SESAC announced today that its arbitration with the Radio Music Licensing Committee has resulted in a rate 50 percent higher than the one announced by ASCAP this January, which it claimed is the rate RMLC has been trying to impose on the industry. The rate represents the amount each performing rights organization (PRO) can charge radio stations in exchange for playing their works over terrestrial radio; while ASCAP and BMI operate under federal consent decrees determined in rate court, SESAC is not, and negotiated its rate set by an arbitration process.
But the rate awarded in this arbitration is less than SESAC had been getting from radio previously. SESAC agreed to the new terms set by arbitration as part of the settlement of an RMLC-initiated anti-trust lawsuit, which was resolved in 2015.
While the ASCAP rate isn't publicly known, the RMLC says it has agreed to pay a rate of 0.2557 percent of net revenue to SESAC, which it says is 60 percent less than what it had been paying the PRO before.
Yet SESAC called the arbitration rate award an important benchmark that has the potential to benefit all songwriters, and one that may be used in the near-term by BMI and Global Music Rights in their ongoing disputes with the RMLC. Other potential beneficiaries include writers and publishers affiliated with PRS for Music, SOCAN, APRA and other foreign performing rights organizations whose works represent a meaningful share of radio play in the United States, according to SESAC.
“While we believe that the value of our music substantially exceeds the amount of the award and the nature of the arbitration process made it inevitable that we would see a reduction in our fees for terrestrial radio, the panel’s decision is a resounding affirmation of the fact that ASCAP rates in radio do not reflect fair market value," SESAC chairman and CEO John Josephson said in a statement. "We are pleased to create a benchmark that we hope will benefit all songwriters and publishers. Songwriters are amongst the most heavily-regulated small businesspeople in the United States, and this agreement marks an important step in SESAC’s ongoing effort to assure that they receive fair compensation for their works."
In a press release announcing the arbitrators' award, SESAC also said that the costs of its arbitration will be covered by its shareholders, and not by the musicians, publishers and songwriters whose works it represents.
