A Milbank, Tweed, Hadley & McCloy litigation team led by firm Chairman Scott A. Edelman has prevailed in a historic rate trial in US District Court for the Southern District of New York, in Manhattan.
The ruling by Judge Louis Stanton, after a five-week trial, awards music performing rights organization BMI a fee of 2.5% of revenue from music streaming service Pandora, which licenses content from BMI as well as other performing rights organizations and music publishers. BMI’s new fee represents a 43% increase from the 1.75% of revenue that Pandora previously paid.
Pandora, with approximately 200 million listeners, had sought to pay between 1.70% and 1.85% of revenue. The closely watched trial was the latest confrontation in an ongoing battle over royalty payments between Pandora and the songwriters and composers who create the music at the foundation of Pandora’s product.
After the ruling in favor of BMI, Mr. Edelman said: “We’re very satisfied with Judge Stanton’s ruling, which we believe brings royalty and licensing rates for musical content into the digital age. Digital streaming has proved itself as a means to greater exposure for artists, but has been less successful at generating a revenue stream. That was the heart of this case.” He continued: “We went into trial knowing that Judge Cote had already ruled in favor of Pandora in a related case against ASCAP, and rejected some of the key market deals negotiated between Pandora and certain major publishers that BMI was relying on. We were able to show that the arguments that Judge Cote relied on for rejecting the benchmarks were primarily generated by lawyers, divorced from Pandora’s actual business decisions. With the benefit of additional evidence not available in the earlier case, Judge Stanton reached the conclusion that the direct publisher deals were the best indicators of value and that Pandora paid higher rates because the music was critical to its business.” In addition to Mr. Edelman, Milbank’s litigation team included partners Linda Dakin-Grimm and Atara Miller, and associates Rachel Penski Fissell, Eric Weiss and Andrew Porter.
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Milbank, Tweed, Hadley & McCloy LLP is a leading international law firm that has been providing innovative legal solutions to clients throughout the world for nearly 150 years. Milbank is headquartered in New York and has offices in Beijing, Frankfurt, Hong Kong, London, Los Angeles, Munich, São Paulo, Seoul, Singapore, Tokyo and Washington, DC.
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