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?
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In the last week, we have received many inquiries from radio stations that received a notice from attorneys for Global Music Rights (GMR) about document production in GMR’s litigation with the Radio Music License Committee (RMLC).  As we have written before (see, for instance, our articles here, here and here), RMLC and GMR have for several years been engaged in antitrust litigation.  RMLC is seeking to impose outside review on the rates that GMR can charge broadcasters for the public performance of the music written by the songwriters that they represent, while GMR argues that RMLC itself violates the antitrust laws by unifying competing broadcasters and preventing them from doing business with GMR.

The recent communications from GMR concern GMR’s obligation to produce documents to the RMLC’s attorneys in discovery in this litigation.  Because RMLC has not been directly involved in GMR’s dealings with radio stations over the interim license agreements (and because RMLC itself does not have copies of the interim licenses that stations entered into with GMR), RMLC’s lawyers asked GMR for the production of these licenses as part of their discovery.  Because the interim licenses contain some confidentiality language, GMR’s recent communications was to let stations know that they are planning to produce those licenses to the RMLC’s attorneys, subject to the Protective Orders that GMR attached to their messages.  These Protective Orders are designed to keep the information in those licenses out of the public record, to be reviewed only by a limited group of people including RMLC’s attorneys and expert witnesses. The GMR communications are asking broadcasters if they have objections to the production of these licenses to RMLC’s lawyers.     
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Global Music Rights (most commonly known as GMR), the newest of the major performing rights organizations (PROs) licensing public performances of musical compositions, filed a lawsuit against radio operator Entravision Communications earlier this month. The suit alleges that Entravision failed to pay GMR royalties for the public performance of hundreds of compositions written by GMR songwriters. According to the complaint, GMR sent Entravision several letters over the last few years, notifying Entravision that it was playing GMR music and asking that it enter into a license to play that music. When no license was signed or even requested after these multiple requests, the lawsuit was filed.

The suit seeks $150,000 for each copyrighted work that was allegedly infringed – the maximum set out by the Copyright Act for “statutory damages,” i.e. damages that can be collected even without providing evidence of actual harm caused by the alleged copyright infringement. While Courts have discretion to order far lower statutory damages than those being sought here, even the threat of such damages have been enough to put many of the original file-sharing music sites out of business. Of course, in this case, these damages are being sought not from some company that provides unlimited downloads of unlicensed music, but from a publicly traded radio company presumably already paying other performing rights organizations for the use of music.
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Recently, the Radio Music License Committee sent out a memo to broadcasters about a July 8, 2019 SoundExchange payment deadline for pre-1972 sound recordings.  As with everything in copyright law, the issues surrounding pre-1972 sound recordings are complicated, and the RMLC notice, while seemingly straightforward, still resulted in our receiving lots of questions.  These questions may have been compounded because of notices sent to broadcasters back in April about another filing deadline concerning these recordings which caused much consternation for what was, for most broadcasters, a matter of little concern.  For most broadcasters, neither of these dates are of particular concern unless the broadcaster has been identifying pre-1972 sound recordings and not paying SoundExchange royalties when those songs are streamed, and we understand that most broadcasters have in fact been paying SoundExchange for these recordings.  But let’s try to explain what is going on in a little more detail.

First, let’s look at the basics.  Sound recordings (the recording of a particular band or singer performing a song) were originally not covered by federal copyright law.  The law provided protections for “musical works” (i.e. the musical composition, the words and musical notes of the song), but the mere recording of that work was initially not seen as a creative work.  It was thought of more as a mechanical rendering of the real creative work – the underlying song.  So when recordings came to have real value in the first half of the last century, recording artists had to rely on state laws to prevent other people from making and distributing copies of their recordings. Laws against what we would refer to as bootlegging or pirating of recordings were passed in most states, and lawsuits against bootleggers would be brought under these state laws.  It was not until 1972 that Congress, through an amendment to the Copyright Act, recognized that the recordings were themselves creative works entitled to copyright protection.  But that amendment did not fully make all pre-existing recordings subject to the Copyright Act, instead leaving most sound recordings first recorded in the United States prior to the adoption of the amendment to the Act in February 1972 subject to state laws until 2067.
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This week, the lawsuit brought by the Radio Music License Committee (RMLC) against new performing rights organization GMR (Global Music Rights) for alleged violations of the antitrust laws was determined by a court in Pennsylvania to have been brought in the wrong place – and transferred to a court in California.  This case has been on hold for well over two years while this procedural question was ironed out.  Now that the case has been transferred to California, the litigation that has been on hold while the jurisdictional issue was resolved can begin – but don’t expect quick results as these complicated cases can take years to resolve.  What is involved in this case?

Back in 2016, when RMLC concluded that it was not likely to reach a negotiated royalty rate for radio’s use of the musical compositions controlled by GMR songwriters and publishers, it brought the Pennsylvania court action.  In that action, it argued that the rates that GMR wanted were an abuse of the market power that GMR was able to exercise by banding these songwriters together and offering a license to radio stations on an all-or-nothing basis (see our articles here and here for more on the initial suit).  As it had done successfully with SESAC (see our article here), and as has been the case for decades with ASCAP and BMI, RMLC had hoped to have the court declare that GMR’s unrestrained royalty demands were contrary to the antitrust laws, and that some limits should be imposed on those rates.  The RMLC suit against GMR was brought in the same Pennsylvania court in which RMLC had sued SESAC, which led to the settlement subjecting SESAC rates to arbitration if the parties could not voluntarily agree on rates (and the arbitration process ultimately resulted in significantly lower rates for commercial radio than SESAC had previously received – see our article here on the results of the arbitration).
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This week, the Radio Music License Committee issued a press release that states that Global Music Rights (“GMR”), the new performing rights organization that collects royalties for the public performance of songs written by a number of popular songwriters (including Bruce Springsteen, members of the Eagles, Pharrell Williams and others) has agreed to extend their

Yesterday brought news that a Federal Magistrate issued a ruling (a 42 page order discussing fine points of law) deciding that the antitrust lawsuit brought by RMLC against GMR should not be tried in the Pennsylvania court where the suit was brought. As we wrote here, RMLC (the group that represents many commercial radio operators in music licensing matters) had argued that GMR (a relatively new organization representing songwriters in licensing music use as do ASCAP, BMI and SESAC) was acting in violation of the antitrust rules by trying to license music from a number of songwriters at prices well in excess of the amount that corresponded to these artists’ share of radio airplay. GMR seemingly retaliated by suing RMLC in a Los Angeles court, arguing that RMLC itself violates the antitrust laws by functioning as a buyer’s cartel unifying music licensing buyers against these songwriters (see our article here). Since these dueling suits were filed, the parties have been fighting over where this case should be heard.

RMLC had brought their case in Pennsylvania both because a number of RMLC members operate in Pennsylvania and because RMLC had obtained a favorable result in that court in similar litigation against SESAC, leading to the arbitration process that substantially decreased the rates that the commercial radio industry pays to that organization (see our article here). GMR sued in California as it is headquartered there, and presumably thought that it might get a bit of a “home court advantage” by trying a case in a state a bit more disposed toward content creators. So what does the decision yesterday mean?
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Last week, I participated in a discussion about music royalties for broadcasters at the Texas Association of Broadcasters Annual Convention in Austin. Speaking on the panel with me were the heads of the Radio Music License Committee and the TV Music Licensing Committee. These are the organizations that represent most commercial broadcasters in their negotiations with ASCAP, BMI and SESAC for public performance licenses for “musical works” or “musical compositions” – the underlying words and music to any song. In our discussion, there was a general summary of the licenses needed for the use of music by broadcasters, a summary of the status of some of the current royalty negotiations, and questions about other issues in music licensing. As this discussion raised a number of issues that I have covered in articles posted on this blog, I thought that it might be worth highlighting some of that past coverage so that those interested in any topic can read a bit more on these subjects.

The TV industry seems to have far fewer issues than radio, perhaps because radio is so much more music-dependent. While there is music in many TV programs, some of it is cleared (i.e. licenses have been negotiated) by the program providers (including some networks), so that stations need only worry about licenses for programming where the music has not been pre-cleared. Thus, TV stations have alternatives of blanket licenses for all programming (principally used by affiliates of networks where music has not been pre-cleared) or per-program fees where stations pay for music only in programs or program segments where music has not been licensed by the program suppliers.
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Global Music Rights, commonly known as GMR, is the newest Performing Rights Organization (PRO) in the US music business, licensing public performance rights to musical compositions of songwriters as diverse as various members of the Eagles to Pharrell Williams to George Gershwin. As we wrote here, in December, they offered a temporary license to the radio industry to allow radio stations to play their music if the stations pay a royalty reportedly based on a percentage of what stations pay to ASCAP and BMI. That license, which was accepted by many radio stations, expires at the end of September. Many stations were concerned as to what would happen on October 1, and whether they could continue to play GMR music. This week, that question was answered when it was announced that GMR has offered to extend the license for another 6 months at the same rates stations are now paying.

While this extension may answer the question of what happens on October 1, it certainly does not resolve all GMR issues. It seems pretty clear that, unless there is a major breakthrough, GMR and the Radio Music License Committee (the organization that negotiates performance royalties for commercial radio operators) will not come to an agreement on rates before the end of September. As we wrote here, RMLC has sued GMR, asking that a court make them subject to an antitrust consent decree much like SESAC where rates, if they cannot be voluntarily negotiated, would be set through arbitration (see our article on the results of the recent RMLC-SESAC arbitration here). GMR has countersued (see our article here), and litigation continues as it may well for years absent a settlement.
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It was announced this week that SESAC’s royalties for radio for the period starting at the beginning of 2016 through the end of 2018 have been slashed – being reduced to less than half what they were in 2015.  This decision came out of an arbitration process that resulted from the settlement of an antitrust lawsuit that the Radio Music License Committee (RMLC) brought against SESAC (see our article here for a summary of the settlement).  Yet, despite the significant reduction in the royalties for radio operators, both sides declared victory (see RMLC press release here and press reports on SESAC’s reaction here).  Can both be right?  While the decision of the arbitrators is not public so we can’t know for sure the reasoning behind the result, it might be that there is something to each of these claims.

For radio, the victory is clear.  For commercial radio broadcasters, the royalties were significantly decreased, retroactive back to the beginning of 2016 year for stations that had elected to have RMLC represent them in this lawsuit.  Some stations had been enticed by an offer made by SESAC at the beginning of 2016 offering stations a new SESAC license at rates 5% less than they were in 2015 (see our article here).  Those stations may not qualify for the much greater royalty reduction available to the majority of commercial stations that opted into RMLC representation and are covered by the arbitration result.  The new SESAC royalties will also cover the use of SESAC music on broadcaster’s streaming platforms and HD broadcasts, uses for which broadcasters had previously had to pay SESAC separately.  Of course, stations still need to pay public performance royalties for musical compositions to ASCAP, BMI and, in many cases, GMR and public performance royalties for sound recordings, when streaming recorded music, to SoundExchange.
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