Broadcast Law Blog : Broadcast Lawyer & Attorney : Davis Wright Tremaine Law Firm : Broadcast Law Blog : Seattle, Los Angeles, Washington D.C., New York, San Francisco, Shanghai

New ASCAP royalties are on their way to radio broadcasters. ASCAP and the Radio Music Licensing Committee (RMLC) have just announced that they have reached an agreement in principal to return to the percentage of revenue royalties that for so long were paid by radio stations to ASCAP and BMI – a system that was abandoned for a market-based flat-fee system designed to avoid having the licensing organizations as partners that shared in what stations believed would be forever rising radio revenues. Of course, soon after the deal was struck, the current economic troubles hit, radio revenues fell, and the flat fees left many stations paying multiples of what they had been paying under the prior system. A return to the percentage of revenue-based system would seem to be a very good thing. See our previous summary of this royalty controversy, here and here. 

But, as of now, we know very little about the details of the deal – other than it returns to the percentage of revenue basis and that it seemingly will include all revenues of the broadcaster – including the ASCAP royalties due for streaming, other website music uses, and mobile applications (note that these royalties cover only the fees due for the public performance of the musical composition.  In online digital applications, fees still need to be paid to SoundExchange or other rights holders for the public performance in the sound recordings - the actual recordings made by a band or singer of one of those musical compositions - see our articles here and here). The deal with ASCAP will run through 2016.  We’ll have to wait until the final deal is released before a full assessment of its impact can be judged. 

For the RMLC and the broadcasters who financially support it, a deal should limit further litigation expenses with ASCAP (as a rate court proceeding had begun) while the final details of the settlement are hammered out. Watch for those details coming at some point in the future. And, remember, the RMLC also has BMI to deal with – which also had an agreement that expired at the end of 2009. The final royalties to be paid to both of these organizations should be retroactive to the beginning of 2010, so some analysis will need to done as to whether stations have over or underpaid under the interim fees that are currently in place (see our article here) once the details of the ASCAP deal is announced, and a final resolution of the BMI royalty is reached through settlement or litigation. 

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

At the end of 2009, we wrote about the interim royalties agreed to by both ASCAP and BMI, agreeing to reduce the amount of royalties paid by commercial radio stations by 7% until final royalties were agreed to by these Performing Rights Organizations and broadcast groups (principally the Radio Music Licensing Committee), either through negotiations or by litigation.  While many had assumed that these reduced rates would stay in place until the final royalties were set, we have now learned that, in fact, these are but "provisional rates" to be in place only until interim royalties are set by the Courts which supervise the royalty-setting process. Recently, the PROs and the RMLC filed motions with the courts that oversee the ASCAP and BMI antitrust decrees under which these organizations have operated for half a century, stating that they have not been able to agree to either final or interim royalties, and thus need the Court to set interim royalties until a final royalty is determined.

The interim royalty process does allow the presentation of evidence and argument by the parties to the Court as to what the appropriate royalty should be until the final royalty-setting process runs its course.  There is a legal presumption that, in the absence of some compelling evidence otherwise, the rates that were previously in place would continue while final royalties are litigated.  Whether the Courts will look back to the royalties paid by radio owners in 2009, or whether the provisional royalties that were set in these end-of-the-year agreements will have any effect on the interim royalties remains to be seen.  But don't count on the interim 7% reductions being in place for long, as the Court should set the interim royalties relatively quickly, probably later this year.  And once these interim royalties are set, the more difficult issue will face the PROs and RMLC - reaching a deal or litigating over the final royalties that will be paid by radio broadcasters for the public performance of musical compositions.  Given the inability of the parties to reach any agreement on interim royalties after a year of discussions, it may well be quite some time before final royalties are set - at which time there will be a "true up" back to January 1 of this year.  So broadcasters need to watch these developments carefully, and to not count any discounts as final until the final royalties are established. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The Radio Music Licensing Committee ("RMLC") has announced that it has entered into agreements with both ASCAP and BMI for interim royalties to be paid by commercial radio stations until final royalties are set.  These royalties will be set either through negotiation or through litigation in Federal Courts which act as a "rate court" to determine what reasonable rates will be under the antitrust decrees that govern these organizations.  As we wrote here and here, the RMLC has been involved in negotiations seeking a significant reduction in the royalties paid by radio stations for the right to make a public performance of musical compositions (or "musical works").  Both organizations have agreed to a 7% reduction in the amount currently paid by radio broadcasters, to be reflected on the invoices sent by these organizations for 2010 royalties.  According to the press release on the ASCAP agreement, the discounts are interim agreements only, and will be subject to retroactive adjustment to January 1, 2010 once final royalties are set.

This money goes to composers of music, as contrasted to the controversial SoundExchange royalties that pay the performers of music (currently only in the digital world, but proposed in legislation pending before Congress to be extended to over-the-air broadcasting).   ASCAP and BMI are essentially collection agencies (called Performing Rights Organizations or PROs) for large groups of songwriters.  By signing up and paying royalties to these organizations and to SESAC, a smaller but still significant PRO, broadcasters obtain a "blanket license" to play all the songs covered by songwriters who are members of these organizations - which are essentially all of the songwriters whose songs are likely to be played by radio.  The existence of these organizations save radio stations from having to negotiate independently with the thousands of songwriters and publishing companies that own the copyrights to these compositions - an arduous task that might be almost impossible without the existence of the PROs. 

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link