Judge leaves Pandora royalties unchanged

Last updated 15:28 17/03/2014

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A federal judge in New York has left the rate that Internet radio giant Pandora must pay songwriters unchanged at 1.85 per cent of revenue for the next two years.

That's according to ASCAP - the American Society of Composers, Authors, and Publishers - which collects royalties for some 500,000 artists and publishers in the US

ASCAP said Judge Denise Cote of the US District Court in New York made the ruling Friday. Court filings show her order and opinion was filed under seal.

ASCAP Chief Executive John LoFrumento said in a statement that the market rate for internet radio is substantially higher than 1.85 per cent and said the ruling demonstrates the need for regulatory reform. ASCAP cited several separate deals as benchmarks, including one between music publishers and Apple for its iTunes Radio service, as examples.

It had sought a retroactive rate increase to 2.5 per cent for 2013 and a boost to 3 per cent in 2014 and 2015. Pandora argued it should be given a rate cut so that it would pay the same as traditional radio stations at 1.7 per cent. It even bought a radio station in South Dakota last June to qualify for the lower rate.

Pandora Media Inc. declined to comment until the ruling is publicly released, which could occur next week.

Pandora has been paying 1.85 per cent of revenue to ASCAP since 2011 on an interim basis.

The rate is set in court because of a decades-old agreement between music publishers and the government that was meant to constrain monopolistic behaviour.

But recently, music publishers have argued that the rate is too low and doesn't reflect the explosive popularity of Internet radio, nor allow them to share fairly in its success.

Last week, Pandora said it streamed 1.51 billion hours of music to its listeners in February, up 9 per cent from a year earlier. Its share of US radio listening rose to 8.91 per cent, up from 8.25 per cent a year earlier, and it had 75.3 million active listeners.

Pandora shares dipped 13 cents in after-hours trading Friday after closing up 72 cents, or 2.1 per cent, at $35.44.

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