Comments on: Pandora’s IPO Filing: Copyright Fees Eat Up Half Its Revenues

By: dpomic

dpomic — Mon, 14 Feb 2011 20:26:23 +0000

UK and other international music licensing rates for Internet radio, particularly interactive, are even higher than US. I’m sure someone can give some exception… And, subject to negotiation… Pandora withdrew from the UK after unsuccessful negotiations.

By: Joe Mullin

Joe Mullin — Mon, 14 Feb 2011 17:33:39 +0000

DAJ Hilton, thanks for your comment, although my understanding is that international music copyrights are pretty complex despite these treaties. My suggestion that it will be both difficult and complex for Pandora to expand abroad comes in part from the company’s own admission, in its S-1, of how tough it will be.

By: Dajhilton

Dajhilton — Sun, 13 Feb 2011 13:27:14 +0000

Very interesting article. And the first comment makes a partially useful clarification. Yes, radio broadcasters have to pay copyright royalties to music publishers and not to record companies. At least with respect to their terrestrial signals. But that scenario all changes when you are talking about digital transmissions over electronic networks (as defined by the Digital Performance Rights Act of 1995). For simulcast transmissions and webcasts, the radio station – or other transmitter – has to pay royalties to both music publishers and to record companies/performers. So there is no ‘hotly debated’ issue about any licensing issue related to Pandora right now in Washington. (Though record companies annually seek to have a performance right in terrestial radio transmissions, that is not likely to happen).

Also, the claim that there is some ‘international copyright problem’ in this area that needs ‘solving’ isn’t accurate either. Over 60 countries have signed up to the WIPO Internet treaties of 1996 that regularize license fee collections for all internet transmissions, and the collecting societies internationally are far more advanced in their database and collection facilities than is SoundExchange in the US. In any case, the US record companies are signatories to the worldwide reciprocal agreement among collecting societies administered by the IFPI that allows a company like Pandora to acquire an essentially worldwide license as easily as it acquires its US license. If there is something additional that complicates there potential for international growth, it is not likely to be a copyright issue (currency and tax problems are much more severe as they have not been harmonized by international agreements the way that the copyright issues have been).

DAJ Hilton
London .

By: Joe Mullin

Joe Mullin — Sat, 12 Feb 2011 03:59:01 +0000

David, thanks for the comment. I was going fast and didn’t think it through. It’s fixed.

By: David Basskin

David Basskin — Sat, 12 Feb 2011 03:28:34 +0000

You wrote, “Pandora has to compete with terrestrial radio, which doesn’t have to pay one cent to these collection agencies.”

Were you serious when you suggested that terrestrial radio doesn’t make any copyright payments? Aren’t you aware that radio stations all pay ASCAP, BMI and SESAC for the exercise of the performing rights in the musical works they broadcast. They don’t pay record labels or performers, a subject being hotly debated in Washington. The odds are the American radio broadcasters will, sooner or later, have to pay performers and labels, just as their counterparts do in virtually every other country. But they’ve been paying the PROs for a very long time. Were you not aware of this?