Guest post by Erin M. Jacobson, this first appeared on Forbes
A committee representing roughly 10,000 commercial radio stations has sued performance rights organization Global Music Rights (GMR) in an effort to further reduce the amount radio stations pay to music composition creators and rights owners for performances of their works. The committee, Radio Music Licensing Committee (RMLC), claims that GMR has created an artificial monopoly over works in its repertoire.
Performance rights organizations (PRO’s) are organizations that track and collect performance royalties on behalf of songwriters and music publishers. In the United States, there are four PRO’s: ASCAP, BMI, SESAC and GMR. ASCAP and BMI are the two largest U.S. PRO’s and are also non-profit organizations. Since 1941, ASCAP and BMI have been subject to consent decrees issued by the Department of Justice. These consent decrees are agreements that allow the government to regulate ASCAP and BMI’s license fees and how they operate in order to prevent monopolization and encourage competition. SESAC and GMR are both independent, privately owned companies that operate on a for-profit basis and are not subject to consent decrees.
Music industry mogul Irving Azoff founded GMR in 2013 in order to provide a more boutique experience for managing performance rights licensing and potentially command higher rates for the performances of works in its repertoire, which includes compositions written and/or performed by artists such as Adele, The Beatles, Pharrell Williams, Katy Perry, Madonna and many more.Because GMR is not subject to a consent decree, it can deny a license to perform the works in its repertoire and can also negotiate license rates as it sees fit. The RMLC argues that the license fees required by GMR are exorbitant and seeks to lower them by forcing GMR to submit to judicial rate-setting proceedings, which would require a judge to mandate the rates GMR can charge its licensees. This is similar to procedures mandated for ASCAP and BMI, but without subjecting GMR to a full consent decree. The RMLC previously filed a similar suit against SESAC and reached a settlement in the RMLC’s favor.
Terrestrial radio makes its money on advertising revenue, and while radio is far from dead, it no longer holds the status of its heyday. Terrestrial radio and other broadcasters regularly fight to reduce license fees, as terrestrial radio lobbyists were also part of the group in favor of the Department of Justice’s crackdown on ASCAP and BMI’s licensing platforms, the outcome of which is still pending.
Most observers of this situation usually fail to mention that the public perception of radio’s purpose is music promotion. Without music driving the listenership of certain stations, those particular stations would not earn the ad revenue from advertisers who want to reach those stations’ listeners. However, the stations repeatedly seek to reduce compensation to the songwriters and music rights owners that create the very music that establishes their listenership and drives their revenues.
Terrestrial radio isn’t the only industry trying to reduce payments to music creators and rights’ owners. Those of us who regularly handle music licenses know that attempts to undervalue music also come from Internet and digital companies, as well as small bars and restaurants. Visual productions seeking synchronization and master use licenses also regularly try to lowball license fees or request gratis uses.
It is up to music creators and rights’ owners to value music (#valuemusic) and require proper payment for uses of their music, and to those that use music to recognize the value that music brings to their project or business.
*This article does not constitute legal advice.
Erin M. Jacobsonis a music attorney whose clients include Grammy and Emmy Award winners, legacy clients and catalogues, songwriters, music publishers, record labels, and independent artists and companies. She is based in Los Angeles where she handles a wide variety of music agreements and negotiations, in addition to owning and overseeing all operations for Indie Artist Resource, the independent musician’s resource for legal and business protection.