Pandora Sues ASCAP for Lower Rates

pandora2

(from billboard.biz, November 6, 2012) In a lawsuit filed last Monday, Pandora has decided to sue ASCAP in the New York federal court in an effort to get lower rates for the work of ASCAP’s songwriters and composers. This is the latest move by Pandora in an attempt to lower the amount it pays to rights holders. Pandora has asked the court to set a “reasonable fees and terms” through the year 2015, which would commensurate ASCAP’s catalog and deals offered to competitors.

In the complaint it explains that Pandora’s original 2005 license was “ill-suited and not reasonable” so in turn they had to file for a new license. Since January 1, 2011, they have been paying interim fees and been unable to settle on an agreement for a new license. The complaint also claims that Pandora is entitled to lower fees because ASCAP gives a lower fee to the Radio Music Licensing Committee. This includes Pandora’s competitor iHeartRadio and the Internet radio service of Clear Channel. In addition, some rights holders, Sony/ATV and EMI Music Publishing, have agreed to negotiate fees privately, while pulling their digital rights with ASCAP. In March, Pandora had reached an agreement with EMI that covers January 1, 2012-December 31, 2013.

A Pandora spokesperson said, “ASCAP continues to seek rates higher than the current rates and above the agreement that they reached earlier this year with all of the major radio groups, which covers both broadcast and internet radio usage for the majority of our competitors.” A rep for ASCAP had no comment.

The National Music Publishers Association is on the side of ASCAP in this situation saying it’s outrageous for Pandora to try and decrease the amount paid to songwriters and music publishers when the amounts are already strikingly low.  Israelite stated that royalties should pay songwriters for helping the success of popular music services, like Pandora.