BMI beats Pandora in court to push up royalty rate to 2.5%

Pandora has been ordered to raise the amount of royalties it passes BMI by 42%. The collection society previously received 1.75% of annual revenues from Pandora, but a New York Rate Court decided yesterday to raise that figure to 2.5%.

With Pandora expecting to turn over $1bn this calendar year, the decision should mean the difference between BMI being paid $17.5m and $25m – a hike of $7.5m.

The court ruled that 2.5% was “reasonable, and indeed at the low end of the range of fees of recent licenses.”

BMI’s rate is now significantly higher than the 1.85% Pandora rate secured by ASCAP last year.

BMI President and CEO Mike O’Neill said:​ “Today is an important day for BMI and a huge victory for the more than 650,000 songwriters, composers and publishers we have the privilege to represent. After a nearly two-year legal battle over the value of the BMI repertoire to the Pandora digital music service, the Rate Court ruled resoundingly in BMI’s favor and concluded that our proposed rate of 2.5% of revenue was “reasonable, and indeed at the low end of the range of fees of recent licenses.”

“The decision also establishes that existing marketplace agreements can be taken into account when determining rates, a key factor for us, and the industry. This is an important step forward in valuing music in the digital age.

“BMI fully supports all new avenues for the performance of our repertoire, but we also believe that creators should never have to virtually give away their product for free in order to subsidize the development of someone else’s business. We were not about to stand by and let that happen to our BMI family. We went through a lot of time and expense to fight that notion, and we are gratified that the Court ruled in our, and ultimately, our affiliates’ favor.

“And our efforts to protect the value of our affiliates’ creative work continue. As you know, we have testified in Washington, DC about necessary changes to our Consent Decree and remain encouraged by our ongoing conversations with the Department of Justice. BMI is also a strong supporter of the Songwriters Equity Act, a bill recently reintroduced in Congress that seeks to create a level playing field when determining rates and fees. These efforts are essential to help modernize the music licensing system, creating one that makes better sense for the digital world we live in today and benefits all stakeholders.”

“My thanks to our friends at Milbank Tweed, who represented BMI at trial, to the in-house legal team of Stuart Rosen, Joe DiMona, Hope Lloyd and Reneé Wolfe, and to all of the BMI team members who gave of their time and expertise in contributing to this achievement.

“I am excited for what’s ahead, and thank you for your continued support.”

Pandora is expected to appeal the decision.Music Business Worldwide

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