The American Society of Composers, Authors and Publishers (ASCAP) began its face off with Pandora Music Inc. in federal court on Tuesday (1/21) to determine how much money the online radio giant should pay ASCAP for the use of its compositions. According to the Wall Street Journal, Pandora currently pays 4.3 percent of its revenue to publishers and songwriters that are represented by ASCAP, as well as other similar organizations, while record labels and performers receive nearly half of the company's revenue. An initial agreement between the two sides expired in 2010, and since then, Pandora and ASCAP have been licensing music on a temporary basis. However, Pandora filed a lawsuit in November 2012, seeking to have a court renegotiate the deal. Pandora's argument is that terrestrial radio stations are not required to pay record companies for song use, hence, why should online radio have to? Conversely, ASCAP lawyers are arguing that licensed music means more to Pandora than to terrestrial radio since Pandora lacks sports and talk programs, and also plays fewer ads, according to the WSJ.
Yesterday, WSJ'sJason Bellini spoke to NPR's Here & Now program about the possible ramifications from the case. He noted that a decision in Pandora's favor could be harmful to ASCAP, since some publishers may drop out of the society if they don't like the terms of the new deal.
"What could be a really big mess for [Pandora] is actually if they win, because then you've got these composers and the songwriters saying, 'We may just pull out of ASCAP and say, forget it. We'll figure out our own deal, but we're not going to except the rate that we're getting paid,'" Bellini said on the show. "If that happens, then Pandora may have to reconsider everything, make deals with a different organization. It could be a really big mess for them."