Comedians Nab Crucial Win Against Pandora in Streaming Pay Dispute

Winston Cho
·5 min read
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Licensing groups representing comedians, including the estates of Robin Williams and George Carlin, will not have to face a suit in sprawling litigation accusing them of monopolizing the market for the rights to the recordings of “superstar” comics.

A federal judge on April 5 dismissed Pandora’s countersuit against Word Collection and Spoken Giants, rejecting antitrust arguments from the audio company faulting the group for its alleged failure to assemble a viable comedy streaming service. U.S. District Judge Mark Scarsi found that the comedians reasonably bargained collectively in the pursuit of higher royalties on top of getting paid for a copyright license that has historically been overlooked.

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The dispute revolves around a feud between streamers and comedians pushing to change the landscape of compensation. The comics raise novel licensing theories claiming that they should be paid for writing their jokes, much in the same way that musicians are paid royalties for composing song lyrics. While comedians are able to license the copyrights to their recorded performances, the comedians stress that they should also be paid royalties for the copyrights to their underlying written works.

The legal battle started in 2021, when Spotify took down albums from several stand-up comics, including Tiffany Haddish, Kevin Hart and John Mulaney, amid the conflict over licensing rights. The estates of Williams and Carlin, joined by Lewis Black, Andrew Dice Clay, Bill Engvall and Ron White, then sued Pandora, claiming that the company and other streaming services don’t properly license their performances.

The company, in turn, brought an antitrust countersuit against Spoken Giants and Word Collections, which was formed in 2020 and requires exclusive partnerships with authors so that it can set a single price for all assets in its portfolio. In addition to price-fixing, Pandora alleged these agreements constitute an anticompetitive conspiracy to corner the market on the rights to routines from popular comedians, since the group allegedly agreed not to license “independently outside of the cartel,” according to the complaint. Since Word Collections represents so many different comedians, Pandora said that it’s forced to work with the agency if it wants to offer a “critical mass” of comedy routines. It accused the comedians of bringing the copyright suits as a way to force it to pay overpriced licenses. In October, Scarsi dismissed the suit but allowed leave to amend.

Among the main arguments that Pandora pressed was that no comedian would risk requesting an extra royalty on top of what has historically been paid absent a conspiracy from Spoken Giants and Word Collections to engage in price-fixing.

Scarsi found, however, that the claim is “both contradictory and implausible” because it’s “hard to comprehend why ‘superstar’ comedians would be afraid to risk seeking a supracompetitive royalty armed with the knowledge they are among the pantheon of ‘must-have’ comedians to run a viable comedy streaming service.” He pointed to the creation of Word Collections in 2020 as a compelling reason the comedians entered into an exclusive affiliation agreement within a short period of time despite never individually demanding a literary-works license, explaining that the comics were reacting to “similar pressures within an interdependent market.”

“Given there was previously no entity who negotiated a license for the rights at issue in this case, the formation of Word Collections offers a reasonable and non-conspiratorial reason for any sudden change in pricing practices,” he wrote.

The judge also concluded that there’s no evidence that the comedian groups have monopoly power in the market for the streaming rights to comedy routines. He pointed to evidence that Pandora in 2016 offered more than 35,000 tracks from roughly 3,000 comedians, whereas Word Collections only represents an estimated 30 comics.

Part of Pandora’s argument was that Spoken Giants and Word Collections had the ability to control the small but economically necessary cadre of highly popular comedians, allowing it to demand inflated prices to license their routines. Scarsi said that the company failed to provide a method of answering a “number of simple, but critically important questions” to back up the claim.

“Why is Lewis Black a ‘superstar’ such that his routines might form part of a ‘must-have” portfolio?” the judge wrote. “For another, if Larry the Cable Guy is a ‘superstar’ comedian, is Jerry Clower? What about comedians who have risen to prominence more recently? Is it fair to call Hannibal Buress a ‘must-have’ talent? What about Hannah Gadsby? Ali Wong? Ultimately, the Court can only speculate.”

Despite arguments from Spoken Giants and Word Collections that Pandora should be sanctioned for bringing a frivolous suit, the judge declined to do so. While the company fell short of the mark in getting past dismissal, Scarsi said, “an unsuccessful argument alone does not warrant sanctions.” Pandora will not be allowed to refile its complaint.

“Rather than defend against them on the merits, Pandora and its lawyers decided to file antitrust claims that we believe were clearly meant to intimidate my clients and their families, and put Word Collections out of business. It didn’t work,” said plaintiffs’ attorney Richard Busch in a statement.

Jim King, CEO of Spoken Giants, said that the group “will continue to aggressively advocate on behalf of our comedian-members to ensure that comedians’ spoken word copyrights are protected and paid for by digital services such as Pandora.”

Pandora didn’t respond to requests for comment.

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