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BMI Asks Court for Rate Boost

It says radio is consuming a larger amount of music

Broadcast Music Inc. believes radio stations are using more of its music than ever. Despite that assertion, it says the “erosion in the promotional value of radio stations” means the medium no longer drives enough music sales for its members.

That information has led the performing rights licensing group to say the Radio Music Licensing Committee was off base when it asked a federal rate court judge in U.S. District Court in the Southern District of New York to lower its blanket music licensing rate for songwriters. BMI pitched the information in new court documents filed this week.

“BMI songwriters no longer benefit to the same degree from the promotion they receive when their song is played on a terrestrial broadcast station,” BMI says in a court document filed earlier this week. “It’s no longer reasonable to maintain the historically-depressed rates paid by RMLC stations to BMI.”

[Read: Music Licensing Group Asks Judge to Decide BMI Rate]

At the same time BMI says the adoption of digital streaming and multicasting has resulted in “explosive growth in the overall use of its licensed music” by RMLC-represented radio stations, which therefore should lead to higher rates. The requested licenses would cover terrestrial analog, multicasting signals and only certain digital transmissions.

The RMLC, which represents approximately 7,200 commercial radio stations on music licensing matters, hopes to reduce the current BMI rate set at 1.7% of defined net revenue. The RMLC has previously said it thinks something like 1.4% is a better number. It’s unclear what fee is being proposed by BMI.

An interim rate of 1.7% has been in place since the last blanket license rate agreement between the two sides expired at the end of 2016. BMI claims another 2,200 commercial radio stations have already agreed with BMI to be bound by the outcome of the negotiations or rate court proceeding between BMI and RMLC.

BMI’s proposed license does not include the wide range of digital services covered by the previously expired agreement, according to court documents. “It is no longer appropriate for large RMLC station groups to shoehorn standalone services that use high volumes of BMI-affiliated music into a license focused primarily on terrestrial broadcasts,” BMI says. It specifically mentions “co-branded on-demand subscription streaming services” as being out of bounds.

BMI, which holds the public performance rights in approximately 13 million musical works, argues that the RMLC has already negotiated a higher rate with another PRO (Performance Rights Organization). It cites several industry publications as reporting that a new agreement with ASCAP starts at 1.73% of revenue and escalates to 1.75% over the life of the deal, although it admits it cannot verify those numbers in court documents.

RMLC has argued that ASCAP’s market share is larger thus the higher rate. BMI counters in its most recent court filings that according to its own analysis it has “a significantly greater market share than any other domestic PRO, including ASCAP.”

An earlier court ruling now permits BMI to do fractionalized licensing in place of whole works licensing, according to those familiar with the judge’s order.

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