Irving Azoff's Global Music Rights Files Motion to Dismiss RMLC's Anti-Trust Lawsuit

Irving Azoff photographed in 2016
Nathaniel Wood/Getty Images Portraits

Irving Azoff photographed on March 10, 2016 in Los Angeles. 

Azoff recently likened radio to a 'cartel' conspiring to keep songwriter payments Low.

Global Music Rights, as expected, has filed a motion to dismiss the Radio Music Licensing Committee’s anti-trust lawsuit against the performance rights organization in the U.S. Eastern District Court of Pennsylvania.

The court document, filed by O’Melveny & Myers LLP and Harkins Cunningham LLP on behalf of GMR on Jan. 20, says that the court where RMLC filed its lawsuit lacks personal jurisdiction and is an improper forum in which to adjudicate the dispute; and notes that the RMLC complaint fails to state a claim upon which relief can be granted.

On the first point, the GMR filing points out that neither the defendant or plaintiff are located in Pennsylvania, where the suit was initially filed on Nov. 18. GMR responded by filing its own anti-trust lawsuit against the RMLC, alleging it is acting like a cartel, in the U.S. central District Court of California.

If the Pennsylvania case is not going to be dismissed and must be adjudicated, the latest filing states that the case should be in the U.S. Central District of California Court because that’s where GMR is located and the only licensing negotiations that happened in person occurred there; and RMLC also has twice has many member radio stations in California than it does in Pennsylvania, according to the document.

Once again, GMR, founded by renowned artist manager Irving Azoff in 2013 and headed by former ASCAP executive Randy Grimmett, makes the case that it is much smaller than the plaintiff and that if anyone is wielding anti-trust practices, it is the RMLC. For one, GMR only handles 73 songwriters, which combined have a share in 20,000 songs--including ones by by the Eagles, Metallica, OneRepublic, Drake, Pharrell Williams and John Lennon--and which only make up one-eightt of 1% of all songs available for radio to play; and its songs only get between 5%-to 7.5% of all radio play. In contrast, the RMLC members combined own about 10,000 radio stations that generate about 90% of U.S. terrestrial radio revenue.

It charges that the RMLC is trying to impose a compulsory licensing scheme with a rate court as if GMR had a consent decree from the Dept. of Justice, which regulates two of its much larger competitors, BMI and ASCAP. In addition, the RMLC filed a similar lawsuit in 2012 against the fourth U.S. performance rights organization, SESAC, which agreed to a settlement that includes arbitration if the two sides can't negotiate a fee.

Since the RMLC insisted on those terms, GMR tried to negotiate directly with RMLC members but was only successful in cutting a deal with iHeartMedia, the largest terrestrial radio network in the U.S; and with TownSquare, which according to its website owns 312 radio stations in 66 markets.

Contrary to the RMLC charges, GMR asserts that as a new PRO, it is creating more competition, especially for songwriters. Moreover, the GMR documents points out that its conduct won’t harm the consumer, i.e., the radio listening public, since terrestrial radio is already free to listen to.

While the two sides are involved in litigation, there appears to be ongoing dialog. On Christmas Eve, for an undisclosed fee, GMR offered a temporarily license that needs to be signed by Jan. 31 that would allow radio to continue to playing GR songs through Sept. 30, 2017, with each party reserving the right to seek a retroactive fee adjustment. That proposed adjustment would depend on a future licensing agreement, the outcome of the antitrust litigation, or a possible settlement between the RMLC and GMR.

According to the initial lawsuit, GMR is seeking $42 million combined for the 10,000 radio stations to license its music for a year. Any station that signs the interim license agreement by Jan. 31 and pays the applicable interim license fee will not be subject to copyright infringement claims while the interim license is in effect.

On Jan. 9, the RMLC issued a letter to its broadcasters saying that the wording used by GMR in sending out the interim license “incorrectly asserts that the fee was ‘negotiated’ with the RMLC," although the radio group concedes that it did work with GMR to help it offer its members the temporary license. Negotiation is a mis-characterization, according to the RMLC, which characterizes the arrangement as non-negotiable, a take it or leave it proposition fro the GMR.

Secondly, according to the RMLC, the letter with the interim license from GMR incorrectly states that the fees to each station was calculated by the radio group. THE RMLC said it wasn’t involved or “would ever entertain any involvement whatsoever in GMR’s final fee calculations,” according to the radio group letter to its members.

“The RMLC believes that these GMR representations, as the level of the RMLC involvement with their interim license offering borders on bad faith at the very least and are intended to lend an RMLC stamp of approval to the process."

While the interim license fee was initially undisclosed, GMR was trying to secure industry payments totaling $2.5 million per month for the temporary license, according to that letter. The RMLC letter says it is not disparaging or recommending GMR’s interim license offer.

The following day, GMR responded to the RMLC letter with its own letter to RMLC stations:

“The interim license was the product of weeks of negotiations, proposals, and counter-proposals between GMR and RMLC,” according to a copy of that letter. “Despite this documented history, the RMLC issued yesterday a statement on its website claiming it did not negotiate the $2,500,000 monthly fee or your company’s allocation of that fee. Both statements are categorically false.”

While the two parties were involved in long-term negotiations, the RMLC proposed a one-year deal that would pay out about $27 million, or $2.25 million per month from the stations that abided by the RMLC negotiations.  GMR made a counter proposal of $30 million, or $2.5 million a month, which the RMLC rejected and then filed the lawsuit.

Despite the lawsuit, GMR said it was willing to still offer a temporary license at its last rate. “In the course of our ensuing negotiations, the RMLC prepared and sent to GMR a detailed spreadsheet allocating the $2.5 million among each member of the RMLC,” according to the GMR letter. “The interim license fees that we sent to each of you over the weekend were taken directly from the RLMC's spreadsheet,  In addition, the interim license itself was reviewed, revised, and approved by the RMLC and its counsel.  All of this is documented.  The RMLC’s contrary statements are inexcusable and counterproductive.”