I downloaded their detailed income statements[0]. The Google Finance income statement appears to be wrong. Google's income statements imply royalties of less than 8.5%.

In their latest quarter (Q2 FY2013) "Cost of Revenue" made up $68,036,000 on revenue of $101,267,000. Of that, "Content acquisition costs" were $60,522. That means royalties make up a whopping 60% of all revenue. They're not making a profit and have lost money in FY2012 and FY2011.

0. http://investor.pandora.com/phoenix.zhtml?c=227956&p=iro... (see Historical Financials).