WEBVTT - Huge Battle Heats Up Between Artists and Radio Stations (Audio)

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<v Speaker 1>In the digital music era, we have seen a number

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<v Speaker 1>of lawsuits over payment for songs, but now dueling lawsuits

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

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<v Speaker 1>Music Rights, alleges that ten thousand radio stations colluded in

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<v Speaker 1>an illegal cartel to underpay them for the right to

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<v Speaker 1>play their music. GMR only represents about seventies songwriters with

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<v Speaker 1>twenty six thousand songs compared to the combined twenty two

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<v Speaker 1>million songs under as CAP and b m i's umbrellas.

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<v Speaker 1>But those seventies songwriters are an elite group from John Lennon,

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<v Speaker 1>But those seventy songwriters are an elite group from John

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<v Speaker 1>Lennon to Farrell Williams, Shakira, Kenny Chesney, Justin Bieber. The

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<v Speaker 1>list goes on, and g MR was designed to be

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<v Speaker 1>an exclusive boutique organization most likely to get songwriting heavyweights

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<v Speaker 1>out from under the blanket licensing of as CAP and

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<v Speaker 1>b m I. G MRS lawsuit follows a law by

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<v Speaker 1>the Radio Stations Trade Group last month alleging GMR was

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<v Speaker 1>exercising monopoly power over its copyrights. Our guests are intellectual

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<v Speaker 1>property litigator Terrence Fross, a partner at Captain Nuchen Rosenman

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<v Speaker 1>and Sarona Elton, a professor at the University of Miami

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<v Speaker 1>Front School of Music, Terry explain what's going on here

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<v Speaker 1>and how songwriters in as CAP and b m I

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<v Speaker 1>get paid when their songs are played on terrestrial radio stations.

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<v Speaker 1>So it's still surprised, June probably that this is all

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<v Speaker 1>about money and ACECAP and b m I control about

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<v Speaker 1>of the copyrighted music that is played on terrestrial radio stations,

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<v Speaker 1>the things we listen to on a M and FM

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<v Speaker 1>radio for example. UM. The concept behind GMR is relatively simple. Um.

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<v Speaker 1>They go after an elite group of songwriters. UM. Their

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<v Speaker 1>theory is that because they are the more popular songwriters,

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<v Speaker 1>that the radio stations should pay more to hear them

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<v Speaker 1>to be able to play their music on their radio

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<v Speaker 1>stations and therefore charge a higher play rate than what

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<v Speaker 1>a SCAP and being my charge and return more money

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<v Speaker 1>as a result to those songwriters. Um. Uh. The radio

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<v Speaker 1>stations UM have simply refused to go along with that theory.

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<v Speaker 1>They want a the same sort of system that they

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<v Speaker 1>deal with with BMN a SCAP, which is essentially a

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<v Speaker 1>uniform rate depending on the type of music UM. And

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<v Speaker 1>that's where we are from an economic um UM situation.

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<v Speaker 1>So along UH comes up the trade Association for the

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<v Speaker 1>radio stations and says, well, the way to break this

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<v Speaker 1>log jam is to file UH and I trust lawsuit

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<v Speaker 1>against GMR and to force GMR to agree to consent

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<v Speaker 1>order of the same site type that a SCAP and

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<v Speaker 1>b M I have UM, which sets rates in a

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<v Speaker 1>uniform manner and requires them to deal with all the

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<v Speaker 1>radio stations on an equal and fair basis. And that's

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<v Speaker 1>where we are essential at theloment. So, Sarona, now we

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<v Speaker 1>have them suing each other. You have the the radio

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<v Speaker 1>stations suing GMR. You have GMR suing the radio stations.

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<v Speaker 1>Does either of them really have a good legal claim

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<v Speaker 1>or is this just posturing for negotiation purposes? I do

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<v Speaker 1>think that they both have a good legal claim. UM.

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<v Speaker 1>If you take the one UM that the Radio Music

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<v Speaker 1>Licensing Committee has brought, which which by the way, is

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<v Speaker 1>not UM what you might think of as a typical

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<v Speaker 1>trade association. They exist solely for the purpose of negotiating

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<v Speaker 1>UM with the music community for licenses for the radio stations. UM.

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<v Speaker 1>If you look at their case, it's very similar to

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<v Speaker 1>a case they brought against C SACK, which is another

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<v Speaker 1>performing rights organization UM that end up settling around summer

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<v Speaker 1>two thousand fifteen, and a lot of the allegations are

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<v Speaker 1>the same UM. And in that case there was a

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<v Speaker 1>ruling on an injunction where the court didn't grant the injunction,

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<v Speaker 1>but it did find that there was a likelihood of

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<v Speaker 1>success on the merits UM. And so you know, one

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<v Speaker 1>could say that if those same set of facts are

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<v Speaker 1>proven to be true in both cases and it's in

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<v Speaker 1>front of the same judge, you might end up with

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

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<v Speaker 1>that it's sort of frivolous or baseless UM in terms

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<v Speaker 1>of its similarity to what was already brought and and

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<v Speaker 1>you know they got resulted in a settlement ultimately. UM.

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<v Speaker 1>What's what's more interesting if you look at the case

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<v Speaker 1>that g MR has brought UM. You know, their case,

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<v Speaker 1>their complaint, if you read it, is full of UM,

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<v Speaker 1>lots of factual allegations about the way the r MLC

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<v Speaker 1>behaves UM, and that I think is a more UM.

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<v Speaker 1>It appears to be a more novel argument. I don't

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<v Speaker 1>know that anybody has ever brought a case like that

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<v Speaker 1>against that particular organization, at least not that I was

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<v Speaker 1>able to find UM. And I think if you read

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<v Speaker 1>those facts, UM, you know it also makes a very

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<v Speaker 1>compelling case. So it it is one group accusing the

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<v Speaker 1>other in both ways of you know, acting in a

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<v Speaker 1>very kind of monopolistic or UM in the other case

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<v Speaker 1>of UM the other way around monogonistic behaviors. And I

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<v Speaker 1>think they both are really interesting cases that have merit.

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<v Speaker 1>Okay Terry. The gm OR lawsuit says that radio stations

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<v Speaker 1>pay only about four of their revenue to songwriters, and

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<v Speaker 1>streaming music services pay more. Why shouldn't a group be

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<v Speaker 1>able to negotiate a better rate. It does sound like

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<v Speaker 1>a monopoly. Well, it arguably is a monopoly, but it's

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<v Speaker 1>one that's been approved by the Department of Justice. So

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<v Speaker 1>b M and a SCAP have been in in operations

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<v Speaker 1>since UM the Escape since nineteen fifteen, b M I

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<v Speaker 1>since the late thirties. And essentially what they present to

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<v Speaker 1>radio stations as a package of songwriters in their and

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<v Speaker 1>their musical compositions to play on the record, and they

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<v Speaker 1>say take it or leave it, and they have a

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<v Speaker 1>norm as power econom power and invents. So the department

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<v Speaker 1>just as long time ago side, UM, we can't allow

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<v Speaker 1>that that that's monopolistic. Um. It puts the radio stations

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<v Speaker 1>essentially at at risk of being held hostage, being held

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<v Speaker 1>up um to play the music, and which shut down

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<v Speaker 1>the radio industry. And so they pursued antitrust actions against

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<v Speaker 1>both of those licensing organizations and forced them to enter

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<v Speaker 1>into consent decrees that essentially regulate on both sides the

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<v Speaker 1>radio stations and the music license in the organizations, how

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<v Speaker 1>the payments are well be made. And what is fundamentally

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<v Speaker 1>going on here is that g m R does not

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<v Speaker 1>want to be regulated in that manner. They want to

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<v Speaker 1>be able to go after individual radio stations and do

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<v Speaker 1>one off deals, whereas on the other side, UM the

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<v Speaker 1>radio stations r MLC on behalf the radio stations wants

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<v Speaker 1>to force them into that same model as b M

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<v Speaker 1>and a SCAPE eventually essentially forced down their throats a

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<v Speaker 1>consent decree. Songwriter's group Global Music Rights alleges that ten

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<v Speaker 1>thousand radio stations colluded in an illegal cartel to underpay

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<v Speaker 1>them for the right to play their music. But those

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<v Speaker 1>seventies songwriters are an elite group from John Lennon image

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<v Speaker 1>to Pharrell Williams, Mighty Shakira, Kenny Chesney, Justin Bieber. The

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<v Speaker 1>list goes on, and g MR was designed to be

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<v Speaker 1>an exclusive boutique hoping to get more money for songwriting

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<v Speaker 1>heavyweights than the blanket licensing of AZCAP and d m I.

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<v Speaker 1>We've been talking with intellectual property litigator Terence Ross, a

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<v Speaker 1>partner at Captain Uten Rosenman, and Sarona Elton, a professor

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<v Speaker 1>at the University of Miami Frost School of Music. Terry

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<v Speaker 1>is the is this just a way to negoti she

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<v Speaker 1>ate a better settlement, a settlement that's different from what

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<v Speaker 1>b M I and ASCAP has Well, I don't think

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<v Speaker 1>on the part of the radio stations it is. I

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<v Speaker 1>think the radio stations are are trying, fundamentally is to

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<v Speaker 1>impose the same concept of proportionality that's required of a

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<v Speaker 1>SCAP and b m I. They're trying to impose that

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<v Speaker 1>on g MR. On the other side, this new suit

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<v Speaker 1>that was filed earlier this week by g MR out

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<v Speaker 1>in California, um I would be raised certainly raises questions

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<v Speaker 1>into my mind in my mind as to whether or

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<v Speaker 1>not that is designed um to give them some sort

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<v Speaker 1>of counterweight to load to the earlier lawsuit filed by

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<v Speaker 1>the radio stations as a way of trying to negotiate,

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<v Speaker 1>Because fundamentally what GMR wants is to be able to

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<v Speaker 1>charge at a higher rate UM than b MN, A

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<v Speaker 1>SCAP or else. The artists that they've collected so far

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<v Speaker 1>have no reason to stay with them. UM. Taylor Swift

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<v Speaker 1>is a g MR artist. She obviously been with I

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<v Speaker 1>believe b M I UM, and she moved over to

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<v Speaker 1>GMR on the promise that they could get her more

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<v Speaker 1>money for her radio, for her songs being played on radio.

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<v Speaker 1>If they can't deliver on that, GMR can't deliver on that,

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<v Speaker 1>I don't see why any of those seventy artists you

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<v Speaker 1>just mentioned UM don't simply return to b M and

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<v Speaker 1>Acecaft well Sarona the You know, almost everybody except for

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<v Speaker 1>these elite songwriters is with a s CP or b

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<v Speaker 1>M I and now they are trying they're trying to

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<v Speaker 1>get more money. Should they be able to get more

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<v Speaker 1>money or is there will the system really work in radio?

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<v Speaker 1>And if if you don't have sort of these blanket

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<v Speaker 1>agreements where radio stations pay the same thing for everyone. Well,

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<v Speaker 1>I think, UM, I think you could make an argument

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<v Speaker 1>that they should pay more money because these particular recorded

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<v Speaker 1>assets are more valuable. UM. And I think it's important

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<v Speaker 1>to understand that GMR is offering a blanket license. UM.

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<v Speaker 1>But you know, there's a difference between being the kind

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<v Speaker 1>of license that they're willing to grant as opposed to

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<v Speaker 1>the rates that they want. You know, as CAPA and

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<v Speaker 1>B M I together represent a you know, it's been

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

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<v Speaker 1>and you know, the reason they became subject to the

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<v Speaker 1>consent decrees when they did was because of the percentage

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<v Speaker 1>of the market that they controlled. UM. In this case,

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<v Speaker 1>GMR represents a tiny portion of the market, really truly tiny,

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<v Speaker 1>seventy or so odd songwriters, UM, with a small catalog.

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<v Speaker 1>And it would be I think difficult to say that, UM,

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<v Speaker 1>when you're when you're not operating in the size that

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<v Speaker 1>as CAPA and B M I R, that you are

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<v Speaker 1>wielding monopolistic power by simply not being willing to license

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<v Speaker 1>your content at a at a rate that you're not

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<v Speaker 1>You're not okay with UM. You know, on some level,

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<v Speaker 1>a copyright owner is allowed to license their content at

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<v Speaker 1>whatever rate they see fit. Um, and they you know,

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<v Speaker 1>and other areas of of music, uh sorry, other areas

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<v Speaker 1>of like TV and film and book and the like.

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<v Speaker 1>You know, you can't imagine someone like a Steven Spielberg

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<v Speaker 1>or or someone like a J. K. Rowling being forced

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<v Speaker 1>to license their content in particular ways and subject to

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<v Speaker 1>some kind of oversight. Um. That just wouldn't make sense

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<v Speaker 1>to anybody. And so it's so it's fascinating how people

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<v Speaker 1>think of music differently. You know, not all songs are

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<v Speaker 1>equal in terms of their commercial viability and in terms

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<v Speaker 1>of the amount of money that can be commanded for

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<v Speaker 1>their use. Um. So I think absolutely it could be

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<v Speaker 1>the case that let's say the uh this, these all

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<v Speaker 1>settle and a higher rate is agreed to, and you know,

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<v Speaker 1>life would move on just fine. Um. So I don't

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<v Speaker 1>think them paying the station's paying a higher rate for

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<v Speaker 1>this particular premium content is going to break the system.

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<v Speaker 1>I think the opposite. We'll have to leave it there.

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<v Speaker 1>I want to thank you both that. Sarona Elton, a

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<v Speaker 1>professor at the University of Miami Frost School of Music.

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<v Speaker 1>At intellectual property litigator Terence fross A partner at Captain

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<v Speaker 1>Uchen Rosamond. Thanks for being on Bloomberg. Law coming up.

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<v Speaker 1>If you ever call or email people abroad, beware because

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<v Speaker 1>the government could be listening or reading without getting a warrant.

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

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<v Speaker 1>talking to Professor Noah Feldman. This is Bloomberg