Music Business

Pandora Buys South Dakota Radio Station In Attempt To Lower Royalty Payments

image from Pandora has purchased a small radio station in South Dakota in an attempt to lower the rate it pays to ASCAP and other performing rights organizations. Hot AC radio station KXMZ-FM in Rapid City, South Dakota, is now owned by the music streamer, according to an op-ed written by Pandora assistant general counsel Christopher Harrison. Internet radio services operated by terrestrial broadcasters like Clear Channel's iHeart Radio pay lower performance royalty rates than internet only stations.

ASCAP is clearly Pandora's principle target. "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 Harrison.  

Action In The Courts

In addition to buying a radio station, Pandora is also taking ASCAP to court. According to Harrison's, Pandora is "filing a motion in federal district court in our pending rate case with ASCAP (the motion will be publicly available soon). The motion details discriminatory treatment of Pandora and other Internet radio companies by ASCAP and their publishing industry members."

As the owner of a terristrial radio station – even in one based in a city of just 70,000 – Pandora is likely technically able to pay a lower rate. But today 's move may be more public relation salvo, as the company works to change royalty rates for internet radio stations. 

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