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Pandora wins court battle with music publishers

By Ryan Nakashima

AP Business Writer

LAST UPDATED: 09:14 a.m. HST, Sep 18, 2013

LOS ANGELES » Internet radio leader Pandora Media Inc. said today that it won a court battle with the music publishing society known as ASCAP in a ruling that should help it lower its royalty payments.

The ruling only impacts the royalties Pandora pays to songwriters -- a fraction of the total since royalties for performers are about 13 times larger. But the decision marks an incremental win in its larger battle to contain growing costs.

Pandora has said it pays about 4.3 percent of its revenue in songwriter royalties to groups including ASCAP, which distributes them to major publishers like Sony/ATV and Warner/Chappell.

Starting two years ago, major publishers began to withdraw rights from Pandora, forcing it to reach separate deals.

Judge Denise Cote's ruling in a federal district court in New York on Tuesday said such withdrawals violate the conditions ASCAP has acted under since a 1941 agreement with the Justice Department to prevent anticompetitive behavior.

"We welcome the court's decision," said Chris Harrison, Pandora's assistant general counsel, in a statement. "We hope this will put an end to the attempt by certain ASCAP-member publishers to unfairly and selectively withhold their catalogs from Pandora."

ASCAP, the American Society of Composers, Authors and Publishers, said the ruling does not undermine its position that songwriters should be paid fairly by Pandora, an issue to be addressed in a December trial.

"Songwriters deserve fair pay for their hard work," said ASCAP CEO John LoFrumento. He said the society looks forward to the Dec. 4 trial that could rewrite a five-year deal in place since January 2011, where it will "demonstrate the true value of songwriters' and composers' performance rights."

As one example of the value of songwriters' work, ASCAP negotiated higher royalties for Apple's iTunes Radio, a streaming service that launches today and will compete with Pandora.

While Pandora said the ruling "has no impact on the royalty rates Pandora currently pays to ASCAP," Pandora spokeswoman Mollie Starr said it did annul agreements Pandora reached separately with Universal Music Group and BMG/Chrysalis Music after they withdrew rights for Pandora in July.

With Tuesday's ruling, Pandora will now pay Universal and BMG the lower ASCAP rate.

Starr said Pandora will continue to honor a separate rate it negotiated with Sony/ATV, which bought EMI Music Publishing in June 2012, through the end of the year.

A spokesman for Universal did not immediately respond to a message seeking comment. A BMG spokesman had no immediate comment.

Pandora shares rose 50 cents, or 2 percent, to $25.69 today.

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nodaddynotthebelt wrote:
I used to listen to Pandora until I discovered Spotify. The problem with Pandora is that they require you to listen to the tracks that they decide to play for you. You can only skip songs a couple times and then you are stuck to listening the song that comes up. And there are commercials on the device screen and audio commercials that interrupt the music. I don't know if they still do audio commercials but Spotify does do audio commercials on their free version. They do, after all, have to pay the artists. What I love about Spotify is that you not only can skip songs but you can choose an entire album and play it as if you were playing a CD. You can start anywhere on the album and even repeat play as many times as you want (I have never encountered a time where I was denied that ability). Further, Pandora often plays music that is supposed to be similar to the artist that you select but more often than not the songs do not have a close similarity or interest me. I like the freedom to choose the exact artist and or album. The paid version of Spotify removes the ads but I am willing to put up with the audio commercials. If they all of a sudden decide to up the amount of audio commercials, then I guess I'll go back to the old fashioned way of finding the CD and playing it on the CD player. I highly recommend Spotifiy to Pandora listeners. I would suspect that many will switch if they try.
on September 18,2013 | 09:43AM
juscasting wrote:
I agree with you. But what I've learned is that I know what music I want to listen to, so what I did since i tunes, MP4 and MP3 were created was build my own collection over a span of a decade or so. Now I have like thousands and thousands of songs that I like and don't have to depend on Pandora. I still use it once in a while to piss my self off!
on September 18,2013 | 12:32PM
HazieMae wrote:
How can they be "unfairly holding withhold their catalogs"? They don't have to make them available if the rates Pandora is paying are unacceptable. Songwriters are being ripped off.
on September 18,2013 | 10:35AM
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