Radio gag: Pandora is facing a hefty licensing bill for its music

Internet radio service Pandora Media Inc (P) said it will appeal a rate court ruling that could force the company to pay higher royalties to Broadcast Music Inc (BMI) for music licenses.

Music licensing group BMI sued Pandora two years ago, demanding a higher royalty for licenses.

BMI said on Thursday the New York Rate Court ruled in its favor and agreed that the royalty rate of 2.5% of revenue was “reasonable, and indeed at the low end of the range of fees of recent licenses.”

BMI manages performance rights for composers and publishers like Lady Gaga, Rihanna and Willie Nelson, and licenses about 90% of the music heard on online services along with ASCAP.

Pandora said in an emailed statement the ruling could increase its content costs as a percentage of revenue by 80 basis points. One basis point is a hundredth of a percent.

“We disagree with the court’s ruling and will appeal to the same court that ruled in Pandora’s favor in the ASCAP case last week. We strongly believe the benchmarks cited by the court do not provide an appropriate competitive foundation for a market rate,” Pandora said in the email.

The latest court decision comes close on the heels of a court ruling in favor of Pandora last week, rejecting an effort by the American Society of Composers, Authors and Publishers (ASCAP) to charge Pandora more to license its music from 2013 to 2015.

Pandora is one of the most popular Internet radio services. The Oakland, California-based company last month said it has more than 250 million users, including 79.2 million “active” users, who listen to 1.77 billion hours of music each month.

BMI called the latest court decision “an enormous victory” for more than 650,000 song writers, composers and publishers that it represents.

Reuters could not immediately verify the ruling on court records.


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