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Pandora Sued for Not Paying Licensing Fees on Songs Made Before 1972

Image: Pandora Sued for Not Paying Licensing Fees on Songs Made Before 1972

By Nick Sanchez   |   Friday, 18 Apr 2014 01:00 PM

Pandora, the world's largest Internet radio provider, has been sued by major record labels for using songs recorded before 1972 without paying licensing fees.

The New York Times reported that Sony, Universal, and Warner Music groups filed the suit Thursday at the New York State Supreme Court in Manhattan in an attempt to win an obscure but potentially significant argument about music copyright in the face of differing federal and state laws.

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"This case presents a classic attempt by Pandora to reap where it has not sown," the labels asserted. "Pandora appropriates plaintiffs' valuable and unique property, violates New York law, and engages in common law copyright infringement and misappropriation and unfair competition."

Under federal law, all recordings made before Feb. 15, 1972, are not protected by basic copyright, while contradictory state laws — including those in New York — say they are covered. This leaves radio services like Pandora and Sirius XM satellite radio in murky territory, as it's unclear whether they need licenses for the pre-1972 music or not.

Music made before 1972 generates a significant portion of the services' demand through stations specializing in specific decades, golden oldies, classic rock, and more.

According to Bloomberg News, Pandora issued a statement in a filing with the Securities and Exchange Commission earlier this year. The company said paying licensing fees on older music could be highly unprofitable and might force the company to drop the songs altogether. Pandora added that copyright is "governed by a patchwork" of contradictory state and federal laws.

Other music services growing in popularity, like Spotify, offer "on-demand" streaming in which users can choose particular songs they'd like to play instead of listening to a radio of one artist that is determined by algorithms. These services don't qualify as radio, and negotiate directly with record labels and distributors for all music both pre- and post-1972.

Pandora has more than 70 million regular users, and Sirius XM has roughly 26 million subscribers. Together, they paid roughly $656 million in performance royalties last year.

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