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Pandora sues ASCAP over songwriter fees, asks court to establish 'reasonable' licensing

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Pandora iPhone
Pandora iPhone

Pandora today filed a lawsuit against the American Society of Composers, Authors and Publishers (ASCAP) in a bid to lower the licensing fees it pays out to songwriters, composers, and publishers to stream their music. First reported by Bloomberg, the suit follows more than a year of failed discussions between the two sides to reach a new rate, with Pandora now asking a US District Court in New York to implement a blanket licensing fee that would cover all work under ASCAP's representation. The organization's membership currently stands at over 435,000.

Pandora wants an all-encompassing deal for ASCAP content

The company is also complaining about preferential treatment ASCAP has heaped upon traditional broadcasters like Clear Channel, owner of competing streaming service iHeartRadio. Earlier this year the two organizations reached a new digital licensing pact with favorable terms that reportedly weren't extended to Pandora.

A level playing field for all digital radio

Pandora has previously voiced support for legislative measures that would achieve the same result. Back in September, the company threw its weight behind a bill designed to cut down on royalty rates paid by internet radio stations. Such "discrimination against internet radio," as co-founder Tim Westergren put it, acts as a roadblock to profitability for his company. "A predatory licensing fee orchestrated over ten years ago by the RIAA and their lobbyists in Washington has devastated internet radio," he said in a blog post last month. "Imagine the impact on artists if this industry grew to become 25% or even 50% of radio listening."

Yet in the face of criticisms over minuscule royalty payments, Westgren already views Pandora and its 150 million users as a meaningful revenue stream for musicians. By his estimates, the company will dole out royalties of $10,000 to over 2,000 artists over the next year. More than 800 will receive $50,000 and top artists are already taking in annual rates in the millions. That success obviously doesn't translate to the vast majority of artists on the service, but with forecasts for streaming music pointing upward (and Apple's rumored flirtation with a radio platform of its own) it makes sense that Pandora is tackling this nagging problem now if it hopes to have a viable path forward.