SESAC is the one major performing rights organization whose rates have not, until now, been subject to judicial review as part of an antitrust consent decree.  Perhaps because of that fact, broadcast stations have often complained about the rates they charge for the music that they license, as there is currently no cap on what SESAC can charge, and there is no requirement that SESAC treat all similar licensees in the same way.  In fact, because of this dissatisfaction, both the TV and Radio Music License Committees have filed antitrust suits against SESAC seeking relief from the rates they charge.  In a settlement announced this past week, the Television Music Licensing Committee has entered into a settlement by which SESAC will pay the TVMLC $58.5 million and agree that, over the next 20 years, SESAC will negotiate license agreements with TVMLC.  Under the agreement, if rates can’t be reached as a result of negotiations, SESAC and the TVMLC would submit to an arbitration process to arrive at the appropriate rates.  The full settlement can be found on the TVMLC website, here

Under the terms of the settlement, commercial TV stations (except for those owned by Univision, which appear to have opted out of the class of stations covered by the TVMLC settlement) will have their SESAC obligations covered for the rest of this year and next, including website SESAC music use and use in digital multichannel programming.  In 2015, TVMLC will negotiate with SESAC over rates for the period from 2016-2019.  If no rates are agreed to by the parties, an arbitration panel will set the rates.  The same process will continue for 4 year periods through 2035, as long as ASCAP and BMI are also subject to either rate court or arbitration review of the rates charged by those organizations.  While the Department of Justice is reviewing the ASCAP and BMI consent decrees that require rate court review of royalty rates charged by these groups (see our article here), it appears that they are not asking for an end to all rate review.  Instead, they are asking that the review be done by an arbitration panel, not the US District Court that currently reviews such rates.  So it would appear likely that the “out” in the deal would not give SESAC an escape from this agreement to be bound by arbitration any time soon.
Continue Reading TV Music Licensing Committee Settles Antitrust Action with SESAC over Music Licensing Rates and Terms – Radio Watches and Wonders if It Can Get a Similar Deal

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.

Continue Reading Radio Music Licensing Committee Announces Settlement With BMI Following Settlement With ASCAP – Why SESAC is Not Included

New ASCAP royalties are on their way to radio broadcasters. ASCAP and the Radio Music Licensing Committee (RMLC) have just announced that they have reached an agreement in principal to return to the percentage of revenue royalties that for so long were paid by radio stations to ASCAP and BMI – a system that

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. 

Continue Reading ASCAP and BMI Enter Into Agreement With RMLC for Interim Reductions In Radio Royalties Until Final Fees are Set