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Court rules that Pandora won't pay higher royalties to songwriters (update: ruling details)

Jon Fingas, @jonfingas
March 16, 2014
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Pandora has been fighting tooth and nail against potential songwriting royalty increases, and it appears that this tenacity is largely paying off. A court has ruled that the streaming radio service should pay the same 1.85 percent royalty rate that it has paid for years, resisting both Pandora's call for 1.7 percent (like traditional radio) and the American Society of Composers, Authors and Publishers' (ASCAP) demand for 3 percent. Details of the ruling are under a court seal, so the motivations behind the decision aren't yet clear. However, ASCAP is more than a little upset by its loss; it sees the verdict as proof that full-scale licensing reform is necessary to "reflect the realities" of modern music. Whether or not that's true, the Society may have inadvertently sabotaged its own case. It pointed to iTunes Radio's higher royalty rate as a model for fair compensation, but Apple is willing to make little to no profit from its music services -- ASCAP may have unintentionally suggested that its proposal wasn't realistic.

Update: A week later, the details of the ruling are available. The judge determined that ASCAP was colluding with publishers to force Pandora to pay higher rates; it would ask publishers to leave the group so that they could negotiate more lucrative deals on their own, raising their royalty demands to give ASCAP more leverage at the rate court.

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