Mechanical Licensing Collective Files Suit Against Pandora Over Unpaid Mechanical Royalties

MLC Pandora
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MLC Pandora
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Photo Credit: Pandora

The Mechanical Licensing Collective is suing Pandora for allegedly failing to pay the mechanical royalties required to continue functioning as a consumer streaming platform.

The Mechanical Licensing Collective (MLC) has filed a lawsuit against Pandora Media, LLC (Pandora) over allegedly unpaid blanket royalties that are due under the compulsory mechanical license that Pandora obtained in order to function as a consumer music streaming platform.

As an interactive service, Pandora must pay mechanical royalties for all streaming activity on the service; in the lawsuit filed in Nashville federal court on Monday, (February 12) the MLC states that the company has failed to report and pay all that it owes under its ad-supported offering, Pandora Free.

“The MLC has repeatedly raised this license compliance issue with Pandora and asked it to correct its reporting, but it has refused to do so,” writes the MLC. “We are taking legal action to ensure that our Members receive all the mechanical royalties they are due in connection with the use of their songs by Pandora.”

In particular, the MLC takes issue with “unusually low royalties per stream” reported and paid out by Pandora, beginning in 2021. The MLC says this is due to the exclusion of substantial service revenue and total content cost (TCC) for Pandora Free — TCC refers to the amount paid by streaming services to record labels for the right to stream a recording. Both the TCC and service provider revenue are “essential to calculating the royalties due for this blanket license.”

Further, the MLC is concerned about Pandora’s lack of retroactive royalty accounting for 2021 and 2022. The MLC says it has repeatedly “reminded” Pandora to report its retroactive adjustments for both years, setting a deadline for February 9, 2024, which it says Pandora failed to meet.

Though Pandora has yet to respond and provide its version of events, it will have an opportunity to do so, after which the court will set and manage a case schedule for the proceeding as necessary. Similarly, representatives for Pandora have not yet responded to media requests for comment.

News of the filing comes on the heels of the MLC issuing its first audit of streaming services, including the audit of the organization itself by Bridgeport Music. Further, just weeks ago, the MLC and the Digital Licensee Coordinator (DLC), its counterpart organization, entered their first re-designation process, “a routine five-year checkup” to ensure both organizations’ efficiency and effectiveness.