Pandora, one of the largest music streaming services on the Internet, has won a major victory in court. Pandora and the music industry has been in a battle to decide the kind of rates that should be paid to the record labels. In a recent ruling, Judge Denise Cote ordered Pandora to pay ASCAP around 1.85% of its annual revenue. ASCAP wants Pandora to pay 3% this year and next year.
Here is a statement that ASCAP CEO John LoFrumento sent to PULSE 2.0:
?Streaming is growing in popularity — and so is the value of music on that platform. We are pleased the court recognized the need for Pandora to pay a higher rate than traditional radio stations. But recent agreements negotiated without the artificial constraints of a consent decree make clear that the market rate for Internet radio is substantially higher than 1.85%. And today?s decision further demonstrates the need to review the entire regulatory structure, including the decades-old consent decrees that govern PRO licensing, to ensure they reflect the realities of today?s music landscape. That?s why ASCAP remains committed to working with all music industry stakeholders to create a system that preserves the benefit of collective licensing to businesses seeking music licenses, while giving consumers greater access to the music they love and allowing the 500,000 songwriters, composers and music publishers we represent to be compensated for the true value their music brings to the marketplace.?
Many artists are not happy with what they are paid from Pandora. Ellen Shipley said she received $39 for a song that was played 3.1 million times. David Lowery said that a song that was played 1 million times earned him under $17. Pandora responded to those claims with a lengthy discussion about how much it pays out and the industry as we whole. In the Lowery case, Pandora said it paid approximately $1,370 in total with a little over $200 going to the songwriter.
The way that Pandora works compared to radio stations is very different and can be distinguished in the terms of “spins” and “plays.” A play on the radio station is sent out to many listeners, but a spin is a song that is given to a single user. Pandora would need millions of spins of a song to equal the same exposure as a single play on the radio. This is why the royalty paid for a single spin is much lower than the royalty paid on a single play.