Pandora sued by Broadcast Music Inc over license fees

June 14 Fri Jun 14, 2013 1:39am EDT

June 14 (Reuters) - Broadcast Music Inc, a songwriters rights organization, is suing Pandora Media after the Internet radio company rejected a higher license fee for playing songs across various devices including mobile phones.

In a lawsuit filed with the Manhattan federal court on Thursday, BMI said it had proposed an increase in Pandora's fees "consistent with market rates to reflect the explosive growth of the Internet music streaming marketplace."

Broadcast Music Inc collects license fees on behalf of over 600,000 affiliated songwriters, composers and music publishers and distributes them as royalties to those members whose works have been performed.

One of the main challenges facing the decade-old Pandora is the rising cost of licensing music, which grows as more people tune in. The company had about 70.8 million active listeners at the end of May.

On Tuesday, Pandora said it agreed to purchase KXMZ-FM, a Rapid City, South Dakota-area radio station.

Pandora hopes that the radio station deal will allow it to pay lower rates similar to the ones paid by traditional broadcasters such as Clear Channel Communications Inc on their digital services, such as Clear Channel's iHeartRadio.

BMI said in the filing that it expects Pandora to claim that is no different than commercial broadcast radio now that it owns a radio station.

The group currently has agreements with Pandora's rivals Spotify and Music Choice, in which the rates and terms are "the same as, or higher than, BMI's proposal to Pandora," it said in the filing.

BMI did not disclose the proposed license fees in the court filing. It has requested the court to confirm as "reasonable" the rates and terms requested by BMI for using music in the BMI portfolio.

Meanwhile, BMI said it has negotiated an interim license fee to be paid by Pandora starting Jan. 1 until such time the dispute is resolved.

Pandora could not immediately be reached for comment by Reuters outside of regular U.S. business hours.

The case is in re Broadcast Music Inc vs Pandora Media Inc, Case No. 13-4037, U.S. District Court, Southern District of New York.

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