SESAC was, until recently, the only one of the three major performing rights organizations (PROs) that was not subject to an antitrust consent decree – meaning that it could set the rates that it wanted without any oversight by any court or other judicial body. For practical purposes, that ended when the radio and television industries separately sued SESAC claiming antitrust violations. Both the radio and TV industries felt that the SESAC royalties were too high in relation to those charged by ASCAP and BMI given the far greater amount of music controlled by these two larger PROs. As we wrote here (television) and here (radio), both antitrust cases ended with settlements where SESAC agreed that its rates would be subject to review by an arbitration panel to assure their reasonableness, if voluntary negotiations between the groups representing the industries and SESAC were not successful in arriving at mutually agreeable rates. So far, it appears that the rate-setting process for radio and TV are going in different directions.
The TV Music License Committee and SESAC have announced that they have reached an agreement in principle as to rates for the TV industry. See the press release here. While the agreement has not been finalized or made public, if negotiations of the final documents are successful, the TV industry and SESAC appear to avoid having their rates set by the arbitration process. So far, that does not seem to be the case for the radio industry.
In recent weeks, hundreds of radio stations across the country have received letters from the Radio Music License Committee (RMLC) asking that stations produce documents requested by SESAC in the arbitration process. Like any sort of litigation, an arbitration proceeding allows for “discovery” of relevant evidence, requiring each side to produce documents that allow the parties to gather facts to support the positions that they are advocating to the arbitrators. Here, the documents being requested provide information as to the issues in the case, including how much SESAC music is played at radio stations and how much that music should be worth. Obviously, the fact that there is a document request that has gone out to RMLC members shows that, unlike in TV, there has not been any voluntary settlement between SESAC and the radio industry.
While many stations seem to not know who RMLC is (an issue we have addressed before, see for instance our post here), they are the radio-industry association fighting to control music royalties. So, if a station receives an RMLC request for documents, a station should certainly consult with its own legal and business advisors, but give serious consideration to producing the requested documents to help the industry in its efforts in the arbitration. This is not some sort of scam letter.
While the radio industry proceeds in the arbitration with SESAC, remember that it also has open negotiations with BMI and ASCAP, whose radio agreements expire this year (see our article here). Plus, both radio and TV may well have to deal with GMR, the newest PRO that is seeking a piece of the music royalty pie (see our article here). Music royalty issues are never easy, and this is a particularly complicated year.