updated 07:14 pm EDT, Mon July 29, 2013
ASCAP claims Pandora meets none of the wickets for proper broadcast
The American Society of Composers, Authors, and Publishers (ASCAP) has filed a formal protest with the US Federal Communications Commission, opposing streaming radio purveyor Pandora's attempted purchase of a radio station in Rapid City, South Dakota. ASCAP is opposing the deal on procedural grounds, saying that Pandora failed to properly reveal its international interests involved in the company, and in not doing so, isn't properly proving that it does not exceed foreign ownership rules set by the FCC.
Additionally, it claims that Pandora has no interest in serving the local area the station resides in, and is only purchasing the station to qualify for lower royalty rates for music. Critics have pointed out, however, that the latter claim violates no law or guideline.
After ASCAP rules were amended to allow individual publishers to selectively withdraw rights from song catalogs available to online streamers, Pandora was forced to negotiate in the dark with Sony/ATV without a list of tracks that were being withdrawn from the service. The negotiations, up against a tight deadline, resulted in increased streaming rates for the company. Purchasing the radio station by definition qualifies Pandora as a whole for the lower streaming rates that terrestrial radio is entitled to.
In its filing with the FCC, ASCAP claims that "Pandora's public statements lay bare its plot: to use KXMZ as a bargaining chip in Pandora's quest to obtain lower royalty rates for its online music streams. Given these brazen proclamations, there can be no doubt Pandora's interests do not lie in providing service to Box Elder and the greater Rapid City area. Station KXMZ and its listeners should not endure such a fate."
ASCAP maintains in the document that the higher rate is fair for Pandora because it "operates under a completely different business model, using music in an entirely different and much more intensive manner, than do broadcasters. Unlike most broadcast radio stations, Pandora's 'stations' do nothing but play music -- they offer no commentary, news, information, public affairs programming, public service, emergency alerts, or non-musical entertainment of any kind."
Additionally, ASCAP maintains that "Pandora has voiced no desire to own KXMZ for the sake of the Station itself, or to provide service to the residents of Box Elder, South Dakota, or the greater Rapid City area. Pandora's acquisition of KXMZ is a theatrical media stunt, designed to draw attention to what Pandora wrongly perceives as an unfavorable royalty payment structure."
Electronista has spoken with sources familiar with the matter within the FCC, who believe that ASCAP may have a case with the Pandora ownership paperwork, but less so for the needs of South Dakota that ASCAP claims that Pandora has no interest in. "ASCAP seems to be holding Pandora to a higher standard for the 'public interest' sections of FCC purchase approval than, say, Clear Channel. If Pandora wishes to qualify for the lower royalty payments, it needs to properly maintain the station, as well as abiding by all broadcast laws, which include public interest programming as mandated by us," said our source.
"We are in the midst of the latest battle, in which ASCAP and its members have abruptly shifted away from 100 years of business practice and attempted to create a new right to 'withdraw' from ASCAP the right to license certain songs on what is essentially a case-by-case basis," wrote Pandora assistant general counsel Christopher Harrison in an editoral published in The Hill, a Washington DC-based political newsletter at the time of the buy.
KXMZ is a "hot adult contemporary" station, with a key demographic between 18 and 54 years of age. The station broadcasts at 102.7MHz with 50kW of power, reaching nearly 175,000 listeners terrestrially, and generally another 5,000 on the Internet.