BMI sues Pandora over terrestrial radio station purchase

Pandora has been on a mission over the past couple of years to lower the royalty rates it pays music labels. The company argues that it should pay the same rates as traditional over-the-air radio stations and not be subjected to higher fees because it operates on the Internet. Despite numerous campaigns, nothing has changed and roughly 50% of the company’s revenue goes to paying licensing fees. In a last-ditch effort, Pandora this week purchased a terrestrial radio station in South Dakota. The move will theoretically give the company the same preferential licensing terms offered to services such as Clear Channel’s iHeartRadio and others. It won’t be that easy for Pandora, however. The company’s purchase is being challenged by BMI, which claims the purchase is a “stunt” that “makes a mockery of the performing rights licenses and the rate court process.” The group filed suit in the U.S. Southern District Federal Court in New York and is asking the court to set “reasonable, market driven” royalty fees for Pandora.