Pandora buys South Dakota station as it continues to battle with music publishers

Pandora bought a terrestrial radio station in South Dakota in its latest move to try to get lower royalty rates from the country’s music publishers.

According to CNN, Pandora has been complaining that American Society of Composers, Authors and Publishers (ASCAP) has been requesting an unfair royalty rate higher than its competitors. It also claims that ASCAP will let publishers frequently pull entire artists’ catalogs, but keep them available for others.

In a blog post on The Hill, Christopher Harrison, Pandora's assistant general counsel, explained the move, noting that some in the music industry see Internet radio as “a threat to the status quo.”

Harrison wrote that terrestrial stations that have Internet radio providers made an ASCAP agreement with the Radio Licensing Marketing Committee (RMLC) in 2012 that allows those competitors to pay lower royalty rates. He specifically used iHeartRadio as an example, noting that it has to pay a lower royalty rate because Clear Channel, which owns terrestrial stations, owns it.

So, to qualify under the new RMLC agreement, Pandora bought Rapid City’s KXMZ-FM. It didn’t announce financial terms of the deal.

According to Billboard, ASCAP later issued a statement slamming the move.

“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,” ASCAP president Paul Williams stated. “"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 National Music Publishers' Association issued a similar statement.

Harrison tried to justify the move for other reasons. “Pandora excels in personalizing discovery and terrestrial radio is experienced in integrating with a local community,” he wrote in his post. “We look forward to broadcasting our personalized experience to the community in Rapid City, an area where over 42,000 residents already use Pandora. And we will apply Pandora’s insights about listening habits to program music that accurately reflects local listeners’ evolving tastes.”

image: Pandora