This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Deal: A Royalties Pain on the Air

Lowery represents a band of industry personalities that questions the whole foundation of licensing regimes, which govern the broadcast of music. Pretty much unique to music, revenue sharing and royalties are determined by a hodge-podge of courts and administrators, including a board of judges appointed by the Librarian of Congress.

It's a system cantilevered on a copyright platform from the early 1900s. One pillar is the compulsory or statutory licensing of music recordings. Compulsory licensing allows radio stations to play recorded music whether the performer agrees or not.

Pandora opted to use this regulatory framework in return for building in certain limitations in its personalized delivery system, including the number of times per hour it can play an individual artist on a particular channel. That's why, for example, a personalized "The Monkees" radio station on Pandora also broadcasts the Four Tops, the Rascals, the Beach Boys, the Beatles and the Mamas and the Papas.

Some major competitors in Internet streaming music services, notably Spotify, can offer an entire album on demand, say, "The Best of the Monkees Volume Two." That's because they don't rely on compulsory licenses, but instead have negotiated directly with rights holders. ITunes Radio is expected to follow Pandora's model.

On June 5, Pandora bought South Dakota's KXMZ-FM. In a filing with the SEC, Pandora maintained the acquisition would enable the company to lower royalties its pays songwriters, and was made with that specifically in mind.

The two major American organizations that collect royalties on behalf of songwriters and publishing houses were not amused. The American Society of Composers, Authors and Publishers, known as ASCAP, filed objections with the FCC.

On June 13, Broadcast Music Inc., or BMI, petitioned in the U.S. District Court, Southern District of New York that Pandora should increase the royalties it pays songwriters, not decrease them. While the suit doesn't address KXMZ directly, the implication is there. "We expect Pandora to claim that it is no different than commercial broadcast radio," BMI lawyers stated in their petition. "This contention is wrong."

A BMI spokesperson said the company wouldn't comment beyond legal filings.

2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
P $16.32 3.16%
AAPL $123.25 -0.80%
FB $83.30 0.35%
GOOG $548.34 -1.23%
TSLA $185.00 -2.84%

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs