Yesterday, the US Court of Appeals for the Second Circuit in a “Summary Order” that the Court said does “not have precedential effect,” upheld an even briefer decision of the US District Court Judge who oversees the BMI antitrust consent decree, determining that the Department of Justice was wrong in its interpretation of the consent decree requiring that all songs licensed by BMI represent 100% of the musical work. This is a very arcane issue very deep into the nitty-gritty of copyright law – and an issue that we wrote about several times before, including our articles here and here.

The issue arises as many songs are written by several co-writers. Often times, it is simply a composer of the music and someone else who writes the lyrics. But more and more in many musical genres, there are multiple people who receive songwriting credits on any single song. Each of these authors is deemed to have a “fractional interest” in the song. When these multiple authors of a song belong to different performing rights organizations (e.g. ASCAP, BMI, SESAC and GMR, organizations which authors and their publishing companies join to simplify music licensing to users of lots of music – like radio stations, digital music services, and even bars, restaurants and retail establishments that play music to entertain customers), the issue addressed in this case arises. The question that parties before the court have been debating is whether, when one of these PROs signs a deal with a music user, the user gets the rights to actually perform the song, or whether they simply get the fractional interest in the song that is held by the songwriter who is a member of the PRO, which would require that the user also get the rights to the other fractional interests before the user can play the song.
Continue Reading Court of Appeals Upholds BMI Decision Allowing Fractional Music Licensing – What Are the Issues?

Just a few weeks ago, we wrote about the Radio Music License Committee (RMLC) filing a lawsuit against Global Music Rights (GMR) alleging that GMR was violating the antitrust laws by offering an all or nothing blanket license for rights to play the songs written by certain songwriters now represented by this new performing rights organization. RMLC was seeking to impose some oversight over the rates being charged for GMR royalties. This would be similar to the controls over the rates of ASCAP, BMI and SESAC, whose rates can only be imposed following an agreement with a copyright holder or, where there is no voluntary agreement, by a determination by a court (for ASCAP and BMI) or an arbitration panel (for SESAC) that the new rates are reasonable. Now, GMR has filed its own lawsuit against RMLC (though it claims that its suit is unrelated to the one that RMLC filed against it) alleging that it is RMLC that is violating the antitrust laws (and certain California statutes) by forming a “cartel” of buyers, i.e. commercial radio stations who are refusing to deal with GMR individually but instead are looking to RMLC for the negotiation of a license agreement that will cover the entire industry. What are the issues presented by this dueling litigation?

The RMLC suit is premised on the concept that any time multiple products from independent marketplace competitors (in this case the songs of multiple songwriters) are packaged together and sold at an all or nothing price, there is the potential for obtaining prices higher than would be obtained on the open market. For example, while a contemporary hits formatted radio station could potentially decide that the price of Adele songs are too high and pull those songs from its playlists, it is not able to do so if that song is bundled with songs written by Pharrell Williams, Bruno Mars, Beyoncé, Kanye West, Brittany Spears and Katie Perry (all of whom are listed on the GMR website as being part of its repertoire) so that the radio station either takes all the songs from all of those writers or none at all. While it might be able to get away with not playing one or two of these artists, if it has to pull them all, listeners will notice. If the station wants to keep playing in the format that it has selected, it has to pay the bundled rights fee asked by the representative performing rights organization.
Continue Reading GMR Sues RMLC – Claims Antitrust Violations for Negotiating Royalties on Behalf of the Radio Industry – What Are the Implications?

RMLC, the organization that represents most commercial radio stations in the US in negotiating music license agreements for the public performance of musical compositions, has filed an antitrust lawsuit against GMR (Global Music Rights). GMR is a new performing rights organization (PRO), founded by music industry heavyweight Irving Azoff.  As we wrote here and here, GMR has signed agreements to represent songs from the catalogs of many prominent songwriters, including Adele, Taylor Swift, some of the Beatles, Madonna, Jay Z and many other big names.  RMLC (the Radio Music License Committee) is asking in its lawsuit that, initially, GMR be enjoined from licensing its catalog of songs for more than a rate that represents the pro rata share of its catalog to those of the other PROs while its broader antitrust action is litigated to establish an appropriate mechanism for determining those rates in the future.

Currently, the two largest PROs, ASCAP and BMI, are subject to antitrust consent decrees that govern their operations – decrees that the Department of Justice recently refused to substantially modify at the request of these groups (see our articles here and here.).  SESAC recently entered into a settlement of with RMLC, following an antitrust action similar to the one filed Friday against GMR, imposing restraints on SESAC’s ability to unilaterally impose its rates on radio stations, requiring instead that such rates be set by arbitrators if they cannot be voluntarily negotiated (see our articles here and here).  The songs in the GMR catalog are covered by ASCAP, BMI and SESAC licenses through the term of the current licenses with those organizations, but those licenses for radio all expire this year (see our article here).  Thus, RMLC argues that, if there is no injunction, starting January 1, 2017, a radio station will either be forced to pay whatever rates GMR demands for songs that are being withdrawn from the catalogs of ASCAP, BMI and SESAC, or risk being sued for copyright infringement (and potential damages of up to $150,000 per infringement). 
Continue Reading RMLC Files Antitrust Lawsuit Against GMR And Seeks to Enjoin New Music License Fees on Radio Stations