Tags: ASCAP | Pandora | songwriter | fees

US to Review Rules for Songwriter Fees Paid by Pandora

Wednesday, 04 Jun 2014 10:59 AM

The U.S. Justice Department will review decades-old agreements that govern songwriter royalties, following court battles between rights holders and the Internet radio firm Pandora Media Inc.

The review will “examine the operation and effectiveness of the consent decrees” dating back to 1941 with two major songwriter groups, the American Society of Composers, Authors and Publishers and Broadcast Music Inc., the department said in a notice today. Pandora shares fell as much as 6.1 percent in New York trading.

The review could lead to changes in the rules governing how much Pandora, the leader in Internet radio, pays songwriters each time their works are played. Ascap and BMI, both based in New York, represent hundreds of thousands of songwriters, composers and publishers. They’ve argued in court disputes with Pandora that the agreements with the Justice Department don’t take into account the rise of digital media.

“The department understands that Ascap, BMI and some other firms in the music industry believe that the consent decrees need to be modified to account for changes in how music is delivered to and experienced by listeners,” the Justice Department said.

Pandora dropped 5.3 percent to $23.30 at 9:34 a.m. The shares had declined 7.5 percent this year through yesterday.

The review will explore whether changes are appropriate, the department said. It is seeking public comment on possible modifications.

Songwriters, publishers and the groups that represent them have sought higher royalty rates from broadcasters for public performances of their works at a time when royalties from the sale of recorded music have declined.

Higher Rates

Pandora pays songwriters separately from performers, who make up a bigger chunk of expenses. The company, based in Oakland, California, sued Ascap in 2012 to seek “reasonable” license fees to play Ascap songs on its service.

In March, a federal judge in Manhattan ruled that Pandora must pay 1.85 percent of revenue to Ascap from 2011 to 2015, a higher rate than Pandora had proposed. The court rejected Ascap’s request for increasing rates over that period.

Pandora was sued by BMI over rates in June 2013, when that songwriters group alleged that it proposed a “reasonable” blanket royalty rate for allowing songs to be played on the Internet radio service and was rejected. The case is pending.

Pandora has about 76 million monthly users, and about a 70 percent share of the Internet radio market in the U.S.

The consent decrees, reached in antitrust cases against the groups, require broadcasters and performing rights organizations to seek license rate determinations from the New York federal court if they can’t negotiate an agreement.

New Technologies

Ascap President and Chairman Paul Williams said the group is “gratified” by the department’s decision to review the agreements.

“Since the Ascap decree was last reviewed in 2001, before even the iPod was introduced, new technologies have dramatically transformed the way people listen to music,” Williams said in a statement. “The system for determining how songwriters and composers are compensated has not kept pace, making it increasingly difficult for music creators to earn a living.”

Michael O’Neill, chief executive officer of BMI, said in a statement that “technology has truly helped democratize the entertainment industry, giving large and small players a forum to be heard over any device, but the creators of the music must be paid properly and fairly for their contributions.”

Mollie Starr, a spokeswoman for Pandora, had no immediate comment.

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The U.S. Justice Department will review decades-old agreements that govern songwriter royalties, following court battles between rights holders and the Internet radio firm Pandora Media Inc.
ASCAP, Pandora, songwriter, fees
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2014-59-04
Wednesday, 04 Jun 2014 10:59 AM
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