After BMI received a rate proposal from the Radio Music Licensing Committee (RMLC) that sought to reduce its rate from 1.7 percent of revenue to 1.4 percent for 2017-2021, BMI has now filed an action in Federal Rate Court to set an interim fee for the 10,000 radio stations represented by the radio group.
The RMLC apparently came at that rate by using undisclosed market shares for the four U.S. performance rights organizations: BMI, ASCAP, SESAC and Global Music Rights (GMR).
“The RMLC has justified its proposed rate based upon incomplete and incorrect information regarding BMI’s radio performances,” BMI said in a statement. “BMI disagrees fundamentally with the RMLC’s proposal and, consistent with past practices, is asking the Court to maintain its most recent rate while new terms are negotiated.”
It petitioned the BMI rate court and the U.S. Southern District Court of New York to set an interim rate of 1.7 percent, according to the court filing.
BMI and the RMLC were in rate negotiations throughout 2016 in preparation for the 2017-2021 term. But on Dec. 22, the RMLC formerly requested a license from BMI for that period even though a rate had yet to be agreed upon. That ask qualifies as a compulsory license, which means the radio stations covered by the RMLC can continue to play BMI music, while the ultimate rate is worked out through either negotiations a rate trial.
“The RMLC can point to no changed circumstances that warrant a reduction in BMI’s interim or final rate,” the BMI filing states. “BMI believes that the market developments will support a final rate of greater than 1.7 percent of gross revenue payable to BMI.”
In its petition to the court, the RMLC claimed this reduction is appropriate “in light of the RMLC’s understanding of BMI’s market share of public performances on radio relative to ASCAP and the new costs associated with the emergence of Global Music Rights.”
BMI added that the RMLC has not disclosed the support for its market share assertions, which BMI stated are inconsistent with its own internal analysis. While the petition doesn’t disclose what market share has been assigned to any of the PROs by the RMLC, it can be inferred that if ASCAP has a deal with the RMLC, that culminates in a rate intreat to 1.75 percent. Given the offer to BMI (again, 1.4 percent) that would mean ASCAP’s market share is 25 percent larger than BMI’s.
Mathematic speculation could put those shares at 50 percent for ASCAP and 40 percent for BMI.
But in addition to disagreeing with whatever market share has been assigned to it by the RMLC, BMI further argues that if the radio group is trying to offset the rate it will have to pay to Global Music Rights, the new U.S. PRO begun at the end of 2013, then most of what’s paid to GMR should be offset by ASCAP, not BMI.
Both BMI and ASCAP have lost songwriters to GMR, but BMI asserts that ASCAP has lost five times as many affiliates to GMR as BMI. Since the losses disproportionately impact ASCAP, the RMLC cannot use the emergence of GMR as a basis to reduce fees payable to BMI, the PRO argues.
“We attempted to negotiate in good faith with the RMLC for many months, and just before the end of the year, the RMLC presented an interim rate that significantly undervalues the work of BMI’s songwriters,” BMI senior VP of licensing Mike Steinberg said in a statement. “Given the unmatched caliber of BMI’s repertoire, our superior market share on radio, and the ever-increasing value that BMI music brings to the radio industry across all its platforms, we believe the RMLC’s proposal falls well short of what is in the best interests of our affiliates.”
In November, BMI sent a letter to 3,000 commercial radio stations that are not a part of the RMLC but generally abide by whatever license the RMLC work out, asking them to agree to an interim rate of 1.7 percent of gross revenue. So far, over 1,100 stations have signed the license extension agreements, BMI reports.