Music streaming service Pandora has potentially infuriated songwriters the world over after filing a lawsuit against ASCAP (the American Society of Composers, Authors and Publishers) in a bid to lower the royalties it pays artists to use their music.
According to Digital Music News, the lawsuit claims that ASCAP has established rates that are “ill suited and not reasonable”, based on an ‘experimental’ licensing agreement originally set in 2005.
It’s a move that’s sure to incite the ire of all those who rely on the likes of Pandora and other streaming services for much-need revenue in a climate where many traditional sources of income are dwindling or non-existent, the attack on ASCAP – the body that represents artists and ensures they get the proper royalties for their work – is in turn a symbolic attack on the music-makers themselves.
“ASCAP continues to seek rates higher than the current rates and above the agreement that they reached earlier this year with all of the major radio groups, which covers both broadcast and Internet radio usage for the majority of our competitors. As a result, we are initiating the process that has been in place for decades to resolve royalty disputes.”
But the music industry has hit back, with the American music publishing trade association NMPA releasing a statement condemning Pandora’s actions.
“It’s outrageous Pandora would try to reduce the already nominal amount they pay songwriters and music publishers, when Pandora’s business model is based entirely on the creative contributions of those songwriters,” said David Israelite, president and CEO of the NMPA. “To file this suit at the same time that Pandora’s founders are pocketing millions for themselves adds insult to injury.”“To file this suit at the same time that Pandora’s founders are pocketing millions for themselves adds insult to injury.”
Israelite added: “Royalty rates should protect songwriters and compensate them for their significant contribution to the success of music services like Pandora. As this area of the market grows, we need to ensure that songwriters are protected, and that they are appropriately compensated for their work.”
Pandora reported revenue of $338 million last year, with a market cap of over $1.5 billion. Pandora has also undergone a huge update to its mobile app, adding new features and overhauling its mobile music interactivity.
“This is our biggest update to our iPhone and Android app since we launched on both platforms,” said Pandora’s Director of Product and User Experience, Asi Behar. Officially called Pandora 4.0, the new update brings many of the features that users of the web version have been enjoying to mobile phones.
With Pandora already engrossed in a battle for the music streaming market, this lawsuit is all but certainly an attempt to one-up the opposition. Tech giants Apple have also had issues with royalties, after a failed deal with music publisher Sony ATV derailed plans for the company’s own music streaming platform. They’ve since announced they’re moving ahead with their original plans to develop the service which is expected to be launched in 2013. It will join the likes of Rdio, Grooveshark, Spotify, Pandora and the new offering from arch rival Microsoft, who will soon unveil their ‘all-in-one’ music service Xbox Music – across computer, tablet, phone, and Xbox 360.
Meanwhile, the artists themselves are left wondering where all the money is going if it’s not reaching their pockets (particularly indie darlings Grizzly Bear), but Rdio have made a bold new move, recently announcing their new ‘Artist Program’ that pays musicians and recording artists direct – not for the streaming of their music, but for how many fans they can sign up as subscribers.
Controversial music streaming service Grooveshark have also changed their model, launching a new program that allows user to create an account and like or ‘flttr’ artists with money then distributed between artists accordingly.
Pandora should take note – demanding more money from musicians and publishers when their entire business model relies on the creativity of artists not only seems hypocritical, it just seems ethically wrong.
