S., Australia and New Zealand--the few countries that make music licensing essentially automatic for internet-radio firms, as long as they pay the mandated rates.

Neither of Pandora's free or paid offerings allow users to select specific songs to listen to. Users instead are able to chose a custom "station" that includes music similar to their initial choice. The new agreements might allow Pandora to let users chose to listen to songs on demand.

"This was a truly collaborative attempt to find a solution that would support artists while profitably growing our respective businesses," Pandora Chief Executive Tim Westergren said.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

September 13, 2016 09:15 ET (13:15 GMT)

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