Sony and ASCAP collude against Pandora…and lose

With all of the stink created over royalty payments via streaming services that has been made from people on every angle of the issue, it’s odd to think that one of the biggest court rulings in relation to that fight has gone down almost completely off of the radar. Then again, when every side manages to simultaneously lose, and some of the largest companies in that fight gets exposed for obvious collusion, perhaps it makes a bit of sense.

For those unaware, ASCAP  (one of the oldest and most powerful copyright organizations around) spent a great deal of time and money in a New York state court attempting to get more royalty money out of Pandora. In many ways, the outcome of this was likely to set an industry-wide precedent; and yet the ruling, made well over a week ago, garnered very little press.

In short, ASCAP got together with some of the most powerful companies in the music industry in an attempt to scare Pandora into paying more money than they initially agreed upon. Taking a larger picture look at the situation, it’s obvious that ASCAP and their allies underestimated just how popular streaming services would become, and they were hoping this court case would give them a precedent to carry onto other similar services.

The core of this battle began about a year ago, when the folks at Pandora finally had enough with the games ASCAP was playing, and publicly called them out for backing out of an already agreed to deal, clearly only doing so to try and force more money out of Pandora. This was also the point when Pandora showed all their cards, citing a long list of lies being circulated by companies like Sony, the RIAA, and many other industry leaders who were clearly scared that they would not be making as much money from the rising streaming services market.

In the end, the judge in the case ruled that Pandora would need to continue to pay the same royalty rate, denying both ASCAP’s request for a higher rate, as well as Pandora’s hope to lower it to the same percentage paid by traditional AM/FM stations. Yet the most fascinating element of the entire legal proceeding came out of the judge’s reasoning, which was in short: ASCAP colluded with major labels and artists to scare Pandora into paying far more money than their contract stated.

The judge in the case directly called out ASCAP, Sony, UMPG and a number of other companies for colluding with one another in an effort to scare Pandora into paying this outrageously high new rate. Citing a number of emails and meetings between these companies, the judge wrote in her decision, “What is important is that ASCAP, Sony, and UMPG did not act as if they were competitors with each other in their negotiations with Pandora. Because their interests were aligned against Pandora, and they coordinated their activities with respect to Pandora, the very considerable market power that each of them holds individually was magnified.”

Later in the ruling, she specifically calls out Sony for leaking the details of the proposed deal, which created a massive stir in the industry when it was revealed. The judge also wrote in her decision that at one point, “…Sony decided quite deliberately to withhold from Pandora the information Pandora needed to strengthen its hand in its negotiations with Sony.”

In addition, all through this process, ASCAP was feeding untruths to the songwriters it represents; with the hopes that in the end, there would be more money for the company and they would come off as heroes to those they represent. This is likely the reason so many musicians suddenly took issue with streaming services, as the companies they trust were making the situation out to be something it simply wasn’t.

The ruling is a massive tomb of writing, and much of it seems like the plot from a terrible movie. But what it really shows is another area where the music industry as a whole is refusing to catch up to the current reality, and that at the end of the day, the companies who are trusted to get fair royalty rates for songwriters are just as evil and greedy as anybody else, stopping at nothing to destroy anyone that doesn’t play their game.

Joel Freimark hosts a daily music-related webseries HERE and you can follow his daily music musings and suggestions HERE as well.

Image: St8ge

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