Text has been updated to clarify and update several points.
A pair of fractious lawsuits surrounding music licensing fees may have a considerable impact on radio broadcasters come Jan. 1, 2017. Broadcasters learned more about it in a recent webinar by telecom law firm Fletcher, Heald & Hildreth.
Lawsuits have been filed by two organizations— one by the Radio Music License Committee against Global Music Rights, the other by GMR against RMLC — that may have an impact on copyright fees paid by radio stations. GMR is a performing rights organization founded in 2013 by Irving Azoff as an alternative to ASCAP, BMI and SESAC. RMLC calls itself the nation’s largest group negotiating licenses on behalf of commercial radio broadcasters.
In a suit filed in November in the U.S. District Court for the Eastern District of Pennsylvania, RMLC alleged that the licensing practices of GMR are anticompetitive and violate antitrust laws. According to RMLC, the all-or-nothing blanket license GMR has set up allows GMR to charge commercial radio stations monopoly prices to publicly perform musical works in the GMR repertory. RMLC is seeking to impose oversight over rates being charged for GMR royalties, it said in a press release.
In December, GMR filed a lawsuit in the U.S. District Court for the Central District of California to allege that RMLC is the one violating antitrust laws and engaging in price fixing. According to the suit, RMLC has formed a “cartel” of buyers — which is how GMR refers to commercial radio stations looking to RMLC for the negotiation of a license agreement — and that this has limited GMR’s ability to negotiate individually with radio stations.
GMR has amassed a fairly small yet highly valued group of artists. According to various sources, the GMR artist repertory includes an estimated 70 artists; BMI, in comparison, has an estimated 750,000 composers in its roster. GMR artists are said to include artists like Pharrell Williams and Taylor Swift, though the company has not issued a complete list on its website.
It’s been noted that both iHeartRadio and Townsquare have negotiated licensing deals with GMR, according to a Rolling Stone interview with Azoff.
On Jan. 1, 2017, all of this has even more significant implications.
The new year brings in a new licensing window: Radio stations interested in playing music by GMR artists will need a license as of Jan. 1, 2017, to legally keep playing those artists’ songs.
A Dec. 14 webinar hosted by the communications law firm Fletcher, Heald & Hildreth in conjunction with several state broadcaster associations clarified why the suits were filed, what happens next and how broadcasters may want to respond.
“GMR has fewer compositions but are asking for more money proportionally,” said atorney Kevin Goldberg. “They [effectively] said, ‘If you don’t like it, sue us. And RMLC took them up on that.”
According to Goldberg, RMLC claims that GMR is demanding fees that are grossly disproportionate to the underlying share of works in its dossier. In its suit, RMLC is requesting that GMR submit to a judicial ratemaking procedure like ASCAP and BMI; that it must offer alternatives to blanket licensing; and it must grant licenses to stations while these fees are being negotiated.
Of particular interest to radio stations is GMR’s one-size-fits-all structure. This is particularly true for all-news or sports stations that will not be able to secure a per-program license under the current GMR structure. It will also impact stations seeking direct licensing with publishers. “[For] a radio station wanting to economize by going directly to a publisher and trying to negotiate a deal — that deal will not help you because the only option GMR is offering is a one-blanket-fits-all license structure,” Goldberg said.
Under the GMR structure, a radio station is not able to reduce its fees by taking advantage of another type of license structure, said FHH attorney Karyn Ablin, who also participated in that webinar.
Another difficulty is that, according to the attorneys, GMR has not made its full catalog of artists and compositions widely available. (One participant on the webinar, however, said that GMR is releasing its artist list to those stations that call GMR directly.)
Come Jan. 1, there were four possible options stations could consider, Ablin said: Rely on RMLC to fight battle for your station; capitulate and pay what GMR is asking; avoid playing any GMR compositions on your station; or continue playing GMR compositions, and possibly risk copyright infringement. (“We do not recommend strategy four,” Ablin added.)
Many stations were likely to opt for option one, Ablin said, though some may attempt to simply not play any GMR artist songs. That comes with risks as well, she said.
“Even if you’re able to [see] a list of the repertory, it’s just a snapshot,” she said. “Because GMR is so new, they are aggressively courting others to join their catalog. A year later, there might be other [artists added to the GMR repertoire] that you don’t know about and you might play.”
Even missing one publisher could be costly — as high as $150,000 per work, assuming a copyright owner gets upset enough to file a suit, she said. It’s also important to consider content provided by a third party, such as commercials, that are subsequently played on your station after Jan. 1. “You have to think about all the third-party supplied content that goes up on to your broadcast and [ensure it] is clear of all GMR content,” she said.
For noncommercial broadcasting, GMR is less relevant, Ablin said, except when it comes to streaming. “If you are a noncom, your fees are set by the Copyright Royalty judges,” whose fees were recently negotiated and expected to be published shortly, she said. “But where GMR will affect you is if you stream [online],” she said. “If you do, you will need a license.”
The next two weeks may offer the industry an answer, Goldberg said. A telephone court conference is scheduled between the two parties on Dec. 16 in Pennsylvania. Ablin and Goldberg also expect that the RMLC will provide stations with additional information before the end of the year. And the presenters were clear on one other thing: Stations should consult their own legal counsel for advice with this issue.