BMI Wins Rate Court Ruling to Get Songwriters Paid 138% More From Live Events
Tuesday's decision, which also awarded BMI an expanded revenue base, marks the first such rate increase since 1998.
BMI enjoyed a double win Tuesday (March 28) in a federal rate court decision that will increase the royalties the performance rights organizations’ songwriters earn at live events.
The federally adjudicated decision in BMI’s rate case against Live Nation, AEG and the North American Concert Promoters Association (NACPA) awarded a 138% increase in rate to 0.5% of the event’s revenue. It also expands that revenue base to include a cut of concert hall VIP packages and box suites, tickets sold directly to the secondary market and servicing fees received by the promoters.
Previously, the revenue definition only reflected earnings directly from the face value of primary market ticket sales.
The rate and expanded revenue base applies to the period of mid-2018 through Dec. 31, 2022.
“This is a massive victory for BMI and the songwriters, composers and publishers we represent,” BMI president Mike O’Neill said in a statement. “It will have a significant and long-term positive impact on the royalties they receive for the live concert category. We are gratified the Court agreed with BMI’s position that the music created by songwriters and composers is the backbone of the live concert industry and should be valued accordingly. Today’s decision also underscores BMI’s continued mission to fight on behalf of our affiliates, no matter how long it takes, to ensure they receive fair value for their creative work.”
On the flip side, Southern District of New York Judge Louis Stanton, who handed down the rate court decision, rejected BMI’s attempt to ditch the historical 10% discount fee that the trade group and its promoters get for helping to administer the license on behalf of BMI. As well, BMI’s effort to expand the revenue base to also include sponsorship and advertising revenue was also rejected.
Moreover, the 0.5% rate is lower than the initial 1% rate of revenue requested from the promoters when negotiations began and the subsequently lowered proposal of 0.8% of revenue when BMI turned to rate court litigation.
“We advocated on behalf of artists to keep their costs down, and managed to hold the increase to less than 1/3 of BMI’s proposed increase,” said a Live Nation spokesperson in a statement to Billboard. “This will cost the performers we work with approximately $15 million a year spread out over thousands of artists, and cost increases for Live Nation directly are not material.”
Likewise, NACPA, the concert promoters trade group, was also grateful that the judge didn’t give BMI its total rate ask of 0.8%.
“NACPA appreciates that the Court rejected BMI’s fee proposal for the period commencing July 1, 2018 as unreasonable,” said an NACPA spokesperson in a statement to Billboard. “The fees set for that period are well below BMI’s proposal. NACPA is reviewing the opinion and has no further comment at this time.”
AEG reiterated other promoters’ stance of standing up for artists in their statement on the ruling.
“AEG Presents and NACPA were defending performing artists, who bear the costs of BMI fees, in this litigation,” an AEG spokesperson said in a statement. “The result is that BMI was awarded significantly less than it sought, which is an important benefit for performing artists. AEG Presents will always support all of the artists who make their living on our stages.”
Prior to this decision, BMI and the live concert industry have been operating under an interim license negotiated in 1998 that was renewed twice through June 30, 2013. That agreement called for promoters to pay a performance licensing rate of 0.3% of revenue for concert venues with under 10,000 seats, and 0.15% of revenue for venues with over 10,000 seats. That rate, and the revenue definition that only covered primary market ticket sales, also served as the interim rate from mid-2013 through Dec. 31, 2017, until this decision came down Tuesday.
Here’s the new rate structure, as proposed by BMI and approved by Judge Stanton for the retroactive period of July 1 to Dec. 31, 2017. But unlike the new revenue definition for the 2018-2022 period, the judge also ruled that these rates are based on the previous, less expansive revenue definition.
- Up to 2,500 seats, rate is 0.8% of revenue
- 2,501 to 3,500, rate is 0.6% of revenue
- 3,501 to 5,000, rate is 0.4% of revenue
- 5,001 to 9,999 seats, rate is 0.3% of revenue
- 10,000 or more seats, rate is 0.15% of revenue
In order to claim the 138% rate increase, sources say that in the prior period the 0.15% interim rate of revenue for venues sized 10,000 or more and the rate of 0.3% of revenue for venues smaller than 10,000 produced an effective blended actual rate of 0.21% of revenue across the board.
Sources confirm that in the prior year the $21 million in royalty revenues collected from concert promoters by BMI, as first reported by Music Business Worldwide, is “ballpark correct.”
Looking ahead, sources say BMI is involved in negotiations with NACPA for a license for the 2023-2027 period and BMI has proposed an undisclosed rate quote. In light of the court’s just issued rate decision, that proposed rate quote is likely to be revisited.
AEG did not respond to Billboard‘s request for comment.
UPDATE: This article was updated March 30 at 10:15 a.m. EST to include AEG’s statement.