Court Says ASCAP Can't Selectively Remove Songs From The Blanket License It Gives Pandora

from the some-sense dept

The legacy recording industry's ridiculous war on Pandora has reached some really ridiculous levels, especially as ASCAP has continually tried to pretend that Pandora was trying to stiff artists. The details suggested something entirely different. After staying quiet for a while, Pandora finally highlighted the true story, which showed that the claims about Pandora were completely bogus. It was actually ASCAP who was playing sick games with Pandora, trying to remove the right to play certain songs, without even letting Pandora know which songs.
Historically, Pandora has paid essentially the same rate as all other forms of radio, a rate established unilaterally by the performing rights organizations, ASCAP and BMI, in the late 1990s. In November of last year, following a lengthy negotiation, Pandora agreed with ASCAP to a new rate, an increase over the prior amount, and shook hands with ASCAP management. Not only was our hand-shake agreement rejected by the ASCAP board, but shortly thereafter we were subjected to a steady stream of “withdrawals” by major publishers from ASCAP and BMI seeking to negotiate separate and higher rates with Pandora, and only Pandora. This move caused us to seek the protection of the rate, also recently negotiated, enjoyed by the online radio streams of broadcast radio companies. It’s important to note that these streams represent 96% of the Internet radio listening hours among the top 20 services outside of Pandora (talk about an un-level playing field). We did not enter this period looking for a lower rate – we agreed to a higher rate. But in a sad irony, the actions of a few small, but powerful publishers seeking to gain advantage for themselves has caused all songwriters’ royalties to go down. Any characterization of Pandora as being out to cut publishing rates flies in the face of the facts.
And while not highlighted there, Pandora also noted that ASCAP refused to let Pandora know which tracks were being withdrawn, leading to uncertainty over potential liability if it played the wrong track:
During negotiations, ASCAP and the publisher increased the pressure by refusing to provide Pandora the list of tracks that were being withdrawn, exposing Pandora to copyright infringement liability of up to $150,000 per work. At Pandora’s scale, such liability would be enormous.
As we noted at the time, this appeared to be in direct violation of a long-term antitrust agreement ASCAP has with the DOJ, given ASCAP's massive market power. Some in our comments suggested it was crazy to suggest this move violated the antitrust agreement, but a court has basically ruled strongly in favor of Pandora, noting that it goes against the agreement to selectively remove songs from the blanket license, and allowing Pandora to continue to stream such songs. Basically, the court rules that the consent decree from the antitrust fight means that ASCAP can't divide up the various copyrights to separate out things like "new media rights," but rather if it has a song in its catalog, it must license it under its blanket license.
ASCAP’s argument is predicated on the Copyright doctrine of “divisibility of rights” within a copyrighted work. It is true that “[t]he Copyright Act confers upon the owner of a copyright a bundle of discrete exclusive rights, each of which may be transferred or retained separately by the copyright owner.” But while the Copyright Act allows rights within works to be alienated separately in general, [the consent decree] imposes restrictions beyond those imposed by the Copyright Act on ASCAP. [The consent decree denies] ASCAP the power to refuse to grant public performance rights to songs to particular users while, at the same time, retaining the songs in question in its repertory.
I await ASCAP's next press release insisting that Pandora is the one playing games....


Reader Comments (rss)

(Flattened / Threaded)

  •  
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    Zakida Paul (profile), Sep 19th, 2013 @ 4:13pm

    Good ruling but the bad news is it will probably make the recording industry add such a clause to future record deals. These are extremely devious people being dealt with.

     

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      James Burkhardt (profile), Sep 19th, 2013 @ 5:08pm

      Re:

      Nothing that (for instance) Universal Media signs in its contract with artist X, affects the PROs like ASCAP. The court has ruled that if it is in ASCAPs library, it must be part of the blanket licence. This ruling prevents the very clauses you are talking about. The only option is for a company to stop licensing through the PRO.

      If Universal Media just stops licensing to ASCAP it has a completely different problem. PROs were established to reduce infringement and improve collection of royalties owed to artist and recording companies. Those problems all come back with te decision to withdraw. By only providing certain musicians (the new, up-and-coming talents that will be the next big thing) to licence their music individually, either the talents don't become hits, or infringement goes up. Neither of which is good for business.

       

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    Matthew Cline (profile), Sep 19th, 2013 @ 6:07pm

    The judgement doesn't seem to reference ASCAP's stupid little game of "we won't tell you which tracks you're no longer allowed to use". Did Pandora just not bring up that issue? IANAL, but there's just no way that can be legal.

     

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      Sheogorath (profile), Sep 23rd, 2013 @ 4:50am

      Re:

      The judgement doesn't seem to reference ASCAP's stupid little game of "we won't tell you which tracks you're no longer allowed to use".
      Would you kindly tell me what part of "if it's in your catalogue, then it's covered by the blanket license you issued" doesn't deal with that and smack ASCAP down?

       

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  • This comment has been flagged by the community. Click here to show it
     
    identicon
    out_of_the_blue, Sep 19th, 2013 @ 6:27pm

    Where are these "crazy" comments, Mike?

    "Some in our comments suggested it was crazy to suggest this move violated the antitrust agreement" -- NOT that I can find. My guess is that you mis-remember this question from an AC:
    Ooh, let's look at that. Back up the argument that the "antitrust agreement" is being violated, Mike. You surely wouldn't repeat it as fact unless you had the goods to back it up, would you?
    as being "crazy" because expecting you to argue the merits or back up claims IS crazy.

    Now, the fanboys will blow this off, and the theoretical new reader dropping in will puzzle for a couple seconds then shrug, but assertions of "crazy" suggestions and other assertions tossed in as fact are typical Mikeness. Anyone who questions His Mikeness gets censored by the fanboys in a mis-use of the "Report" buttons. The above is ALL the text the AC wrote in that post, yet it was censored. See link:
    http://www.techdirt.com/articles/20130613/14324223460/legacy-recording-industry-claims-pandor a-is-playing-sick-joke-seeking-same-rates-others-pay.shtml#c373

    Readers should also look into Pandora, which Mike is clearly keen on (for unknown reason) in several posts; it pays artists VERY low rates that some famous ones complain about (see link), and at best, is just a new middleman that hopes to replace the old, will do nothing better for artists.

    Pink Floyd: Pandora's Internet radio royalty ripoff

    http://www.usatoday.com/story/opinion/2013/06/23/pink-floyd-royalties-pandora-column/24474 45/

     

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      identicon
      Anonymous Coward, Sep 19th, 2013 @ 7:04pm

      Re: Where are these "crazy" comments, Mike?

      I have a secret for you that will save you a lot of time.

      Whenever someone is talking about crazy, they mean you.

       

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    •  
      identicon
      Anonymous Coward, Sep 19th, 2013 @ 7:22pm

      Re: Where are these "crazy" comments, Mike?

      Dananananana drive-by DMCA!

       

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      Anonymous Coward, Sep 19th, 2013 @ 8:07pm

      Re: Where are these "crazy" comments, Mike?

      Brief antagonistic retorts that are little more than ad homs attacking the author of the article are exactly what the report button is for.

       

      reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
     
    identicon
    out_of_the_blue, Sep 19th, 2013 @ 7:36pm

    Here's a typical take from a sane site:

    Tightwad music spaffer Pandora opens box for Wall St to fill with cash

    Takes breather from kicking penniless songwriters to plead for more dosh

    Controversial webcaster Pandora, under fire for running its music streaming business with the iron grip of a plantation owner, is returning to Wall Street for a cash injection.

    http://www.theregister.co.uk/2013/09/17/plantation_op_pandora_wants_more_cash/

     

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      identicon
      Anonymous Coward, Sep 19th, 2013 @ 8:19pm

      Re: Here's a typical take from a sane site:

      Wow, the language is so loaded even the commenters on theregister aren't buying it.

       

      reply to this | link to this | view in chronology ]

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        PaulT (profile), Sep 20th, 2013 @ 12:28am

        Re: Re: Here's a typical take from a sane site:

        What's surprising is that the comments are turned on. Orlowski usually has them turned off on his articles so nobody can point out the bullshit he usually spouts.

         

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          Anonymous Coward, Sep 20th, 2013 @ 12:56am

          Re: Re: Re: Here's a typical take from a sane site:

          Orlowski?

          The crazy dude that believes Google is the source of all evil?

          Sometimes I thing he and ootb are the same person, but it couldn't be the Register is a fun tabloid I like most the titles if for no other reason for the laughs I get out of those, but come on, every single time I am unfortunate to click on a story written by that dude I regret it immensely, but I digress The Register wouldn't hire a doorknob would they?

           

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            PaulT (profile), Sep 20th, 2013 @ 2:25am

            Re: Re: Re: Re: Here's a typical take from a sane site:

            "Sometimes I thing he and ootb are the same person"

            Nah, Orlowski has his own little outlet that he can control and presumably benefits financially from his trolling. ootb is a barely coherent mess who can't handle the fact that a free debate on someone else's site allows people to mock and dismantle his arguments or choose simply not to view them. Orlowski at least manages to come across as balanced even if his articles are not.

            "The Register wouldn't hire a doorknob would they?"

            He's the executive editor of The Register (http://www.theregister.co.uk/about/company/contact/)

             

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      identicon
      Anonymous Coward, Sep 19th, 2013 @ 9:20pm

      Re: Here's a typical take from a sane site:

      You are not qualified to judge sanity.

       

      reply to this | link to this | view in chronology ]

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      PaulT (profile), Sep 20th, 2013 @ 12:27am

      Re: Here's a typical take from a sane site:

      So, what makes them "sane"? Details, please. No, "well known troll and provocateur Andrew Orlowski wrote some things I agree with" doesn't count - explain yourself instead of acting like a toddler, please.

       

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    PopeRatzo (profile), Sep 19th, 2013 @ 8:03pm

    Getting used to it

    It's a good day whenever ASCAP is told, "No".

     

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    Karl (profile), Sep 19th, 2013 @ 8:50pm

    Yup

    Yet another case where Average Anonymous Coward was wrong.

    ...Now, I really gotta get to work.

     

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    identicon
    Anonymous Coward, Sep 19th, 2013 @ 10:01pm

    Step one - Demand more money.
    Step two - After they pay up sue them out of existence.
    Step three - Wait for a new company to fill the void.
    Step four - Repeat

    -Profit

     

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    Anonymous Coward, Sep 20th, 2013 @ 7:01am

    If this was Google or Microsoft, there would have been government lead Anti-trust cases and fines in the US, EU, and who knows where else.


    Not that there shouldn't have been, just saying it's amazing what the entertainment industry can get away with...

     

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    tywebb (profile), Sep 20th, 2013 @ 7:36am

    Most of you really have no clue what you're talking about. You hear "evil record companies" or "legacy recording industry" and it's like blood in the water causing a feeding frenzy of misinformed comments. ASCAP represents SONGWRITERS, not record labels. The record labels are currently paid streaming royalties through SoundExchange and receive over 50% of Pandora's royalties, while the songwriter/publisher receives about 4%. The disparity between the levels of compensation is attributable to the fact that two of the performance rights organizations that songwriters/publishers rely on to negotiate licenses and collect royalties on their behalf (ASCAP and BMI) are subject to restrictive consent decrees that severely undercut their ability to negotiate rates that reflects the fair market. Recognizing this, several of the large publishers withdrew their catalogs from ASCAP and BMI in order to negotiate directly with Pandora and they were in fact successful in getting a better rate. Pandora doesn't like this and wants to chain them to their PROs so that they can get a lower rate through a Federal Court rather than pay them a negotiated rate where the publisher/songwriter can actually say NO. So this is indeed an attack on songwriters by Pandora. Songwriters whose only source of income is royalties. Sorry, Mike, they can't sell T-shirts or tour or beg people on kickstarter for money to pay for their groceries.

     

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      PaulT (profile), Sep 20th, 2013 @ 8:09am

      Re:

      "Most of you really have no clue what you're talking about"

      ...and given that you didn't bother to address the actual complaint in the article, nor do you. What does what you had to say have to do with the central problem that ASCAP were telling Pandora that they didn't have a blanket licence but refused to tell them which songs weren't covered? Why is that a good tactic for dealing with a company trying to provide your customers with a legal way to access music and pass royalties on to the creators of that music? Why do the publishers think that screwing over legal channels is any way to provide a long-term solution to piracy (which would be most peoples' alternative, not suddenly going from free streaming to purchasing albums)? Why are these tactics being used against Pandora, but not offline radio outlets?

      "legacy recording industry"

      "ASCAP represents SONGWRITERS"

      How is the method by which songwriters have their work licensed not part of the legacy industry? Was it revamped after CD sales started falling?

      "Sorry, Mike, they can't... beg people on kickstarter for money to pay for their groceries."

      Ignoring the t-shirt idiocy (do you people really have no other arguments?), why can a songwriter not get hired for his work through Kickstarter or another non-legacy industry method? He could even negotiate a royalty mechanism if he wished. Why do you feel that licensing through ASCAP and other legacy methods is his only option?

       

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      Anonymous Coward, Sep 20th, 2013 @ 9:24am

      Re:

      tywebb just hates it when due process is enforced.

       

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      James Burkhardt (profile), Sep 20th, 2013 @ 1:15pm

      Re:

      The first thing id like is a few citations of some numbers and assumptions you've made, without which you have undermined your own arguement: Please cite me a source (non-Ascap please, we want independent secondary sources) for your 50%/4% statistic (I do not have the detailed financials you would need to state that.) And then cite me a separate entity in the internet radio arena which has a significantly smaller payment disparity then the 10:1 that Pandora Has (7:1? 5:1?) And then show me where in Pandora's Financials you suggest they have more money to pay out in royalties, as by my read they are spending 8.92% more then they take in (source). If you can do all of that, then the following logical questions still apply:

      You seem to ignore one key factor: the rates Pandora pays through ASCAP are HIGHER rates then any other source type. That means, given the level of play Pandora produces, that Pandora was already the single greatest income source to ASCAP.

      Pandora had agreed to raise the rates it was paying. It wasn't until ASCAP withdrew its offer that Pandora began to attempt to find ways to protect itself and lower its rates.

      If you blanket licence your music to a internet radio with a terrestrial arm for x, why would back out of the deal with pandora that gets you more (y), in the hopes that you could collect EVEN MORE (z)? The fact that the royalty rates are different depending on how you broadcast such that the larger the likely audience and the more plays you are likely to produce, the more you pay per play, is ass backwards, failing to make sense in any other market, doesn't suggest that ASCAP (and soundexchange) are abusing their monopoly powers is absurd and you want to give them more?

      So rather then take the greatest windfall to songwriters since vinyl made the idea of being a songwriter financially possible, they want to jack up the rates to what, 50% of pandoras revenue? so pandora folds and is out? what sense does that make?

      Please cite me a source for your 50%/4% statistic. And then And then show me where in Pandora's Financials you suggest

       

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    identicon
    Anonymous Coward, Sep 20th, 2013 @ 8:05am

    Philanthropist Music Lovers

    Any Philanthropists out there who care to get together with the rest of the [music loving world] and start a new neal leaving the greedy bastards in the dust? That would be good for artists, radio and audiophiles everywhere. The one-sided choke holds by monopolistic contractual demands are killing the music. K i l l i n g MUSIC.

     

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    Ninja (profile), Sep 20th, 2013 @ 11:04am

    Simple solution

    Eliminate all music collection societies, set up a public place where artists can offer licenses for their own music and anyone can choose what they want to have in their catalogs. This public place could offer blanket licenses where the money collected would be split evenly among the artists. The service itself would keep enough to pay for its costs and a small surplus for further investment, everything in percentage so the biggest earners also pay more. Maybe some flattr style where you can pay a monthly fee and this fee is split equally among the songs played.

    Whatever the solution is, collection societies must go. They are just rotten, greedy corruption hives.

     

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