This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
Business News Digital Labels & Publishers Legal Top Stories
BMI launches legal action against Pandora
By Andy Malt | Published on Friday 14 June 2013
As expected, BMI has launched legal action against Pandora, asking for a ruling on the rates the streaming music service should reasonably be expected to pay on a blanket license for songs represented by the American royalty collection agency.
As previously reported, Pandora has been pushing for a while to reduce its royalty payments to both the record companies and the music publishers, in the former case by lobbying in Washington to reform the statutory licensing system through which American interactive radio services can access sound recording rights, and in the latter case by negotiating hard with the US music publishing sector’s collecting organisations, mainly ASCAP and BMI.
Pandora launched legal action against ASCAP late last year when negotiations failed to go its way – and earlier this week announced that it had bought an FM radio station in order to get a seat on the Radio Music Licensing Committee, which it hopes will help its chances of lowering fees to the same level as those given to traditional radio broadcasters who operate online services.
Perhaps worried that with all these fights already being picked, Pandora might forget about it, BMI yesterday struck first and launched its own legal challenge. In fact, it was the purchase of South Dakota station KXMZ-FM that seemingly spurred the organisation into action.
According to Billboard, BMI says in its lawsuit that after Pandora terminated its licence with the collection agency in October last year, seeking a new agreement, it had proposed an increase in fees to Pandora that it felt were consistent with market rates and the growth in popularity of streaming music, and accounted for those music publishers which were withdrawing from the collective licensing system in the digital domain. But, says BMI, Pandora rejected this offer, even though the digital service is paying more on a deal done with the biggest music publisher of them all, Sony/ATV, which is now licensing the streaming platform directly.
With regard to Pandora’s call for parity with those RMLC-allied broadcasters who now operate online, BMI argues that its deal with those companies – which is based on a similar deal struck between the radio industry body and rival collecting society ASCAP – takes into account the high income the traditional broadcasters provide the music publishers across their operations. That deal was not designed to cover an “internet-based music streaming service that happens to own a single radio station in a city with a total population that is less than 0.045% of Pandora’s online membership”.
Pandora’s strategic purchase of KXMZ-FM was, it added, “an open and brazen effort to artificially drive down its license fees … for the expressly stated purpose of ‘qualifying for the same RMLS license under the terms as our competitors'”.
