Listener preference data is a valuable resource in the music industry. It can drive the way music is commoditized, consumed and promoted. It can drive how concert tours are routed. It can drive which artists and songwriters are signed and which are left to toil away in obscurity. It can drive the dollar value of recording and publishing agreements for artists and songwriters that do get signed. It can impact the functionality and features of music services. It can drive marketing and advertising partnerships. Whether and how state privacy laws across the United States apply to the collection and sharing of listener preference data could have a profound effect on not only the ability of music streaming services to deliver their content to listeners, but on the future of music and the music industry generally.
A recent U.S. Court of Appeals for the Ninth Circuit decision, in which the court dismissed a proposed class action suit against Pandora for disclosure of listener music preferences in violation of Michigan’s Preservation of Personal Privacy Act (PPPA), shed light on the uncertainty looming over the music industry from the prospect of state privacy law placing constraints on the alienability of this valuable data. The Michigan PPPA, in relevant part, prohibits a business engaged in selling, renting, or lending sound recordings from knowingly disclosing to anyone information that personally identifies a particular customer as having purchased, leased, rented, or borrowed those sound recordings from that business. The question before the Ninth Circuit was whether this statute could be construed to prohibit Pandora, a music streaming service with both paid and ad-supported unpaid options, from disclosing listener preference data.
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