Pandora has opened up a boxful of ire by the American Society of Composers, Authors and Publishers over the music streaming company’s announced plans to buy radio station KXMZ in Rapid City, South Dakota.
The performing rights society — which negotiates, collects and distributes royalties to its 465,000 members — sees this purchase as a way to cheat songwriters and composers out of royalties, and, in a post on its website, ASCAP says it has petitioned the Federal Communications Commission, asking it to bar Pandora’s bid to buy the AM-FM station.
ASCAP, to show that Pandora’s move to acquire KXMZ is an attempt to undercut royalties owed to its members, points to data indicating that for every 1,000 plays of a song on Pandora, a songwriter and composer is owed eight cents; that’s a pittance compared with what other similar companies pay, it says.
But in an Op-Ed in a widely read Capitol Hill publication, Christopher Harrison, Pandora’s counsel, defends the station buy. He says the company’s ownership of a broadcast outlet legally should entitle it to more favorable royalty rates.
ASCAP refutes this argument, saying Internet radio and traditional AM-FM radio play music and generate revenue in sharply different ways. The society says Pandora should be barred from benefiting from a broadcast provision by the Radio Music Licensing Committee, an accord designed for businesses that earn more than 95 percent of their revenue from traditional AM-FM radio. Pandora, instead, should pay internet licensing fees because nearly all of its revenue comes from the net.
Despite ASCAP’s fervent opposition to its moves to lower its royalty payments, Pandora points out that it has not recorded the financial boons the music rights group says it has reaped. Pandora now pays for each additional song streamed by its users, whether or not it can make money on those rates. The company says its revenues are only slightly higher than its royalty payments; after factoring in other costs, it has reported a $28.6 million loss.
Pandora claims that: ASCAP inflates royalties it charges the company and withholds songs that it makes available to others; the music streaming firm says ASCAP also refuses to give it the same rates it accords other comparable enterprises. Pandora’s pending lawsuit, filed against ASCAP in November, 2012, seeks “reasonable” fees and royalty terms; the company also is also lobbying Congress to pass legislation giving it better royalty rates.