In a significant procedural turn for the music industry, a federal judge in Nashville has declined to rule on a high-stakes summary judgment motion regarding streaming royalty payments. Citing a “corpulent” mountain of evidence totaling over 7,000 pages, U.S. District Judge Eli Richardson has effectively bypassed the opportunity to resolve the legal battle between Pandora and the Mechanical Licensing Collective (MLC) through a pre-trial order, signaling that the complexities of the case are best left to a jury.
The dispute, which strikes at the core of how digital service providers compensate songwriters and publishers, hinges on whether Pandora’s "free tier" functions as an "interactive" service—akin to Spotify or Apple Music—or as a "noninteractive" service, similar to traditional terrestrial radio.
The Core Conflict: Defining the Streaming Experience
At the heart of this litigation is the Music Modernization Act (MMA), the landmark 2018 legislation that overhauled how mechanical royalties are handled in the digital age. Under the MMA, the MLC was established to collect and distribute these royalties to songwriters and music publishers.
The MLC’s 2024 lawsuit alleges that Pandora has been systematically misclassifying its free, ad-supported service tier to avoid paying the higher mechanical royalty rates mandated for interactive platforms. In the music streaming landscape, the distinction is binary and financially consequential:
- Interactive Services: Platforms that allow users to select and play specific songs on-demand typically command higher royalty rates.
- Noninteractive Services: Platforms that offer a radio-like experience—where the service dictates the sequence of tracks—are subject to different, lower statutory rates.
The MLC contends that Pandora’s "Sponsored Premium Access" sessions—which allow users to listen to specific, chosen tracks in exchange for watching advertisements—blur the line between passive listening and on-demand control. By allegedly masking this functionality, the MLC claims Pandora has engaged in an unlawful underpayment of royalties.
A "Corpulent" Record: The Judge’s Refusal to Decide
In late September, both Pandora and the MLC filed motions for summary judgment, essentially asking the court to decide the case based on the submitted evidence without the need for a full jury trial. A summary judgment is standard practice when a judge determines there are no genuine disputes of material fact.
However, Judge Richardson’s order on September 30 broke from convention. Faced with a collection of 263 documents comprising over 7,000 pages, the judge expressed skepticism that such a volume could be distilled into a clear-cut legal ruling.
"The court in its discretion finds that it would be more efficient to deal with all contested issues and examine the fulsome factual record at trial rather than expending the (very substantial) judicial resources necessary to dispose of the motions," Judge Richardson wrote.
The judge’s reasoning offered a rare glimpse into the judicial philosophy regarding evidence volume. He suggested that when parties file thousands of pages to argue that there is "nothing to see here," the sheer scale of the paperwork serves as its own evidence that a trial is necessary. "If a summary judgment motion requires so many different pillars of support, there naturally is an increased mathematical likelihood that one of the essential pillars is unsteady," he observed.
Chronology of the Dispute
- 2018: The Music Modernization Act is signed into law, establishing the Mechanical Licensing Collective (MLC).
- Early 2024: The MLC initiates litigation against Pandora, alleging that the streaming service has been underpaying royalties by misclassifying its free, ad-supported tier.
- Mid-2024: Pandora moves for summary judgment, arguing that the MLC’s claims are "plainly and unmistakably wrong" and suggesting the organization is exceeding its statutory authority.
- September 2024: Judge Eli Richardson issues an order denying the motions for summary judgment, citing the overwhelming volume of evidentiary documentation.
- Present: The parties move toward discovery and trial preparation, with no firm date yet set for the courtroom proceedings.
Perspectives from the Parties
Both the MLC and Pandora have framed the judge’s decision to send the case to trial through the lens of their own strategic interests.
The MLC’s Position
A spokesperson for the MLC expressed satisfaction with the court’s decision to move toward trial. "The MLC will continue to pursue this action to enforce Pandora’s royalty payment obligations under the statutory license, supported by the substantial evidence that the MLC has compiled," the statement read. The organization maintains that its role as a congressional designee necessitates the vigorous pursuit of these claims to ensure songwriters receive the compensation they are legally owed.
Pandora’s Position
Pandora, a unit of SiriusXM, has taken a defensive posture, emphasizing that the judge’s order is purely procedural and not an indictment of the merits of their case. "Pandora is committed to compensating songwriters and publishers in accordance with the law, and we remain confident in our position," the company stated. Pandora has consistently argued that its free service remains fundamentally noninteractive, regardless of the optional, ad-supported features it offers.
Broader Industry Implications
This lawsuit does not exist in a vacuum. It is part of a broader, increasingly litigious environment surrounding digital music royalties.
The Shadow of the SiriusXM/SoundExchange Saga
Only months prior to the current lawsuit, SiriusXM was the subject of a high-profile legal battle with SoundExchange over alleged underpayments related to the bundling of satellite and web streaming services. A federal judge ultimately dismissed that lawsuit, ruling that SoundExchange lacked the statutory authority to initiate such litigation. That ruling, currently under appeal, has cast a long shadow over the industry, raising questions about which entities have the standing to enforce royalty obligations.
The "Bundling" Question
The MLC is also currently embroiled in legal friction with Spotify regarding the practice of "bundling" music with audiobooks to reduce mechanical royalty payouts. While some of the MLC’s core claims against Spotify were dismissed earlier this year, the issue of bundling remains a central pillar of the ongoing Phono V rate-setting process at the Copyright Royalty Board.
The outcome of the Pandora case will likely serve as a bellwether for the music industry. If a jury determines that Pandora’s "Sponsored Premium Access" qualifies as interactive, it could force a massive restructuring of how "radio-style" platforms operate. Such a ruling would set a legal precedent that could effectively raise the barrier for what constitutes "noninteractive" streaming, potentially forcing companies to reclassify their services and pay significantly higher royalties across the board.
The Path to Trial
With no trial date currently on the docket, the parties are entering a period of renewed legal maneuvering. While a settlement remains a distinct possibility—as both sides now face the prospect of a costly and unpredictable jury trial—the current stalemate suggests that the music industry is prepared for a long-haul fight over the definitions that govern digital revenue.
For songwriters and publishers, the case represents the front lines of the effort to ensure that technological advancements in streaming do not outpace the legal mechanisms designed to protect creator income. For platforms like Pandora, the fight is about maintaining the flexibility of their business models in an era where the definition of "interactive" is being rewritten by the very tools they use to attract and retain listeners.
As the legal teams prepare to condense 7,000 pages of documentation into arguments suitable for a jury, the music industry watches closely. The final verdict will likely resonate far beyond the Nashville courtroom, influencing the financial viability of streaming tiers and the ongoing evolution of the Music Modernization Act’s enforcement regime.
