NEW YORK (Reuters) — A federal judge
has left stable the rate U.S. Internet radio service Pandora Media
Inc must pay songwriters to license their music, a performing rights
organization said Friday.
The American Society of Composers, Authors and Publishers
said the judge following a non-jury trial set Pandora's rate to
license songs registered with the association at 1.85 percent
for five years through 2015.
The rate, set by U.S. District Judge Denise Cote in Manhattan,
left the royalty at the current rate paid by Pandora. Pandora
had sought a rate of as low as 1.7 percent.
But the judge also appears to have rejected an escalating rate
structure proposed by ASCAP. The group sought to have Pandora
pay 1.85 percent for 2011 to 2012; 2.5 percent for 2013; and 3
percent for 2014 to 2015, according to court filings.
While ASCAP acknowledged not getting the rate it sought, the
organization nonetheless said it was pleased the judge did not
adopt Pandora's argument that it should pay the 1.7 percent rate
that commercial radio stations pay.
"Streaming is growing in popularity — and so is the value of
music on that platform," John LoFrumento, the chief executive of
ASCAP, said in a statement. "We are pleased the court recognized
the need for Pandora to pay a higher rate than traditional radio
stations."
But LoFrumento added that the decision demonstrated a need to
review the entire regulatory structure for how the U.S.
government regulates licensing to "to reflect the realities of
today's music landscape."
Cote's ruling remains under seal. In an order Friday, the judge
acknowledged having decided the rate and directed the parties to
tell her by Tuesday what parts of her ruling should be redacted.
Pandora in a statement said it was "aware that Judge Cote issued
an order today under seal, but we cannot comment until it is
publicly released."
The ruling came in a 2012 lawsuit by Pandora against ASCAP over
what constituted "reasonable" licensing fees.s
Under a 1941 antitrust consent decree, ASCAP's rates are subject to
review by the federal court in Manhattan when disputes arise.
The New York-based non-profit has membership of about 500,00 members
composers, songwriters, lyricists and music publishers and
represents artists including Duke Ellington, Katy Perry, George
Gershwin and Jay-Z.
Royalties are a major cost for Pandora, with licensing representing
54 percent of its total revenue in 2013.
Pandora said that for the eleven months ended December 31, 2013, it
spent 4 percent of its revenue licensing the public performance of
musical works from organizations representing songwriters like
ASCAP.
The case is In re: Petition of Pandora Media Inc, U.S. District
Court, Southern District of New York, No. 12-08035.
(Reporting by Nate Raymond in New York;
additional reporting by Jennifer Saba; editing by Lisa Shumaker)
