The judge presiding over the royalty litigation between BMI and the Radio Music Licensing Committee (RMLC) approved the settlement between these parties by an order released on March 23. At the same time, the judge approved an order keeping the specifics of the approved settlement confidential for 30 days while the settlement is being implemented
BMI and the Radio Music License Committee announced a settlement of their rate court litigation over the royalties that commercial radio will pay for the public performance of musical compositions licensed by BMI. While we have not yet seen the agreement, the press release already raises one issue likely to sew confusion in the broadcast industry – the extent to which the agreement allows the use of music in podcasts. While the press release says that the BMI license includes the use of music in podcasts, radio stations should not assume that means that they can start to play popular music in their podcasts without obtaining the rights to that music directly from rightsholders. They cannot, as BMI controls only a portion of the rights necessary to use music in podcasts and, without obtaining the remaining rights to that music, a podcaster using the music with only a BMI license is looking for a copyright infringement claim.
So why doesn’t the license from BMI fully cover the use of music in a podcast? As we have pointed out before, a broadcaster or other media company that has performance licenses from ASCAP, BMI, SESAC and even GMR does not get the right to podcast music – nor do the SoundExchange royalty payments cover podcasts. These organizations all collect for the public performance of music. While podcasts may require a performance license (see our article here about how Alexa and other smart speakers are making the need for such licenses more apparent as more and more podcast listening is occurring through streaming rather than downloads), they also require rights to the reproduction and distribution of the copyrighted songs and the right to make derivative works – all additional rights given to copyright owners under the Copyright Act. These additional rights are not covered by the public performance licenses from ASCAP, BMI, SESAC, GMR and SoundExchange, nor are the rights to use the “sound recording” or “master” in the podcast. What is the difference between these rights?…
Continue Reading BMI Settlement of Royalty Battle with RMLC to Include Music in Podcasts? – Not So Fast….
Most years, at some point in January, we look into our crystal ball and try to see some of the legal and regulatory issues likely to face broadcasters. We already provided a calendar of the routine regulatory filings that are due this year (see our Broadcaster’s Regulatory Calendar). But not on that calendar are the policy issues that will affect the regulatory landscape in the coming year, and into the future. This year, the biggest issue will no doubt be the November election. Obviously, broadcasters must deal with the many day-to-day issues that arise in an election year including the rates to be charged political candidates, the access to airtime afforded to those candidates, and the challenges associated with the content of issue advertising that non-candidate groups seek to transmit to the public. The election in November will also result in a President being inaugurated in just less than a year – which could signal a continuation of the current policies at the FCC or potentially send the Commission in a far different direction. With the time that the election campaigns will demand from Congress, and its current attention to the impeachment, Congress is unlikely to have time to tackle much broadcast legislation this year.
The broadcast performance royalty is one of those issues likely on hold this year. While it was recently re-introduced in Congress (see our article here), it is a struggle for any copyright legislation to get through Congress and, in a year like the upcoming one, moving a bill like the controversial performance royalty likely will likely not be high on the priorities of Congressional leaders. This issue will not go away – it will be back in future Congresses – so broadcasters still need to consider a long-term strategy to deal with the issue (see, for instance, our article here on one such strategy that also helps resolve some of the music royalty issues we mention later in this article).…
Continue Reading Looking Ahead to the Rest of 2020 – Potential Legal and Regulatory Issues For the Remainder of the Year
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 Radio Music Licensing Committee has announced a settlement with BMI over music royalties for the public performance of musical compositions for the period from 2010-2016. Terms have not been announced, so we can’t provide the details, yet. But as we wrote recently when the RMLC announced the terms of its agreement with ASCAP, we would assume that the terms would be somewhat similar to the ASCAP deal. If no settlement had been reached with BMI, the case would have gone to a "rate court" in Federal District Court to see what the fair market value of the performance right was. As analogous rates often form the basis for rate court determinations of fair market value, the settlement with ASCAP would no doubt have been an issue for BMI, as it would appear to set a benchmark rate for the public performance of musical compositions. But, we will have to wait to see what the filings say before we can determine if, for sure, the rates will decrease relative to prior rates to the same extent that they did for ASCAP.
It is worth reflecting on how RMLC came to reach deals with ASCAP and BMI, and to explain why there is no reference to a SESAC deal. I’ve already heard or seen several people suggesting that an agreement with SESAC may be next – when in fact that is not something that is imminent, as can be explained by the differences between ASCAP and BMI on one hand, and SESAC on the other. ASCAP and BMI are both governed by anti-trust consent decrees that have been in place for over 50 years. Under both decrees, these organizations have to enter into agreements to set royalties for all similarly-situated users of music in various categories of businesses – categories including radio, TV, websites, background music, restaurants, bars, hotels, performance venues and practically every other place where music is performed for the public. If no agreement can be reached on a voluntary license, a “rate court” decides on the royalties. Essentially, that means that a US District Court in New York has a trial to set the rates.
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…
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.
Radio broadcasters all over the country have been receiving letters about music royalties – from ASCAP, BMI and the Radio Music Licensing Committee (RMLC). The ASCAP and BMI letters are asking for the broadcaster to sign a letter committing themselves to some royalty obligation for 2010. They pose three options to the broadcaster – sign up to pay royalties for 2010, join the RMLC negotiating group, or notify ASCAP and BMI that they will be negotiating their own royalties. The RMLC letter suggests that the broadcaster join in their negotiating group to help to establish a new royalty structure with these entities. What does it all mean, and what should a broadcaster do?
These letters are all triggered because the rates for royalties that commercial radio broadcasters pay to ASCAP and BMI for the musical compositions that they play on the air expire at the end of 2009. (Noncommercial broadcasters have a special rate set under the review of the Copyright Royalty Board, and thus are not subject to these deals) RMLC represents most radio broadcasters in their dealings with the performing rights organizations (or "PROs" as ASCAP and BMI, and SESAC, are called). We wrote about the many issues that have held up an extension of the current agreements between radio broadcasters and ASCAP and BMI here. If there is no new deal covering these royalties in place by the end of the year, broadcasters who continue to play these compositions (which will be virtually all commercial radio operators) will need to determine how to pay royalties when the current royalty agreements expire. The current agreements do not have any automatic extensions in them, as the antitrust consent decrees that bind these companies call for royalty deals of no more than 5 years in duration. Thus, as the old agreements are about to expire, and no new agreements are in place, the flurry of letters has followed to put broadcasters on notice of the current situation. Of course, none of these letters is entirely clear in spelling out all the issues involved. So we’ll try to explain some of those issues below.
The Senate Judiciary Committee today approved the bill to impose a performance royalty (or the "performance tax" as the NAB had called it) on radio broadcasters for the public performance of sound recordings on their over-the-air stations. As was the case in the House of Representatives when its Judiciary Committee approved their version of the bill, the Committee acknowledged that there was still work to do before a final bill would be ready for the full Congress. Nevertheless, this is the first time that the Judiciary Committees in both Houses of Congress have approved the performance royalty, serving as a warning to broadcasters that this issue may well be moving to a showdown before the full House and Senate during the current session of Congress.
There was only limited debate on the bill at the Committee hearing, yet several open issues were identified. The Committee made clear that, even though it was approving the bill in the form introduced and amended by its managers, there were still changes that would be made in the future before any legislation was ready to be finalized. Senator Feinstein of California discussed several of the issues. First, the bill as amended by the Senate managers (Senators Leahy and Hatch), the bill provided relief for small broadcasters so that any performance royalty would not impose an undue burden on them. The bill proposed the following royalty structure for small broadcasters:
(I) revenues of less than $50,000 – a royalty fee of $100 per year;
(II) revenues of at least $50,000 but less than $100,000 – a royalty fee of $500 per year;
(III) revenues of at least $100,000 but less than $500,000 – a royalty of $2,500 per year;
(IV) revenues of at least $500,000 but less than $1,250,000 – a royalty of $5,000 per year.
Senator Feinstein, who stated that she favored parity between all music services that pay a royalty, suggested that this same royalty structure should be applied to small webcasters who, under current settlement agreements, can pay almost 30 times the amount that a small broadcaster with the same revenues would pay under this bill – and those settlements were an improvement on the royalties that would have been paid under the decision of the Copyright Royalty Board. Senator Feinstein stated that "the parties" were working on an agreement that would amend the bill to extend these rates to small webcasters.
While we have written much about the battle over the broadcast performance royalty (or the "performance tax" as broadcasters call it) – whether broadcasters will have to pay artists and record labels for the right to play their music on the air – we have not written much about another looming issue with the royalties that broadcasters must pay to play music on their stations. While broadcasters are very familiar with the ASCAP and BMI royalties, they may not be fully aware that there is a looming dispute over the amount that broadcasters will pay to these organizations in the near future. At a panel that I moderated at the NAB Radio Show, Bill Velez, the head of the Radio Music Licensing Committee, talked about the current negotiations for the renewal of the royalty agreements between radio stations and these two Performing Rights Organizations ("PROs"). Both of the current agreements expire at the end of this year, and the RMLC is in the process of trying to negotiate new agreements. However, because many broadcasters feel that the current deals charge more for these music rights than is justified in the current economic environment, while the PROs are reluctant to decrease the royalties that the composers they represent currently receive, the differing perceptions of the value of these rights could lead to litigation over the amount that should be paid by broadcasters for the use of this music.
First, it is important to understand what rights ASCAP and BMI are providing. These organizations, along with SESAC (about which we have written here), provide the copyright license for the "public performance" of the "musical work" or the composition, the words and musical notes to a song. This is in contrast to the rights to the sound recording (the song as performed and recorded by a specific artist), which is licensed by SoundExchange. Webcasters have to pay ASCAP and BMI for the use of the composition, as well as paying SoundExchange for the use of the sound recording when streaming music on the Internet. Broadcasters only have the obligation to pay ASCAP,BMI and SESAC for the composition in connection with their over the air broadcasts but do not, under the current law (unless the broadcast performance royalty is passed), have to pay SoundExchange. Because the current ASCAP and BMI royalties have been in place for several years, most broadcasters probably don’t think much about them, but they may have to in the near future.