The real reason for Pandora's purchase of an FM radio station is Pandora's royalty rate for musical compositions on its internet radio service. Note: this is a separate legal issue from the licensing Pandora pays for its use of sound recordings. The underlying musical composition gets its own copyright, and must be licensed in addition to the sound recording rights.It's important to point that out from time to time, the distinction between the two different types of royalties. Just like it's important to articulate the difference between the compulsory rate Pandora chooses to pay for the use of sound recordings vs. the direct licensing deals services such as Spotify go with. I mean I was arguing with a guy the other day who actually publishes articles on this topic and it became clear he had no clue whatsoever as it pertains to these important nuances. A basic understanding of facts you really have to have before getting into the opinion business. But what Griffin says from there about the Pandora FM radio purchase/publishing dispute applies across issues:
This is a perfect example of the twisted incentives and strange results we get from a music licensing system that is based on who wants a license instead of just what they want to do with the music they're using. This makes no sense. The law should treat like uses alike. Regardless of how high or low you think performance royalty rates for webcasting should ultimately be, there is no logical reason to give preferential rates to certain companies just because they arrived at the negotiation table first.
... But most importantly, treating the same uses differently to give preference to older technologies and dominant companies will only ensure that upstarts and new competitors won't be able to successfully enter the market. This means that the incumbent companies will feel no pressure to become more responsive to listeners or to artists, because neither group will have any other alternative path to reach each other. As a result, individual musicians and music fans will continue to be little more than an afterthought among the dominant rights holders and distributors.Man. If I wasn't married I would hit one knee and propose to Griffin over Skype. So very well-stated. Follow @rocco_thestreet -- Written by Rocco Pendola in Santa Monica, Calif.