Pandora and BMI have court date to settle royalty rates

Pandora and BMI are scheduled to go to court tomorrow and hash out the legal issues surrounding the streaming company’s royalty payments to the performing rights organization. BMI represents songwriters and publishers, whose copyrights are represented in U.S. law by Consent Decrees, which offer services like Pandora the right to use music at a government-mandated rate. Rate disputes are resolved in cases like this.

BMI is seeking 2.5% of Pandora’s revenue for royalties, up from the 1.75% that it currently pays. Pandora wants a rate of 1.7%, comparable to the rates paid by most terrestrial radio stations.

The case is expected to be similar to the one ASCAP brought against Pandora last year. The online radio company wanted to pay a reduced royalty rate, while ASCAP wanted a higher one. The result was the continuing of Pandora’s existing rate of 1.85% of its revenue for five years.

In the ASCAP case, judge Denise Cote sharply refuted ASCAP’s argument for an escalating rate, and more generally said the organization failed to make a good case that Pandora should pay a much higher rate than broadcast radio does. The royalty percentages are roughly the same in the BMI case as they were in the ASCAP proceeding.

If that earlier judgment sets a precedent, BMI might be facing an uphill battle. There’s no telling when we’ll get a ruling; as we’ve seen in the past, untangling these legal knots can take a long time.