BMI, Pandora Royalty Battle Begins In Court

Court Battle

As noted earlier (NET NEWS 2/9), BMI and PANDORA are now in a NEW YORK federal court, battling over how much the latter should pay for airing the music, SFGATE.COM reports. PANDORA is arguing that its service is a passive experience much like terrestrial radio and, as such, should be governed by deals BMI has struck with radio groups such as CLEAR CHANNEL COMMUNICATIONS (now iHEARTMEDIA).

Radio stations pay 1.7% of revenue for rights to broadcast the 7.5 million works licensed by BMI, but BMI wants PANDORA to pay 2.5%.

To further prove its radio bonafides,PANDORA also bought station KXMZ/RAPID CITY, SD, two years ago, but that matters little to BMI. BMI called PANDORA’s radio-station purchase a “brazen effort to artificially drive down its license fees.” Conventional radio stations pay an average of $150 million a year each for licensing fees. PANDORA paid only 4% of its $920 million in revenue last year — or nearly $37 million — to songwriters and publishers. About half of PANDORA’s revenue last year went to performers and record labels under a separate agreement.

PANDORA spokesman DAVID GRIMALDI said the court is the right place to settle the matter: “We are confident in our legal position, and look forward to continuing to serve the tens of thousands of artists who spin on PANDORA and the 81 million active monthly users who enjoy listening to them.”

For its part, BMI SVP/General Counsel STUART ROSEN said. "The foundation of PANDORA’s business was built with the words and music of songwriters, and we are fighting on their behalf to secure rates that reflect the true value of their work in today’s digital marketplace.”

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