Last week, the Radio Music License Committee (RMLC), the organization representing most commercial radio broadcasters in negotiating performance royalties for musical compositions, initiated a proceeding in US District Court in the Southern District of New York against BMI. This action raises short-term issues as to what this particular lawsuit means for the radio industry, and it also highlights longer term issues that may arise through legislative and regulatory changes that may affect these cases like this one in the future.
As we have written many times (see e.g here and here), BMI is subject to antitrust consent decrees governing its activities – including the rates that it charges to companies wanting to use the music that it licenses. When BMI and a user cannot agree on the terms of the license, either party can initiate a proceeding in court for the court to determine what reasonable rates are for the use proposed. These actions are all brought in the Southern District of New York where a specific judge is assigned to hear BMI disputes. This proceeding is referred to as a “rate court” proceeding where the parties will present evidence as to what each believes to be a reasonable rate – with the judge making the decision, subject to review by the Second Circuit Court of Appeals. What issues brought BMI and RMLC to Court?