Pandora Media, who runs the uber-popular Pandora Radio, has sued publishing royalties powerhouse Ascap in the interest of paying lower royalties to songwriters. Sound evil? Pandora Radio's intention is probably not as evil as it seems ... the company runs on a thin line of profit because the major recording labels own major stakes in the company (in order to get the music licensing) and have too pay beaucoup $$$ to play the music we all love.
“The license rates and other material terms of the 2005 license agreement were presented to Pandora by ASCAP as being effectively non-negotiable,” reads the court filing. Pandora Radio would rather pay a blanket licensing fee that would last with ASCAP (American Society of Composers, Authors and Publishers) until 2015. This would make things smoother for the media company. The lawsuit was filed in the US District Court of Manhattan this week.
As Paul Resnikoff at Digital Music News points out, this presents a tough situation, as artists want more money, Pandora wants to pay less money, and both sides need each other.
"But wait: there's one gigantic problem with trying to drive publishing royalties down. Because publishers themselves are trying to drive them up, by a huge margin. And part of the motivation behind that push is that publishers are receiving just a fraction of the payouts allocated for recordings. "Right now, Pandora pays record labels $12.50 for every $1 paid to songwriters and music publishers," a top publishing executive recently ranted to Digital Music News," he wrote.
So the NMPA (National Music Publishers Association) responded with a statement and words from David Israelite, the president and CEO of the NMPA, who said “It’s outrageous Pandora would try to reduce the already nominal amount they pay songwriters and music publishers, when Pandora’s business model is based entirely on the creative contributions of those songwriters. To file this suit at the same time that Pandora’s founders are pocketing millions for themselves adds insult to injury.”
So that leaves an awkward situation for Pandora Radio, the NMPA, ASCAP and the recording labels, not to forget the musicians and songwriters, who are stuck in the middle of this whole process.
What do you think? Should Pandora pay less to ASCAP or do artists deserve more money?