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.