MUMBAI: Online radio Pandora has been slapped with a royalty lawsuit by Broadcast Music Inc (BMI) a day after its purchase of Rapid City, South Dakota bases terrestrial radio station KXMZ-FM in a move to lower its royalty obligations.
BMI, which filed the case, and collects royalties for music publishers and songwriters termed Pandora’s acquisition a ‘stunt’ and a ‘brazen’ effort to artificially drive down its license fees.
“Pandora’s stunt makes a mockery of the performing rights licenses and the rate court process,” BMI said.
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In a separate statement, the company said it is asking the court to set ‘reasonable, market-driven fees for Pandora’ after direct negotiations with the company failed.
In the suit, BMI also said it is willing to accept a lower royalty rate from terrestrial radio stations’ online services because they pay such significant fees for on-air broadcasts. BMI argued that Pandora’s lopsided mix of online and broadcast audiences means that it shouldn’t be treated like a terrestrial broadcaster.
At stake is the royalty from songs played by terrestrial and Internet radio stations. BMI and its rival, the American Society of Composers, Authors and Publishers (Ascap) say that Internet radio doesn’t benefit music-rights holders in the same way that terrestrial radio does. In the suit, BMI also said it is willing to accept a lower royalty rate from terrestrial radio stations’ online services because they pay such significant fees for on-air broadcasts. Pandora has about 70 million active users.
Pandora last year terminated its 2005 agreement with BMI, which expired 2012 end, and sought a new license. Meanwhile Pandora also launched its own rate-court proceeding to lower the fees it must pay Ascap.
BMI’s rate agreement with terrestrial radio “does not cover performances by a primarily Internet-based music streaming service that happens to own a single radio station in a city with a population that is less than 0.045 percent of Pandora’s online membership,” the suit said.
BMI said it has proposed a new rate deal to Pandora, which it said Pandora rejected. Pandora’s said that wasn’t true but couldn’t share details.
Report said Pandora’s move was part of a lengthy battle between Pandora and music publishers over what should be considered a fair price for online radio and has been viewed dimly by music publishers, who accused the company of being “at war with songwriters.” In November the company sued the American Society of Composers, Authors, and Publishers (Ascap) in an effort to achieve lower rates — it had failed in an earlier effort to enact licensing changes in Congress.
A Pandora spokeswoman said,”We look forward to the court’s oversight of this.”
