Money & Business

Pandora's New to the FM Dial, And Musicians Aren't Happy

By / Jun 17, 2013 (iStockphoto/Thinkstock)

Upset with what it saw as favoritism toward terrestrial broadcasters, the popular online radio platform tried to solve the problem last week by buying an FM radio station. Now a number of music industry associations are crying foul.

Pandora Internet Radio put the old saying “if you can’t beat ’em, join ’em” into practice in a big way last week, and the music industry isn’t happy about it.

More details:

A Pandora’s box opens: Publicly traded Pandora Internet Radio, which has long faced challenges from the recording industry over its business model, found that its competitors owned by terrestrial radio networks (most notably  Clear Channel’s  iHeartRadio) got more favorable licensing rates than it did. In an effort to remedy this problem, Pandora purchased a terrestrial radio station: Rapid City, South Dakota-based KXMZ. “Pandora shouldn’t be discriminated against simply because we don’t own a radio station,” the company’s attorney, Christopher Harrison, explained to NPR.

Pandora is hoping to fraudulently sneak in the back door. Any shred of credibility that Pandora had is gone. They are at war with songwriters.

“They are at war with songwriters”: A number of music industry groups, including the National Music Publishers Associations (NMPA), Broadcast Music Inc. (BMI), MusicFirst, and the American Society of Composers, Authors and Publishers (ASCAP) spoke up about the company’s move, referring to the move as a “stunt” and suggesting that the company was acting in bad faith. “Pandora is going to pursue lawsuits and gimmicks,” NMPA’s David Israelite said at a conference last week, according to The Verge. “Pandora is hoping to fraudulently sneak in the back door. Any shred of credibility that Pandora had is gone. They are at war with songwriters.” The royalty-collection firm ASCAP, which was already the subject of a lawsuit by Pandora, claimed the company was trying to “to brazenly and unconscionably underpay” songwriters and composers, according to The Hill.

Not without its defenders: While the move faced strong criticism from the music industry, one internet-focused advocacy group, Public Knowledge, said Pandora’s move was effective in proving the music industry’s convoluted nature. “This is a perfect example of the twisted incentives and strange results we get from a music licensing system that is based on who wants a license instead of just what they want to do with the music they’re using,” the group’s Jodie Griffin writes. “This makes no sense. The law should treat like uses alike. Regardless of how high or low you think performance royalty rates for webcasting should ultimately be, there is no logical reason to give preferential rates to certain companies just because they arrived at the negotiation table first.”

The move wasn’t the only recent development on the music-publishing front for Pandora: Soon after the news of the radio station purchase broke, BMI filed a lawsuit asking for the Federal Rate Court to “set reasonable, market driven fees” on the BMI-represented music that Pandora uses.

Ernie Smith

Ernie Smith is the social media journalist for Associations Now, a former newspaper guy, and a man who is dangerous when armed with a good pun. More »

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