SESAC royalties

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In a Press Release issued on November 1, the Radio Music License Committee announced the results of its arbitration with SESAC.  Despite the arbitrators’ decision that rates for commercial radio broadcasters are going up modestly, RMLC declared the decision a win.  How can an increase in royalties be a win?  Let’s provide some background on this decision and why the radio industry may breathe a sigh of relief.

First, it is important to set the background for the decision.  As we wrote here, in 2015, RMLC and SESAC settled an antitrust lawsuit brought by RMLC, agreeing that rates for the public performance by commercial radio broadcasters of the catalog of SESAC music would be set by binding arbitration.  Every four years, a proceeding is held to set the royalties to be paid by a broadcaster for music used in its over-the-air programming and on internet streams of that signal. 

The royalty currently paid by commercial radio stations was set by a settlement between RMLC and SESAC before arbitration in 2020 (see our article here).  That agreement, under which music radio stations have been paying .2557% of revenue, expired at the end of 2022.  As RMLC and SESAC could not mutually agree to new royalties, the recent arbitration was held to set royalties for the period from January 1, 2023 through December 31, 2026.  The decision announced on Friday set those royalties at .2824% of revenue.  Why is this increase from .2557% to .2824% considered a win?Continue Reading RMLC Announces Arbitration Decision on SESAC Royalties for Commercial Radio Stations for 2023-2026

  • The FCC announced the circulation for Commissioner review and approval of two decisions of interest to broadcasters, signifying that we
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We often write about issues concerning the royalties paid by radio stations for their various uses of music.  It is not just paying the royalties that are important, but stations must also observe all of all the other obligations under each of their license agreements.  The Radio Music License Committee asked us to remind commercial…

Earlier this week, we covered the broadcast issues that the FCC may be facing in 2024.  But the FCC is just one of the many branches of government that regulates the activities of broadcasters.  There are numerous federal agencies, the Courts, Congress, and even state legislatures that all are active in adopting rules, making policies, or issuing decisions that can affect the business of broadcasting and the broader media industry.  What are some of the issues we can expect to see addressed in 2024 by these authorities?

For radio, there are music rights issues galore that will be considered.  Early in the year, the Copyright Royalty Board will be initiating the proceeding to set streaming royalties for webcasters (including broadcasters who stream their programming on the Internet) for 2026-2030.  These proceedings, which occur every five years, are lengthy and include extensive discovery and a trial-like hearing to determine what royalty a “willing buyer and a willing seller” would arrive at for the noninteractive use of sound recordings transmitted through internet-based platforms.  Because of the complexity of the process, the CRB starts the proceeding early in the year before the year in which the current royalty rate expires.  So, as the current rates expire at the end of 2025, parties will need to sign up to participate in the proceeding to determine 2026-2030 rates early this year, even though the proceeding is unlikely to be resolved until late 2025 (unless there is an earlier settlement)(the CRB Notice asking for petitions to participate in the proceeding is expected to be published in the Federal Register tomorrow).  Initial stages of the litigation (including the identification of witnesses, the rate proposals, the evidence supporting those proposals, and the initial discovery) will likely take place this year. Continue Reading Gazing into the Crystal Ball at Legal and Policy Issues for Broadcasters in 2024 – Part II: What to Expect from the Courts and Agencies Other than the FCC

Royalties paid for the use of music by broadcasters and digital media companies, and other issues about music rights, can be an incredibly dense subject, with nuances that can be overlooked.  I participated in a CLE webinar earlier this week, sponsored by the Federal Communications Bar Association, where we tried to demystify some of the issues in music licensing (see description here).  I moderated a panel on the Hot Topics in Music Licensing, talking about the broadcast performance royalty, the appeal of the webcasting royalty decision, issues about the proliferation of performing rights organizations seeking royalties for the public performance of musical compositions, and more theoretical issues about the entire process of clearing music for use by broadcasters and other businesses.  To highlight some of the issues, and some of the tensions in the world of music royalties, I put together the attached article.  Hopefully, it provides some context on the relationship between some of these hot topics, and gives some food for thought as to how these issues can be addressed. 

As 2023 begins, our “Hot Topics” panel will look at some of the current legal and policy issues in music licensing that may be relevant to the communications industry.  Most of the issues we will discuss are ones that have been debated, in one form or another, in copyright circles for decades.  But, as copyright can be so complicated with many stakeholders with differing interests, the chances of any final resolution to any of these issues may well be small.  This article is meant to put some of those debates in context, as many of the specific issues, in one way or another, are intertwined. 

The issue that likely will be the most contentious this year (and has been for decades) is the continuing effort of the recording industry to establish a public performance right in sound recordings that would apply to non-digital performances.  For over 25 years, recording artists and the record labels (which usually hold the copyrights to popular recordings) have had a right to a performance royalty for digital performances.  Broadcasters who stream an online simulcast of their programming, along with webcasters and others who make non-interactive digital transmissions, must pay a performance royalty, generally to SoundExchange.  The rates to be paid are set by the Copyright Royalty Board.  But in the US, over-the-air broadcasters, restaurants, bars, clubs, retail establishments, and others who publicly perform music pay only for the performance of the musical compositions (the “musical work”), not for the performance of the song as recorded by a particular artist (the “sound recording”).  That has been a point of contention for a century, almost from the moment when recorded music first appeared, but the issue has become particularly heated in the last two decades, once the sound recording public performance right was established after being mandated by copyright legislation in the late 1990s.Continue Reading  An Overview of the Hot Policy Topics in Music Licensing

Here are some of the regulatory developments of significance to broadcasters from the last week, with links to where you can go to find more information as to how these actions may affect your operations.

  • In the last two weeks, many stations have discovered that links to their FCC-hosted online public inspection file no longer

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The Radio Music License Committee and SESAC yesterday announced an extension of the terms of the royalty agreement that is currently in place between the commercial radio industry and this performing rights organization.  As we wrote here, the agreement under which radio broadcasters have been paying for the last three years was arrived at after an arbitration process following the settlement of an antitrust proceeding, and resulted in a dramatic reduction in the amount of the royalties paid to SESAC prior to that litigation.  The antitrust settlement calls for arbitration every three years if RMLC and SESAC cannot voluntarily arrive at new royalties.  The initial three-year period expired at the end of the 2018.  The parties have been negotiating a deal that covers the period starting from January 1, 2019, and the new deal that they arrived at runs for four years through December 31, 2022.  The new blanket agreement is available on the RMLC website here and with instructions from SESAC here.  It principally carries forward the deal terms of the prior agreement.

Note that in many trade press reports there have been statements that the agreement covers the public performance of SESAC music, not just on over-the-air radio but also on the streams of broadcast stations and in other “new media transmissions.”  These new media transmissions, under the terms of the agreement, also include “radio-style podcasts.”  As we noted in connection with RMLC’s recent license agreement with BMI, these agreements cover the public performance rights in a podcast, but that is not the only music license that you need to use music in a podcast.  As podcasts are downloadable and playable on-demand, and they involve the synchronization of music and speech into a unified recorded work, the rights under Copyright law to make reproductions and likely the right to make derivative works of these recordings need to be secured.  These rights need to come directly from the copyright holders in both the musical composition (the words and music of a song) and the sound recording (that song as recorded by a particular band or singer).  The public performance rights from ASCAP, BMI and SESAC are insufficient by themselves to give you the rights to use music in a podcast, which is why there are so few podcasts that make extensive use of major label recorded music.
Continue Reading RMLC and SESAC Agree to Extend Current License Agreement for Commercial Radio – Music Licensing Update for Radio

We wrote last summer about the substantial reductions in SESAC royalties that the Radio Music License Committee was able to achieve for commercial radio stations through a decision in its arbitration proceeding. RMLC recently sent out an email to all commercial stations that had authorized it to act on the stations’ behalf reminding them that,…

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.
Continue Reading SESAC Royalties for Commercial Radio Slashed By More Than Half – Both SESAC and RMLC Claim Victory in Arbitration