Pandora Media, Inc. v. ASCAP

In 2014 the American Society of Composers Authors and Publishers (ASCAP) (defendant) appealed two decisions involving a music-streaming service called Pandora (plaintiff). The first decision related to whether copyright holders who license their music to ASCAP could partially withdraw ASCAP’s right to issue a public-performance right to users of new media services such as Pandora, yet permit ASCAP to license the songs to users of different media outlets. Copyright holders Sony, Universal, and EMI had become concerned that new media outlets such as Pandora were paying too little for licensing fees. These owners insisted that ASCAP allow them to license their music to Pandora directly. EMI even threatened to remove all its music from ASCAP if the partial withdrawal was not permitted. ASCAP then permitted the withdrawals, and these three copyright holders withdrew their licensing rights to new media companies and entered into direct licensure agreements with Pandora. Given ASCAP’s size and concerns about its possible monopoly power, ASCAP was required to abide by a consent decree that did not give ASCAP the discretion to permit partial withdrawals. Another issue was that when Pandora requested a new five-year license from ASCAP, the two groups could not agree on a rate. Pandora wanted a rate of 1.7 percent for all five years, and ASCAP wanted a rate that would escalate from 1.85 percent in the first two years to 2.5 percent in the third year, to 3 percent for the last two years. Pandora filed suit over both issues. In 2013 Pandora sought summary judgment on the issue of the partial withdrawals of licensing rights. On the prior rate-determination issue, Pandora filed a petition in 2012 for a court to settle the rate dispute. The United States District Court for the Southern District of New York granted Pandora summary judgment on the withdrawal issue and set the new licensing rate at 1.85 percent for five years. ASCAP, Sony, Universal, and EMI appealed the withdrawal decision, and ASCAP appealed the rate decision.