Global Music Rights Takes Fire at Radio "Cartel"

Dueling antitrust claims could shake the music industry.
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The digital music era has seen no shortage of lawsuits over payment for songs — but the latest battle is poised to rock the industry.

Global Music Rights, a boutique performing rights organization, claims the country's 10,000 radio stations are acting as a cartel to keep payments to songwriters artificially low, according to a complaint filed Tuesday in California federal court. 

At the heart of the issue is how songwriters get paid when their music is played on a terrestrial radio station. Here's how it works: Most rightsholders are represented by either ASCAP or BMI. Those organizations typically license music through "blanket licenses" covering their entire collections. Consent decrees issued by the Department of Justice decades ago in an effort to avoid antitrust issues require ASCAP and BMI to give a license to anyone who's willing to pay for one.

Music industry heavyweight Irving Azoff launched GMR in 2013 in an effort to give elite songwriters another option and, hopefully, more money.  

While GMR boasts songwriters behind hits by artists including John Lennon, Kenny Chesney and Drake, its roster of about 70 clients and 26,000 works pales in comparison to the combined 22 million compositions held by ASCAP and BMI — according to the complaint, that is by design.

"GMR has not accumulated and has no intention to amass the market power that other PROs have wielded," writes attorney Daniel Petrocelli. "By keeping its catalog small and high-quality across the board, GMR is able to provide personalized customer service to its songwriters and keep the cost of those services low."

GMR is now suing the Radio Music License Committee because it claims the group is ensuring there is no competition among radio stations in order to stifle the rates they pay to license songs.

"RMLC’s member stations are competitors," writes Petrocelli. "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 license rates."

According to the complaint, GMR has been in negotiations with RMLC since shortly after it was launched but they have yet to reach a deal —  because GMR won't agree to an industrywide licensing deal and binding rate arbitration. Efforts to negotiate with member stations directly have failed, with two exceptions. 

Earlier this month, RMLC filed its own antitrust lawsuit against GMR, claiming the boutique has created an artificial monopoly over its works and seeking to make GMR subject to Department of Justice oversight for rate-setting like ASCAP and BMI.

A footnote in the complaint states this lawsuit is not in response to RMLC's suit but rather the group's illegal conduct including price fixing, information sharing and threats of group boycotting.

RMLC executive director Bill Velez issued a lengthy statement in response to the lawsuit on Wednesday, calling the claim that RMLC is a cartel "frivolous and offensive."

"The RMLC will not roll over in the face of the baseless, bullying lawsuit filed yesterday by Global Music Rights," Velez writes. "GMR’s lawsuit is an obvious ploy designed to pressure the RMLC in response to the antitrust suit the RMLC filed against GMR in federal court in Philadelphia last month. GMR now tries to hide from reality: the fight between the RMLC and GMR stems from GMR’s attempt to impose monopoly pricing on the radio industry, and the RMLC’s opposition to that plan."

It's worth noting that Petrocelli is currently wrapping up one of the biggest fights over music payment in recent years. He is representing SiriusXM in a lawsuit brought by Flo & Eddie of The Turtles to secure royalties for pre-1972 song recordings, which aren't protected by federal copyright law. They reached a settlement on the eve of trial, but the court has not yet approved it. 

Dec. 7, 3:00 p.m. Updated with a new statement from RMLC.

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