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Comedy ‘Cartel’? Pandora Isn’t Laughing About Copyright Lawsuit

In a countersuit, the streaming service accused Word Collections of violating federal antitrust laws by creating a "monopolistic portfolio" of comedy rights.

Pandora has filed a scathing response to a lawsuit that claims the streamer doesn’t pay proper royalties for comedy, accusing a group called Word Collections of trying to create an illegal “cartel” by orchestrating litigation over a problem that “no comedian” had ever raised before.

Months after a slew of comedians (including the estates of George Carlin and Robin Williams) accused Pandora of failing to pay the equivalent of publishing royalties for spoken-word content, Pandora’s attorneys lodged their first formal answer to the lawsuit Thursday – and they weren’t laughing.

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In a countersuit against Word Collections, Pandora accused the group of violating federal antitrust laws by creating a “monopolistic portfolio” of comedy rights, aimed at “dramatically increasing” the prices streamers must pay for comedy.

“Word Collections’ true business model is not that of a benign licensing agent or an advocate for comedians’ intellectual property rights,” wrote Paul Fakler, who’s leading a team of Pandora attorneys from the law firm Mayer Brown. “It is that of a cartel leader.”

The new counterclaims against Word Collections is a dramatic escalation of a long-simmering dispute over how streaming services like Pandora and Spotify pay for comedy.

Every piece of audio is covered by two copyrights – one for the sound recording itself and another for the underlying “literary work” that’s been recorded. When it comes to music, streaming services pay licensing fees to the owners of each copyright. But for comedy, platforms like Pandora have typically only ever paid for the recordings.

Part of the problem is that there is no society like ASCAP or BMI to collect such publishing royalties for spoken works. Over the past year, Word Collections has moved to fill that void and has begun asking streaming services to pay those fees for comedy; those efforts are what prompted Spotify to pull down some comedy content last fall.

In February, several comedians took the issue to court, accusing Pandora of willfully refusing to pay the legally required royalties for their content: “Pandora did what most goliaths do: it decided it would infringe now to ensure it had this very valuable intellectual property on its platform to remain competitive, and deal with the consequences later. Later is now.”

But in Thursday’s response, Pandora said it had “always satisfied its copyright obligations” by paying “millions of dollars in license fees every year” for comedy recordings. Comedians had been “clearly satisfied with this long-standing custom and practice,” Pandora said, since no comic had ever raised the issue — and had in fact regularly reached out to request more airtime under existing licenses.

“Comedians chose unilaterally to benefit from the royalties they were already receiving for the use of the comedy recordings and the added promotional and other benefits that the services gave them, creating additional demand for their live performances and otherwise benefiting the comedians,” Pandora wrote.

That arrangement worked for years, Pandora said, until Word Collections began organizing comedians into the illegal “cartel” with the goal of forcing streaming services to pay for a blanket of rights they don’t necessarily want.

“Word Collections has coordinated and funded the filing of the [lawsuit] to impose this dysfunctional market on all manner of entities that perform, reproduce or distribute comedy through the threat of crippling infringement penalties,” Pandora’s lawyers wrote.

In response to Pandora’s filing, Richard Busch – a well-known music attorney who is representing the comedians – told Billboard on Friday: “We have seen it, we vehemently disagree with it legally and factually, and we will be responding appropriately.”

Read the full filing here: