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Pandora Takes Long View on Streaming Rate Proceeding

Webcaster believes its rate proposal is fair

Pandora believes its webcasting rate proposal to the Copyright Royalty board is fair and “will appropriately compensate recording artists.”

That’s according to Pandora CFO Mike Herring and VP Business Affairs/Associate General Counsel Chris Harrison.

Speaking to Wall Street analysts last night about the CRB proceedings, the executives said the proceedings are in a relatively early stage; they believe a decision on rates is likely sometime in December 2015.

Pandora has paid more than $1billion in webcasting royalties to SoundExchange to-date. It proposes to cut its rate to the greater of 25% of revenue or, in 2016, $0.00110 for a nonsubscription performance or $0.00215 for a subscription performance; the rates would go up slightly over the five-year term. Herring says SoundExchange is proposing 55% of revenue: “In response to these exorbitant rates Pandora would be forced to limit music play by approximately 75% to survive,” says Herring. That would mean rights-holders would receive much less than they do now, he adds.

The executives are glad that the NAB and iHeartMedia are part of the proceeding also. “We’re hopeful” having NAB and iHeartMedia involved in the CRB proceeding will enable everyone to present the “best evidence to the judges to enable us to come up with the best rate,” according to Harrison.

Of course, that conviviality only goes so far. Pandora notes it has sales forces competing with terrestrial radio in 37 markets. Eventually, its streaming rate should go down as the company takes away market share from terrestrial radio, according to the executives.