The radio industry is about to learn what many others already have — when you push Irving Azoff, he pushes back. Usually harder.
After nearly two years of negotiations over licensing rates for radio song plays, the Radio Licensing Music Committee (RMLC) recently "ambushed" Global Music Rights (GMR) — the nascent U.S. performance rights organization launched in late 2013 by Azoff, in conjunction with MSG Entertainment and with former ASCAP executive Randy Grimmett at the helm — with an antitrust lawsuit filed in the U.S. Eastern District Court of Pennsylvania on Nov. 18.
That was followed by the filing, on Dec. 6, Daniel Petrocelli and his firm O’Melveny & Myers of an antitrust suit on behalf of GMR against the RLMC in the U.S. Central District Court of California. Petrocelli stresses that the suit is not retaliatory, but was filed to fight the RLMC’s "collusive tactics to depress [the] prices" that radio stations pay songwriters.
Azoff, the legendary artist manager who began GMR because he felt songwriters were getting shortchanged in performance licensing, tells Billboard that he takes "artist rights very seriously. I grew up around guys named Lew Wasserman [former head of MCA, now known as Universal Music Group] and Steve Ross [who created Warner Music Group], who taught me to respect talent. We feel that they [the RMLC] violated respect for talent. We didn’t start this fight, but we aren’t going away."
The two lawsuits are similar in their allegations. The RMLC describes GMR as an unlawful monopolist deploying a calculated scheme to extort the U.S. commercial radio industry, and that GMR is wielding monopoly power to compel radio stations to pay much higher prices. GMR's lawsuit charges RMLC with operating a cartel, forcing songwriters and the companies that represent them to license their works at artificially depressed fees. According to GMR's filing, it wants "fair pay for fair play," with the RMLC in turned allegedly threatening "low play or no play."
The RMLC issued a statement after the GMR filed its lawsuit, writing that it would "not roll over in the face of the baseless, bullying lawsuit" from GMR. "GMR’s lawsuit is an obvious ploy designed to pressure the RMLC in response to the antitrust suit the RMLC filed against GMR in federal court in Philadelphia last month… the RMLC looks forward to defeating GMR’s claims in court."
"GMR is a new organization, trying to find a place in the market and the radio stations are trying to squelch it before it gets off the ground," Petrocelli charges.
Whether in California or Pennsylvania, the question in front of the judges is essentially the same. Is the RMLC — which represents over 10,000 terrestrial radio stations, 90 percent of the total in the U.S., with combined revenue of around $14 billion (90 percent of the estimated $16 billion in advertising that radio brings in) and which reaches nearly 245 million Americans — a monopoly, as GMR alleges? Or is GMR — which Billboard estimates generates under $100 million a year in performance licensing revenues and which represents about 70 songwriters, or 0.006 percent of all registered U.S. songwriters — a monopoly, as the RMLC alleges?
The RMLC is expected to heavily rely on the argument that the collective market power of GMR's clients — which include Gershwin, John Lennon, members of the Eagles, Metallica and One Republic, Pharrell Williams and Drake — are responsible for 5 percent of all radio plays, making its small client roster a must-have, and thus controls a monopolistic share of the recording marketplace.
In making its filing, the RMLC filed in what many consider a court favorable to its position. The RMLC already received a favorable judgement in a case against SESAC (the other U.S. performance rights organization that does not operate under a government-mandated consent decree, unlike BMI and ASCAP). In that case, from 2015, U.S. Magistrate Judge Lynne A. Sitarski ruled that, among other things the RMLC had successfully argued for SESAC's violation the Sherman Act (specifically, Section 2), the foundational U.S. antitrust law.
Armed with that win, the RMLC returned to the well, filing its lawsuit against GMR in the same venue, just ahead of Thanksgiving weekend. GMR's lawyer argues that this move should be the end of it. "There is no jurisdiction," he says of the RMLC's case. "All negotiations (between GMR and RMLC) occurred in Los Angeles or Nashville. The venue is [not] proper and we will be seeking to dismiss it on that basis."
Venue aside, sources tell Billboard that parts of the RMLC's filing against GMR read as though copy-pasted from the complaint filed in its SESAC suit.
Those sources also say the RMLC overstepped when alleging it couldn’t know, or keep track of, songwriters and copyright owners — because GMR was not providing the information. In its filing, the RMLC it claims that GMR "does not tell radio stations, in any reliable, transparent way, which of its works it has the full right to license and which works it only offers to license 'fractionally,' at any given time. Thus, radio stations have no way to determine what value, if any, a GMR license actually provides or whether they even truly need a license at all. This obfuscation is all intentional."
In other words, the RMLC stations might be able to program around songwriters exclusively signed to GMR.
That aside, the RMLC may have another, possibly more pressing, problem. Its member stations have allegedly been playing music from GMR songwriters for the past two years without a license — songs which it could very easily have determined were not licensed. While RMLC stations would have been covered by contracts that would overlap with a songwriter's GMR contract (for instance, an agreement with ASCAP would have covered through the end of this year), those licenses wouldn't cover new music. For instance, the entire Drake album, with the exception of the first single or two, was released after he left ASCAP and joined GMR in 2016. So far Drake's wildly successful Views have received 1.5 million spins, according to Nielsen Music. With another 724,000 plays facing a possible per-spin cost of $150,000 (the maximum per-infringement fine allowed under U.S. Copyright law), the RMLC and its stations could potentially be under a mountain of debt.
GMR is keeping that in its back pocket… for now. "GMR has been extremely patient in negotiating with the RMLC," says Petrocelli. "GMR has to right to bring copyright infringement suits… but it is an option of last resort. The songwriters represented by GMR want to be played on the radio."