Pandora Demands Lower License Fees in Lawsuit Against ASCAP

The digital music streamer says that the agency representing song publishers refuses to give it fair and reasonable terms.

On Monday, in New York federal court, Pandora sued The American Society of Composers, Authors and Publishers, the leading performance rights royalty collection agency, in hopes of attaining "reasonable"

According to the petition filed, "Despite negotiations spanning more than a year, Pandora and ASCAP have been unable to reach agreement on final license fees and terms -- leading to this filing by Pandora seeking this Court's determination of same."

The lawsuit, first reported by Bloomberg, says that Pandora began negotiating its rates around the same time that a New York federal court approved last January a settlement between the Radio Music Licensing Committee and ASCAP.

ASCAP is maintaining it should receive a lower 15% deduction applicable to actually-incurred outside-agency commissions, says Pandora, which the company maintains is "arbitrary, unreasonable and particularly harsh."

The lawsuit goes onto say that after ASCAP changed its rules in April, 2011 to allow its members to withdraw certain licensing authority, EMI took advantage of this and soon negotiated a new media rights deal directly with Pandora. Sony is also said to be negotiating directly with Pandora.

Pandora now says "it is critical...that its ASCAP fees be diminished by a factor commensurate with Pandora's payment obligations to EMI, Sony and any other publisher that may withdraw catalog from ASCAP."

If successful in court, Pandora might trim the licensing fees it pays, but the legislative fight still figures to continue. Digital Music News has been told by a publishing executive that Pandora pays $12.50 to record labels for every $1 paid to songwriters and publishers.

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