Court ruling reduces aggregate interim annual fee due to ASCAP, but specific details are still in the works

Late last week a judge in the U.S. District Court for the Southern District of New York threw an interim bone to radio broadcasters in their quest for lower royalties paid for performance of musical works.  Before you start setting off the fireworks, though, know that the precise effect on individual stations is still unknown. And it will in any event be limited because of its interim nature. Oh yeah, and it’s subject to retroactive adjustment at some point down the line.

But, hey, take ’em where you can get ’em, that’s what we always say.

We previously wrote about the need for interim royalty rates to be paid by radio stations to ASCAP and BMI for the performance of musical works (the underlying music and lyrics in each song transmitted over-the-air and on the Internet). The previous rate-setting arrangement expired on December 31, 2009, and rates for the next term are still in negotiation – so interim rates needed to be established to “ensure a reasonable flow of funds” to ASCAP and BMI. We thought the interim rate was going to amount to a seven percent reduction in the rates previously paid by radio stations to ASCAP. Our thinking was based on an agreement announced between the Radio Music License Committee (RMLC) and ASCAP in January. But now Judge Denise Cote has issued a Memorandum Opinion and Order which supersedes that agreement and further reduces the amount paid across the board. 

Judge Cote’s decision is short on analysis – in fact, at three pages (and two lines), it’s just plain short. She offers no details at all. Instead, she points out that she has read the submissions of the various parties and has heard their arguments, and without further ado she announces that “the interim fee payable by the RMLC is $192,413,111 per year” – a figure that amounts to $40 million less than that which was paid in 2009.

The actual details – including when the reduction will be implemented and how it will be allocated on a per-station basis – should be announced in the near future. Check back regularly for our update. But here’s what we know now (thanks mainly to an update on the Radio Music License Committee website):

  • Individual stations will pay less to ASCAP during this interim period than they paid in 2009;
  • Though the now-discarded interim rate was imposed as of January 1, 2010, stations won’t get any money back for any “overpayment” so far in 2010 – that is, even though Judge Cote’s bottomline number is less than the previously-announced/now-superseded interim rate, and RMLC members will thus have technically overpaid some since January, anyone who overpaid should NOT expect a rebate check in the mail; instead the interim fee adjustments will be worked into your bill starting in June or July bill – so keep an eye out for that;
  • This is temporary, applicable only until the permanent rate-making decision is issued by the District Court – and it’s subject to retroactive adjustment once that permanent rate is set.

Here’s what we don’t know:

  • Just how much of a reduction any individual broadcaster will see in its individual bill from ASCAP and when it’ll first see that reduction;
  • Whether broadcasters will see a similar reduction – or any reduction at all – from BMI (similar court proceedings are pending relative to BMI, so we may expect some decision on that point shortly);
  • How long the interim rate will be in effect (it could be years before the permanent rate is set).

As we said, we’ll tell you more when we know more.