Did Pandora Just Notify Its Intention to Use the Compulsory License that Landed Spotify in Trouble?

According to Charlotte Hassan writing in Digital Music News, Pandora has announced that it engaged Music Reports, Inc. to handle mechanical licensing on Pandora’s planned streaming service assembled out of the Rdio assets.

MRI is widely known in songwriter circles for “carpet bombing” the notices of intent to use songs (or “NOIs”) similarly to the HFA business practices that got Spotify, YouTube and Rhapsody sued by songwriter class actions.  So we can only assume that Pandora intends to use MRI to bombard songwriters with NOIs, penny checks and the other techniques of digital services seeking the protection of the NOI.

As David Lowery has taught songwriters in his allegations in litigation against Spotify and Rhapsody, services often fail to send NOIs properly, don’t pay royalties and can’t be audited without a lawsuit.  (And even then songwriters struggle to get a “straight count.”)  Whether this will happen with MRI and Pandora remains to be seen, but songwriters should be vigilant that Pandora is not already creating an unauditable black box.

According to the press release:

To review and respond to the licensing offer [from Pandora], music publishers can simply log into their Music Reports account online at www.musicreports.com, where they will be able to access and download a full copy of the agreement, and then directly accept the terms if they choose. Any music publisher can request a Music Reports account, which gives full access to the licensing and royalty reporting details that Music Reports administers for their songs.

Be careful when you log in that you are not required to accept a click through agreement relating to MRI’s own terms.  Also check if the “full copy of the agreement” allows you to audit Pandora and perhaps most importantly, what happens if you say no.  Not to mention if the “full copy of the agreement” is just a version of the statutory license that’s available anyway before you give MRI more data they can use to send you more NOIs.

On a related point, it still remains to be seen if Pandora will be implicated in Sony Music’s fraud claims against Rdio executives relating to the sale of Rdio’s assets to Pandora.  If Pandora gets drawn into that case as a co-conspirator, that could question the legality of the sale of Rdio’s assets to Pandora in the first place.

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