Songwriters had good reason to celebrate on Friday: BMI won a battle in court that will force Pandora to pay it 2.5% of annual income as a performance royalty. The digital service previously had to pay BMI just 1.75% of its yearly revenues.
What that means in practical terms is that Pandora – expected to turn over $1bn this year – would have to pay US publisher/songwriter collection society BMI a total of $7.5m more than it did in 2014. It is expected to appeal the verdict.
The news came a year after a rate court ruled that Pandora must give 1.85% of its annual revenue to BMI rival ASCAP.
Sony/ATV’s CEO & Chairman Martin Bandier slammed that decision, calling it “woefully inadequate” and a “clear defeat for songwriters”.
Following the BMI result last week, ASCAP President and Chairman Paul Williams said: “This decision is welcome news for music creators, but make no mistake, Pandora will stop at nothing in their ongoing effort to shortchange songwriters.
“ASCAP and the music community must continue to fight for the urgent reforms needed to enable all songwriters, composers and music publishers to obtain fair compensation for the use of our music.”
So, to recap: Pandora currently has to pay 2.5% of its annual revenue to BMI and 1.85% to ASCAP.
For its use of sound recordings, it also has to pay a separate license to artists and labels via SoundExchange: $0.0014 per ad-funded stream and $0.0024 per premium stream.
But the digital company is fighting to reduce all of these rates.
As well as teaming up with Google in a pressure group to achieve exactly that, it’s also on the verge of purchasing a terrestrial FM broadcaster in the US, which it could theoretically use to dramatically reduce its legal royalty payment burden.Music Business Worldwide
