Royalties

Broadcast Music Inc. (BMI) has begun notifying the 10,000 radio stations and broadcast groups that license its music about the new terms of its agreement with the radio industry. Under a settlement to the four-year old dispute between the Radio Music License Committee and BMI, broadcasters will pay more for the music they use from its repertoire for the period that covers January 2017 through December 2021. The agreement calls for stations to pay 1.78% of their annual gross revenue for on-air spins, less a standard deduction of 12%. That’s a modest increase compared to the 1.7% rate under the previous deal and higher than the 1.4% rate the radio industry had initially proposed in 2016.

Salem CEO Ed Atsinger, who chairs the RMLC, says the rate is “in line” with what the industry has paid to ASCAP and BMI for decades. “While the RMLC certainly would have preferred to report a rate decrease,” he said in a letter to broadcasters, “during the course of negotiations, BMI was able to substantiate that its affiliates’ radio spin share had increased relative to ASCAP’s.” He also said pointed out the two agreed to maintain a sliding scale based on station revenue, which will be especially helpful in the current business climate. “The percentage-of-revenue license structure means that fees will adjust along with station revenues during these uncertain economic times,” said Atsinger.

In a win for radio, BMI will continue to offer a single license covering all new media platforms, including digital streaming, mobile, smart speakers, and other wireless devices. The deal also increases the size of the deduction applied to digital revenue. It has been increased to as much as 30%, compared to a previous 25% cap under the prior license. As digital revenue becomes a larger part of station business, that larger deduction could become more significant for broadcasters.

For talk stations that use little music, BMI and RMLC also agreed to retain the per program license. That allows those stations to legally use music for things like bumpers in and out of talk shows. The base rate will be 0.31% of the station’s revenue, minus the same rate of deductions as music stations.

Yet it’s clear the radio industry didn’t emerge the winner overall for the years-long fight, illustrated by the settlement including a one-time payment of $5 million to BMI to cover its legal fees through the years. Atsinger said there will be an industry-wide allocation of this fee that will be tied to how much each station paid in BMI fees during 2019. “You can expect to receive a statement from the RMLC for this assessment in short order,” he wrote in the letter to broadcasters.

More Time To Make Good For Last Three Years

Facing the prospect of a protracted fight, the RMLC and BMI agreed in February 2017 to set an interim rate that allowed stations to keep using the performance rights organization’s catalog until a final deal covering the 2017-2021 could be struck. But that came at a price. Because the final settlement pays more to BMI than what stations have been charged under the interim rate set in 2017, stations will need to make good on the difference between the two rates.

In a letter BMI is mailing to stations, it says it will give broadcasters more time to pay their fee adjustment. The deal allows for a nine-month installment payment process. But while that had originally been set to begin July 1, BMI Senior VP of Licensing David Levin said they appreciate “the strain” that stations may be under for some time. “We will postpone the start of the installment payment process until September 1,” he said, saying stations won’t incur any late penalties for any balance of the retroactive fee, so long as it is paid in full within the nine-month payment period, ending May 31, 2021. “We hope that this provides a helpful bit of flexibility to your station(s) during this challenging time,” said Levin.

The RMLC also told owners they should plan on submitting their 2019 annual revenue report to BMI, and any corrections to the 2017 and 2018 annual revenue reports, by July 1. Once it’s in their hands, BMI will then issue a true-up invoice related to 2017-2019 license fees.

At the same time BMI says many broadcasters won’t need to sign the new agreement since their stations previously agreed to be bound by the terms of the new license.

Could Impact GMR Case

The RMLC’s tentative settlement with BMI was first announced in January and the terms have since secured the approval of U.S. District Court Judge Louis Stanton. With a pair of agreements with ASCAP and BMI now roughly the same – an earlier deal with ASCAP was settled for a reported 1.73% rate – it could set the stage for what radio may need to pay Global Music Rights if the Irving Azoff-led company can demonstrate its share of music is on par with what the two legacy performance rights organizations have.

Depending on the judge’s calendar and the availability of the attorneys in the GMR case, it’s now possible a trial may not begin until next year. In the meantime GMR has offered stations an interim deal covering airplay through March 31, 2021.

Read the Radio Station Blanket/Per Program License Agreement HERE.