20 December 2013Copyright

Court ruling threatens to derail Pandora

A US district court has refused Internet radio service Pandora’s bid to stop a group of music publishers from partially withdrawing their works from US collecting society Broadcast Music Inc (BMI).

The case arose after BMI-affiliated music publishers started withdrawing digital rights from online radio streaming service Pandora and other “new media services”, according to the December 18 judgment.

The case was heard at the US District Court for the Southern District of New York.

Pandora argued that the publishers’ withdrawals are “ineffectual”, as BMI operates under an antitrust consent decree that requires it to offer Pandora a licence to perform all compositions within the BMI catalogue since January 1, 2013.

Judge Stanton, who heard the case, said that the decree requires BMI to offer Pandora a licence to perform everything in the BMI catalogue.

However, he found, if BMI is no longer authorised by the publishers to license their works to Pandora and new media services, the works are no longer eligible for inclusion in BMI’s catalogue. Therefore, BMI may not legally license the compositions to Pandora or any other applicant.

The ruling contrasts with that of Judge Cote’s September decision in Pandora’s case against collecting society ASCAP, which was told to license songs to any company that applies for a licence.

Despite allowing publishers to choose whether to withdraw from BMI or not, the ruling may have negative implications for publishers that do.

Paul Fakler, a partner at Arent Fox LLP in New York, said the BMI decision is a “huge blow” for the music publishers involved in the case. He said they will now have to decide whether to continue to license their works to BMI for performance on new media services like Pandora in addition to “old world” outlets, which generate the bulk of their revenue, or to withdraw completely.

Old world outlets could include analogue radio and TV.

The decisions in the ASCAP and BMI cases were “in principle the same”, he said: “The judges agree on the fundamental issues – they both do not allow publishers to partially withdraw works from BMI’s repertory.”

However, he said, Judge Cote took a “glass half full” approach while Judge Stanton saw the glass as “half empty”.

“Judge Cote – in a reasonable decision – allowed publishers to decide whether they want to withdraw their works, while Judge Stanton essentially revoked their agreements with the collecting societies,” he said.

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