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Pandora sues publishers over online music royalties

Says ASCAP is being unreasonable on rates

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Internet radio station Pandora has gone to court to try and get a better royalty deal from the American Society of Composers, Authors and Publishers (ASCAP.)

ASCAP has over 435,000 members, ranging from the biggest music publishers to individual troubadours, and Pandora had a license with them from 2005 to 2010. But over a year of negotiations over new royalty rates have come to naught, and so Pandora is heading into court to get what it thinks is a fair deal.

Pandora argues that the current royalty rates it is being charged are unfair and are stopping it from reaching profitability. Court documents note that ASCAP has already concluded deals with similar internet radio operations, but is refusing to give Pandora the same kind of royalty rates.

"It's outrageous Pandora would try to reduce the already nominal amount they pay songwriters and music publishers, when Pandora's business model is based entirely on the creative contributions of those songwriters," said David Israelite, president of the National Music Publishers' Association (NMPA). "To file this suit at the same time that Pandora's founders are pocketing millions for themselves adds insult to injury."

That last dig seems to be directed at cofounder of Pandora Tim Westergren, who has been steadily selling his shares in the internet radio station at the rate of around $1m per month. As El Reg has pointed out, this hardly fills one with confidence about his view of the long-term viability of the company.

A lot depends on the Pandora-sponsored Internet Radio Fairness Act – IRFA (H.R. 6480/S. 3609) – which seeks to cut the amount of royalties paid to musicians by 85 per cent, as well as reducing the rights of musicians to bargain collectively for royalties to their works. ®

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