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Speaker 1: In the digital music era, we have seen a number

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Speaker 1: of lawsuits over payment for songs, but now dueling lawsuits

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Speaker 1: threatened to rock terrestrial radio stations. A songwriter's group, Global

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Speaker 1: Music Rights, alleges that ten thousand radio stations colluded in

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Speaker 1: an illegal cartel to underpay them for the right to

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Speaker 1: play their music. GMR only represents about seventies songwriters with

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Speaker 1: twenty six thousand songs compared to the combined twenty two

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Speaker 1: million songs under as CAP and b m i's umbrellas.

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Speaker 1: But those seventies songwriters are an elite group from John Lennon,

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Speaker 1: But those seventy songwriters are an elite group from John

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Speaker 1: Lennon to Farrell Williams, Shakira, Kenny Chesney, Justin Bieber. The

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Speaker 1: list goes on, and g MR was designed to be

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Speaker 1: an exclusive boutique organization most likely to get songwriting heavyweights

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Speaker 1: out from under the blanket licensing of as CAP and

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Speaker 1: b m I. G MRS lawsuit follows a law by

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Speaker 1: the Radio Stations Trade Group last month alleging GMR was

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Speaker 1: exercising monopoly power over its copyrights. Our guests are intellectual

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Speaker 1: property litigator Terrence Fross, a partner at Captain Nuchen Rosenman

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Speaker 1: and Sarona Elton, a professor at the University of Miami

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Speaker 1: Front School of Music, Terry explain what's going on here

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Speaker 1: and how songwriters in as CAP and b m I

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Speaker 1: get paid when their songs are played on terrestrial radio stations.

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Speaker 1: So it's still surprised, June probably that this is all

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Speaker 1: about money and ACECAP and b m I control about

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Speaker 1: of the copyrighted music that is played on terrestrial radio stations,

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Speaker 1: the things we listen to on a M and FM

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Speaker 1: radio for example. UM. The concept behind GMR is relatively simple. Um.

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Speaker 1: They go after an elite group of songwriters. UM. Their

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Speaker 1: theory is that because they are the more popular songwriters,

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Speaker 1: that the radio stations should pay more to hear them

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Speaker 1: to be able to play their music on their radio

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Speaker 1: stations and therefore charge a higher play rate than what

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Speaker 1: a SCAP and being my charge and return more money

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Speaker 1: as a result to those songwriters. Um. Uh. The radio

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Speaker 1: stations UM have simply refused to go along with that theory.

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Speaker 1: They want a the same sort of system that they

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Speaker 1: deal with with BMN a SCAP, which is essentially a

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Speaker 1: uniform rate depending on the type of music UM. And

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Speaker 1: that's where we are from an economic um UM situation.

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Speaker 1: So along UH comes up the trade Association for the

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Speaker 1: radio stations and says, well, the way to break this

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Speaker 1: log jam is to file UH and I trust lawsuit

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Speaker 1: against GMR and to force GMR to agree to consent

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Speaker 1: order of the same site type that a SCAP and

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Speaker 1: b M I have UM, which sets rates in a

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Speaker 1: uniform manner and requires them to deal with all the

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Speaker 1: radio stations on an equal and fair basis. And that's

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Speaker 1: where we are essential at theloment. So, Sarona, now we

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Speaker 1: have them suing each other. You have the the radio

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Speaker 1: stations suing GMR. You have GMR suing the radio stations.

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Speaker 1: Does either of them really have a good legal claim

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Speaker 1: or is this just posturing for negotiation purposes? I do

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Speaker 1: think that they both have a good legal claim. UM.

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Speaker 1: If you take the one UM that the Radio Music

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Speaker 1: Licensing Committee has brought, which which by the way, is

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Speaker 1: not UM what you might think of as a typical

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Speaker 1: trade association. They exist solely for the purpose of negotiating

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Speaker 1: UM with the music community for licenses for the radio stations. UM.

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Speaker 1: If you look at their case, it's very similar to

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Speaker 1: a case they brought against C SACK, which is another

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Speaker 1: performing rights organization UM that end up settling around summer

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Speaker 1: two thousand fifteen, and a lot of the allegations are

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Speaker 1: the same UM. And in that case there was a

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Speaker 1: ruling on an injunction where the court didn't grant the injunction,

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Speaker 1: but it did find that there was a likelihood of

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Speaker 1: success on the merits UM. And so you know, one

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Speaker 1: could say that if those same set of facts are

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Speaker 1: proven to be true in both cases and it's in

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Speaker 1: front of the same judge, you might end up with

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Speaker 1: the same sort of ruling. So UM, I wouldn't say

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Speaker 1: that it's sort of frivolous or baseless UM in terms

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Speaker 1: of its similarity to what was already brought and and

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Speaker 1: you know they got resulted in a settlement ultimately. UM.

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Speaker 1: What's what's more interesting if you look at the case

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Speaker 1: that g MR has brought UM. You know, their case,

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Speaker 1: their complaint, if you read it, is full of UM,

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Speaker 1: lots of factual allegations about the way the r MLC

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Speaker 1: behaves UM, and that I think is a more UM.

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Speaker 1: It appears to be a more novel argument. I don't

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Speaker 1: know that anybody has ever brought a case like that

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Speaker 1: against that particular organization, at least not that I was

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Speaker 1: able to find UM. And I think if you read

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Speaker 1: those facts, UM, you know it also makes a very

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Speaker 1: compelling case. So it it is one group accusing the

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Speaker 1: other in both ways of you know, acting in a

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Speaker 1: very kind of monopolistic or UM in the other case

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Speaker 1: of UM the other way around monogonistic behaviors. And I

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Speaker 1: think they both are really interesting cases that have merit.

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Speaker 1: Okay Terry. The gm OR lawsuit says that radio stations

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Speaker 1: pay only about four of their revenue to songwriters, and

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Speaker 1: streaming music services pay more. Why shouldn't a group be

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Speaker 1: able to negotiate a better rate. It does sound like

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Speaker 1: a monopoly. Well, it arguably is a monopoly, but it's

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Speaker 1: one that's been approved by the Department of Justice. So

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Speaker 1: b M and a SCAP have been in in operations

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Speaker 1: since UM the Escape since nineteen fifteen, b M I

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Speaker 1: since the late thirties. And essentially what they present to

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Speaker 1: radio stations as a package of songwriters in their and

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Speaker 1: their musical compositions to play on the record, and they

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Speaker 1: say take it or leave it, and they have a

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Speaker 1: norm as power econom power and invents. So the department

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Speaker 1: just as long time ago side, UM, we can't allow

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Speaker 1: that that that's monopolistic. Um. It puts the radio stations

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Speaker 1: essentially at at risk of being held hostage, being held

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Speaker 1: up um to play the music, and which shut down

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Speaker 1: the radio industry. And so they pursued antitrust actions against

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Speaker 1: both of those licensing organizations and forced them to enter

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Speaker 1: into consent decrees that essentially regulate on both sides the

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Speaker 1: radio stations and the music license in the organizations, how

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Speaker 1: the payments are well be made. And what is fundamentally

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Speaker 1: going on here is that g m R does not

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Speaker 1: want to be regulated in that manner. They want to

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Speaker 1: be able to go after individual radio stations and do

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Speaker 1: one off deals, whereas on the other side, UM the

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Speaker 1: radio stations r MLC on behalf the radio stations wants

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Speaker 1: to force them into that same model as b M

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Speaker 1: and a SCAPE eventually essentially forced down their throats a

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Speaker 1: consent decree. Songwriter's group Global Music Rights alleges that ten

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Speaker 1: thousand radio stations colluded in an illegal cartel to underpay

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Speaker 1: them for the right to play their music. But those

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Speaker 1: seventies songwriters are an elite group from John Lennon image

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Speaker 1: to Pharrell Williams, Mighty Shakira, Kenny Chesney, Justin Bieber. The

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Speaker 1: list goes on, and g MR was designed to be

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Speaker 1: an exclusive boutique hoping to get more money for songwriting

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Speaker 1: heavyweights than the blanket licensing of AZCAP and d m I.

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Speaker 1: We've been talking with intellectual property litigator Terence Ross, a

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Speaker 1: partner at Captain Uten Rosenman, and Sarona Elton, a professor

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Speaker 1: at the University of Miami Frost School of Music. Terry

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Speaker 1: is the is this just a way to negoti she

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Speaker 1: ate a better settlement, a settlement that's different from what

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Speaker 1: b M I and ASCAP has Well, I don't think

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Speaker 1: on the part of the radio stations it is. I

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Speaker 1: think the radio stations are are trying, fundamentally is to

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Speaker 1: impose the same concept of proportionality that's required of a

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Speaker 1: SCAP and b m I. They're trying to impose that

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Speaker 1: on g MR. On the other side, this new suit

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Speaker 1: that was filed earlier this week by g MR out

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Speaker 1: in California, um I would be raised certainly raises questions

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Speaker 1: into my mind in my mind as to whether or

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Speaker 1: not that is designed um to give them some sort

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Speaker 1: of counterweight to load to the earlier lawsuit filed by

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Speaker 1: the radio stations as a way of trying to negotiate,

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Speaker 1: Because fundamentally what GMR wants is to be able to

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Speaker 1: charge at a higher rate UM than b MN, A

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Speaker 1: SCAP or else. The artists that they've collected so far

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Speaker 1: have no reason to stay with them. UM. Taylor Swift

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Speaker 1: is a g MR artist. She obviously been with I

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Speaker 1: believe b M I UM, and she moved over to

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Speaker 1: GMR on the promise that they could get her more

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Speaker 1: money for her radio, for her songs being played on radio.

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Speaker 1: If they can't deliver on that, GMR can't deliver on that,

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Speaker 1: I don't see why any of those seventy artists you

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Speaker 1: just mentioned UM don't simply return to b M and

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Speaker 1: Acecaft well Sarona the You know, almost everybody except for

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Speaker 1: these elite songwriters is with a s CP or b

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Speaker 1: M I and now they are trying they're trying to

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Speaker 1: get more money. Should they be able to get more

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Speaker 1: money or is there will the system really work in radio?

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Speaker 1: And if if you don't have sort of these blanket

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Speaker 1: agreements where radio stations pay the same thing for everyone. Well,

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Speaker 1: I think, UM, I think you could make an argument

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Speaker 1: that they should pay more money because these particular recorded

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Speaker 1: assets are more valuable. UM. And I think it's important

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Speaker 1: to understand that GMR is offering a blanket license. UM.

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Speaker 1: But you know, there's a difference between being the kind

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Speaker 1: of license that they're willing to grant as opposed to

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Speaker 1: the rates that they want. You know, as CAPA and

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Speaker 1: B M I together represent a you know, it's been

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Speaker 1: reported in the high nineties of music content that's out there,

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Speaker 1: and you know, the reason they became subject to the

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Speaker 1: consent decrees when they did was because of the percentage

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Speaker 1: of the market that they controlled. UM. In this case,

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Speaker 1: GMR represents a tiny portion of the market, really truly tiny,

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Speaker 1: seventy or so odd songwriters, UM, with a small catalog.

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Speaker 1: And it would be I think difficult to say that, UM,

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Speaker 1: when you're when you're not operating in the size that

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Speaker 1: as CAPA and B M I R, that you are

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Speaker 1: wielding monopolistic power by simply not being willing to license

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Speaker 1: your content at a at a rate that you're not

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Speaker 1: You're not okay with UM. You know, on some level,

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Speaker 1: a copyright owner is allowed to license their content at

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Speaker 1: whatever rate they see fit. Um, and they you know,

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Speaker 1: and other areas of of music, uh sorry, other areas

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Speaker 1: of like TV and film and book and the like.

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Speaker 1: You know, you can't imagine someone like a Steven Spielberg

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Speaker 1: or or someone like a J. K. Rowling being forced

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Speaker 1: to license their content in particular ways and subject to

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Speaker 1: some kind of oversight. Um. That just wouldn't make sense

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Speaker 1: to anybody. And so it's so it's fascinating how people

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Speaker 1: think of music differently. You know, not all songs are

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Speaker 1: equal in terms of their commercial viability and in terms

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Speaker 1: of the amount of money that can be commanded for

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Speaker 1: their use. Um. So I think absolutely it could be

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Speaker 1: the case that let's say the uh this, these all

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Speaker 1: settle and a higher rate is agreed to, and you know,

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Speaker 1: life would move on just fine. Um. So I don't

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Speaker 1: think them paying the station's paying a higher rate for

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Speaker 1: this particular premium content is going to break the system.

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Speaker 1: I think the opposite. We'll have to leave it there.

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Speaker 1: I want to thank you both that. Sarona Elton, a

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Speaker 1: professor at the University of Miami Frost School of Music.

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Speaker 1: At intellectual property litigator Terence fross A partner at Captain

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Speaker 1: Uchen Rosamond. Thanks for being on Bloomberg. Law coming up.

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Speaker 1: If you ever call or email people abroad, beware because

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Speaker 1: the government could be listening or reading without getting a warrant.

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Speaker 1: I'm June Grosso with Michael Best. Coming up, we'll be

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Speaker 1: talking to Professor Noah Feldman. This is Bloomberg