Business

Pandora’s FM Station Riles Up Music-Publishing Groups

After a years-long debate over whether it could purchase a small South Dakota station, the online radio provider won big last week with the FCC—frustrating music publishing groups like ASCAP in the process.

As its name suggests, Pandora Media isn’t afraid of opening a can of worms every once in a while—and the latest is the most frustrating yet for the music industry.

Last week, Pandora gained approval to purchase South Dakota terrestrial radio station KXMZ-FM. Buying the station will effectively give the company the ability to avoid some of the higher performance fees associated with running its online radio platform.

Good for Pandora, of course, but not so good for industry groups focused on collecting revenues from performance rights, such as the  American Society of Composers, Authors and Publishers (ASCAP); Broadcast Music Inc. (BMI); and the National Music Publishers Association (NMPA).

The plan, first announced in 2013, has had a long and bumpy road to fruition, with the Federal Communications Commission questioning whether Pandora could meet federal domestic ownership standards due to its status as a publicly owned company.

But, over the disapproval of the music industry groups, the FCC eventually granted Pandora a waiver, ensuring that a company known for creating customized radio playlists for individuals would be dishing out a more traditional kind of FM radio—at least in one part of the country.

ASCAP had unsuccessfully argued against the plan due to its motives.

“With respect to ASCAP’s allegations regarding Pandora’s motivation in acquiring the station,” the FCC wrote in its decision last week, “the [Communications Act of 1934] does not require us to examine the business rationale of a petitioner for a declaratory ruling on foreign ownership, but instead requires us to determine, on a case-by-case basis, whether it is in the public interest to permit an entity to obtain a station license if the foreign interest in the U.S. parent of the licensee would exceed 25 percent.”

The decision frustrated the affected trade groups, especially ASCAP. Speaking out against the FCC’s action, it called Pandora’s effort “a transparent ploy” to hurt songwriters.

“It’s telling that Pandora would rather cloak itself as traditional radio than engage in meaningful discussion of how we can update our nation’s outdated music licensing regulations to better serve all stakeholders in the digital age,” the group stated.

NMPA President and CEO David Israelite called the move “cynical and shameless” and said that “there can be no doubt that Pandora has declared war on songwriters.”

A Tough Week for ASCAP

Pandora’s radio-station win was only one of two losses for ASCAP in the past week.

On Wednesday, a ruling in a federal Appeals Court regarding the rates set for music publishing didn’t go the group’s way, either. That ruling affirmed that, under the industry’s current consent decree—which is currently being analyzed by the Justice Department—publishers cannot split these rights between physical and digital uses.

In a statement after the appellate decision, ASCAP CEO Elizabeth Matthews emphasized that the Justice Department’s decision on the consent decree would ultimately be a bigger deal for the music industry.

“This ruling reaffirms what we already know—that the ASCAP Consent Decree and the rules that govern music licensing are outdated and completely out of step with the way people listen to music today,” she said.

(iStock/Thinkstock)

Ernie Smith

By 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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