BMI challenges Pandora’s bid to lower its rates by buying a terrestrial radio station

That didn’t take long. Today, Broadcast Music Inc. (BMI) filed suit in the Southern District Federal Court in New York, asking the court to set rates for Pandora’s online radio business, on behalf of its “600,000 songwriters, composers and music publishers.”

The long-standing fight between Pandora and those who control music copyright took a new turn yesterday, when Pandora announced in an op-ed published in The Hill that it had purchased a small terrestrial radio station – KXMZ-FM of Rapid City, South Dakota – in a bid to pay royalty rates in line with other, traditional radio stations.

Pandora, in its post, stated that it is being forced through “discriminatory treatment” at the hands of the American Society of Composers, Authors and Publishers (ASCAP). The company, in a list of grievances, stated that it was being subjected to “discriminating in license fees and terms between Pandora and other similarly situated licensees such as Clear Channel’s iHeartRadio.”

So, Pandora bought a small radio station that has its boots on the ground, so that it would no longer be an online-only provider of radio, but instead a more traditional, hybrid provider. As quoted in The Hollywood Reporter, BMI’s not taking too kindly to the move: “Pandora’s stunt makes a mockery of the performing rights licenses and the rate court process.” Well then.

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BMI claims that it offered Pandora fair rates that were refused. Pandora, in a statement claims that “Pandora offered to pay ASCAP higher rates than it currently pays, but ASCAP refused, choosing instead to enable the publishers to try to extort even higher rates through a scheme of ‘selective withdrawals.'”

That this is going to court isn’t a surprise. Pandora, to its credit, pays a massively higher percentage of its revenue to copyright holders than other radio services, including, it claims, other online-only providers.

The KXMZ maneuver might not work, but Pandora is going to have its day in court. Again. According to Casey Newton on the Verge, Pandora provided comment that it looks “forward to the court’s oversight of this matter.”

Here’s BMI’s press release regarding its suit:

Broadcast Music Inc (BMI) filed an action in New York City today asking the Federal Rate Court to set royalty fees for internet radio service Pandora on behalf of the organization’s 600,000 songwriters, composers and music publishers.  The action asks the court to set reasonable, market driven fees for Pandora after negotiations did not result in an agreement.  BMI represents the public performance copyright interest of its affiliates when their works are played across all venues including the internet, cable, broadcast television and radio, satellite and in nightclubs, bars and other commercial establishments.  BMI negotiated the first music industry blanket copyright license agreement for the performance of music online in 1995.  Today, there are approximately 10,000 digital properties covered by BMI licenses.  This is the first time the organization has resorted to litigation on fees in the digital arena in the 18 years since it signed the first music industry copyright license for the performance of music on the internet.

Top Image Credit: Erwin Bernal