Pandora Suit Against ASCAP May Portend Future for Inventors as well as Songwriters

The royalties guaranteed to songwriters for playing their work on radio, television, and in restaurants and retail establishments are being threatened by a law suit filed by the streaming media service, Pandora, against ASCAP, the American Society of Composers, Authors and Publishers.

Pandora contends that the century-old royalty scheme governed by a Department of Justice consent decree is outdated. ASCAP says the new technology company is trying to marginalize the songwriters and publishers, effectively cutting them out of any significant revenue streams from listener plays.

The New York Times reports that the wider music world has been galvanized by the issue of the low royalties paid by fast growing streaming media companies. (See “Pandora Suit May Upend Century-Old Royalty Plan.”)

In 2012 when songwriters protested on Capitol Hill, “five writers of hits by stars like Beyoncé and Christina Aquilera showed that 33 million plays of their songs on Pandora yielded just $587.39 in royalties for them.”

pandora2-580x300For record labels and recording artists without negotiating leverage the situation is not much better. (See “Patent Holders can Learn from Angry Musician’s File Sharing Fight” in IP CloseUp.

Clear Warning

The warning for inventors and other patent holders is clear: Content providers and new tech distribution and delivery platforms, including social media, are interested in accessing the widest range of and best quality content for the lowest price. Many have an inherent disrespect for authorship and the unauthorized use of inventions by many companies, already poorly monitored and infrequently enforced, is not likely to improve.

With demand for innovation exploding tech companies are no longer able to generate internally all that they need to compete. Like streaming media companies, these businesses are hungry for ideas and motivated by access to as much innovation as possible for the lowest price (or no price). Often, they have established the distribution channels, brand recognition and capital to achieve success without having to pay licensing fees. This leaves many innovators out in the cold. Clearing houses, like publishing societies established, play an important role in generating respect for songwriters’ work.

ASCAP and BMI, music rights clearing houses establish by consent decree, have done a good job at monitoring the use of their members’ work and making certain that they are paid. For patent holders there has been no watchdog, and unauthorized use of inventions, despite NPEs, is likely to remain widespread.

Industry-Established Royalties?

With ASACPA and BMI possibly losing more ground to new media it will be interesting to see if businesses that petition_sitebanneruse the innovation rights of others, including independent inventors, SMEs and universities, will ever agree to pay industry-established royalties unless they are forced to.

Once the technology for tracking patent holders’ rights is as ubiquitous as that for monitoring music airplay, I suspect that many of those who are involved in invention disputes will want to find new ways to resolve the majority of them faster.

For now, it remains to be seen what will be learned by patent holders and lawmakers from businesses’ latest attempt to circumvent content providers.

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