The Radio Music License Committee may have had its antitrust lawsuit against Global Music Rights tossed in Philadelphia, but the industry group is taking another whack at the performance rights organization. The RMLC has filed a new lawsuit in Los Angeles alleging GMR of using “flagrant and shameless” moves that violate antitrust laws to squeeze millions from radio. L.A. is where GMR has filed an antitrust lawsuit of its own. The claim, filed in 2016, contends the RMLC is essentially an “illegal cartel.”
Radio’s suit against GMR alleges the organization was created in 2013 by “powerbroker” Irving Azoff specifically to raise the price of pre-existing intellectual property rights related to giving stations the right to publicly perform musical compositions. “The scheme has been brazen, effective—and flagrantly illegal,” the RMLC says. It alleges GMR has “openly coordinated” with “dozens” of music rights holders in “concerted action to cause the precise harms that U.S. antitrust laws prevent.” The RMLC says the performance rights organization also lured away artists from ASCAP and BMI with promises of rates 30% higher than they’d been collecting, knowing stations would have no choice but to sign deals for well-known songs. It’s a strategy it says has allowed GMR to get “radically higher rates” from music users than before for “nothing more than a license to the same old songs, just sold by a new company that hasn’t yet been determined to violate antitrust laws.”
The RMLC argues the evidence backs up why the court should bring an end to that lucky streak. It says GMR is flouting antitrust law by ignoring an earlier Supreme Court decision which said ASCAP and BMI needed to license music on a non-exclusive basis. Instead, it says the only way to get permission from GMR to play any song in its repertoire is to buy a license for all of them. “Its anticompetitive conduct and intent are flagrant and shameless,” RMLC says.
But the RMLC says the core of its antitrust violation is the “concerted action” taken by the performance rights organization that “engineered among rights owners to collectively decamp from their pre-existing PROs specifically to raise prices.” If that doesn’t violate antitrust law, the RMLC says, then noting does.
A ‘Shakedown’ Of Radio
In a 49-page complaint filed this week in U.S. District Court in Los Angeles, the RMLC alleges GMR has all the same attributes and behaviors that previously led multiple courts to conclude SESAC likely violated antitrust laws. That includes making it “impossible” for radio stations to determine what songs are in its repertory so stations would have no way of knowing which songs not to play should they opt to not secure a license from GMR.
The maneuvers have already led to what the radio collective says is a “shakedown” of broadcasters. It says GMR demanded $42 million in 2017 from the RMLC’s 7,300 member stations—excluding iHeartMedia which has signed a direct licensing deal with the organization. The RMLC says that equates to demanding a near 15% share of music royalties paid by commercial radio stations, despite the fact that GMR artists had “nowhere near” a 15% share of spins. “GMR also promised to ratchet up its already supra-competitive prices by demanding annual rate increases,” RMLC tells the court, adding, “The increases would occur regardless of whether GMR’s repertory contained less frequently played works, or a smaller percentage of works controlled 100% by GMR.”
Same Process As ASCAP & BMI
In its suit, the radio industry not only asks Judge André Birotte to rule that GMR violated federal and state antitrust laws but it also wants him to put constraints on its practices. That includes requiring GMR to submit to the same court-scrutinized rate-making procedures that ASCAP and BMI must use. It also wants the court to set the licensing fees GMR charges. The RMLC also would like GMR to be forced to offer blanket licenses, such as per-program licenses. And it asks the court to allow GMR to only license songs in which it owns all of the rights. “If left unchecked, GMR’s anticompetitive conduct will continue to cause RMLC’s members and other consumers to pay monopoly overcharges for musical compositions that would otherwise be available at more competitive prices,” it says.
The faceoff between the RMLC and GMR is once again advancing after a two-year delay that came to an end in April when a federal judge in Philadelphia decided to dismiss a competing suit brought in his court. The RMLC’s lawsuit means two antitrust lawsuits, with very different views, are moving forward.
While the courthouse action plays out, the radio industry has relied on a succession of interim deals to keep more than 36,000 works in GMR’s catalog on radio. The previous interim deal expired March 31 and GMR has agreed to extend those interim deals through Sept. 30, 2019 as long as they sign a new interim agreement.