BMI Sues Pandora Over Royalty Rates

Last week, performing rights organization BMI filed a lawsuit against Pandora, the popular Internet radio service that claims more than 70 million members.

BMI, which collects public performance royalties for songwriters and music publishers, is requesting that the Federal Rate Court – a part of the U.S. District Court in Manhattan that handles royalty disputes– pay BMI members more money for use of their work.

“The action asks the court to set reasonable, market driven fees for Pandora after negotiations did not result in an agreement,” BMI said in a June 13 statement. “This is the first time the organization has resorted to litigation on fees in the digital arena in the 18 years since it signed the first music industry copyright license for the performance of music on the internet.”

BMI filed the lawsuit just two days after Pandora said it had reached a deal to buy a small terrestrial radio station in South Dakota. According to Pandora, the acquisition would allow the streaming service to qualify for the lower rates the court sets for terrestrial radio operations.

Pandora argues that attempts by “certain industry players” to impose higher royalty rates on the radio service are “unreasonable.”

Christopher Harrison, a lawyer for Pandora, outlined the company’s position in an opinion piece published in The Hill, a D.C. newspaper that covers Congress. “The status quo is a dead end for the vast majority of working musicians and the Internet is driving a sea change that will fundamentally shift the equation away from big industry players towards a more democratic and inclusive industry,” Harrison wrote. “For this to become reality, Internet radio must be embraced – not discriminated against.”