Pandora’s Music Box

The legal battle between streaming service Pandora Media, ASCAP and BMI regarding royalty payments is causing some to wonder about the future of the U.S Department of Justice consent decrees in place since 1941.

BMI filed its lawsuit against Pandora Media in June because of the Internet radio company’s attempt to lower its royalty obligations by purchasing a small radio station in South Dakota, thereby qualifying its streaming services for the lower rate paid by broadcasters like Clear Channel Communications for its iHeart Radio.

BMI’s suit claims Pandora’s acquisition was just a stunt to artificially drive down its license fees.

Pandora Media sued ASCAP in Nov. 2012, asking a New York federal court to set what Pandora considers “reasonable” license fees through 2015.

The company claimed ASCAP fees prevent profitability, according to Bloomberg.

However, publishers’ complaints about the out-of-date system are represented in how Pandora reportedly pays two sides of the industry.

Pandora was said last year to have paid 49 percent of its revenue, about $313 million, to record companies and 4 percent, about $26 million, to publishers, according to the New York Times.

The outcome of the battles could affect a government system that, with the rise of Internet radio, has been under attack as being outdated, the Times said.

“What’s happening with these court cases will determine the future of the music publishing and songwriting industries, David Israelite, president of the National Music Publishers’ Association, told the paper. “It is simply unfair to ask songwriters and publishers to be paid something less than a fair market rate for their intellectual property.”

Meanwhile, musicians including David Byrne, R.E.M’s Mike Mills, Cake’s John McCrea, and guitarist Marc Ribot formed the Content Creators Coalition about a year ago to protest the way radio stations pay royalties.

“This is possible now because musicians and artists are fed up,” Ribot told the Times. “It takes a lot to get a musician to go to a meeting, serve on a committee. It’s not what we do; we play music. “But the way things are now, many of us feel that our backs are to the wall.”

The Content Creators Coalition reportedly represents a variety of creative types including visual artists and writers.

A bone of contention stems from a never-ending dispute: why aren’t U.S. broadcasters required to pay songwriters but not performers when playing music?

“It’s not about Spotify,” McCrea told the Times. “It’s about what’s coming in five years if we don’t have a collective voice.”