Business News Digital Labels & Publishers Legal

BMI wins Pandora royalties case, streaming service to appeal

By | Published on Friday 15 May 2015


Having finally had a set back in its bid to cut royalty payments, Pandora has said that it will appeal a court ruling ordering it to increase royalty payments to US collecting society BMI from 1.75% to 2.5%.

As previously reported, American performing rights organisation BMI sued Pandora in its ongoing royalty dispute with the digital service back in 2013 and the case finally reached court in February this year. Ironically, by that time Pandora was busy elsewhere in its portfolio of music industry litigation attempting to stop the big publishers withdrawing their digital rights from societies like BMI and do direct deals with the streaming service.

But it was provisional negotiations between Pandora and Sony/ATV – before the courts said the publisher couldn’t just pull digital from collective licensing – which BMI used to claim that the current 1.75% royalty rate it is receiving undervalued its catalogue. And yesterday a judge agreed, stating the 2.5% was “reasonable, and indeed at the low end of the range of fees of recent licenses”.

In a statement, BMI CEO Mike O’Neill said: “Today is an important day for BMI and a huge victory for the more than 650,000 songwriters, composers and publishers we have the privilege to represent. After a nearly two-year legal battle over the value of the BMI repertoire to the Pandora digital music service, the Rate Court ruled resoundingly in BMI’s favour”.

“The decision also establishes that existing marketplace agreements can be taken into account when determining rates, a key factor for us, and the industry”, he continued. “This is an important step forward in valuing music in the digital age”.

Although this is a significant win for BMI, and Pandora is already planning to appeal, the final result of the case may only be shortlived. If the US government does overhaul the consent decrees that regulate BMI and ASCAP’s collective licensing in the way the publishers want, that will open up a much more flexible system for rightsholders anyway.