FCC Approves Pandora’s Complicated Plan to Screw Songwriters…

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The Federal Communications Commission (FCC) has now unconditionally approved Pandora’s acquisition of KXMZ-FM, a tiny radio station in South Dakota.

The acquisition allows Pandora to pay even lower royalties to publishers and songwriters.

The $600,000 purchase effectively re-qualifies Pandora as a traditional broadcaster and online radio provider, a status that means far royalty rates to performance rights organizations like ASCAP.  That’s a clever loophole, and one that ASCAP and the entire publishing community fought against for years.

Pandora immediately pointed to synergies between its online radio empire and KXMZ, which serves a Rapid City, South Dakota population of approximately 114,000.  That’s mostly cooked-up BS, but… there is the question of why ASCAP has a lower royalty rate for big, traditional broadcasters that also stream online.

Then again, there’s also the question of why Pandora spends so much energy lobbying, lawyering, and scheming to pay songwriters even less money, regardless of whether the rules ‘make sense’.

In response, the entire publishing community has given Pandora a giant middle finger, with a suggestion on where to stuff it.   “In the history of the struggle between creators and those who try to profit off of their work without paying them fairly, this move by Pandora ranks as the most cynical and shameless,” said David Israelite, head of the National Music Publishers Association (NMPA). “Sadly this small station in South Dakota has become a pawn in Pandora’s game to pay the creators on which it built its business even less.”

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“Now, there can be no doubt that Pandora has declared war on songwriters.”

 

Image by Sohel Parvez Haque, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).  Written while listening to Daddy & Match.

 


27 Responses

  1. Anonymous

    The fact that Pandora has to exploit this loophole to be on equal footing as their competitors in the first place is BS. I applaud them for this rather ingenious move.

    BTW, I think songwriters are paid too little from digital services. But playing favorites with certain services is unfair and should not be tolerated.

    Reply
  2. Sonny Brooks

    It doesn’t make sense to me why the FCC would approve something so blatantly manipulating the system. No one in the FCC understands or was told the real reasoning behind what Pandora is doing? or they just don’t care?

    Reply
    • Anonymous

      The FCC cares only about the radio station license. They don’t care about the rest.

      Reply
    • Think Again, Sonny...

      Oy…

      “It doesn’t make sense to me why the FCC would approve something so blatantly manipulating the system.”

      It’s not “manipulating the system.” There was NO bending of any rules. No hank-panky. Pandora did NOT argue for – nor is there – any kind of a tortured re-interpretation of the rules. This is no exploitation of any long-forgotten provision. This was an entirely public process.

      Both Congress and the music publishers and their PROs have fought very long and very hard – and very clearly and willingly – to give owners of terrestrial radio stations preferential treatment.

      All Pandora did was join the little “club” that THEY established, to try and prejudice Pandora.

      No one in the FCC understands or was told the real reasoning behind what Pandora is doing? or they just don’t care?

      On the contrary, the Commissioners at the FCC know EXACTLY why Pandora wanted to purchase the station. And they LOVE IT!

      Goose? Meet Gander – and let her have some of your sauce!!

      Reply
  3. tcooke

    Tcooke

    Friday, April 10, 2015
    Pandora lobbying for transparency? I thought they might be lobbying to keep their rates low?

    Reply

    MusicianWhoUnderstands
    Friday, April 10, 2015

    And your thinking would be incorrect.

    Pandora of course wants to keep their royalty obligations low, that shouldn’t be a surprise to anyone.

    But they don’t – and can’t – do that by lobbying. Congress doesn’t set Pandora’s royalty rates.

    Like our esteemed editor Paul, you would do well to actually learn a bit about how this all really works, before announcing your misguided opinions on it.

    ….just sayin’….

    Reply
  4. Chris H

    I think it is a way to give them a small “win” before Congress hands them their ass by approving the Consent Decree changes requested by the US Societies.

    Reply
    • Think Again, Chris H...

      You might want to spend a minute and figure out that Congress does NOT have jurisdiction over the Consent Decrees and will NOT be “approving” ANY aspect of them, including proposed changes.

      If you can grasp that, if you can, you might then want to go on, to consider that, with this purchase of a radio station, the major change requested by the US Societies – that they be allowed to partially withdraw licensing from “new media services” – arguably can no longer affect Pandora!!!!!

      Reply
      • Chris H

        My bad, you got me, The DOJ. There, you were right sir, that did only take a minute. Live and learn never to make mistakes, lest you be checked by trolls. So, let me rephrase “Before the DOJ hands them their ass”.

        And “Arguably” just means there is a legal case down the road, as the vast majority of their business is still digital. But thanks for telling me what to think…

        Reply
      • Think Again, Chris H...

        1) The DOJ isn’t going to “hand Pandora their ass.” If you think that, you don’t understand what’s going on (and if you WANT that to happen, then you REALLY don’t understand what’s going on).

        2) And “arguably” does NOT just mean there is a potential legal case. The only reason I put that qualifier in there is becuae I don’t know to what extent Pandora wants to exploit their newly-minted position as an FCC licensed broadcaster. Not because there is any question about it. If they want to join the RMLC and take part in the settlement, then they can do that – and it doesn’t matter if the vast majority of their business is digital.

        But hey, thanks for confirming for us that you don’t understand how any of this works….

        Reply
        • Chris H

          LOL my pleasure. And thanks for telling me how YOU Think it works. Unsolicited, but I guess that was fun..for you.

          If you think that the ability to change what the costs of goods are DOESN’T change the game for them (in what is already an unprofitable business model), I can’t help you. College or math classes might.

          If you think also there is NOT a legal case coming down the road, just wow.

          Reply
        • Think Again, Chris H...

          You have a hard time being consistent. Stop changing what you’ve said, arguing with stuff that I didn’t say, and stay on point – and we might be able to have a discussion.

          *fingers crossed*

          So, let’s see:

          Chris H

          “If you think that the ability to change what the costs of goods are DOESN’T change the game for them (in what is already an unprofitable business model), I can’t help you. College or math classes might.”

          Um, “changing the costs of goods” =/= “handing them their ass” OR necessarily “changing the game” for Pandora.

          Pandora has apparently managed – without the benefit of being an FCC licensed broadcaster, natch – to lower their cost of goods, by themselves. They are obviously keen to continue to do so.

          Just as I wouldn’t characterize Pandora’s demonstrated ability to modestly lower their cost of goods as them “handing record companies and PROs their ass” or a “game changer,” I also wouldn’t say the possibility of major music publishers getting a limited ability to direct license is a “game changer,” either.

          Chris H

          “If you think also there is NOT a legal case coming down the road, just wow.”

          1) When did I say that I think there is “NOT a legal case coming”?

          I think – no, I KNOW – that there’s going to be tons of cases.

          2) You specifically said that there would be a case on Pandora’s ability to take advantage of the RMLC license. I said I wasn’t sure that would be an issue.

          Do you even understand how DMCA-compliant internet radio works? Or the RMLC deals? It’s becoming clearer and clearer that you really don’t.

          Reply
  5. Musician Who Understands

    Paul Resnikoff

    “The $600,000 purchase effectively re-qualifies Pandora as a traditional broadcaster and online radio provider, a status that means far royalty rates to performance rights organizations like ASCAP. That’s a clever loophole,”

    It’s not a “loophole.”

    It’s a specific standard – that music publishers came up with, entirely on their own – and have voluntarily applied, in more than one instance. All Pandora did was recognize the standard, that was being used entirely against them, and simply complied with the standard.

    Paul Resnikoff

    “and one that ASCAP and the entire publishing community fought against for years.”

    That’s a flat-out lie.

    The preferential treatment of terrestrial radio broadcasters is, in fact, something the entire music publishing community invented, lobbied for and got – over the objections of digital broadcasters (before Pandora even existed).

    Paul Resnikoff

    “Then again, there’s also the question of why Pandora spends so much energy lobbying, lawyering, and scheming to pay songwriters even less money, regardless of whether the rules ‘make sense’.”

    The answer is: Because Pandora STILL only spends only about 1/5th of the energy, lobbying money and lawyer fees that NMPA and RIAA do, scheming to put them out of business with these dumb laws and deals that don’t make sense (but that keep the record companies and music publishers in power).

    Reply
    • Musician Who Understands

      No, it’s not a “loophole.”

      A “loophole” is an ambiguity in the law that allows some people to avoid complying with the law.

      This is Pandora COMPLYING WITH a specific definition (albeit one that was intended to be patently prejudicial), that the publishers ASKED FOR.

      Even if you want to say if it’s a “loophole,” then it’s a) one the publishers ASKED FOR, 2) one they willingly agreed to and applied, and 3) one they allowed – and indeed encouraged – many, many others to exploit.

      Funny, I don’t recall anyone calling it a “loophole” in 2012, when ASCAP and BMI agreed to give the RMLC broadcasters special low rates because they fit the definition…

      Reply
    • danwriter

      Correct, Congress doesn’t set royalty rates. But that doesn’t mean that legislative activity isn’t involved in this matter. Note the substantial amounts being spent by Pandora, the RIAA, SoundExchange, the NMPA and other interested parties around legislation such as the Internet Radio Fairness Act, which is integal to the larger discussion here.

      Reply
  6. tcooke

    Paul Resnikoff

    “The $600,000 purchase effectively re-qualifies Pandora as a traditional broadcaster and online radio provider, a status that means far royalty rates to performance rights organizations like ASCAP. That’s a clever loophole,”

    It’s not a “loophole.”
    —it’s a loophole
    It’s a specific standard – that music publishers came up with, entirely on their own – and have voluntarily applied, in more than one instance. All Pandora did was recognize the standard, that was being used entirely against them, and simply complied with the standard.

    —loop hole.

    Paul Resnikoff

    “and one that ASCAP and the entire publishing community fought against for years.”

    That’s a flat-out lie.
    –no evidence of a prevarication.

    The preferential treatment of terrestrial radio broadcasters is, in fact, something the entire music publishing community invented, lobbied for and got – over the objections of digital broadcasters (before Pandora even existed).

    —everyone is trying to keep up in this rapidly changing business.

    Paul Resnikoff

    “Then again, there’s also the question of why Pandora spends so much energy lobbying, lawyering, and scheming to pay songwriters even less money, regardless of whether the rules ‘make sense’.”

    The answer is: Because Pandora STILL only spends only about 1/5th of the energy, lobbying money and lawyer fees that NMPA and RIAA do, scheming to put them out of business with these dumb laws and deals that don’t make sense (but that keep the record companies and music publishers in power).

    different constituents. nmpa and riaa represent artists and writers, while pandora represents itself, which exploit the said artists and writers as their sole purpose of existing.

    Reply
  7. FarePlay

    Pandora’s behavior begs the question whether single play interactive streaming is a viable business model.

    Reply
  8. Truth

    Pandora didn’t create nor lobby for the law that allows Clear Channel to pay lower rates than them. Isn’t fair for Pandora to want a level playing field in the market?

    Wouldn’t it be amazing if DMN became a forum where real change could be ignited through education rather than propaganda and gossip? We could all be focusing our energy to change the law that allows Pandora to pay lower, making all Big Radio pay the same and as a kicker make the past 2 years Pandora has been working on this acquisition completely useless.

    Now that would be something musicians could be proud of. Any thing less is embarrassing.

    Reply
  9. Anonymous

    This gnashing of teeth over Pandora is a huge waste of time. The problem is pirate websites. Congress must pass a law allowing rightsholders to go to court to get pirate sites blocked or shut down. Absolutely nothing will change until that is done.

    Reply
    • Anonymous

      Let me get this straight. You want congress to actually do something? Dude that’s not how it works.

      Reply
    • AnonII

      Consider also, that even so called “pirate site’s” that the average person doesn’t know or bother with anyhow, STILL is promoting said artist And at a cost of said artist of FREE! As in free promotion…

      Reply
  10. James

    WHY all the hype? Especially about the small fm radio station? Is it just GREED?? Pandora plays music and promotes various artist’s. Many people have discovered (new to the listener) artist’s and music groups in there preferred genre through Pandora. Should they be raped and pillaged for having doing so?? This should not be an argument. Someone who sincerely enjoys music and talent, discover’s more through these outlet’s and also spends money$ on future purchase’s of albums or singles that they enjoy, should be expected to pay, Pay, pay, more more more to enjoy their favorite music and discover unknown artists?? Farce, money grubber’s everywhere as in all media, leave the true music and art connisuers that appreciate the service for what it is truly worth, Alone!

    Reply

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