Battle Over Radio Royalties Goes West: What's at Stake as RMLC & GMR Head to Court
An important legal battle over songwriter royalties is going back to Cali, in a win for Irving Azoff and his boutique performing rights organization (PRO) in its ongoing fight with radio. On March 29, a federal court in Pennsylvania ruled that it did not have jurisdiction to hear the Radio Music Licensing Committee's antitrust lawsuit against Azoff's Global Music Rights. That decision sent the case back to the central district of California, where GMR filed an antitrust lawsuit of its own against the RMLC, in a fight that has lasted over two years.
Both parties see the location of a trial as important to their chances for victory, presumably because the Pennsylvania court seemed sympathetic to the RMLC's arguments in a similar case against SESAC that ended in a 2015 settlement. Although the principles at stake are complicated, both cases came out of negotiations between the RMLC, which represents 10,000 radio stations reaching 245 million listeners and collectively accounts for $14 billion in annual revenue; and GMR, which represents 75 songwriters with a share in 20,000 songs -- and which Billboard estimates pulls in about $90 million in annual revenue.
GMR claims in its legal filing that the RMLC doesn't negotiate fairly because it offers radio stations a way to collude to force GMR to submit to a "mandatory" licensing scheme, with artificially depressed fees. "Unless GMR succumbs to these monopsonistic demands, GMR songwriters will not have access to the vast majority of radio stations," it says. Further, "an alliance of buyers exercising market dominance to reduce prices is just as pernicious and dangerous as an association of sellers exercising market dominance to increase prices," although U.S. courts haven't always seen the issue that way. (The RMLC did not respond to requests for comment, while GMR pointed Billboard to its suit.) GMR is arguing that the RMLC is an "illegal cartel" in its California filing and is essentially seeking a court order to prevent it from doing what it was founded to do
That has never been successfully argued by a PRO so far. According to the RMLC, GMR -- billed as a smaller alternative to ASCAP and BMI -- has created and leveraged a "competitive vacuum" created by the Justice Department consent decrees that regulate ASCAP and BMI. Since GMR's roster includes some of the most popular songwriters on radio -- such as Bruce Springsteen, Pharrell Williams and Drake -- the RMLC is arguing that GMR has "created an untenable and illegal situation wherein RMLC's members are forced to either pay overly priced licensee fees to GMR or face copyright infringement claims," which would put huge financial strain on stations.
After SESAC unsuccessfully sued the RMLC, the PRO agreed to a voluntary compulsory license and a 20-year period where arbitration would decide a rate when negotiations couldn't. (SESAC and GMR, unlike ASCAP and BMI, are not regulated by consent decrees.) If the RMLC wins, GMR could find itself in a similar situation.
If Azoff's PRO wins, however, the court could rule that the RMLC may not collude with its members to drive down prices, potentially forcing the organization to change the way it operates, or even possibly break up.