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BMI Takes Pandora to Court Over Music Streaming Rates

In another twist in the battle over the rates that streaming music services pay publishers and artists, Broadcast Music Inc. filed suit against Pandora, claiming that the popular music service has engaged in a “stunt” to “artificially drive down its license fees.”

BMI is asking a federal court to set “reasonable, market driven fees” after negotiations broke down.

The move comes amid increasing acrimony between the music industry and Pandora over just how much songwriters and artists should be compensated on their service. Last year, Pandora, along with Clear Channel and the Consumer Electronics Assn., pushed legislation to put the amount that streaming services pay in parity with cable and satellite radio. That would reduce the amount that Pandora and other Internet radio services pay in royalties.

In its suit, BMI claims that Pandora’s recent purchase of a broadcast station in South Dakota is an effort to instead fall under a different and lower rate structure, one that was negotiated for over-the-air stations with new media properties. “The BMI radio station license governs terrestrial radio station broadcasts,” BMI said. “It does not cover performances by a primarily internet-based music streaming service that happens to own a single radio station in a city with a total population that is less that 0.045% of Pandora’s online membership.”

Pandora has contended that the current rate structures in the industry are unfair, as other competing digital streaming services like iHeartRadio, owned by broadcaster Clear Channel, pay lower rates.

In a statement, Pandora said that “disputes regarding the reasonableness of fees between BMI and music users are adjudicated in federal court just as disputes between ASCAP and music users. This process is required by the consent decrees both organizations agreed to after the U.S. Department of Justice sued them for anti-competitive behavior. We look forward to the court’s oversight of this matter.”

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