To online radio service Pandora’s chagrin, the California-based company will now have to pay rights management firm Broadcast Music Inc. (BMI) 2.5 percent — or 42 percent more — in performance royalties for each stream. The change comes after nearly four months of court proceedings between BMI and Pandora, following a lawsuit launched in 2013. BMI songwriters shouldn’t feel too victorious yet, though, as Pandora plans to appeal the decision.
“Today’s decision is an enormous victory for more than 650,000 songwriters, composers and publishers that BMI has the privilege to represent,” BMI said in a statement. “The Court resoundingly agreed with BMI, supporting our position that 2.5 percent was ‘reasonable, and indeed at the low end of the range of fees of recent licenses.’ This is an important step forward in valuing music in the digital age.”
BMI is one of the top two American organizations responsible for collecting and paying songwriters and publishers royalties, the other being the American Society of Composers Authors and Publishers (ASCAP). One of ASCAP and BMI’s responsibilities is negotiating fair payment to members for their music played on streaming services, including Pandora, Spotify and others. Pandora is the largest of the online music streaming services in the U.S., boasting 175 million registered Pandora users, over 80 million of which are considered to be “active” users.
Interestingly, the news comes just days after Pandora won a related case against ASCAP. The court ruling gave ASCAP just a 1.85 percent performance royalty rate after the organization unsuccessfully appealed the case. “Powerful corporate interests, like Pandora, are determined to stand in the way of meaningful licensing reform so that they may continue to shortchange songwriters,” said ASCAP CEO Elizabeth Matthews following the ruling.
Because of Pandora’s win against ASCAP, the streaming platform will undoubtedly bring the Pandora-BMI case to the U.S. Court of Appeals.
“We remain confident in our legal position,” said a Pandora spokesperson in a statement. “We disagree with the Court’s ruling and will appeal to the same court that ruled in Pandora’s favor in the ASCAP case last week. We strongly believe the benchmarks cited by the court do not provide an appropriate competitive foundation for the market rate.”