On Saturday, RMLC announced that it has reached an “interim” agreement with the new performing rights organization Global Music Rights (GMR) for a license to perform musical compositions controlled by GMR.  This agreement (available on the RMLC website here) is an interim agreement for radio stations that elect to participate, and covers only the first 9 months of 2017.  To be covered by this license, a station must make an election by January 31, and pay the first month’s assessment to GMR by that date.  GMR has promised not to sue any stations in January while stations are deciding whether to opt into this agreement.  The amount to be paid by any individual station can be ascertained by communicating with GMR at an email address furnished by the RMLC in the notice distributed on Saturday.

This is an interim agreement as it removes the threat of a lawsuit for playing GMR music after January 1 that could potentially be faced by any radio station that does not have a license.  The rates paid by any station that opts in could be adjusted retroactively, up or down, based on the results of further negotiations between RMLC and GMR, or based on the results of the lawsuits currently being litigated between the two (see our article here on RMLC’s suit against GMR, and the article here about GMR’s follow-up lawsuit against RMLC, each accusing the other of violating the antitrust laws).  It would seem obvious that RMLC believes that the amounts being paid under this interim deal are higher than justified based on the percentage of music played by radio stations that is controlled by GMR.  If it was believed that the interim fee represented a fair price, then it would seem that RMLC would have entered into a permanent license at these rates – but instead the litigation continues.  What is a station to do?

Basically, stations have a few choices.  They can sign this deal, and ride with the RMLC and see what happens in the next 9 months.  Alternatively, they can try to pull all GMR music off their stations (but they would need to exercise care to get that music not only out of their own playlists – but also out of the playlists of syndicated programs, and out of commercials and other productions aired on their stations).  While some syndicators have indicated a willingness to work with stations to pull GMR music, the task of weeding out all such music is not easy, particularly as it is possible that the roster of GMR songwriters could vary from week to week, and constant adjustments to its list of excluded songs would need to be made by any station going this route.  Finally, a station could try to cut their own deal with GMR which, reportedly, a few of the big radio groups in which GMR founder Irving Azoff has a connection have done.

Where this all ends up is a big issue for broadcasters as, if GMR succeeds in licensing its songs at a rate higher than what is paid by broadcasters to ASCAP, BMI and SESAC for the music that they license, then you can bet that there will be other defections from these old-line performing rights organizations (PROs).  Already, numerous music publishing companies, including some co-owned by record labels, have threatened to withdraw from the PROs and license music on their own.  Thus, at some point, there could be a fifth PRO looking for licensing fees from broadcasters, or a sixth or seventh or even more in the future.  I have been warning about this fractionalization of music licensing throughout the past year, and it seems more and more likely to occur (see for instance, my articles here and here).

This licensing regime gets even more difficult, based on the “fractional licensing” issues that were identified by the DOJ in its review of the licensing by the PROs.  From the RMLC paperwork, it appear that many GMR works are fractional interests in songs.  If a PRO cannot convey a full license to an entire contribution, a song with multiple writers, where those writers are members of different PROs, could be included in the repertoire of multiple PROs.  In effect, a station would be paying for more than 100% of the music it is playing.  The station would be paying each PRO for any fractional interest that may be in the catalog of that PRO, so the station may end up paying multiple times for the same song.  Fractional interests in songs seems to be very common.  This was noted in this article from a recent edition of the Washington Post, noting that the Tim McGraw hit “Humble and Kind,” up for numerous song of the year awards, was written by Lori McKenna one morning at her dining room table.  The article notes that this is the first Number 1 hit on the country music charts in the last four years to be written by a single songwriter.  See our articles here and here for more on this issue.

Broadcasters need to recognize that GMR is licensing the underlying song (known as the “musical work” or “musical composition”) – the words and music to any song.  They are not licensing a recording by any particular artist ( a “sound recording” or “master recording”).  The issue about whether artists should be compensated for the playing of their recordings by broadcast radio – the broadcast performance royalty or “performance tax” as some have referred to it – is a completely different issue.

The fact that GMR licenses only the underlying musical work actually makes it harder for stations to pull all of the songs that they represent, as licensing issues can arise anytime music is played on a station, no matter who the artist may be.  In fact, at least one band (Anthrax) which has been included on some lists of GMR artists, has written a letter to GMR, asking that it be made clear that virtually all of their music can still be played by radio under the licenses from the traditional PROs except for a single song that they recorded on an early album which was a cover version of a song written by members of Metallica who are GMR writers.  If even one GMR song is played in a performance by a local artist playing music at a local event broadcast by a station, or by a marching band playing songs at a football game covered by the station, a station without a GMR license could be in jeopardy of a copyright infringement claim.

The difficulty and consequences of the creation of this new PRO, especially when there is no completely accurate, universally available database of the copyrights for all musical works, makes this an issue certain to be included in the upcoming debates on copyright reform (see our article here).  Watch as these issues develop further in the coming year.