Last week, the Radio Music License Committee (“RMLC” – see our article about the RMLC), filed a complaint in US District Court in Pennsylvania against SESAC, arguing that SESAC is a monopoly and should be treated like ASCAP and BMI. RMLC is asking that SESAC be subject to an antitrust consent decree as are these two bigger collection societies. As we have written before, SESAC is not a non-profit organization like ASCAP and BMI, and is not subject to consent decrees like these other performing rights organizations (“PROs”). Instead, it is a private company, owned by venture funds which, up to now, has set its own prices for licenses subject only to negotiations with the rights holders. So what is this suit all about, and will broadcasters see any changes in SESAC licensing in the short-term?
RMLC claims that SESAC, by effectively being the only way to license the public performance of compositions by thousands of different composers, effectively can get monopoly prices. Practically speaking, radio stations cannot individually license all the songs written by SESAC performers and, even if the stations were able to directly license some of the music from SESAC writers, SESAC still would not reduce their fees. All SESAC licenses are blanket licenses that give stations the right to use all the music in the SESAC catalog, but are not reduced by any pro rata amount should any music be directly licensed. Thus, argues RMLC, stations cannot try to reduce their licensing liability through direct licenses with songwriters even if such deals could be negotiated.
A second concern claimed by RMLC is that it is effectively impossible to avoid a SESAC license. According to the complaint, SESAC does not make available a complete and accurate inventory of all of its music so that a user can try to weed all SESAC music out of its playlist to avoid paying its fees. In addition, there are claims that SESAC licenses music that it is impossible for stations to avoid playing – like music in commercials (music in McDonald’s commercials was given as an example). Given that stations can’t reasonably avoid all SESAC music, they cannot avoid having to deal with its licensing demands (or face the potential statutory liability of up to $150,000 for each violation, i.e. each musical selection they play without a license).
The RMLC action is not the first time that an antitrust law suit has been filed against SESAC. Very similar allegations have been raised by several television companies and documented on the website of the Television Music Licensing Committee. These issues were raised in an antitrust complaint filed in 2010. While a Judge denied SESAC’s motion to dismiss the complaint in 2011, there still is much litigation to go on that law suit. So, with the TV case still not even having gone to trial despite a two and a half year head start, don’t expect a fast resolution to the claims made in the RMLC proceeding. But stations should monitor this action and any updates on its status from the RMLC, as this proceeding may well have an impact on station’s licensing obligations in the future.
(Note: Corrected, 10/16/2012, as to the details of the Court in which the complaint was filed.)