Pandora, BMI To Face Off In Court

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The music industry’s attention this week will shift to a federal courtroom in Manhattan, according to the NYTimes, where Pandora will square off against the giant licensing agency BMI in the latest fight over music royalties in the digital age.

The trial, which begins on Tuesday, will determine how much Pandora, the popular Internet radio service, pays BMI’s songwriters and music publishers to stream their songs.

The larger debate over music royalties online has galvanized musicians, and the Justice Department is reviewing the regulatory agreements that govern BMI and ASCAP, its rival. Both groups — which together handle nearly $2 billion in royalties when songs are played on the radio or streamed online — complain that the licensing system in place for decades is now outdated.

Pandora is struggling to prove itself on Wall Street, writes Ben Sesario at The Times.  Last Thursday, the company reported that it had $921 million in revenue last year, and paid a total of $446 million in music licensing costs, most of that for recordings, which are separate from the songwriting and publishing rights handled by Ascap and BMI.

Pandora now competes against terrestrial radio companies for advertising dollars, but the cost of the company’s music licenses has been a constant concern for analysts. In addition to its fights with BMI and ASCAP, Pandora is in the middle of another battle with the music industry over the cost of its recording rights, which are set by a separate panel of federal judges in Washington.

An advertising shortfall at the end of the year led Pandora to miss analysts’ revenue targets for the fourth quarter. On Friday, shares in the service closed down 17.2 percent, at $15.24, and a number of analysts downgraded the stock in response to the earnings report.

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