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US radio industry accuses Global Music Rights of monopoly abuse, goes legal

By Chris Cooke | Published on Monday 21 November 2016

Well, this won’t really surprise anyone who follows this kind of thing, but America’s mini performing rights organisation Global Music Rights has been sued by the US radio industry in a bid to force the rights agency to submit to independent arbitration when it comes to setting the rates broadcasters must pay to play the songs it reps.

Whenever music rights owners license their works collectively, monopoly concerns are raised by licensees, even though collective licensing generally makes life easier for those seeking to make use of lots of music, like broadcasters. To that end, in many countries copyright law seeks to regulate collective licensing and the collecting societies, sometimes by setting statutory rates that societies must charge, other times by providing a statutory body or court to approve or set rates, especially where rights owners and licensees can’t agree.

In the US, the big two collecting societies representing the performing rights in songs – ASCAP and BMI – are regulated by the much talked about consent decrees, which the music industry is desperate to reform but which licensees, like the big broadcasters and web firms, have been keen to keep as they are.

However, there are also two other smaller performing rights organisations in the US – SESAC and the much newer Global Music Rights – which sit outside the consent decrees, giving those organisations much more flexibility.

Though some licensees have pursued anti-trust litigation against SESAC to enforce some consent-decree-like regulations when it is negotiating deals with it, and now the Radio Music Licensing Committee is trying to get the something similar applied to GMR, which was founded by often-vocal artist manager Irving Azoff back in 2014.

Confirming its litigation last week, 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”.

The radio group went on to say that its lawsuit “alleges that GMR has created and maintained an unlawful monopoly over the works in its repertory. RMLC seeks injunctive relief, requiring, among other things, that GMR submit to a judicial rate-making procedure comparable to what the consent decrees governing ASCAP and BMI impose”. The RMLC has “also filed a motion for a preliminary injunction to prevent GMR from charging radio stations monopoly prices for a GMR licence while the litigation is pending”.

The Chair of the RMLC, Ed Christian, then insisted that his organisation was only going legal because its members had not been able to negotiate what its considers reasonable rates with Azoff’s new rights agency. He told reporters: “Resorting to litigation is never a first option for the RMLC. This legal process will undoubtedly prove to be taxing in terms of the amount of labour and expense involved. Yet, we feel that GMR’s exorbitant fee demands are out of balance with their competitors and would do irreparable harm to our industry and this has left us with no other alternative”.

The RMLC will be hoping for a similar outcome to that achieved in its most recent legal battle with SESAC, which reached its conclusion last year.

GMR may dispute RMLC’s use of the word “monopoly” though, because of course, in the absence of a compulsory licence, the whole point of copyright is that it gives the rights owner exclusive controls – a monopoly if you like – over its works; and at a basic level copyright law has no problem with a rights owner holding a potential licensee to ransom over price, the argument being that if you’re not willing to pay the fee requested, just use another song.

In collective licensing, however, monopoly concerns arise because of the quantity of rights represented by one organisation – which outside the US is often pretty much all song rights – so that the “just use another song” option isn’t available. However, in the US, where there are four organisations all representing the performing rights in songs, the question is, how many songs do you need to represent before there is a credible claim of abuse of monopoly? This case, should it get to court, will pose that question.