ASCAP and the National Music Publishers' Association have responded harshly to Pandora's purchase of a small-market radio station in an attempt to lower its ASCAP royalties.
Pandora announced Tuesday it has purchased KXMZ-FM in Rapid City, South Dakota, the 255th largest radio market in the country. The company believes it should receive the more favorable ASCAP licensing terms available to companies that own both terrestrial radio and Internet radio operations. The acquisition continues an ongoing scuffle between Pandora and ASCAP that peaked in November when Pandora sued the performing rights organization for lower royalties.
"Pandora is trying every trick in the book to brazenly and unconscionably underpay and take advantage of the creative labor that produces the core offering of their business -- music written by individual songwriters and composers," said ASCAP president Paul Williams in a statement to Billboard. "ASCAP has an ethical obligation to serve and protect the hundreds of thousands of small and independent songwriters, composers and music publishers we represent to ensure that they receive fair compensation when their songs are performed on any technology platforms."
The NMPA expressed a similar sentiment. "This is another sad step in Pandora's escalating war against songwriters," said David Israelite, president and CEO of the NMPA. "While other digital partners are making voluntary deals, Pandora chooses to sue the very creators who make its business possible."
The acquisition of KXMZ is a continuation of an ongoing tussle between Pandora and ASCAP over licensing terms. In November, Pandora filed a lawsuit in a federal district court seeking a license with terms available to Internet radio services under the 2012 settlement between the Radio Music Licensing Committee (RMLC) and ASCAP. That settlement covers both broadcast and Internet performance royalties and sets a blanket license fee of 1.7% of a licensee's gross revenue less a deduction for commissions. The RMLC represents the majority of radio stations in the U.S.
Pandora's November petition notes that Clear Channel is able to pay the RMLC rates for iHeartRadio, Pandora biggest Internet radio competitor, and claims "there is no basis for discriminating" among similar types of music services or the way they distribute music to listeners. ASCAP disagrees. "Internet and traditional AM/FM radio services are very different businesses with different formats, using music in very different ways," said Williams.