Court ruling in ASCAP case will save Pandora US$21m in unpaid royalties

The recent decision of the rate court judge, that Pandora will pay American performance rights organisation ASCAP a royalty rate of 1.85% of their annual revenue, will save Pandora US$21m, according to figures crunched by tech and radio publication RAIN News.

Although Pandora didn’t receive the royalty rate reduction they were after (1.7%, in line with terrestrial radio rates for digital broadcasts), ASCAP weren’t granted a retroactive increase on 2013 fees, nor a rate increase to 3% for 2014 and 2015.

While many commentators are declaring the result a draw, Sony/ATV CEO Martin Bandier was more outspoken, calling the decision a "clear defeat for songwriters".

"This rate is woefully inadequate and further emphasises the need for reform in the rate court proceedings", Bandier said. "Songwriters can’t live in a world where streaming services only pay 1.85% of their revenue. This is a loss, and not something we can live with."

ASCAP CEO John LoFrumento was more measured, conceding the decision recognised that Pandora should pay higher royalty rates than digital radio station, while pointing to the larger issues as play. "[The decision] further demonstrates the need to review the entire regulatory structure, including the decades-old consent decrees that govern PRO licensing, to ensure they reflect the realities of today’s music landscape", LoFrumento said.

RAIN’s arithmetic suggests ASCAP – and songwriters – were the clear losers in this scenario, with US$21 million that would have been paid out in royalties remaining with Pandora. The graph below explains further, with all the heavy mathematics here.