Latosha Cooper's List: OAA Legal Case

• Since 1941, Ascap and BMI, the two giant licensing organizations that dominate music publishing, have been governed by consent decrees with the Justice Department. These agreements were made to guarantee fair royalty rates for songwriters and for the radio stations, television networks and even restaurants and retail shops that play their music.
• But with the industry struggling to make money from digital music, this system has come under attack.

  The streaming service Pandora is squaring off against Ascap in a closely watched trial over royalty payments.
• For nearly a century, Ascap and BMI, known as performing rights organizations, have served an essential middleman function. They grant the licenses that let various outlets use songs, and then funnel royalties from these billions of “performances” back to publishers and songwriters.
• Performance royalties have become critical for songwriters as sales of compact discs and downloads — which pay a different kind of royalty not administered by Ascap and BMI — have fallen.
• with the rise of Internet radio, publishers have complained that the rules are antiquated and unfair. They point to the disparity in the way Pandora compensates the two sides of the music business: Last year, Pandora paid 49 percent of its revenue, or about $313 million, to record companies, but only 4 percent, or about $26 million, to publishers.
• Five writers of hits by stars like Beyoncé and Christina Aguilera showed that 33 million plays on their songs on Pandora yielded just $587.39 in royalties for them.
• Music executives argue that the problem is rooted in the Justice Department’s oversight of Ascap and BMI. Under the consent decrees, the performing rights groups are not permitted to refuse licenses to any outlet that applies for them, and rate negotiations can drag on for years. To get around this, some big publishers have tried to change their ties with Ascap and BMI, forcing digital outlets like Pandora to negotiate directly.

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• Pandora today filed a lawsuit against the American Society of Composers, Authors and Publishers (ASCAP) in a bid to lower the licensing fees it pays out to songwriters, composers, and publishers to stream their music. First reported by Bloomberg, the suit follows more than a year of failed discussions between the two sides to reach a new rate, with Pandora now asking a US District Court in New York to implement a blanket licensing fee that would cover all work under ASCAP's representation. The organization's membership currently stands at over 435,000.
• The company is also complaining about preferential treatment ASCAP has heaped upon traditional broadcasters like Clear Channel, owner of competing streaming service iHeartRadio. Earlier this year the two organizations reached a new digital licensing pact with favorable terms that reportedly weren't extended to Pandora.
• Back in September, the company threw its weight behind a bill designed to cut down on royalty rates paid by internet radio stations.
• "A predatory licensing fee orchestrated over ten years ago by the RIAA and their lobbyists in Washington has devastated internet radio," he said in a blog post last month.

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