Pandora is an internet radio company based in Silicon Valley. It serves the US, Australia and New Zealand. One of the big focuses for the company in the next year is to figure out how to expand internationally.
“When you are dealing with music and licensing, depending on what the regime is, a lot of people will say: ‘I think the UK should be next!’” Nakeena Taylor, an IP lawyer and compliance expert at Pandora, tells Managing IP. “When it comes to considering all the regimes and extra costs, it’s wise to stop and think: does this make sense?”
Issues regarding territorial expansion are mainly handled by Pandora’s strategy and licensing team. Taylor says her focus is helping product and advertising managers, engineers and fellow employees to consider their plans from a business perspective.
“Thinking through that is interesting because it’s unchartered territory and there is growing competition,” Taylor explains.
“We are giving a lot of information on how to think through these scenarios without having a lot of information to pull from. We are learning and looking around us saying: ‘Spotify has this lawsuit coming up, maybe we need to think about how we do this,’ so we don’t have to go through that same thing.”
Ambiguity in IP law
In addition to ever-increasing competition in music technology, Taylor predicts “more partnership with the music industry”.
“We’re having a much bigger push on policy,” she says. “There is a lot of talk about updating rules, but they are never usually in favour of the new up-and-coming technology. This adds a little bit of pressure.”
To illustrate her point, Taylor refers to a case in 2012. “A user’s listening history was inadvertently posted and the plaintiff discovered some obscure law about borrowing and video rental history,” she says. “Does this really apply? You are talking about something in the sense of VCRs and VHS while trying to talk about a streaming service that is more of internet radio service!”
She continues: “It was really tortured in the sense of trying to apply these old laws. The issue was more related to privacy. Even in talking about how the technology works, it still does not apply so we are always playing catch-up. At the same time, as advisors, we are trying to figure out what kind of claims can be made that might actually outplay of a lot of these really old laws.”
Taylor says this type of issue can make it hard to be able to give clear advice and manage risk. “There are some risks that seem so out there but people will still try, because there is no other law to go to,” she says.
Licensing and royalty determination
Taylor highlights a number of legal areas surrounding music technology that she feels are in need of modification.
“It would be helpful to have clarity on anything related to royalties so that there is a set rate and a rate that is fair. Here in the US, we have different rates for terrestrial radio, streaming, on-demand, depending on the type of interaction. That’s fine; the problem is that they change all the time.”
For example, the US Copyright Royalty Board last December announced the per-performance rate for 2016 will increase to $0.0017 for ad-supported streaming, up 21% from $0.0014 under the present "Pureplay Rate" for 2015. However, the rate decreased to $0.0022 for subscription streaming from $0.0025.
Taylor also mentions law surrounding pre-1972 recordings, looking for the correct rights owners and data mining as additional challenges of accurate and efficient licensing.
Before becoming a lawyer, Taylor worked in music and licensing. Taylor suggests a national database of rights owners: “We need to come up with something that will enable us to actually get the money to where it’s supposed to go, so we can start to the change the narrative of musicians feeling they are not getting their fair share.”
She continues: “We have plans to introduce more transparency of what we pay out and how, for that very reason. We want to put that pressure on all the stake holders in the industry to do the same. This is why we need reform.”
At the end of 2015, Pandora negotiated a licensing deal with leading performance rights organisations ASCAP (American Society of Composers, Authors and Publishers) and BMI (Broadcast Music Inc. The company agreed to pay 2.5% revenue to BMI as part of their commitment “to ensure that music thrives” and “grow the music ecosystem”, as stated by Pandora’s then-chief executive officer Brian McAndrews.
Recently, the antitrust division of the United States Department of Justice has received criticism from music artists, producers and songwriters for its decision to proceed with plans to introduce 100% music licensing. The decision comes as a nasty shock and despite strong opposition from the music community over concerns that the decree will impose greater depreciation of royalty payments to content owners.
Creative industries and innovation
With an educational foundation in media, culture and communication, Taylor maintains respect for artists and creative professionals
“Before going to law school, I knew I wanted to go into the creative industry,” she says. “For me, trade mark, copyright, media and the creative industry was really interesting.” After taking cross-registered classes in media law, Taylor opted for a career in IP law.
“I wanted to be on that side. I found a really good medium between the IP industries and technology industry, mixed with the business side,” she says. “I am excited by these industries and I know that they cannot exist without IP.”
Pandora is mostly recognised for its Music Genome Project technology in which a team of musicologists listen to all content on the system and suggest songs for users based on hundreds of scoring attributes, instead of algorithms. The exact list of attributes is a trade secret, but Taylor says it is hard to keep secrets in such a competitive industry.
“It’s one of those things that might change, especially when we go into the on-demand area,” she says. “Essentially, we are using those new features and aspects of the service as ways to attract customers to our services and stand out from our competitors.”
With this considered, Taylor rhetorically asks: “What can you actually protect?” She responds: “We need to protect the technique. It is what makes Pandora different. Eventually, we may also need to protect music playlists.”
She adds: “We are having these conversations and don’t really have the answers right now, but the future is exciting.”
The reluctant lawyer
Despite the fact that she has been in the legal profession for almost a decade, Taylor says she at times sees herself as a “reluctant lawyer”.
“I was late. I did not decide that I wanted to be an IP lawyer until I was in the middle of my degree!” she explains. “There are so many stereotypes attached to the legal profession that I never felt that I identified with, but I love this profession. I feel that the more diversity we get in thought and perspective, the better.”
Outside her role as corporate counsel, Taylor is president of the Black Women Lawyers Association of Northern California. Reflecting on her responsibilities in the IP community, Taylor says: “I rise to the challenge, but sometimes it takes some nudging from the network around me.”
What drives Taylor in her philanthropic efforts? “It’s about representation, honestly. Just both from being a black female and just being a female in technology and IP; it has its own challenges. You want more people to be able to say: ‘You know what? I can do this!’ That’s really why I try and get involved outside my main responsibilities at work.”
In addition to promoting better representation of women and underrepresented groups in the legal profession, Taylor is a champion of diversity within the IP field: “A lot of people tend to focus on patents and prosecution. There are all these other roles centred on protecting IP that you don’t learn about at law school, such as product counsel. I decided to get out there and show a different example, a different path and perspective.”
She continues: “You have these other pressures. Sometimes you want to tap out and you start to think maybe this isn’t the right lifestyle. For me, I do still feel the pressure but we have got to be present for something to change.”
Taylor : “We need to continue to reach back to make sure that people who are in the industry, those that are coming in, and new attorneys are supported. We also need to be able to reach even further back, whether that is to middle school or before that to support others early on so that when they get to this point, they are confident already.”