Similar to ASCAP deal inked earlier this year, new arrangement sets rates through 2016

Earlier this year, the Radio Music License Committee (RMLC) and ASCAP reached a deal setting the royalty rates to be paid, through 2016, by broadcasters to perform musical works by composers repped by ASCAP.   The major components of the deal were (a) a simplified payment process and (b) a basic licensing fee equal to 1.7% of gross revenues.

We had since heard through the grapevine that RMLC and BMI had reached a deal, also running through 2016, for use of BMI-represented musical works. Good news – on June 11 RMLC and BMI issued a joint press release confirming the deal, and providing a summary of the details. Though the agreement must still be formally approved by the United States District Court for the Southern District of New York (because of some antitrust litigation involving ASCAP and BMI that goes back several decades), the prospects for approval are generally good. And that’s welcome news for broadcasters, because the BMI deal is very similar to the ASCAP deal.

Here are the high points:

Most importantly, the old “benchmark fee” based computation system is gone. It’s being replaced by a much simplified percentage of revenue payment rate, with broadcasters paying the same 1.7% of gross revenues to BMI that they are paying to ASCAP. 

Broadcasters can also take a standard deduction of 12% for revenue derived from terrestrial/analog and HD multicasting broadcasts and 25% for revenue attributable directly to new media.

The “per program” option reducing a news/talk station’s royalties by at least 50% from its blanket license is being retained. There is a base fee of 0.2958% of gross revenue with the same deductions as above.

There is also expanded rights coverage to accommodate new media uses.

This translates into a $70.5 million credit across the industry which will be reflected in broadcasters’ June, 2012 statements.   So what we have here are lower rates and a simplified computation mechanism that will apply to both ASCAP and BMI. 

That’s what is known in legal circles as a “win-win”.  Kudos to Bill Velez and his team over at RMLC for their great work.