BMI, Pandora Say PRO Wins Rate Case Against Company

Both sides in a dispute over how much Pandora should pay a performing rights organization said the PRO won. Judge Louis Stanton of the U.S. District Court for the Southern District of New York was said to have awarded Broadcast Music Inc. a royalty rate of 2.5 percent of Pandora's annual revenue, up from the current rate of 1.75 percent. Pandora vowed an appeal to the 2nd U.S. Circuit Court of Appeals, also in New York. "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 percent of revenue was 'reasonable, and indeed at the low end of the range of fees of recent licenses,'" BMI said in a Thursday news release. "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." The ruling in docket 1:13-cv-04037-LLS on BMI v. Pandora wasn't available on the court's online filing service. It may be released this week, a court official said. Earlier this month, the 2nd Circuit ruled for Pandora on a case involving American Society of Composers, Authors and Publishers, upholding a 1.85 percent rate in March 2014 for the company to pay from its annual revenue for ASCAP works (see 1505060072). The benchmarks cited by Stanton "don't provide an appropriate competitive foundation for a market rate," Pandora Government Affairs Director Dave Grimaldi said Friday. "We anticipated a range of potential outcomes in this case and remain confident in our ability to grow and thrive. Pending the outcome of the appeal, this ruling could increase our content costs as a percent of revenue by up to 80 basis points." ASCAP cheered Stanton's decision, though it wasn't a direct party to it. Stanton's decision "cited market benchmarks ASCAP has long argued are relevant in rate court proceedings," an ASCAP spokeswoman noted Friday. "This decision is welcome news for music creators, but make no mistake, Pandora will stop at nothing in their ongoing effort to shortchange songwriters. ASCAP and the music community must continue to fight for the urgent reforms needed to enable all songwriters, composers and music publishers to obtain fair compensation for the use of our music.”