Pandora sues publishers over online music royalties
Says ASCAP is being unreasonable on rates
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. ®
"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"
So, 85% of virtually nothing is still virtually nothing, right?
Seems everybody else is lining their pockets EXCEPT the artists...
If this whole royalty deal was a broken windows box, I'd be formatting the hard drive and starting again from scratch.
Re: The issue at hand.
Technically, parity would be the elimination of performance royalties? Given broadcast radio is exempt from performance royalties.
Music is a luxury, it's a very nice one at that, but what is the issue? If Pandora stops, how many puppies drown? I like music, I pay a monthly subscription to listen to pretty much whatever I want via the internet at home and on my phone. I also listen to a couple of local stations. Pandora is not owed a deal because it wants or needs one. Canon don't owe me cheaper cameras, even if they give other people a better deal. I sometimes give some clients a cheaper rate, that doesn't mean any other clients have a right to that rate. Business clients knowing pay 300% markup, they don't bitch. They understand there are reasons and the pay what it's worth to them. If Pandora folds then publishers lose money, so they stand to lose something by not agreeing to Pandora's demands so they aren't just being an arse for the sake of it. If Pandora can't 'sell' for more than it 'buys' for then frankly it needs to fail.
The issue at hand.
Is that rules setting web-radio royalties in the 90s were so punitive that a lot of real radio stations shut down their streaming operations.
Pandora aren't arguing for elimination of the royalties, merely parity.