![]() No publisher may make a partial withdrawal of digital rights, ever. ![]() In late September, the judge agreed, ruling that publishers are either ASCAP members for all types of uses, or they’re not. Then suddenly, a few weeks ago, perhaps hoping or sensing that the court may grant its request for a lower rate, Pandora went to court to ask the judge for a Summary Judgment invalidating those publisher withdrawals, arguing their interim license with ASCAP was a "license in effect" and that the withdrawals of publishers that took place after the interim license went into effect should not affect them. Meanwhile, the interim rate Pandora is paying to all PROs combined is a very low (approximately) 4%.Įarlier this year, several publishers, including all of the largest, withdrew their "digital rights" (the right to license music to digital users, including Pandora) from ASCAP, and entered into direct licensing negotiations with Pandora. That case is pending and the trial will begin in November. However, when the two sides couldn't agree on a license fee, Pandora went to court to see if the judge would grant them a lower rate than what ASCAP was asking. Last fall, Pandora and ASCAP entered into an interim license agreement designed to cover Pandora's use of the ASCAP repertoire while the two sides worked out an agreement about the future fee for the license. So we believe that Pandora should pay more for the use of our work, the sole product/service they offer. No news, no information, no weather reports. It's very intensive: Pandora and other digital providers perform a much higher rate of music than broadcasters. It's interactive: consumers can determine pretty much what they want to hear. Digital providers argued they were just like traditional broadcasters the PROs rejected that argument and asked for a higher rate.ĬMC believes that the PROs are right: Pandora is unlike any radio station that ever existed. As the digital music market developed, the PROs struggled to find licensing models that worked. Over the years, that rate fluctuated between 3 and 5% of income, with various types of offsets and carve-outs, adjusted for market share. Why such a low rate? Historically, terrestrial broadcasters had licenses with the Performing Rights Organizations (PROs) that were based on percentage of income. ĭuring that same year, Pandora paid only about 4% of its income to PROs representing songwriters, composers, and music publishers. The money was paid to SoundExchange, which distributes money to record companies, featured artists, and, to a certain extent, musicians who play on their records. In 2012, this amounted to about 46% of Pandora's income. ![]() Songwriters, composers, artists, record companies, and music publishers have all grown up with this system, so it makes sense to us, just as the Chinese alphabet makes sense to billions of people, but is utterly incomprehensible to everyone else.Ī few years ago, the Copyright Royalty Board (CRB), a group of three federal judges, which sets rates for performances of sound recordings under the Digital Millennium Copyright Act (DMCA), set a rate of $0.00102 cents per song streamed by companies like Pandora. ![]() Therefore, it’s certainly understandable that internet music innovators, anxious to launch their businesses, are less-than-happy with this situation. ![]() The advent of digital music distribution has brought internet entrepreneurs face-to-face with an arcane (some would say Byzantine) system of licensing music that involves multiple rights, multiple rights owners, and a handful of organizations that purport to license some - but not all - of those rights on behalf of their "members" - all of whom, however, can also license those rights directly. ![]()
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