Radio broadcasters have been receiving invoices from the Radio Music License Committee (“RMLC”), and many are asking whether the invoice is “real.” Some stations seem concerned that they are being asked to pay some fee that they really don’t owe. The truth is that this is one bill that most commercial stations in fact do owe, and it is a bill that they should actually be happy to pay. RMLC is the committee that represented radio broadcasters in the recent negotiations with ASCAP and BMI, leading to new agreements covering the royalties to be paid to these organizations through 2016. We wrote about the ASCAP agreement, here. The BMI agreement was announced recently, and we’ll try to get a summary of that agreement up on the blog sometime soon. These settlement agreements significantly reduced the amount of royalties that the radio industry as a whole pays to ASCAP and BMI for the public performance of musical compositions on over-the-air radio (and in connection with their digital uses of music as well). As part of these settlement agreements, the Court overseeing the antitrust consent decrees with ASCAP and BMI, which had to approve the settlements, approved the fees to RMLC as well.
Under the terms of the Court approval, all stations that either elected to be represented by RMLC in the negotiations (see our article on that election here), or those who elect to be covered by the settlement by signing an agreement with ASCAP and BMI under the terms that RMLC negotiated, are required to pay the fee to RMLC. The fee funds RMLC operations in the future, and pays for the cost of the litigation and negotiations that led to the settlements.
The vast majority of commercial radio stations will elect to be covered by these settlement agreements. While there were a few commercial religious broadcasters that elected to separately negotiate with ASCAP and BMI, other commercial stations either must accept the agreements or negotiate or litigate with ASCAP and BMI over the terms of the agreements on their own – a very expensive proposition. And not only would litigation be expensive, it would be hard to reach a deal that reduced royalties beyond the reduction reached by the RMLC negotiations. The RMLC deals even resulted in credits against future royalties for overpayments by broadcasters in the past - BMI's reductions being built into the current royalty, ASCAP's being paid as a yearly credit against future royalties (causing many recent Asset Purchase Agreements in connection with the sale of radio stations to build in a clause asking for future credits to the seller for past "prepayments" of these fees).
Broadcasters hate to pay for anything that they don’t think confers a benefit on them. This fee, while seemingly a little obscure, indeed pays real, tangible benefits to most stations in helping to control royalty costs. Paying RMLC should not be viewed as an imposition by the vast majority of stations – as the payments provide funding for the RMLC to negotiate or litigate future royalty issues – including potentially with SESAC, which is currently not covered by any antitrust decree (see our article on SESAC here). Without guaranteed funding, the RMLC would not be as effective as it has been in rolling back the royalty fees that had been in place before the new agreements, and and it would not be as effective in fighting increases in the royalties in the future.