Universal Music Publishing, Pandora Strike Deal on BMI Repertoire

Universal Music Publishing Group has signed a license agreement with Pandora that allows the digital service to play its songs in the BMI repertoire.

"Our deal with Pandora is another step toward reaching our goal of ensuring that there is a vibrant digital marketplace where both music services and the songwriters and composers who make those services possible can thrive," UMPG chairman and CEO Zach Horowitz said in a statement. "This arrangement will allow music fans to enjoy our music on Pandora while protecting our songwriters and composers."

The agreement between UMGP and Pandora comes after a legal battle over whether UMPG and other publishers had the right to withdraw digital licensing from the performance rights organizations. In September, the ASCAP rate judge ruled that they could, but publishers would have to pull all their rights, not just digital. In the case of Pandora, however, the Judge ruled that the service had an interim consent-decree license, which is good through Dec. 31, 2015. On Dec. 18, the BMI judge agreed that publishers had to be all in or all out, but in his judgement, he ruled that there was no interim consent-decree license, which meant that if UMG decided to withdraw from BMI after Dec. 31, Pandora's BMI blanket license would no-longer cover UMPG songs.

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After that ruling UMPG and Pandora then entered into direct negotiations for a license for UMPG's BMI repertoire, which ended in a license agreement signed on Dec. 31, 2013, according to a UMPG statement.  Terms of the deal were not disclosed. Pandora is not the only digital service believed to be facing this issue because of the BMI Judge ruling. While sources say that BMG, UMPG and Sony/ATV had either entered into short-term deals or were informing digital services that they didn't need to worry about copyright infringement suits for the short-term, its unclear where those negotiations now stand.

But for now, the license means that UMPG and its songwriters and composers will not be subject to the Pandora/BMI rate court proceeding. Publishers say that the consent-decree interferes with their ability to get market rates, which is why some of the larger ones first began withdrawing their digital rights. According to UMPG, the market, rather than a rate court judge, determined appropriate terms.

"Today, songwriters and composers are too often denied fair compensation for their work because BMI and ASCAP, the two major performance rights organizations that license these services, are regulated by antiquated consent decrees, conceived in a different century for a different world," said Horowitz. "The decrees make government mandated rate courts the final arbiters of fees—especially problematic in the rapidly evolving digital marketplace where an absence of market benchmarks may make that impractical, and where the consent decrees restrict the courts from customizing arrangements to address the full array of issues that may arise."

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But Pandora sees things differently. "Judge Stanton’s series of rulings [in the BMI rate court] created uncertainty within the music industry and threatened to negatively impact songwriters and performers by having their music removed from the largest U.S. internet radio service," Pandora said in a statement. "With only days to act before a January 1st deadline, we moved quickly to reach an agreement to keep their music playing on Pandora. This agreement should be viewed as a specific approach to address a short term-issue resulting from a legal decision."

Going forward, UMPG's Howowitz added, "Direct negotiations between a willing buyer and willing seller offer the best approach to empowering services while securing reasonable fees and terms for songwriters and composers.  UMPG's deal with Pandora for our BMI repertoire is a prime example of this."