Judge May Turn to DOJ In Ongoing Pandora-ASCAP Dispute
by Brian Kim, Arther Law’s Industry Insider
U.S. District Judge Denise Cote recently stated that she might ask the U.S. Department of Justice to weigh in and clarify the terms of a consent decree dating back to 1941 which had clarified the scope of ASCAP’s licensing rights in an antitrust dispute.
The call for potential DOJ involvement came amidst an ongoing dispute between internet radio service provider, Pandora Media Inc. and the American Society of Composers Artists and Publishers (ASCAP). ASCAP licenses music and collects royalties for its members, which include large publishing companies. As an Internet radio company, Pandora is suing ASCAP because it claims it is paying royalties over four times as high as other broadcast companies.
Pandora has argued that ASCAP is using a two-tiered system to extract higher rates while ASCAP has justified the disparity on the grounds that Pandora operates in a different form of media. ASCAP argues that a ruling in favor of Pandora would cause immense changes, claiming that the consent decree reached with the Department of Justice does not require publishers to license songs to Internet companies on the same terms as other media companies. Additionally, ASCAP claims that Pandora is actually paying very little licensing fees for its songs and is simply pulling a stunt to lower its royalty fees for its music streams even further.
In a different action between Pandora and ASCAP, Judge Cote last week, ruled in favor of Pandora on whether ASCAP-member publishers could withhold their catalogs from Pandora. The judge based her decision on the consent decree that ASCAP has operated under since 1941. Under the decree, because Pandora requested a license from ASCAP, it automatically gets the right to play all of ASCAP songs under an interim license, even ones that publishers tried to pull digital rights off for other musical licensees. The judge declared “All means all,” holding that ASCAP cannot deny Pandora the right to play certain songs in its repertory.
While this was a win for Pandora, the rate trial with potential DOJ involvement, has been set for December 4th, to determine what percentage of Pandora’s advertising revenue will be paid to ASCAP for its license. This percentage would potentially impact publishers who made deals with Pandora. If the rate is high, it would not make much difference to publishers who can withdraw their digital rights, but if the rate is set low, it would potentially cost publishers millions of dollars.