what do ASCAP BMI and SESAC royalties cover

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This week it was announced that the Radio Music License Committee, the organization that represents the commercial radio industry in its negotiations with performing rights organizations over the public performance rights in musical works (the musical compositions – the words and music to any song), had entered into settlement agreements with both ASCAP and BMI to settle rate court litigation over the amount of royalties to be paid by the industry for the period from 2022 through 2029.  Rate courts, pursuant to the antitrust consent decrees under which both ASCAP and BMI operate, determine reasonable rates for music licensed by ASCAP and BMI if parties cannot voluntarily negotiate deals for the use of that music.  Agreements between RMLC and both ASCAP and BMI expired at the end of 2021, so the commercial radio industry has been paying interim rates at the level of the prior agreements since January 1, 2022.  Now both organizations have reached deals with RMLC for the rates for the next three years, and those deals include a “true up” for the difference between the old rates and the new rates for the period from 2022 through the end of 2024. 

The rates for BMI are increasing from approximately 1.7% of a station’s revenue to the following levels:

  • 2.14% for 2022 and 2023,
  • 2.26% for 2024,
  • 2.19% for 2025
  • 2.20% for 2026, 2027, 2028, and 2029

The agreements also contain details about lower rates for stations that have significant talk or other non-music programming, and definitions of what constitutes “revenue” that is subject to royalties.  Under the BMI agreement, the difference between the rates from 2022 to the end of 2024 under the prior agreement (2024 being the last full year for which station revenues have been reported) and that specified in the new settlement must be made up by monthly payments over the next 18 months, starting with payments in October 2025. 

While the ASCAP rates have not been made public, we can assume that the increase is not as large as that for BMI, as BMI announced their rate increase as being one of “historic” size.  But the ASCAP announcement does reference an increase.  Stations should learn the details of that increase from private correspondence from ASCAP or the RMLC in the near term.  Why would RMLC agree to these rate increases?Continue Reading BMI and ASCAP Enter into Agreements with Commercial Radio Industry – Music Royalty Rates Going Up Retroactive to 2022

Using music in commercials is not as simple as just paying your ASCAP, BMI and SESAC royalties.  While many broadcasters think that paying these royalties is enough to give them the rights to do anything they want with music on their stations, it does not.  The payments to these Performing Rights Organizations (PROs) only cover the right to publicly perform music, i.e. to broadcast it.  They do not give you the right to take the music and "synchronize" it with other words or video material, e.g.  you cannot put music in a recorded commercial or otherwise permanently fix it into a recorded audio or video production.  Instead, to make such a production, the producer needs to get the rights to both the underlying musical composition (the words and musical notes) and, if you are planning to use a particular recording of a song, the rights to use that particular recording ( the "sound recording" or "master recording").  Getting these rights may very well require that you deal both with the record company or performing artist whose recording you plan to use, and the publishing company that represents the composer of the music.  And, as some artists may have concerns about having their music used to pitch some products, getting the rights to that artist’s version of a particular song may not be easy. 

Even using the tune of a familiar song in an advertisement, with different words, is not permitted without getting the rights to do so from the publishing company.  A copyright holder in a musical composition has the right to prepare "derivative works" of that composition.  A derivative work is one that uses the original copyrighted material, but changes it somehow – like putting new words to an old tune.  Many think that "fair use" permits the making of a parody of a song, so they are allowed to use the tune as long as they produce a new version that is funny.  However, in the copyright world, fair use is not that simple.  A parody, to allow use of the original tune, must be making commentary or criticism of the original song.  Being independently funny or amusing, or otherwise dealing with some independent social or political issue, does not give you the right to use the music without securing permission from the composer of the music first.  A recent story in the Hollywood reporter’s legal blog, THR,esq.com, told the story of a Congressional candidate, Joe Walsh, who thought that it would be cute to use the music of former Eagle Joe Walsh, to make fun of Democratic politicians.  As set out in that story, Eagle Joe Walsh’s attorney did not find the campaign song very funny, and sent a very strong letter objecting to that use (the LA Times site had at one point had a link to a video of a band playing the candidate’s version of the Joe Walsh song "Walk Away", but it now says that the video has been taken down due to a copyright objection). Don’t let your station be the recipient of such a letter – get the rights to use music in commercials or other productions. Continue Reading Using Music in Advertising or In a Video Production? Secure the Necessary Rights – ASCAP, BMI and SESAC Licenses Are Not Enough