IN RE PANDORA MEDIA, INC. 317 Cite as 6 F.Supp.3d 317 (S.D.N.Y. 2014) 225 F.Supp.2d 190, 213 (N.D.N.Y.2002) sonable fees and terms for through-to-the- (‘‘In order to hold an individual liable un- audience (TTTA) blanket license to per- der [the aiding and abetting provision], TTT form musical compositions in repertoire of plaintiff must also show that the individual performing-rights organization (PRO), aided or abetted a primary violation of the pursuant to consent decree. The court pro- [NYS]HRL committed by another employ- hibited PRO from withdrawing rights from ee or the business itself.’’ (alterations in petitioner to perform any compositions original) (internal quotation marks omit- over which PRO retained any licensing ted)). Because plaintiff’s underlying retal- rights, 2013 WL 5211927. iation claim under NYSHRL has been dis- missed or otherwise abandoned, any claim Holdings: After conducting a bench trial, she seeks to assert against Heifferon as an the District Court, Denise Cote, J., held aider and abettor of such alleged retaliato- that: ry conduct fails as a matter of law. (1) TTTA blanket license rate of 1.85% of Plaintiff’s claims under NYSHRL revenue was reasonable for every year against Heifferon in her individual capacity of license term and are dismissed. (2) service was not entitled to rate of IV. CONCLUSION 1.70% of revenue. For all of the foregoing reasons, Defen- Ordered accordingly. dants’ motion for summary judgment dis- missing the Amended Complaint in its en- tirety is granted. 1. Copyrights and Intellectual Property IT IS SO ORDERED. O48.1 ‘‘Non-interactive’’ digital music ser- , vices are eligible for a compulsory or stat- utory licensing fee set by the Copyright Royalty Board (CRB) made up of Copy- In re Petition of PANDORA right Royalty Judges appointed by the Li- MEDIA, INC. brary of Congress, whereas interactive services must independently negotiate Related to United States of rates for sound recording licenses. 17 America, Plaintiff, U.S.C.A. § 114. v. 2. Copyrights and Intellectual Property American Society of Composers, O Authors, and Publishers, 48.1 Defendant. Through-to-the-audience (TTTA) blan- Nos. 12 Civ. 8035(DLC), ket license rate of 1.85% of revenue of 41 Civ. 1395(DLC). customized Internet radio service was rea- sonable for every year of compulsory li- United States District Court, cense term for performance of musical S.D. New York. compositions in repertoire of performing- Signed March 14, 2014. rights organization (PRO), and service also Filed March 18, 2014. was entitled to take deduction for any Background: Customized Internet radio direct payments made to publishers follow- service petitioned for determination of rea- ing their partial withdrawals from PRO, 318 6 FEDERAL SUPPLEMENT, 3d SERIES since, among other things, there was tion (PRO) to a customized Internet radio strong basis to recognize presumption that service. 17 U.S.C.A. § 114(i). 1.85% rate would be reasonable rate, adop- 7. Copyrights and Intellectual Property tion of escalating rate would have been out O48.1 of step with historical practice, and other Customized Internet radio service was licenses that had been used for comparison not entitled to rate of 1.70% of revenue were not competitive, fair market rates. that commercial radio stations had to pay 3. Copyrights and Intellectual Property (RMLC rate) for performance of musical O 48.1 compositions in repertoire of performing- When determining the reasonableness rights organization (PRO), since RMLC of a compulsory licensing fee, a rate-set- rate applied to large-scale compulsory li- ting court must attempt to approximate cense agreement that bound variety of li- the fair market value of a license, i.e., what censees in both terrestrial and internet a license applicant would pay in an arm’s radio sphere, internet radio sphere was length transaction; in so doing, the court very small, governing consent decree for- must take into account the fact that a bad discrimination only among licensees performing rights organization (PRO), as a and service was not similarly situated to monopolist, exercises market-distorting any RMLC licensee, and service was simi- power in negotiations for the use of its larly situated to internet music services music. covered by license at rate of 1.85%. 4. Copyrights and Intellectual Property O48.1 When a rate-setting court determines the reasonableness of a compulsory licens- Kenneth L. Steinthal, Joseph R. Wetzel, ing fee, fair market value is a hypothetical Jason Blake Cunningham, Katherine matter; the appropriate analysis ordinarily Merk, King & Spalding, LLP, San Fran- seeks to define a rate or range of rates cisco, CA, Jeffrey Scott Seddon, King & that approximates the rates that would be Spalding, LLP, New York, NY, Mary set in a competitive market. Katherine Bates, King & Spalding, LLP, 5. Copyrights and Intellectual Property Atlanta, GA, Marc Brian Collier, Fulbright O48.1 & Jaworski LLP, Austin, TX, for applicant In rate court compulsory licensing Pandora Media, Inc. proceedings, a determination of the fair Jay Cohen, Eric Alan Stone, Darren W. market value often is facilitated by the use Johnson, Amy E. Gold, Lynn Beth Bayard, of a benchmark, i.e., reasoning by analogy Paul, Weiss, Rifkind, Wharton & Garrison, to an agreement reached after arm’s LLP, New York, NY, Richard H. Reimer, length negotiation between similarly situ- Christine A. Pepe, American Society of ated parties. Composers, Authors and Publishers, New 6. Copyrights and Intellectual Property York, NY, for the American Society of O48.1 Composers, Authors and Publishers. A rate-setting court may not take the rates set by the Copyright Royalty Board OPINION & ORDER (CRB) into account when determining the DENISE COTE, District Judge. fair market rate for a public performance license from a performing rights organiza- TABLE OF CONTENTS IN RE PANDORA MEDIA, INC. 319 Cite as 6 F.Supp.3d 317 (S.D.N.Y. 2014) INTRODUCTIONTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT320 FINDINGS OF FACT TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT322 I. The American Society of Composers, Authors and Publishers TTTTTTTTTTTT322 A. ASCAP Background TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT322 B. The ASCAP Consent DecreeTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT323 II. The Evolution of the Radio Industry TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT323 III. The RMLC–ASCAP License Agreement for the Period 2010–2016 TTTTTTTT325 IV. PandoraTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT327 A. Pandora’s Music Genome ProjectTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT327 B. Pandora Premieres TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT328 C. Pandora’s Comedy ProgrammingTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT328 D. Pandora’s Revenue TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT328 E. Pandora’s Competitive Environment TTTTTTTTTTTTTTTTTTTTTTTTTTTTTT328 V. Pandora’s Licensing History with ASCAP TTTTTTTTTTTTTTTTTTTTTTTTTTTTT330 VI. The April 2011 ASCAP Compendium Modification TTTTTTTTTTTTTTTTTTTTTT331 A. Overview and Context TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT331 B. Public Performance Rights for Compositions versus Sound Recordings TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT332 C. ASCAP–Publisher Negotiations Prior to the Compendium Modification TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT333 D. The Compendium Modification Allowing New Media Withdrawals is Enacted TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT336 E. ASCAP Provides Administrative Services for Withdrawing PublishersTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT337 VII. A Second Compendium Modification in December 2012 the ‘‘Standard Services’’ AgreementTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT338 VIII. Pandora Negotiates Direct Licenses with EMI, Sony, and UMPG and Fails to Negotiate an Agreement with ASCAP TTTTTTTTTTTTTTTTTTTTTTT339 A. The Pandora–EMI License Negotiations TTTTTTTTTTTTTTTTTTTTTTTTTT339 B. The Pandora–ASCAP License NegotiationsTTTTTTTTTTTTTTTTTTTTTTTT340 C. The Pandora–Sony License Negotiations TTTTTTTTTTTTTTTTTTTTTTTTTT342 D. The Pandora–UMPG License Negotiations TTTTTTTTTTTTTTTTTTTTTTTT347 IX. September 17 Partial Summary Judgment OpinionTTTTTTTTTTTTTTTTTTTTTT350 X. Other Licensing Agreements Put Forth as Benchmarks TTTTTTTTTTTTTTTTT351 A. The Pandora–SESAC License TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT351 B. Apple’s iTunes Radio Licenses with Publishers and PROs TTTTTTTTTTT351 CONCLUSIONS OF LAW TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT353 I. ASCAP’s Rate Proposal of 1.85% for 2011 and 2012 TTTTTTTTTTTTTTTTTTTTT355 II. ASCAP’s Rate Proposal of 2.50% for 2013 and 3.00% for 2014 and 2015 TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT355 A. Presumption of a Single Rate TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT356 B. Pandora’s Direct Licenses with Sony and UMPG TTTTTTTTTTTTTTTTTTT357 1. ASCAP and Publisher Coordination TTTTTTTTTTTTTTTTTTTTTTTTTTT357 2. The Pandora–Sony License TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT358 3. The Pandora–UMPG License TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT360 320 6 FEDERAL SUPPLEMENT, 3d SERIES C. ASCAP’s Secondary Benchmarks: the SESAC and Apple Licenses TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT361 1. The Pandora–SESAC licenseTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT361 2. The Apple Licenses TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT362 D. ASCAP’s Theoretical Arguments and Motivations TTTTTTTTTTTTTTTTTT363 1. An Increase in Competition TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT363 2. Demand for VarietyTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT364