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Judge rejects Pandora’s cartel claims against comedy rights agency

By Chris Cooke | Published on Friday 28 October 2022

A US judge has rejected arguments by streaming service Pandora that an agency representing the copyrights of a roster of comedians is operating an anti-competitive licensing cartel. Judge Mark Scarsi concluded that Pandora had failed to demonstrate that the operations of Word Collections contravene American competition law.

A stack of comedians have now sued Pandora claiming that the streaming firm has been making their comedy material available without all the proper licences in place. While Pandora does have permission to stream the recordings of those comedians’ performances, it does not have licences covering the actual material contained within each act.

On the music side, companies like Pandora secure two sets of licences. One set from record labels and music distributors covering the rights in recorded music. And another set from music publishers and collecting societies covering the separate rights in the songs that are contained in those recordings. But with spoken word content to date, only licences covering the recordings have been secured.

That means – a number of comedians now allege – that Pandora has been streaming their comedy material without licence, and that’s copyright infringement. Many of the comedians that have gone legal on this issue to date are working with Word Collections, which is seeking to negotiate deals with various streaming services on behalf of the comedians and other spoken word artists that it represents.

In response to those lawsuits, Pandora filed its own counterclaim targeting Word Collections. It stated in a legal filing back in May that “Word Collections’ true business model is not that of a benign licensing agent or an advocate for comedians’ intellectual property rights, it is that of a cartel leader”.

Basically, it argued, Word Collections was seeking to hold Pandora to ransom – so to demand an unreasonable royalty rate – by exclusively licensing the rights of various comedians, and forcing streaming services to negotiate all those rights under one deal.

Responding, Word Collections called Pandora’s cartel claims “absurd”, adding that the streaming firms counterclaim was “nothing more than a backdoor attempt to dismiss copyright claims to which they have no valid defence”. Not only that, but Pandora was trying to “dissolve Word Collections and leave comedians to fend for themselves – ie be steamrolled by Pandora”.

Pandora presented a number of arguments to back up its cartel claims, with Word Collections then putting forward a bunch of counter arguments. In a ruling this week judge Scarsi basically sided with the rights agency.

In part, the judge reached that decision on the basis that the Word Collections roster is actually relatively small. He noted that, as far back as 2016, Pandora’s own statements said the streaming service had more than 35,000 comedy tracks from 3000 different comedians. Meanwhile, Word Collections currently represents about 30 comedians.

Pandora’s counterclaim talked about how it needs to secure a certain amount of ‘critical mass’ in terms of comedy content in order to offer a compelling comedy element to its streaming product. But, Scarsi wrote, “Pandora fails to connect Word Collections’ representation of about 30 comedians to its inability to amass the critical mass needed to offer a viable comedy streaming service, especially when Pandora offers recordings by several thousand other comedians”.

Of course, certain comedians will be particularly popular and account for a larger portion of overall comedy streams, which might make Word Collections’ roster a bigger deal than its small size would suggest. However, Scarsi added, “Pandora’s description of Word Collections’ impressive but short list of comedians whose works it licenses does not suffice to demonstrate that Word Collections owns a dominant share of the comedy recording market in the United States”.

It’s not as if Word Collections is even the only agency now representing the comedy material of comedians in the digital licensing domain. Some of the other comedians who have sued Pandora are working with rival licensing agency Spoken Giants, which has also been accused by Pandora of being a “cartel leader”.

Although Scarsi has dismissed Pandora’s cartel claims, it does have the option to submit an amended complaint with the court. Meanwhile, legal reps for both Word Collections and the comedians it represents have unsurprisingly welcomed this week’s ruling.

That includes lawyer Richard Busch, who told reporters that he and his clients were very happy with the judgement and would now focus on pursuing the copyright infringement claims “that are at the true heart of these cases”.