## Facts

- Pandora Media, Inc. operated a non-interactive, internet-based radio service that publicly performed musical compositions.
- ASCAP, a performing-rights organization, licensed public-performance rights in musical works and operated under a federal antitrust consent decree (AFJ2).
- Pandora sought a through-to-the-audience (TTTA) blanket license from ASCAP for January 1, 2011 through December 31, 2015.
- The consent decree required ASCAP to offer licenses to requesting users on non-discriminatory terms and permitted the district court to set a reasonable fee if negotiations failed.
- Before the rate trial, the court ruled that ASCAP could not permit music publishers to “partially withdraw” only new-media public-performance rights while leaving ASCAP able to license other uses.
- During the license period, certain publishers attempted to negotiate direct licenses with Pandora following purported partial withdrawals, creating risk of duplicative payments.
- After a bench trial, the court determined the reasonable rate and related payment terms for Pandora’s blanket license.

## Issues

1. What reasonable fee and terms should apply to Pandora’s TTTA ASCAP blanket license for 2011–2015 under the consent decree?
2. Whether Pandora proved that the historical 1.85% of revenue rate should be reduced (including to 1.70%) based on asserted market changes and proposed benchmarks.
3. How the rate should account for direct publisher payments associated with attempted partial withdrawals, including avoiding double payment for the same performance rights.

## Decision

- The court set a flat blanket-license rate of 1.85% of Pandora’s revenue for each year from 2011 through 2015.
- The court rejected Pandora’s proposal for a lower 1.70% rate and rejected increases not supported by reliable benchmarks.
- The court permitted Pandora to take a deduction/credit against the ASCAP fee for qualifying direct payments made to publishers following attempted partial withdrawals, to prevent duplicative payment.
- The court treated 1.85% as a strongly supported baseline given the parties’ history and required persuasive evidence to justify deviation.

## Legal Principles

- Under the ASCAP consent decree, the rate court sets a “reasonable” fee using a willing-buyer/willing-seller framework, commonly relying on comparable licenses that reflect competitive conditions.
- A historically used revenue-percentage rate may be treated as presumptively reasonable absent credible evidence that a different rate better reflects market value.
- Benchmarks are discounted when they reflect materially different business models or bargaining conditions (including differences between non-interactive services and interactive, on-demand services).
- Rate structures inconsistent with the parties’ prior practice (such as unsupported escalators) may be rejected where not justified by reliable market evidence.
- Where direct licenses were entered in connection with attempted partial withdrawals, the court may structure credits to avoid double payment while preserving a reasonable blanket-license rate consistent with the decree’s non-discrimination requirements.

## Conclusion

The court determined that a 1.85% of revenue TTTA blanket-license rate was reasonable for Pandora’s 2011–2015 performances of ASCAP works and allowed credits for qualifying direct publisher payments made in connection with attempted partial withdrawals to prevent duplicative charges under the consent-decree framework.


In re Pandora Media, Inc., 6 F. Supp. 3d 317 (S.D.N.Y. 2014)