Updated: Pandora Raises $35M

pandoraUpdated with comment from Pandora: Internet radio provider Pandora Media has raised $35 million in new funding, peHUB is reporting, just two days after the company celebrated the establishment of a royalty deal that ends years of negotiation with record labels and content owners. It’s not clear whether there are new investors involved or whether the funding comes from existing backers. Stakeholders in Pandora include Crosslink Capital, WaldenVC, Selby Venture Partners and Labrador Ventures.

As I wrote Wednesday, the resolution of the royalty issue could lead broadly to more investment in the Internet radio sector, as the expenses involved in running a Net broadcasting company become known quantities. Curiously, though, the peHUB report suggests that Pandora’s new funding was in place before the new royalty deal was reached, although it stands to reason that the company could have moved forward with its fundraising as the royalty agreement appeared imminent. Pandora CTO Tom Conrad didn’t mention a new round of funding in our conversation, but he did agree that having royalty structures in place could likely provoke more investment in Pandora’s competitors.

Primarily a free music service supported by advertising, Pandora said this week it would charge its heaviest users 99 cents each month if they exceed a cap of 40 hours of streaming music. The company also offers a separate premium service without ads that costs $36 a year and provides unlimited music from a desktop application.

I’ve contacted multiple sources at Pandora seeking comment, and will post an update if Pandora confirms the news. Update: Pandora CTO Tom Conrad confirmed to me that the company has indeed raised new money, with Greylock Partners leading the round as a first-time investor. He declined to discuss the size of the round or the company’s valuation. Existing stakeholders in Pandora, according to Conrad, include Crosslink Capital, Walden VC, Labrador Ventures, King Street Capital, Hearst Corp., DBL Investors and Selby Ventures.

As well, Greylock’s David Sze is taking a seat on Pandora’s board of directors. Sze also led Greylock’s investments in Facebook, LinkedIn and Digg, among others.