In February, following a much-publicized licensing dispute, multiple comedians (and Word Collections clients) sued Pandora for allegedly failing to license their comedy albums’ underlying compositions. Now, Pandora has fired back with a countersuit.
To recap, the high-profile rights battle between well-known comedians and streaming services initiated late last year, when Spotify took down several of these stand-up stars’ albums. Two organizations, Jeff Price’s Word Collections (which raised $3.5 million in early December of 2021) and Nashville-based Spoken Giants, were behind the overarching push for additional compensation, it subsequently came to light.
These entities were (and are) seeking royalties on the written compositions within their member clients’ comedy albums, aside from the existing payments for the recordings themselves. As initially mentioned, February brought with it five lawsuits against Pandora from Word Collections clients Bill Engvall, Ron White, Andrew Dice Clay, and the estates of Robin Williams and George Carlin.
Nick Di Paolo then filed a sixth such lawsuit in March, and Pandora has officially named each of these plaintiff comedians and/or their companies, besides Word Collections itself, in a countersuit.
The nearly 40-page-long antitrust action just recently made its way to a California federal court, accusing the counter-defendants of price fixing, tying, attempted monopolization and monopolization, and conspiracy to monopolize, all in violation of the Sherman Antitrust Act.
Pandora is seeking “three times any damages suffered” from the allegedly anticompetitive conduct and “an injunction prohibiting Word Collections from obtaining, by license or otherwise, directly or indirectly, the exclusive power to grant licenses to any literary works rights,” among other things.
Regarding the nuances of SiriusXM-owned Pandora’s countercomplaint, the streaming service assumes for the sake of argument “that there exist public performance, reproduction and/or distribution rights in the jokes embodied in comedy recordings and that comedians, as authors of those jokes, might have retained those rights.”
Then, having moved past the existence of the rights at the center of the original suits, Pandora dedicates the lion’s share of its in-depth argument to claiming that the counter-defendants “have agreed to suppress competition that otherwise would exist in the licensing of those rights.
“If a single economic actor gained control over the licensing of the rights to the comedy routines embodied in the recordings of a substantial number of quality comedians,” Pandora’s action reads, “and used that control to set a single elevated price for access to those rights, a streaming service could not substitute away from that collection of rights and rely only on other comedians’ works and survive.
“In other words, that economic actor would have monopoly power over Pandora and other services and could, in effect, decide whether a service’s comedy offering survived or failed,” continues the text, noting also that Pandora’s comedy albums, in a contrast to their music counterparts, needn’t encompass all such works (generally or from popular individuals) to prove successful.
Predictably, the text attempts to paint the “licensing cartel” Word Collections as just such an economic actor and a disruptor of a system that “has been working reasonably well for all involved for decades.
“There is no valid justification for a licensing cartel like Word Collections to offer a blanket license covering the rights to all of the works of its co-conspirator ‘clients,’ particularly when it makes that blanket license the only means of obtaining any license to any of the works.
“These blanket licensing practices force Pandora and other services to take, and pay for, a license covering far more material than it would ever need; they could succeed only as a result of the collective having accumulated market power that forces services to take the license covering the collective’s entire portfolio if they are to get a license to any of it.
“And unlike ASCAP and BMI, which are subject to antitrust consent decrees that require them to offer, among other things, meaningful alternatives to their blanket licenses, Word Collections’ blanket license faces not even a hypothetical constraint from other competitive alternatives,” proceeds the countersuit.
If the counter-defendants succeeded in “carrying out their scheme…Pandora would be forced to pay an ongoing stream of supracompetitive royalties for access to a critical mass of recordings that it must have if it is to provide comedy to its listeners at all,” reads the countercomplaint.
“These increased prices will harm Pandora’s cost-competitiveness, unreasonably limit the return on its investment in its comedy offering, and sap resources that otherwise might have been used to improve Pandora’s products to the benefit of consumers,” the lawsuit concludes.