June 14 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
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
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