Register of Copyrights: Copyright Royalty Board Should Listen to Pandora’s Music Box

Register of Copyrights Maria Pallante has publicly sided with Pandora Media Inc. in an opinion stating that the Copyright Royalty Board (CRB) should hear Pandora’s argument regarding its lower royalty rate payments. Pallante stated that she agreed with the company that the CRB could set Pandora’s rates based on the company’s direct licensing deal with Merlin, a digital rights agency representing over 20,000 independent music labels and distributors.

The issue arose from a dispute between Pandora and SoundExchange, a nonprofit performance rights organization that collects and distributes royalties on behalf of record labels and artists. SoundExchange has opposed allowing the Merlin deal in CRB proceedings. The spokesperson for SoundExchange has so far declined to comment on Pallante’s opinion.

If the Pandora-Merlin rates are used as a benchmark, this could be a big victory for Pandora– in part because of the cost of licensing music. The company has struggled to become profitable throughout its existence. According to Bloomberg, content costs constituted 46% of Pandora’s revenue in the second quarter. Should the CRB side with Pandora, the company may be able to compete with Spotify and Apple, successful competitors in the digital music industry. The CRB’s final decision is expected in December.

Bill Donahue, Pandora Takes Early Round In Rate-Setting Case, LAW360 (Sep. 21, 2015, 6:43 PM),

Todd Shields et al., Pandora Gets Boost From Copyright Chief in Web Radio Fight, BLOOMBERG LAW (Sep. 21, 2015, 4:37 PM),