BMI Court Victory Yields Higher Rate For Pandora

BMI logoA U.S. District Court has ruled in favor of BMI in its suit against Pandora, determining that the music streaming service must pay 2.5 percent of its revenue to license and perform songs in the BMI repertoire. Pandora’s previous rate was 1.75 percent.

Separately, Pandora had been battling ASCAP in a federal appeals court, which recently ruled its rate for that PRO would remain at 1.85 percent.

Meanwhile, Pandora recently made a major step forward with the FCC in its efforts to launch a terrestrial radio station. The online music company is using a loophole to attempt to qualify for the lower licensing rates used by stations that operate both broadcast and streaming radio.

BMI released the following statement:

Today is an important day for BMI and a huge victory for the more than 650,000 songwriters, composers and publishers we have the privilege to represent.  After a nearly two-year legal battle over the value of the BMI repertoire to the Pandora digital music service, the Rate Court ruled resoundingly in BMI’s favor and concluded that our proposed rate of 2.5% of revenue was “reasonable, and indeed at the low end of the range of fees of recent licenses.”

The decision also establishes that existing marketplace agreements can be taken into account when determining rates, a key factor for us, and the industry. This is an important step forward in valuing music in the digital age.

BMI fully supports all new avenues for the performance of our repertoire, but we also believe that creators should never have to virtually give away their product for free in order to subsidize the development of someone else’s business. We were not about to stand by and let that happen to our BMI family. We went through a lot of time and expense to fight that notion, and we are gratified that the Court ruled in our, and ultimately, our affiliates’ favor.

And our efforts to protect the value of our affiliates’ creative work continue.  As you know, we have testified in Washington, DC about necessary changes to our Consent Decree and remain encouraged by our ongoing conversations with the Department of Justice.  BMI is also a strong supporter of the Songwriters Equity Act, a bill recently reintroduced in Congress that seeks to create a level playing field when determining rates and fees.  These efforts are essential to help modernize the music licensing system, creating one that makes better sense for the digital world we live in today and benefits all stakeholders.

My thanks to our friends at Milbank Tweed, who represented BMI at trial, to the in-house legal team of Stuart Rosen, Joe DiMona, Hope Lloyd and Reneé Wolfe, and to all of the BMI team members who gave of their time and expertise in contributing to this achievement.

I am excited for what’s ahead, and thank you for your continued support.

ASCAP also responded:

On Thursday, Judge Louis L. Stanton of United States District Court in Manhattan ruled in favor of BMI in its rate court proceeding with Pandora, setting the rate Pandora must pay BMI at 2.5% of revenue. In his decision, Judge Stanton cited market benchmarks ASCAP has long argued are relevant in rate court proceedings.

In response to the BMI ruling, ASCAP President and Chairman Paul Williams issued the following statement: “This decision is welcome news for music creators, but make no mistake, Pandora will stop at nothing in their ongoing effort to shortchange songwriters. ASCAP and the music community must continue to fight for the urgent reforms needed to enable all songwriters, composers and music publishers to obtain fair compensation for the use of our music.”

NMPA released this statement:

It is a positive first step to the entire publishing and songwriting community that Judge Stanton ruled in favor of BMI, requiring Pandora to pay them a higher percentage of its revenue. While still a small fraction of what music creators deserve, this decision sends a clear message that Pandora cannot continue to get away with growing its business on the backs of struggling songwriters – who deserve to be paid fair market value for their work. – NMPA Pres David Israelite

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Sarah Skates has worked in the music business for more than a decade and is a longtime contributor to MusicRow.

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