The U.S.-based PRO wants as much as a 7x rate increase and access to sponsorship, merch and scalper revenue.
Performing rights organization Broadcast Music Inc. (BMI) has been unable to make a deal with a trade group representing the biggest concert promoters in the United States and has filed a court petition to have new rates determined for concerts and live events.
Mike Steinberg, evp at BMI, says the North American Concert Promoters Association (NACPA) currently pays a rate between .3% to .15% of revenue, base on venue size. BMI estimates it generates $20 million annually from the concert business, a rate BMI estimates is .19% of the $10.5 billion revenue that the live entertainment industry generates annually. BMI wants a much higher royalty rate from the 30-year-old trade organization that represents both independent promoters — like Another Planet Entertainment, Nederlander Concerts and Jam Productions — as well as the companies that fall under the AEG and Live Nation umbrellas.
“The music created by songwriters and composers and enjoyed by American music fans is the backbone of the live concert industry, yet the rate paid to BMI for the use of its affiliates’ music vastly undervalues that contribution,” Steinberg says in a statement provided to Billboard. "We have spent nearly five years attempting to finalize new rates with NACPA that more closely align with the higher rates NACPA members have already agreed to pay to other PROs, both internationally and in the U.S. Instead, NACPA is attempting to shortchange BMI affiliates and rely on outdated rates that do not reflect the evolution of the music industry or take in to account the expanded revenue streams that result from the performances of BMI music. We believe we have a compelling case and look forward to presenting our positions to the Court.”
BMI filed its petition with the Southern District of New York, "seeking a determination of reasonable final license fees for the right to perform all BMI-affiliated musical compositions” from Jan. 1, 2014 to Dec. 31, 2022, and new retroactive rates from 2014 to 2018. According to its petition, BMI is seeking a rate of 1.15% of revenues — an three-to-seven-fold increase — with an expanded definition of revenues that would now include "secondary market sales, sponsorship revenue, VIP packages, ticket broker charges, and other relevant streams of income." It’s also seeking a retroactive rate of 0.15% to 0.8% of ticket sales, depending on the seating capacity.
NACPA has responded to the petition, with their attorney Benjamin Marks from New York-firm Weil issuing the following statement to Billboard:
"BMI is seeking a massive, unprecedented and unjustified increase in the royalty rate paid by NACPA members for the right to publicly perform the compositions in BMI's repertory. BMI’s rate proposal is patently unreasonable. NACPA members are committed to paying a reasonable and fair rate for the public performance of all copyrighted compositions and they will not be bullied by BMI’s demands or its commencement of a rate court proceeding."
BMI claims in its lawsuit that other PROs, like the SOCAN in Canada and Irving Azoff’s Global Music Rights, have negotiated higher royalty rates for its songwriters as the money generated by concerts has steadily increased over the years, while revenues from mechanical rights have decreased with a decline in album sales.
"Songwriters -- through their domestic PROs -- historically accepted low rates for live concerts because those performances were an important means of generating mechanical royalties through album sales,” BMI’s complaint alleges. "Concertgoers experienced an artist’s live performance, and then bought physical copies of albums or singles based on that exposure, both at the concert venue and thereafter, resulting in mechanical royalties for songwriters and composers. That paradigm is no longer driving the music industry, because album sales have declined so dramatically.”
BMI and NACPA first negotiated a rate in 1997, covering 1998 to 2004. Live concerts with paid admission at venues with less than 10,000 seats paid 0.3% of gross ticket revenue, while promoters for concerts with 10,000 or more seats paid 0.15% of gross ticket revenue. The license was later extended through 2006 and has renewed automatically for consecutive one-year terms through Dec. 31, 2013.
"In the nearly five years since NACPA’s most recent rate application, BMI and
NACPA have not made meaningful progress towards resolving a rate for a final license," the petition reads. "The parties’ inability to reach a consensual agreement necessitated this Petition."