Pandora has filed a lawsuit against ASCAP, the organization that chooses the royalties for music. Pandora is asking for lower fees through 2015. Pandora wants to receive a blanket licensing fee that would cover all songs.
Pandora executives claim that fees set more than 10 years ago prevents new media businesses from becoming profitable. Pandora believes that it is unfair that ASCAP will not offer them the same fees that is given to iHeartRadio’s Clear Channel and other stations.
Some organizations pay around 1.7% of gross revenues with offsets for ad commissions. Pandora is asking that they receive the same considerations for streaming music.
ASCAP and Pandora have been in discussions for over one year, but were not able to reach an agreement. In 2011 Pandora paid around 50% of its total revenue in royalties. SiriusXM paid around 6 times less based on their revenue.
Pandora executives hit a net loss of $25.6 million for the period ending in July and the company lost $8.6 million in the year before.