Still looking for a spot for Easter brunch? Check these options -- but hurry
MONEY

Pandora strikes deals with BMI, ASCAP

Nate Rau
USA TODAY NETWORK - Tennessee
Pandora has reached landmark multi-year licensing deals with ASCAP and BMI.

Pandora has reached landmark multi-year licensing deals with ASCAP and BMI, which ends years of legal battles between the top Internet radio platform and songwriters and publishers.

Because of the new agreement, Pandora has agreed to drop its appeal in the rate dispute with BMI. The two performance rights organizations have been engaged in a bitter legal feud with Pandora, which does not need permission to play a songwriter's song under U.S. copyright law. The statutory rate is determined by a federal rate court.

Before the new agreement, Pandora paid BMI members 2.5 percent of its revenue and ASCAP members 1.75 percent. Terms of the deal, namely how much songwriters will be paid each time their song is played on Pandora, were not disclosed. The agreement was met with positive reviews in Nashville, where the top songwriters trade group said the performance rights groups deserve credit for striking deals to increase payouts to their members.

Songwriter Equity Act introduced again in Congress

Pandora's royalty rate has been a sore subject among songwriters, with hit-makers such as Kevin Kadish, who co-wrote "All About That Bass," disclosing he was paid $5,679 for 178 million plays.

“This agreement is good news for music fans and music creators, who are the heart and soul of ASCAP, and a sign of progress in our ongoing push for improved streaming payments for songwriters, composers and music publishers that reflect the immense value of our members’ creative contributions,” said ASCAP CEO Elizabeth Matthews.

The rate Pandora pays songwriters and publishers has been the subject of federal legislation, including the Songwriter Equity Act. The bill would allow the rate court to factor in the value of a song in the free market, including how much songwriters are paid when licensing their songs for television or film, when determining a rate.

BMI President and CEO Mike O'Neill said in prepared remarks that the new deal is comparable to other direct deals in the marketplace.

Bart Herbison is executive director of Nashville Songwriters Association International.

Nashville Songwriters Association International Executive Director Bart Herbison applauded the deals as good news for songwriters. But Herbison cautioned that the agreements do not negate the necessity of the Songwriter Equity Act, or the need for the U.S. Department of Justice to revise the consent decrees that govern ASCAP and BMI. The DOJ has been reviewing the consent decrees that set out how the two nonprofit performance rights organizations operate.

"The (performance rights organizations) have a responsibility to achieve higher rates for the songwriters they represent, and they've done that," Herbison said. "I think it's equally important to note that this does not change the need for Congress to adopt the Songwriter Equity Act. Nor does it change the need for U.S. Department of Justice to make significant changes in the ASCAP and BMI consent decrees that are antiquated from 1941.

"I strongly suspect the rates are nowhere in line with what songwriters should be receiving as a percent of Pandora's revenue for the use of their songs, if these rates were determined by a marketplace standard. If Pandora uses these new agreements to diminish those arguments, Congress and DOJ should not be receptive to that tactic. My guess is you'll still see songwriters getting hundreds of dollars for millions of spins. They're to be applauded, but that doesn't change the argument we've been making for months and years."

Nashville music publisher Marc Driskill said the deals were a real step forward for modernizing compensation for creators, "but still short of a true market rate."

Some major music publishers had pondered withdrawing some of their licensing rights from ASCAP and BMI in order to privately negotiate better rates with Pandora. A federal judge ruled that publishers must enter into all-or-nothing arrangements with the performance rights organizations, meaning they either must withdraw all of their rights or keep them all with ASCAP or BMI. In recent weeks, publishers have been entering into their own deals with Pandora as well.

Last week, the Copyright Royalty Board increased the rates that Pandora will have to pay artists and record labels when their songs are played on the popular Internet radio service. Pandora will pay $0.0017 when a song is played on its free service — up from $0.0014 — and $0.0022 when a song is played on its subscription service. That represents a decrease from its current rate of $0.0025, but substantially more than the $0.0013 rate Pandora wanted.

At mid-afternoon on Tuesday, the price of Pandora stock was flat after news of the deals.

“At Pandora we are delivering on our commitment to ensure that music thrives,” said Brian McAndrews, chief executive officer of Pandora. “These collaborative efforts with the leading Performance Rights Organizations, as well as our recent direct deals with several music publishers, demonstrate our progress in working together to grow the music ecosystem.”

Reach Nate Rau at 615-259-8094 and on Twitter @tnnaterau.