BMI, RMLC Can't Agree on Royalty, Head to Rate Court

After more than two years of negotiating, the Radio Music Licensing Committee is apparently sticking to its guns with trying to lower the royalty rate it pays BMI for the 2017-2012 period.

On Thursday night (May 17), RMLC filed to the BMI Rate Court in U.S. Federal Court in the Southern District of New York. Nearly 17 months earlier in early January 2017, BMI went to rate court asking it to set an interim rate because of seemingly stalled negotiations back then.

“BMI has spent more than two years attempting to negotiate a new rate with the Radio Music License Committee (RMLC) that fairly and accurately reflects the scope and quality of the music we represent,” BMI executive VP of licensing & creative Mike Steinberg said in a statement. “As anticipated, the RMLC is trying to use a below-market rate they negotiated with the only U.S. PRO they were able to come to an agreement with; an agreement based on flawed market share data and one that has since been made irrelevant by newly-agreed to and adjudicated rates in the marketplace. We look forward to presenting our position before the Court and demonstrating the dominance of BMI’s repertoire.”

The RMLC apparently continues to pursue its strategy of assigning market share to the various U.S. performance rights organizations, in an attempt to keep rates in proportion to what it perceives to be the market share of each of those four PROs. Under that strategy, it appears to be seeking to pay BMI about 1.4% of revenue royalty rate, Billboard estimated. 

In January 2017, the RMLC agreed to pay ASCAP 1.73% of revenue in a deal that escalates to 1.75% of revenue over the life of the deal through 2021. As part of its strategy, the RMLC appeared to set ASCAP’s market share at 48% and BMI’s at about 40%, so it was trying to reduce BMI’s rate to lower than the 1.7% of revenue rate it had paid at the end of the last deal, which had ended on Dec. 31, 2016.

When filing for the interem rate and asking for 1.7%, BMI’s filing stated, "The RMLC can point to no changed circumstances that warrant a reduction in BMI's interim or final rate. BMI believes that the market developments will support a final rate of greater than 1.7 percent of gross revenue payable to BMI.”

In July 2017, the RMLC, through arbitration with SESAC, was granted a royalty rate of 0.2557% of revenue, half of what the Nashville-based PRO had been paid during the previous five-year licensing term, Billboard estimated at the time.

In November 2017, the RMLC sued Global Music Rights for antitrust violations during its negotiations for a rate with the boutique PRO. In turn, GMR countersued, also alleging antitrust behavior on the part of the RMLC. So far, that anti-trust proceeding has seen RMLC lose the motion for the venue where the case would be tried as it was moved to Los Angeles where GMR is located, instead of Pennsylvania where the RMLC wanted it to be tried.
 
With the BMI rate dispute now to be decided by rate court, Judge Louis Stanton will preside over the rate trial. The pending Music Modernization Act, which calls for the rate court cases to be rotated among all the judges serving in the Southern District, will not come into play on this case, even if that proposed legislation soon becomes law, according to sources.