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Pandora defeats ASCAP appeal on rate court ruling
By Chris Cooke | Published on Thursday 7 May 2015
Pandora is fighting battles with the American music community on so many fronts it can be hard to keep up. I really need to draw a diagram. Preferably before they open their box and all hell breaks loose.
In the latest development, Pandora has won in the next stage of its legal fight with American collecting society ASCAP. One of the US music publishing sector’s big performing rights organisations, ASCAP appealed an earlier rate court ruling regarding what royalties the streaming service should pay the society, and also whether music publishers could pull their digital rights from the collective licensing system while continuing to licence broadcast and public performance through the society.
In the original ruling, the rate court said that Pandora should pay ASCAP a royalty rate of 1.85% for the entirety of its current five year licence from the society. ASCAP and the major music publishers argued for a higher rate, pointing out that when Universal and Sony/ATV started negotiating directly with the streaming service they secured a better deal. But the Second Circuit Court of Appeals said yesterday that the original ruling was reasonable and should stand.
Of course it’s because the rate courts – which decide royalties when the music publishers licence collectively in America – tend to set rates lower than could be negotiated directly, that the big publishers want to start direct dealing with digital services Stateside (as they already do in Europe).
But the appeals court yesterday also concurred with the earlier decision that partial withdrawal was not possible under the ‘consent decrees’ that govern collective licensing in the US. It was that original ruling on partial withdrawal that stopped Universal and Sony/ATV instigating the direct deals they had negotiated. As previously reported, the music publishers now want the consent decrees rewritten to allow direct dealing on just digital.
Needless to say, ASCAP was critical of the new court decision. The society’s CEO Elizabeth Matthews said: “This ruling reaffirms what we already know – that the ASCAP consent decree and the rules that govern music licensing are outdated and completely out of step with the way people listen to music today. We are encouraged that the Department of Justice is reviewing the ASCAP consent decree and by the growing chorus of voices in support of our efforts to modernise music licensing – from the Copyright Office to Congressional sponsors of the Songwriter Equity Act”.
She went on: “Powerful corporate interests, like Pandora, are determined to stand in the way of meaningful music licensing reform so that they may continue to shortchange songwriters. This is a wake up call for creators to stand together, get involved and fight for their right to be paid a fair market rate for the use of their works”.
Pandora, of course, was bullish about their latest court win, seemingly using the occasion to diss the music publishers for failing to make a Global Repertoire Database, a failure that does arguably make direct licensing harder (though it hasn’t stopped direct dealing in Europe). The digital firm’s Director Of Public Affairs Dave Grimaldi said: “We are pleased that the Second Circuit has affirmed Judge Cote’s ruling, which highlights the anti-competitive harms that can result from a lack of transparency into music ownership”.
So there you go. And the battle continues. On all those many fronts. I really do need to draw that diagram.
