Digital Gabe
Cutting Edge Commentary On All Things Media

BMI Hits Radio Where It Hurts

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I bet you haven’t spent much time lately thinking about the publisher/composer royalty arrangements between songwriter clearinghouses and radio broadcasters.  I can’t blame you – the relationship has been pretty docile for several decades.  But things are changing as tension heats up between BMI (the largest publisher clearinghouse) and the RMLC (the broadcasters’ Radio Music Licensing Committee).  Currently broadcasters pay 1.7% of revenue to BMI to cover all of the publishers and composers it represents.  BMI now wants radio to pay more and has filed suit for an increase.

With that as the backdrop, here’s where things get really nasty.  For decades radio has defended its unique position as the maker of stars and hits since it’s been the primary promotional vehicle for the music industry.  That’s why the broadcasters have gotten away with paying a very small percent in publisher royalties and don’t have to pay performance royalties at all.  But in a court filing BMI challenged radio by pointing out, “The marketplace is different. Radio broadcasts no longer drive music sales, once a critical revenue source for BMI’s affiliates and a factor long considered a justification for lower rates payable to BMI.”  Ouchy!  In one passage BMI, who’s partnered with broadcasters for decades, reinforced the notion that the radio is less relevant to the music industry than ever before.  With partners like this who needs competitors, right?

Obviously radio will fight this assertion tooth and nail to keep their publisher royalty payments as low as possible.  But keep in mind losing to BMI isn’t really the broadcasters’ biggest fear.  Radio’s real problem would be exposure to the same argument on the performance side of the house.  The labels and their artists have been licking their chops for years to get broadcasters to pay for the music they play just like the streamers do.  So if BMI can dismantle radio’s special status as music’s promotional vehicle every artist out there will demand royalty payments too.

 

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