Pandora has won a court battle with music publishers, preventing them from raising the rates Pandora pays to publishers, and from pulling their music from the service in the absence of a rate increase, until at least 2015.
The case in question was about music publishers (the ones who own the song compositions, as opposed to the song recordings) trying to back out of their membership in ASCAP, which administers songwriting royalties through a blanket license, so as to negotiate higher rates on their own.
Publishers including EMI Publishing and Sony/ATV attempted to withdraw their “new media” (i.e. internet-delivered) rights from ASCAP, which collects money from online and offline radio stations and distributes them to owners of music compositions, and instead, strike direct deals with Pandora (and possibly other web and app radio services) at higher rates.
“The language of the consent decree unambiguously requires ASCAP to provide Pandora with a license to perform all of the works in its repertory,” wrote judge Cote in the ruling.
The ruling will prevent publishers from yanking their music off of Pandora and possibly other internet radio services until 2015, when the still-pending agreement between ASCAP and Pandora will reportedly run out. Pandora has filed suit to get the courts to set the rate for that agreement, because otherwise, it said, it could not turn a profit.
Pandora’s predicament: For every song it streams, it owes proportionally more money to music copyright holders. This renders it unlike almost any other kind of digital business. If you publish a blog, for example, additional readers enjoying the same article doesn’t make that article much more expensive to deliver. Pandora can’t seem to turn a profit, even though it’s the most popular streaming radio service in the world’s most valuable music market, paying government-mandated rates for song recordings (in addition to the composition rates involved with this case) that some musicians say are too low. Publishers say the same about their ASCAP-administered rates.
“We welcome the court’s decision,” said Pandora lawyer Chris Harrison in a statement. “We hope this will put an end to the attempt by certain ASCAP-member publishers to unfairly and selectively withhold their catalogs from Pandora.”
Meanwhile, ASCAP says it is looking forward to the trial later this year through which the court will set the rates paid by Pandora to ASCAP and its members, including the ones who tried and failed to withdraw their new media rights from ASCAP and, by extension, Pandora.
“ASCAP’s more than 470,000 songwriter, composer and music publisher members make their living creating the music without which Pandora would have no business,” writes ASCAP CEO John Lofrumento. “The Court’s decision to grant summary judgment on this matter has no impact on our fundamental position in this case that songwriters deserve fair pay for their hard work, an issue that the Court has not yet decided. ASCAP looks forward to the December 4th trial, where ASCAP will demonstrate the true value of songwriters’ and composers’ performance rights, a value that Pandora’s music streaming competitors have recognized by negotiating rather than litigating with creators of music.”
It’s true that the ruling will probably translate for lower royalties paid to music publishers and songwriters — although not as low as if Pandora were forced out of business entirely, in which case the royalties would drop to zero, which is what makes this situation so tricky.
(Photo courtesy of Wikipedia)