Music governing body sues Pandora for allegedly underpaying royalties
The Nashville-based Mechanical Licensing Collective filed a lawsuit against California-based Pandora Media, LLC, on Feb. 12, in an attempt to recover unpaid royalties and late fees it says the streaming service owes under its blanket license agreement.
A spokesperson from the organization declined to cite the amount of money they feel is owed.
The Mechanical Licensing Collective is the sole entity authorized to offer and administer blanket licenses and to collect the ensuing royalties due from those licenses.
Pandora obtained a blanket license on Jan. 1, 2021, because it was already operating under the previous statutory mechanical license, which was superseded by the blanket license, the lawsuit states. Pandora filed a Notice of License with The Mechanical Licensing Collective confirming its operation under the blanket license at the end of January that same year.
The Mechanical Licensing Collective says Pandora misrepresented what it owed by sending incorrect usage reports and royalty payments dating back to 2021.
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In a release, CEO Kris Ahrend, said, "The MLC has worked closely and tirelessly with blanket licensees to ensure their compliance with the compulsory license terms. Our team repeatedly sought to resolve this issue directly with Pandora, but Pandora has refused to correct their reporting or royalty payments."
He added, “The MLC is the only entity that has the statutory authority under the Music Modernization Act to take legal steps to enforce the obligations of streaming services. We have brought this action to ensure that our Members receive all the mechanical royalties they are due in connection with the use of their songs by Pandora on the Pandora Free service.”
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In 2018, the U.S. Copyright Act was amended by the Music Modernization Act, which created the new compulsory blanket license for certain uses of musical compositions, or songs. Digital music providers who obtain a blanket license are, "permitted to reproduce and distribute copyrighted songs in certain covered activity that includes digital streaming services that provide on-demand access to music."
But under that blanket license, Pandora and other music streaming services must pay royalties to blanket licensees, including songwriters, composers, lyricists and music publishers. It is the job of The Mechanical Licensing Collective to collect and distribute the royalties.
Pandora is under a blanket license to report and pay royalties
The lawsuit states that Pandora must report and pay monthly royalties in full to the Collective under the blanket license and that to date, Pandora has failed and refused to pay.
The lawsuit continues: "Pandora’s underpayment of royalties, which underlies the claims in this action, was accomplished by sending incorrect usage reporting and royalty payments to The MLC located in Nashville. Furthermore, these acts directed at Tennessee were done with the knowledge that the failure to pay royalties in full would cause direct and substantial harm to the many songwriters and music publishers in Tennessee to whom someof such royalties are due."
The Mechanical Licensing Collective sent a letter to Pandora on Nov. 4, 2021, indicating Pandora's failure to report correctly involving the "Pandora Free" service, which the letter stated is an interactive streaming offering and the music streams provided to users are covered activity that is subject to Pandora's blanket license.
On Nov. 15, Pandora responded with a letter from its outside counsel stating that Pandora "categorically rejects your contentions, which are outside the purview of The MLC and both factually and legally unfounded."
Calls to attorneys representing Pandora were not immediately returned.
Melonee Hurt covers music and music business at The Tennessean, part of the USA TODAY NETWORK — Tennessee. Reach Melonee at [email protected], on X @HurtMelonee or Instagram at @MelHurtWrites.
This article originally appeared on Nashville Tennessean: Nashville-based Mechanical Licensing Collective sues Pandora