The MLC and Pandora Clash in Opposition Briefs as Mechanical Royalties Battle Nears Decisive Stage

Why It Matters

The ruling will determine how mechanical royalties are calculated for free‑tier streaming, potentially reshaping revenue streams for rights holders and setting a legal precedent for other platforms.

Key Takeaways

• MLC claims Pandora Free is interactive, owes royalties
• Pandora says Premium Access is separate, already licensed
• Case hinges on Copyright Act definition of interactive service
• Judge Richardson will issue ruling on mechanical royalty obligations
• MLC also pursuing Spotify bundling lawsuit over royalty cuts

Pulse Analysis

The Mechanical Licensing Collective, created by the 2018 Music Modernization Act, serves as the sole conduit for mechanical royalties—payments for the reproduction of musical works. As streaming dominates music consumption, the MLC’s ability to enforce accurate royalty collection has become a cornerstone of the industry’s revenue model. By filing an opposition brief, the MLC is reinforcing its mandate to ensure that every stream, even those on free‑tier services, contributes fairly to songwriters and publishers.

At the heart of the Pandora dispute is the legal definition of an “interactive service” under the Copyright Act. The MLC points to three core features of Pandora Free—personalized playlists, the ability to skip or replay tracks, and on‑demand song selection—as evidence that the service meets the interactive threshold, thereby obligating it to pay full mechanical royalties. Pandora, however, leans on the Launch Media decision, arguing that its Premium Access component is a distinct, already‑licensed offering and that marketing language cannot override statutory analysis. The judge’s interpretation will clarify how interactive criteria apply to hybrid free‑tier models that blend radio‑style streaming with limited on‑demand access.

The outcome carries weight beyond Pandora. The MLC is simultaneously pursuing a separate case against Spotify over bundling practices that allegedly reduce royalty payouts. A decisive ruling could prompt streaming platforms to restructure free‑tier features, renegotiate blanket licenses, and adjust royalty accounting systems. Investors and rights holders alike are watching closely, as any shift in royalty obligations directly impacts profit margins, licensing negotiations, and the broader economics of digital music distribution.