Global Music Rights, RMLC Reach Temporary Licensing Agreement
A deal between Global Music Rights and the Radio Music License Committee on temporary licenses for the performing rights organization's music repertoire may signal that both parties are willing to eventually reach a deal to settle the parties' dueling lawsuits on antitrust claims, industry lawyers told us. GMR and the RMLC said Saturday they reached a deal that would allow RMLC-member terrestrial radio stations an interim license agreement covering performances of GMR clients' recordings through Sept. 30. The interim agreement doesn't end RMLC's antitrust suit against GMR or the PRO's countersuit.
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The “stand-still” agreement gives RMLC-member stations until Jan. 31 to individually sign a temporary license with GMR, which will remove the threat of copyright infringement claims during the licensing period. The agreement “gives everyone additional time to negotiate long-term licenses,” said GMR lawyer Dan Petrocelli of O'Melveny & Myers in a statement. Each station will need to check with the PRO to learn what its specific royalty rate will be, though both the station and GMR will have the right under the temporary agreement to seek a retroactive fee adjustment, both sides said. The retroactive rate could be based on a potential future interim licensing agreement, a settlement of the GMR and RMLC lawsuits or a court-awarded decision on the lawsuits, both sides said.
RMLC withdrew its request for an injunction to prevent GMR from charging “monopoly” royalty rates as part of the agreement. RMLC sought the injunction in connection with the lawsuit it filed against GMR last month in U.S. District Court in Philadelphia (see 1611210011), in which the group claimed GMR is seeking licensing rates that are about three times the fees paid to the American Society of Composers, Authors and Publishers (ASCAP) and Broadcast Music Inc. GMR subsequently claimed in its own lawsuit in U.S. District Court in Los Angeles that RMLC is violating federal and state antitrust law by forming a “cartel” of commercial terrestrial radio stations to negotiate a blanket license with the PRO (see 1612090062). Petrocelli said GMR originally offered the temporary license agreement to RMLC before the lawsuits.
The agreement “at least gives some breathing room to stations that otherwise had a very difficult decision to make” by Jan. 1, when a number of newly GMR-affiliated songwriters' previous license agreements with ASCAP are to expire, said Fletcher Heald copyright attorney Kevin Goldberg. At that point stations would have needed to choose among “three bad options” -- negotiate a deal with GMR under terms that RMLC had said weren't good, avoid playing GMR songwriters' music entirely or continue playing the music and risk a copyright infringement lawsuit. The temporary license is at least something that RMLC believes is “doable,” even though the lack of a blanket rate creates “a lot of uncertainty,” Goldberg said.
GMR “made a smart move” in reaching the agreement, particularly because it resulted in RMLC withdrawing its injunction request, said Jay Rosenthal, a Mitchell Silberberg lawyer who represents music industry content owners. The agreement shows GMR "is prepared to be reasonable and that's a good thing," said music industry lawyer Chris Castle. "The first move is not to sue each other; it should be to negotiate and see what they can come up with. It's a great example of economic interdependence."
RMLC's withdrawal of the injunction request could indicate the temporary agreement “is a move toward a permanent settlement,” Rosenthal said. “I think this is all about the rates. I think RMLC wanted GMR to take the same rate that ASCAP and BMI have taken and they weren't interested in that.” The GMR and RMLC lawsuits will likely remain in a holding pattern while the temporary settlement may “get everyone back to the negotiating table,” he said.
The settlement “is at least an indication both sides can reach a settlement, which is nice,” Goldberg said. “Up to this point it has been all antagonism.” Unless the parties “can figure out what an acceptable permanent deal looks like, the lawsuits will continue,” said Wilkinson Barker broadcast attorney David Oxenford. It's important from RMLC's point of view to “establish that any time you have got a PRO that bundles music and sells it on an all or nothing basis, there needs to be a review of the rate setting” because of antitrust concerns, he said.
Oxenford and others noted the potential for a final GMR/RMLC agreement to accelerate fractionalization of the PRO market. Further defections from ASCAP and BMI are possible if a final agreement results in higher rates for GMR than ASCAP and BMI received under their agreements with RMLC, Oxenford said. Castle said he believes it's possible that some music publishers could choose to withdraw their catalogs from the PROs. It's less likely that additional PROs will be created since forming one is "not something that someone casually undertakes," he said. "You need to have a good economy of scale to do it and the people who do have it haven't" formed new organizations yet.