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Pandora reportedly close to major label deal over pre-1972 recordings

By | Published on Thursday 15 October 2015


Pandora is primed to pay $90 million to the major labels over the whole pre-1972 thing, according to the New York Post. This follows Sirius paying $210 million over the same issue back in June, and like that deal it is thought the Pandora settlement covers both past and future usage of tracks that pre-date 1972.

As much previously reported, this dispute centres on some peculiar whims of American copyright law. Unlike in most other countries, in the US traditional AM/FM radio stations only have to pay royalties for the music they play to the publishers, not the labels, based on the argument that airplay is free promo for the record companies. However, online and satellite radio services do need licences from the labels too.

That last rule comes from US-wide federal copyright law, which only applies to recordings that were released after 1972. Earlier recordings are protected by state-level copyright law which says nothing about online and satellite services, and given AM/FM stations have never paid royalties on this repertoire, Sirius and Pandora felt the same should apply to them for the 1950s and 1960s tracks they play.

The record industry did not agree and various lawsuits were filed, with litigation from Flo & Eddie – out of 1960s combo The Turtles – getting to court first. And judges in California and New York indicated royalties probably were due on the earlier recordings, because there was likely a general performing right for sound recordings in state-level copyright law, even though that means the labels could, in theory, have been demanding royalties from AM/FM stations on oldie tracks all this time, and they never did.

Satellite radio network Sirius, which was the main target for most of the initial litigation on this issue, settled with the majors in June. According to the Post, Pandora’s board is expected to approve the $90 million settlement on 20 Oct, with $60 million accounting for past usage of pre-1972 catalogue and $30 million allowing continued usage until the end of next year. Pandora has so far refused to comment on the reports.

Usually SoundExchange and Pandora pay royalties to labels via the SoundExchange collective licensing system, though – while labels are obliged to make their catalogues available to such services through SoundExchange – licensees can choose to do direct deals with the rights owners if they so wish. Plus, the obligation on the labels also comes from federal law, so doesn’t technically apply to pre-1972 material.

How money goes through the system is of interest to artists, because they automatically receive 50% of SoundExchange income oblivious of their record contracts, so for many featured artists and session musicians direct deals in this domain are not so welcome, because then their royalties are all subject to record contracts.

We’ll wait to see if we get an official announcement on the Pandora deal, though in the meantime the more interesting element of the pre-1972 dispute is the ABS Entertainment lawsuit against the traditional broadcasters, which insists the rulings in the Flo & Eddie case means AM/FM stations must now pay royalties on golden oldies catalogue too. That case will be very interesting to watch indeed.