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Upstart Music Licensing Company Accuses Radio Stations of Unlawful Cartel

Global Music Rights, an upstart music licensing company founded by Irving Azoff, filed a federal anti-trust suit on Wednesday against the Radio Music License Committee, accusing the group of running an unlawful cartel on behalf of the nation’s radio stations.

The conflict dates to 2013, when Azoff formed GMR to compete with the established licensing companies, ASCAP and BMI, which together control approximately 95% of music copyrights. ASCAP and BMI have longstanding agreements with radio stations, which are represented by the trade group RMLC, that set rates for airplay.

Azoff’s firm holds the rights for a small handful of successful songwriters — about 70 in all. GMR has sought to collect rights that are essential to radio stations, and then license those rights for substantially more than the songwriters could get through ASCAP or BMI. This fall, GMR has been in negotiation with RMLC for an agreement that would allow radio stations to play GMR’s songs, which include tunes written or performed by Pharrell Williams, Adele, Drake, John Lennon, Smokey Robinson, Steve Miller, Taylor Swift, Tom Petty and the Heartbreakers, and U2.

But over Thanksgiving, those talks broke down. RMLC filed suit on Nov. 18, accusing GMR of exercising monopoly power over its copyrights, and seeking to force it into rate arbitration akin to the arrangements with ASCAP and BMI. RMLC contends that GMR is seeking extortionate rates for its songs.

On Wednesday, GMR fired back, filing its own suit accusing RMLC of running an illegal cartel comprising 90% of the nation’s radio stations — which prevents it from negotiating licensing agreements with individual stations.

“Unable to negotiate freely and fairly, and under threat of a group blockade from radio, the songwriters and the companies that represent them are forced to capitulate to the artificially depressed license fees the RMLC cartel demands,” the suit alleges.

According to the RMLC suit, GMR has indicated that without an agreement, the stations’ right to play its songs will expire on Dec. 31. As of Jan. 1, 2017, stations could be subject to $150,000 penalties for playing songs in GMR’s repertory, which account for about 5-7.5% of total radio plays. RMLC contends that GMR makes it nearly impossible for stations to know which rights GMR holds, meaning they would have difficulty avoiding playing GMR’s songs if they wanted to.

Daniel Petrocelli, GMR’s attorney, disputed that claim. He said RMLC’s lawsuit made it clear that the organization never intended to negotiate in good faith.

“The law does not allow companies who are supposed to be competing against one another to be colluding with one another to keep their costs down,” Petrocelli told Variety. “Business is conducted every single day in this world, and in every single industry, by consensual arrangements. This industry is no different. If they want to play these works they need to pay fair market value.”

The dispute bears similarities to an earlier conflict between RMLC and another licensing firm, the Society of European Stage Authors and Composers (SESAC). RMLC sued SESAC in 2012, won a favorable ruling and ultimately came to a settlement in 2015 that brought SESAC under a rate arbitration scheme similar to the arrangement with BMI and ASCAP.

RMLC did not immediately respond to a request for comment.

Update: RMLC is out with its response:

The RMLC will not roll over in the face of the baseless, bullying lawsuit filed yesterday by Global Music Rights. 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. Courts have recognized, for many decades, that without regulation of their rates, performing rights organizations (PROs) like GMR are anticompetitive and violate the antitrust laws. That is why all the other PROs (ASCAP, BMI and SESAC) are subject to rate controls. GMR baselessly criticizes the rates agreed to between the RMLC and the other PROs as unreasonably low, but conveniently ignores that the courts have regularly found them to be reasonable and non-discriminatory. GMR’s claim that the RMLC is a cartel is frivolous and offensive; GMR apparently seeks to force all PROs to negotiate separately with more than 10,000 radio stations – a ridiculously inefficient proposal. The RMLC looks forward to defeating GMR’s claims in court.

In an interview, Azoff called the dispute with the RMLC “the most important fight I’ve had in my professional career.”

“They expressly say their goal is to reduce payments to songwriters,” Azoff said. “I’m on the right side of this fight. We were sued. We didn’t sue them. Somebody should have brought an anti-trust lawsuit long, long ago.”

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