Last September, BMI initiated a rate court proceeding against the nation's major concert promoters in an effort to secure a more fair and appropriate rate for our songwriters. Our goal is to raise the rate from the mere fraction of a percent promoters are currently paying, to roughly 1 percent of revenue. Not surprisingly, the North American Concert Promoters Association (NACPA) believes this increase is far too large. In a statement to Pollstar(9/26/18), NACPA's attorney characterized BMI's proposal as "massive, unprecedented and unjustified."
Considering our songwriters' contributions provide the very foundation of the live concert industry -- the actual songs that are performed in front of millions of fans -- we believe that this increase is on the low side of reasonable.
Since taking this action, some in the music industry have suggested that BMI is wrong to be advocating for this rate change, as the increase would come out of the paychecks of performing artists. Actually, what we believe is wrong is the prevailing practice of major live concert promoters charging their PRO fees back to performing artists. By doing so, promoters are essentially paying artists to perform, but then docking that pay to cover the cost of the songs they're performing. Not only does this not make sense, we don't believe it's right. Those fees should come out the promoters' revenues which, last year, totaled $10.8 billion for the nation's largest live concert promoter, LiveNation, according to the company's 10-K filing with the SEC.
In addition, BMI has also been questioned as to why we have waited until now to take this action. Our answer is simple -- we do not take litigation lightly. We waited for the right moment to act in our disputes with Pandora and the Department of Justice and won in both cases. We believe now is the right time to focus on the issue of live concerts for a few reasons. First and foremost, changes in the industry dictate it. For decades, live concerts boosted the sales of physical albums and singles, a revenue model that no longer drives the music industry. Second, the very definition of live concert revenue has changed. Historically, BMI's license fees have been based solely on ticket sales, which today represent only one piece of the broad revenues promoters generate from concerts. The rest of their income comes from multiple consumer-driven streams that songwriters are cut out of, such as ticketing service fees, special VIP packages and more, absolutely none of which would be possible without the songs. Third, we've seen recent successes achieved outside of the United States by other PROs who have secured higher rates for their songwriters. There is no valid reason why, on a single tour, the same songs performed in concert overseas or in Canada should earn much higher rates than what they receive here in the United States.
It's time for the major American concert promoters to more fairly compensate the songwriters who make it all possible and do so without penalizing performing artists. BMI is ready to help them do just that.
Mike Steinberg is the Executive Vice President, Creative & Licensing of BMI, overseeing songwriter and composer teams in Atlanta, Austin, Los Angeles, Nashville, New York, Puerto Rico and London, as well as the company's Strategic Partnership division and its Licensing organization, driving all of BMI's domestic revenue.