Business News Digital Labels & Publishers Legal

BMI goes to court over interim royalty rate proposed by US radio

By | Published on Thursday 5 January 2017


US collecting society BMI got the new year off to a fabulous start by filing papers with the federal rate court over the royalties paid by the American radio industry represented by the good old Radio Music License Committee.

Both of the big two collecting societies representing the performing rights in songs Stateside – so that’ll be BMI and ASCAP – spent a bunch of last year negotiating with the RMLC over the rates its member radio stations will pay between 2017 and 2022. ASCAP announced a new deal with the radio group last month which, it said, would provide the songwriters and music publishers it represents with “enhanced financial benefits”.

However, BMI is yet to reach a deal, and with 2017 ignoring that fact entirely and insisting on getting underway last weekend anyway, the RMLC put in a request for an interim rate to be paid while negotiations continue. It’s that rate that BMI is opposing.

The RMLC wants an interim royalty rate below what it paid previously, proposing its members hand over 1.4% of revenues to BMI, instead of 1.7%. The radio bods justify this lower rate – which is indicative of what they’d like the final royalty agreement to be – on the basis of BMI’s market share.

Market share is relevant here because, unlike in most other countries, there are multiple collecting societies representing song rights in the US. This means songwriters must decide which society to join and licensees (for now at least) need deals with all four if they want to play any song.

Which in turn means that, where a licensing deal is a revenue share arrangement, licensees not only need to negotiate what cut of their revenues should go to the music rights community at large, they must also negotiate how that money is divided between the different societies.

The RMLC is basically arguing that – by its calculations – BMI’s market share has declined since the last time the two parties negotiated a deal. That claim, which BMI disputes, will be partly based on key songwriters switching societies and partly on the fluctuating popularity of each societies’ respective repertoire.

Criticising both the RMLC’s proposed interim rate and its workings out earlier this week, BMI said in a statement: “The RMLC has justified its proposed rate based upon incomplete and incorrect information regarding BMI’s radio performances. BMI disagrees fundamentally with the RMLC’s proposal and, consistent with past practices, is asking the court to maintain its most recent rate while new terms are negotiated”.

Meanwhile BMI’s licensing man Mike Steinberg added: “We attempted to negotiate in good faith with the RMLC for many months, and just before the end of the year, the RMLC presented an interim rate that significantly undervalues the work of BMI’s songwriters. Given the unmatched calibre of BMI’s repertoire, our superior market share on radio, and the ever-increasing value that BMI music brings to the radio industry across all its platforms, we believe the RMLC’s proposal falls well short of what is in the best interests of our affiliates”.

BMI wants the rate court that oversees collective licensing in the US to set an interim rate of 1.7% while it continues to negotiate with the RMLC. It remains to be seen if a voluntary deal can be reached between the two organisations in the long-term, or whether this dispute is simply a forerunner of a full-on battle in the rate courts down the line.

One complication in terms of assessing the market share of songs in the US where collective licensing is concerned is the creation, since the last time BMI and ASCAP did deals with the RMLC, of Global Music Rights, Irving Azoff’s mini performing rights organisations that has signed up a small roster of big name songwriters.

A key aim of GMR is to drive up the royalty rates paid to songwriters in the US, which many in the songwriting community reckon remain unfairly low, mainly as a result of compulsory licensing and collecting society regulations in America.

The objective is to pressure big users of music, like radio, to allocate more of their revenue to the songs they exploit, though inevitably if licensees end up paying premiere league writers more, they’ll seek to offset that extra cost by paying lesser known writers less.

Meanwhile, GMR is on its way into battle with the RMLC itself, in a bust up that will likely overshadow any ongoing beef between the radio stations and BMI. It has also been proposing interim rates to radio stations so that they can continue to play the work of GMR-repped songwriters, who were still technically covered by the radio industry’s ASCAP and BMI deals until the end of last year.

GMR said in a statement just before Christmas: “Today, GMR has offered a licence to all radio stations represented by the RMLC allowing the stations to play GMR’s repertoire in exchange for specified licence fees. This licence extends through 30 Sep 2017 and gives everyone additional time to negotiate long-term licences with GMR”.

It went on: “GMR offered this licence to the RMLC last month, but the RMLC refused it and, instead, chose to sue and seek an injunction. With today’s agreement, the RMLC has withdrawn its request for an injunction and radio stations across the country will have the opportunity to offer their listeners GMR’s quality music”.