Radio streaming platform TuneIn is suing Pandora for breach of contract in a deal where the music streaming service failed to meet ad sales goals and guaranteed payments over the first quarter of 2017.
In a lawsuit filed Tuesday (June 20) in California, TuneIn also alleges anticipatory breach, breach of the implied covenant of good faith and fair dealing and negligent misrepresentation, demanding a jury trial.
TuneIn’s complaint against Pandora explains last year the two companies had formed an agreement where Pandora would exclusively sell TuneIn’s digital audio advertising inventory for 2017. Under this agreement, Pandora was to pay TuneIn a guaranteed quarterly revenue so long as TuneIn supplied a minimum number of audio impressions each month. At the crux of the deal was Pandora’s “purportedly revolutionary and newly-launched advertising platform” Harmonic Audio Network, which Pandora had touted as a game-changing service to improve placements to better align with brand values with improve listener engagement.
TuneIn alleges Pandora “did not invest the resources and effort necessary to make the Network a successful sales platform” and points to its “dismal sales” as proof. Over the first three months of 2017, Pandora sold against just 13.9 percent of TuneIn’s forecasted 881,000,000 impressions. Historically, TuneIn states it sold 60-70 percent of its advertising inventory by leveraging several third parties. In this exclusive agreement with Pandora, TuneIn had hoped to increase those figures to 100 percent.
“Pandora also communicated to TuneIn that it had not dedicated the necessary resources or put forth the necessary effort to make the Network a success,” the suit claims.
After Pandora failed to adequately sell TuneIn’s advertisement inventory over the first quarter of 2017, with a multi-million dollar guaranteed payment due, the suit alleges the company fabricated a breach of the agreement by TuneIn that claimed TuneIn failed to provide its inventory forecast in a “reasonably acceptable format,” as their deal demanded. This, TuneIn calls “a thinly-veiled attempt to avoid its payment obligations in light of its poor sales results.”
The suit continues to state confusion over how TuneIn’s forecast was unacceptable and asserts that the company made efforts to assist Pandora in selling its advertising inventory that Pandora failed bring to action. As well, it alleges that Pandora’s Harmonic Audio Network was not fully developed during this term.
In March, Pandora sent TuneIn a notice of termination due to the alleged breach of contract for failure to provide the inventory forecast in a “reasonably acceptable format” and then defaulted on its obligations to pay TuneIn its guaranteed revenue for the quarter. From there, the suit continues, Pandora attempted to “leverage this manufactured situation” to renegotiate the deal with TuneIn in a way that got rid of the guaranteed payment and other obligations to the company.
“It is now evident that the real driver behind Pandora’s conduct is a desire to improperly dodge its payment obligations because poor sales results have made this a bad deal for Pandora,” the suit claims.
TuneIn provides live streams to more than 60 million users worldwide, according to the complaint, with producing and selling advertisement inventory as its primary method of monetization.
“We are disappointed that Pandora did not invest the promised resources and effort to make our exclusive partnership a success,” TuneIn CEO John Donham told Billboard in a statement. “Pandora’s failure to honor its agreement with TuneIn forced us to take this step to protect our contractual rights.”
TuneIn is seeking a money judgment in the amount of damages to be proven at trial and an award of reasonable costs and legal fees.
A spokesperson for Pandora declined to comment for this article.
UPDATE 6/21: A spokesperson for Pandora issued the following statement to Billboard: “We introduced the Harmonic Audio Network and our partnership with TuneIn last fall. In March of this year, we terminated the agreement due to a breach of contract by TuneIn. We believe TuneIn’s current lawsuit against Pandora is baseless and without merit.”