Pandora files lawsuit against ASCAP in search of lower licensing fees

By on November 7, 2012, 12:30 PM

Pandora has filed a lawsuit against the American Society of Composers, Author and Publishers (ASCAP) in an effort to receive a lower licensing fee to use their music. The world’s largest Internet radio service specifically asked a federal court in New York to come up with a reasonable licensing fee that would be good through 2015.

Earlier this year, the ASCAP negotiated a deal with the Radio Music Licensing Committee, a group that represents several broadcasters including Clear Channel. Clear Channel just so happens to operate streaming music service iHeartRadio, one of Pandora’s key competitors.

Pandora claims that the ASCAP refused to offer them the same licensing deal that iHeartRadio wound up with. The company also said in its lawsuit that they should be entitled to lower rates given the fact that a number of music publishers have announced plans to withdraw rights to new content from the organization and offer it directly to Internet radio outlets.

One would have to believe this would essentially cut out the middle man and result in more profit for artists and less cost for web radio outfits.

The two parties have been trying to negotiate a new deal for over a year to no avail. In the event that they can’t settle things on their own, the District Court in New York has the authority to set a rate they believe is fair for everyone involved.

Either way, Pandora will likely have to do something about their current business model. It’s no secret that the company isn’t earning a profit. In fact, they’re bleeding money at a pretty substantial rate. Pandora lost $25.6 million in the first half of this year compared to just $8.57 million during the same time period in 2011.

User Comments: 1

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TJGeezer said:

Anybody know of a good analysis of the rift between ASCAP and these music publishers? Are the publishers RIAA members, or independents trying to reach fans more directly, the way so many new and mid-list performers have been doing these days? Is it maybe the RIAA is trying to hurt ASCAP? The latter has always acted like a kind of union, excluding aspiring new songwriters and limiting access to established ones, while the RIAA seems to concentrate everything filthy involving copyright law, what with its huge political presence, punitive control tactics, ripping off of artists, and so forth.

This dispute looks like it might reflect much deeper trends. Could be interesting but I haven't seen anything much about it. Got links, anyone?

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