Monday, August 8, 2016

Streaming services boosted by DoJ royalty decision

Written by William McConnell — The decision is good news for Pandora , Apple and other streamers because it will keep royalties far lower than what the traditional publishers had been seeking.

Traditional music publishers like Sony/ATV Music Publishing LLC and Universal Music Publishing Group were dealt another blow in their fight to get bigger royalties from Internet streamers after the Department of Justice on Thursday announced that it would not make any changes to consent decrees governing payments made to publishers and artists through American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. (BMI).

"No modifications are warranted at this time," the DOJ said in announcing the conclusion of a review that commenced in 2014.

The DOJ decision is good news for Pandora Media, Apple and other streamers because it will keep royalties far lower than what the traditional publishers had been seeking.

Shares of both companies spiked at the opening bell before falling and rebounding again as the market grappled with the impact of the DOJ decision, which began to leak out prior to its 11 a.m. announcement. At midday, Pandora was trading 1.3% higher to $13.26 while Apple shares were flat.

The world's largest music publishers Sony/ATV and Universal, are owned by Sony and the estate of Michael Jackson and by Vivendi, respectively. Sony shares were up slightly.

Music publishers requested that consent decrees binding ASCAP and BMI be reworked after the federal court responsible for settling copyrighted music disputes stunned the music world in March 2014 by siding with streaming service Pandora in a rate fight with ASCAP.

Judge Denise Cote of the U.S. District Court for the Southern District of New York ruled that Pandora must pay the performance rights organization a rate of 1.85% of annual revenue. Cote refused to grant an escalating fee structure sought by ASCAP and its members that would have required Pandora to pay 3% in 2014 and 2015.

In 2014, ASCAP and BMI asked that large music publishers be permitted to "partially withdraw" their songs from for purposes of licensing to streaming services such as Pandora or Spotify.

Sony/ATV Music Publishing CEO Martin Bandier characterized the court ruling as "a clear defeat for songwriters," when it was handed down.

The rate decision was the second major defeat Cote had dealt music publishers, artists and the performance rights organizations like ASCAP and BMI. Six months earlier, she granted Pandora's claims that it should be entitled to a blanket license to ASCAP's entire portfolio. A blanket license allows the music user to pay a single annual fee for the right to perform, air or stream any of the millions of songs in ASCAP's or BMI's repertory as often as it likes.

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