SESAC announced that a decision had been made regarding the royalty rate paid to its members by commercial radio stations in the US: it's the end of a lengthy arbitration process between SESAC and the Radio Music License Committee (RMLC) – a pressure group representing over 10,000 stations in the States.
Licensing body SESAC – which represents premium writer clients including Adele, Randy Newman and Green Day – claimed that the rate it had won represented a 50% premium over the rates received by rival ASCAP for the equivalent five-year agreement it signed back in December.
Right after this announcement, however, the RMLC claimed something of a victory – reducing, it said, the topline rate paid to SESAC and its members by US radio stations by 60%.
SESAC disputes that number – suggesting the real reduction is actually somewhere closer to 50% – but also says its focus is on the bigger picture: creating an adjudicated benchmark at a significant step-up over the rates the RMLC has typically been able to impose on the US industry to date. Or, in other words, ultimately enlarging the chunk of change coming the way of all songwriters from US radio.
Currently, the radio royalty rates achieved by the US’s two biggest performance rights organizations, ASCAP and BMI, are governed by the market’s much talked-about Consent Decrees – which push any dispute over broadcast payouts to federal rate court proceedings. These legal limitations – originally intended to stop anti-competitive behavior – have been blamed for unfairly capping the potential radio (and digital radio) royalties achieved by both PROs for their members.
As a private and for-profit company, SESAC does not operate within these confines, which is why its dispute with the RMLC came down to commercial arbitration. It’s in this context that many see yesterday’s result as a landmark moment.
The RMLC, says SESAC, argued during arbitration that the royalty rate agreed to by ASCAP represented true market value for publishers and songwriters. In short, it claimed that SESAC should be forced to accept the same terms as ASCAP – an idea SESAC fiercely rebutted.
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