Is Pandora Well-Positioned for the Future?
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Pandora is an Internet radio company that operates in the United States with over 125 million registered users. Pandora’s Music Genome Project and its playlist generating algorithms predict listener music preferences, play music content suited to the tastes of each individual listener, and introduce listeners to music they will love. The main sources of revenue for the company are advertising as well as subscriptions. As the Internet music boom continues, Pandora is well-positioned to capitalize on potential subscriptions and advertising marketing share.
Recording companies including Sony (NYSE:SNE), Comcast (NASDAQ:CMCSA)-owned Universal, Time Warner’s (NYSE:TWX) Warner Music, Capitol Records, and the independent label ABKCO filed a suit in New York State Supreme Court in Manhattan against the popular online radio service Pandora over recordings made before 1972, which aren’t protected under the same copyright laws as recordings made after that year. Federal copyright law doesn’t cover recordings made before 1972, though they are protected through various state laws. The record companies allege that it isn’t being properly compensated for the pre-1972 music they own. Pandora believes that those state laws adequately protect the music in question. “Pandora is confident in its legal position and looks forward to a quick resolution of this matter,” said a Pandora spokesman in a statement seen by Bloomberg Businessweek. This is only the latest in the online radio service’s battle to pay as little as possible in royalties for the music it offers.
“Pandora’s refusal to pay Plaintiffs for its use of [Pre-72] recordings is fundamentally unfair. Pandora’s conduct also is unfair to the recording artists and musicians whose performances are embodied in Pre-72 Recordings, but who do not get paid for Pandora’s exploitation of Pre-72 Recordings. It is also unfair to other businesses that compete with Pandora but obtain licenses and pay for the right to stream Plaintiffs’ Pre-72 Recordings to the public, while Pandora does not,” the suit reads. “As a result, Pandora deprives Plaintiffs and their artists of compensation, while profiting enormously from and gaining an unfair advantage over others who do pay to copy and publicly perform Plaintiffs’ Pre-72 Recordings.”