I wrote this as a guest blog post for hubcanada.com last week, thought I’d share it here as well:
This past week, Pandora began blocking access to our radio streams for all listeners outside the US, Canada, and the UK. This is an incredibly disappointing outcome for us after more than a year of effort toward securing international licensing for Pandora.
Music licensing is a complicated topic, with at least three parties involved when each song is played. There’s the songwriter who composed the song, the label that owns the recording itself, and the performing artist. Webcasters are legally obligated to make royalty payments that benefit all of these parties. In the United States, ASCAP, BMI, and SESAC collect royalties on behalf of the songwriters, and a clearing house called SoundExchange collects royalties for the labels and artists. With respect to the labels and artists, in the US a blanket license is provided to webcasters under the terms of the Digital Millennium Copyright Act.
Unfortunately there is no similar blanket license for labels and performing artists in any country outside the US (most countries do however have some sort of centralized authority for songwriters — for example SOCAN in Canada). This means that making correct payments to the labels is dependent on striking a unique deal with each record label, in each country. Even where the “big four” labels are concerned you have to do a separate deal in each country — Warner “U.S.” is not the same as Warner “U.K.” Pandora plays music from thousands of labels, big and small, and thousands of artists who are not on any label. Even when you take into account the big four labels, and various indie aggregators, there are still thousands of separate deals to do in each and every country. Factor in a licensing environment that is — in general — less than friendly to digital music providers and the task becomes quite Herculean. We have been told in no uncertain terms by the largest rights holders that we had to take this step.
Pandora is a company of musicians. It’s critically important to us that artists and composers are compensated for the music we play. That’s not the stance that all music services take, but it’s very much a part of our DNA. After well over a year of trying to strike deals that would ensure that payments were made to the right entities, it became clear that outside of Canada and the UK those deals were going to take a very, very long time. In light of that, we decided to move beyond zip-code verification and block based on IP address location. This was a very painful decision, but in the end we can’t ignore the existing legal reality.
We’ll continue working as hard as we can to obtain these licenses with the ultimate goal of delivering Pandora as a truly global service. Who knows, perhaps we’ll even see a day were the entire industry moves to a global copyright system. One can hope. In the meantime we’ll surely miss the many, many musical friends we’ve made from all over the world.
