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ASCAP to Pandora: Not So Fast


According to a representative from ASCAP Radio Ink spoke to last night, the Pandora purchase of a radio station may have been a waste of $600,000. ASCAP EVP of Licensing Vincent Candilora says "The RMLC license was designed for terrestrial radio stations and groups which earned the overwhelming share of their revenues from traditional radio, not an online streaming service that buys a radio station that ranks only 255th in the U.S. market as a ploy to undercut songwriters."

That statement makes it sound pretty clear that ASCAP has no plans to give Pandora a break on fees.

And that this issue will no doubt wind up in the courts. Pandora announced Tuesday that it had purchased KXMZ-FM, in Rapid City, South Dakota from Jeff Warshaw for $600,000. Pandora was hoping to use the purchase to level out the playing field when it comes to the fees it pays to ASCAP. Those fees are higher than what Clear Channel pays for iHeartRadio. Jay Cohen, who is a partner with the law firm of Paul, Weiss, Rifkind, Wharton & Garrison added, "Pandora, unlike radio, is essentially a wall to wall music service that has to pay a higher rate." 

(6/14/2013 2:16:13 AM)
So Pandora thinks that ASCAP and BMI should cut their pricing, so that Pandora stockholders and top executives can get rich? What gall and arrogance. Pandora deserves to fail miserably, and they will because they are making one fatal mistake: they think ASCAP and BMI need Pandora. Guess what Timmy boy... THEY DON'T NEED YOU!

- Bob
(6/13/2013 9:12:27 PM)
Pandora's problem is that while consumers want their product, they aren't willing to to pay for it, at least not at the point that Pandora can make money. It's not complicated, Pandora is just a bad business model.

- Bill P
(6/13/2013 7:17:00 PM)
This is a tough argument. There's a major difference between "pure play" outlets like Pandora and streaming radio station programming. The ability of the consumer to choose the music is the key difference. Pandora will probably be a trivia question in a few years because the cost of rights to music is more than the business can sustain.

- John Hendricks
(6/13/2013 1:53:22 PM)
Good for ASCAP. Pandora knew, or should have known, the rules before they got into the business. It's not ASCAP's problem that Pandora is a giant VC black hole.

- Ed
(6/13/2013 11:48:13 AM)
ASCAP has been caught with their pants down. They are protecting their Clear Channel and other mega broadcast partners from fees not paid by solely internet broadcast. While i agree that an FCC license is not a guarantee of internet access, it was the criteria selected by ASCAP to have a two tier royalty system that is elevated for the internet only streamers. either tell Clear Channel no discount, or make it equitable for all.

- Lare Dean

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