Pandora has filed suit against ASCAP (the American Society of Composers, Authors and Publishers) in New York federal court, hoping to force the organization to grant it a "blanket" licensing fee for all of ASCAP's works.
The suit follows more than a year of negotiations in which the two sides were unable to settle.
Pandora is one of several webcasters, broadcasters, and technology groups supporting the Internet Radio Fairness Act in Congress, legislation advocates hope will lead to a reduction in the fees webcasters pay for the use of copyright sound recordings.
The fees webcasters like Pandora pay to ASCAP (and similar groups BMI and SESAC), on the other hand, involve copyright song compositions. The benefactors of such royalties are songwriters and publishers.
Pandora reportedly wants -- and ASCAP refuses -- the same terms as broadcasters. Earlier this year ASCAP reached a deal with the Radio Music Licensing Committee, which represents large broadcasters. The deal has radio broadcasters paying 1.7% of their gross revenue, minus deductions based on advertising commissions.
ASCAP and Pandora reached what was called an "experimental" accord on composition fees for the 2005-2010 term. Pandora's suit is for the term ending 2015.
Relatedly, Sony/ATV, a publisher with huge rights holdings, is pulling out of ASCAP to administer its own digital royalties (more here). This adds to webcasters' complications, as the group would be yet another organization with which to negotiate yet another fee. Though such a move should presumably reduce ASCAP fees, it's not known what it would mean for the overall amount webcasters pay to use copyright song compositions.
Read more in Bloomberg here.