Tectonic shifts in Pandora’s battles may bring cataclysm to internet radio

The eruptions we are experiencing between Pandora on the one hand and the majors & ASCAP/BMI/SESAC on the other hand may have cataclysmic impacts upon internet radio.  Universal, BMG Chrysalis and possibly Warner/Chapell have given ASCAP notice that they intend to withdraw “new media” rights from ASCAP so that they may do direct deals with services, Pandora in particular.  This apparently was a result of the effectiveness of the majors’ negotiations with iTunes radio, according to Digital Music News.

The problem is that the majors cannot simply withdraw their new media rights from Pandora without withdrawing them from every webcaster operating under the statutory license.  That means every webcaster that doesn’t have a direct license with UMG, BMG, and possibly WMG, would be unable to rely upon ASCAP’s license for that content anymore.  To play that music over the internet at that point would be to violate copyright law, whether you are Pandora, or a small pureplay broadcaster.

The majors’ actions here appear to be in response to Pandora’s aquisition of KXMZ in South Dakota.  Pandora acquired KXMZ in order to qualify for rates that ASCAP & BMI negotiated with the Radio Music License Committee in January 2012, according to Bloomberg news.  That January 2012 agreement gave more favorable rates for digital transmissions to webcasters that were owned by terrestrial broadcasters, which means that Clear Channel’s iHeart Radio pays lower rates than Pandora or any other pureplay webcaster.  This all according to Bloomberg news.

An unanswered question is why did ASCAP & BMI cut a deal to accept reduced digital rates that they were receiving from terrestrial broadcasters in January 2012?  With all of the noise made on the web about Pandora’s efforts to reduce rates, how is it that journalists missed the fact that terrestrial broadcasters did it & everyone kept quiet?  Was there transparency in the January 2012 deal?  Did ASCAP & BMI let their members know?

I’m not only an industry member, I’m an ASCAP member, and I’m outraged that ASCAP did this on the sly and is now pounding Pandora for taking advantage of the same rates they’re already giving corporate radio like Clear Channel (owners of iHeartRadio).  It stinks of collusion, of old boys networks.