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Irving Azoff’s GMR declares: “It’s the radio industry being anti-competitive!”

By Chris Cooke | Published on Wednesday 7 December 2016

We knew that as soon as America’s Radio Music License Committee sued Irving Azoff’s Global Music Rights – accusing it of anti-competitive behaviour – that an interesting legal battle was ahead. And we were right. Azoff’s mini performing rights organisation has now filed a lawsuit of its own, insisting that it’s the RMLC that is anti-competitive.

As previously reported, Azoff set up GMR in 2014 and it now represents the performing rights in about 26,000 songs on behalf of about 70 clients, most of them big name hit writing artists. It means that any American organisation wishing to perform or broadcast those songs must secure a licence from GMR, in addition to any licence it may already have from the two main song right collecting societies in the US – BMI and ASCAP – and the other commercial PRO, SESAC.

Collective licensing – ie where the entire music community decides to license as one in certain scenarios – always raises competition law concerns, especially when, as is the case in most countries, that collective licensing is done through one single collecting society. In some countries specific regulations apply to collective licensing in a bid to allay those competition law concerns, which sometimes include a statutory body or court of law to ultimately set royalty rates.

BMI and ASCAP are regulated by the infamous ‘consent decrees’ that are administered by the US Department Of Justice. SESAC sits outside the consent decrees, but past litigation – such as that pursued by the RMLC – has meant that SESAC has voluntarily agreed to third party mediation on royalty disputes. But GMR’s obligations have so far been untested.

Last month the RMLC sued GMR, accusing it of creating and exploiting a monopoly. The radio industry group basically wants GMR to agree to third party mediation, like SESAC.

As it filed its litigation, the RMLC said: “GMR, a public-performance-right licensing agency, is distinguished from ASCAP and BMI, in particular, in that it is a privately-held, for-profit firm that has created a bottleneck to, and artificial monopoly over, the works in its repertory. Unlike SESAC, ASCAP and BMI, which are all now subject to some form of rate regulation that acts to prevent monopoly pricing, GMR has thus far managed to avoid similar limits on its monopoly pricing”.

Now, while GMR does represent about 26,000 songs, it’s easy to take issue with the RMLC defining its licensing operation as a “monopoly”. Where there is one solitary collecting society in a country, which also represents the rights of other societies abroad through reciprocal agreements, that is pretty much a monopoly, because if you’re a music radio station and you can’t agree a deal with that PRO, you can’t play any music.

However, when an organisation represents 26,000 songs – compared to the 22 million repped by ASCAP and BMI – a licensee can realistically operate just fine without using those works if they don’t think the asking price of a licence is justified. They’ll just lose access to a load of popular hit songs.

This is a point that GMR basically makes in a lawsuit it filed against RMLC this week. According to The Hollywood Reporter, GMR states: “GMR has not accumulated and has no intention to amass the market power that other PROs have wielded. By keeping its catalogue small and high-quality across the board, GMR is able to provide personalised customer service to its songwriters and keep the cost of those services low”.

While GMR is not a monopoly, the song rights outfit argues, the RMLC is, because it negotiates for the entire US radio industry, making it difficult for music rights owners, like GMR, to do bespoke deals with individual radio stations or broadcast groups. Writes GMR lawyer Daniel Petrocelli: “RMLC’s member stations are competitors. Yet these ‘competitors’ created and actively participate in a ‘committee’ whose very purpose is to negotiate with PROs as a group and destroy competition among them in the acquisition of performance licence rates”.

Where collective licensing applies, it is common for groups of licensees to appoint one organisation – or a trade body – to negotiate industry-wide rates with a collecting society, and then present that group’s arguments should the matter end up in court. Though when songwriters and rights owners have, in essence, opted out the traditional collective licensing process, there is an argument that individual licensees should also be able to negotiate deals outside their representative organisations too.

GMR says that it has been negotiating with the RMLC since its launch, but any deal has been blocked because the rights body won’t agree to industry-wide rates or third party mediation. Attempts have meanwhile been made to negotiate direct with individual radio companies, but those have failed as well, with, apparently, two exceptions.

Although the RMLC filed first, GMR’s litigation isn’t actually a response to that lawsuit, but instead a separate action dealing with its grievances with the radio sector.

Should either case get to court it will be an interesting test of the obligations of US songwriters when it comes to licensing radio in non-conventional ways. The collective approach simplifies things for licensees as well as rights owners, despite the competition law concerns, so the radio industry doesn’t want to force things in such a way that songwriters and music publishers abandon collective licensing entirely.

Though, if they did, the RMLC would no doubt start lobbying for a compulsory licence for radio, given such a compulsory licence already exists for online and satellite radio on the recordings side.