According to Billboard, the music label BMI is filing a lawsuit against Pandora. Yesterday we wrote about how Pandora bought a terrestrial radio station in South Dakota as a way to lower the royalty rates that they have to pay to music labels. Clearly this did not sit well with BMI.
iHeartRadio, one of Pandora’s largest competitors, is owned by Clear Channel. Clear Channel owns the highest number of terrestrial radio stations in the country. Clear Channel is given special treatment because they do not have to pay music license owners fees for anything that is played on those stations. Instead, Clear Channel pays a 1.7% advertising rate negotiated by the Radio Music Licensing Committee (RMLC) for music that is streamed. Pandora has to pay 4.1% for streaming radio because they are not a terrestrial radio station business. This is why they bought that station in South Dakota.
BMI was in talks with Pandora to have that rate lowered, but now the negotiations have ended. BMI is filing a lawsuit over Pandora’s claim to lower their licensing fees. Pandora’s radio station acquisition will likely not affect revenues. It seemed like the company bought the radio station simply to make a statement about the music industry.
It is not just BMI that is upset with Pandora. National Music Publishers Association (NMPA) CEO David Israelite disapproved of Pandora’s radio station acquisition during their regular meeting in Manhattan last night.
?Pandora is going to pursue lawsuits and gimmicks,? stated Israelite. ?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.”