In the digital music era, we have seen a number of lawsuits over payment for songs, but now dueling lawsuits threatened to rock terrestrial radio stations. A songwriter's group, Global Music Rights, alleges that ten thousand radio stations colluded in an illegal cartel to underpay them for the right to play their music. GMR only represents about seventies songwriters with twenty six thousand songs compared to the combined twenty two million songs under as CAP and b m i's umbrellas.
But those seventies songwriters are an elite group from John Lennon, But those seventy songwriters are an elite group from John Lennon to Farrell Williams, Shakira, Kenny Chesney, Justin Bieber. The list goes on, and g MR was designed to be an exclusive boutique organization most likely to get songwriting heavyweights out from under the blanket licensing of as CAP and b m I. G MRS lawsuit follows a law by the Radio Stations Trade Group last month alleging GMR was
exercising monopoly power over its copyrights. Our guests are intellectual property litigator Terrence Fross, a partner at Captain Nuchen Rosenman and Sarona Elton, a professor at the University of Miami Front School of Music, Terry explain what's going on here and how songwriters in as CAP and b m I get paid when their songs are played on terrestrial radio stations.
So it's still surprised, June probably that this is all about money and ACECAP and b m I control about of the copyrighted music that is played on terrestrial radio stations, the things we listen to on a M and FM radio for example. UM. The concept behind GMR is relatively simple. Um.
They go after an elite group of songwriters. UM. Their theory is that because they are the more popular songwriters, that the radio stations should pay more to hear them to be able to play their music on their radio stations and therefore charge a higher play rate than what a SCAP and being my charge and return more money as a result to those songwriters. Um. Uh. The radio stations UM have simply refused to go along with that theory.
They want a the same sort of system that they deal with with BMN a SCAP, which is essentially a uniform rate depending on the type of music UM. And that's where we are from an economic um UM situation.
So along UH comes up the trade Association for the radio stations and says, well, the way to break this log jam is to file UH and I trust lawsuit against GMR and to force GMR to agree to consent order of the same site type that a SCAP and b M I have UM, which sets rates in a uniform manner and requires them to deal with all the radio stations on an equal and fair basis. And that's where we are essential at theloment. So, Sarona, now we have them suing each other. You have the the radio
stations suing GMR. You have GMR suing the radio stations. Does either of them really have a good legal claim or is this just posturing for negotiation purposes? I do think that they both have a good legal claim. UM. If you take the one UM that the Radio Music Licensing Committee has brought, which which by the way, is not UM what you might think of as a typical trade association. They exist solely for the purpose of negotiating
UM with the music community for licenses for the radio stations. UM. If you look at their case, it's very similar to a case they brought against C SACK, which is another performing rights organization UM that end up settling around summer two thousand fifteen, and a lot of the allegations are the same UM. And in that case there was a ruling on an injunction where the court didn't grant the injunction, but it did find that there was a likelihood of
success on the merits UM. And so you know, one could say that if those same set of facts are proven to be true in both cases and it's in front of the same judge, you might end up with the same sort of ruling. So UM, I wouldn't say that it's sort of frivolous or baseless UM in terms of its similarity to what was already brought and and you know they got resulted in a settlement ultimately. UM. What's what's more interesting if you look at the case
that g MR has brought UM. You know, their case, their complaint, if you read it, is full of UM, lots of factual allegations about the way the r MLC behaves UM, and that I think is a more UM. It appears to be a more novel argument. I don't know that anybody has ever brought a case like that against that particular organization, at least not that I was able to find UM. And I think if you read those facts, UM, you know it also makes a very
compelling case. So it it is one group accusing the other in both ways of you know, acting in a very kind of monopolistic or UM in the other case of UM the other way around monogonistic behaviors. And I think they both are really interesting cases that have merit. Okay Terry. The gm OR lawsuit says that radio stations pay only about four of their revenue to songwriters, and streaming music services pay more. Why shouldn't a group be able to negotiate a better rate. It does sound like
a monopoly. Well, it arguably is a monopoly, but it's one that's been approved by the Department of Justice. So b M and a SCAP have been in in operations since UM the Escape since nineteen fifteen, b M I since the late thirties. And essentially what they present to radio stations as a package of songwriters in their and their musical compositions to play on the record, and they say take it or leave it, and they have a
norm as power econom power and invents. So the department just as long time ago side, UM, we can't allow that that that's monopolistic. Um. It puts the radio stations essentially at at risk of being held hostage, being held up um to play the music, and which shut down
the radio industry. And so they pursued antitrust actions against both of those licensing organizations and forced them to enter into consent decrees that essentially regulate on both sides the radio stations and the music license in the organizations, how the payments are well be made. And what is fundamentally going on here is that g m R does not
want to be regulated in that manner. They want to be able to go after individual radio stations and do one off deals, whereas on the other side, UM the radio stations r MLC on behalf the radio stations wants to force them into that same model as b M and a SCAPE eventually essentially forced down their throats a consent decree. Songwriter's group Global Music Rights alleges that ten thousand radio stations colluded in an illegal cartel to underpay
them for the right to play their music. But those seventies songwriters are an elite group from John Lennon image to Pharrell Williams, Mighty Shakira, Kenny Chesney, Justin Bieber. The list goes on, and g MR was designed to be an exclusive boutique hoping to get more money for songwriting heavyweights than the blanket licensing of AZCAP and d m I. We've been talking with intellectual property litigator Terence Ross, a partner at Captain Uten Rosenman, and Sarona Elton, a professor
at the University of Miami Frost School of Music. Terry is the is this just a way to negoti she ate a better settlement, a settlement that's different from what b M I and ASCAP has Well, I don't think on the part of the radio stations it is. I think the radio stations are are trying, fundamentally is to impose the same concept of proportionality that's required of a SCAP and b m I. They're trying to impose that
on g MR. On the other side, this new suit that was filed earlier this week by g MR out in California, um I would be raised certainly raises questions into my mind in my mind as to whether or not that is designed um to give them some sort of counterweight to load to the earlier lawsuit filed by the radio stations as a way of trying to negotiate, Because fundamentally what GMR wants is to be able to charge at a higher rate UM than b MN, A SCAP or else. The artists that they've collected so far
have no reason to stay with them. UM. Taylor Swift is a g MR artist. She obviously been with I believe b M I UM, and she moved over to GMR on the promise that they could get her more money for her radio, for her songs being played on radio.
If they can't deliver on that, GMR can't deliver on that, I don't see why any of those seventy artists you just mentioned UM don't simply return to b M and Acecaft well Sarona the You know, almost everybody except for these elite songwriters is with a s CP or b M I and now they are trying they're trying to get more money. Should they be able to get more money or is there will the system really work in radio? And if if you don't have sort of these blanket
agreements where radio stations pay the same thing for everyone. Well, I think, UM, I think you could make an argument that they should pay more money because these particular recorded assets are more valuable. UM. And I think it's important to understand that GMR is offering a blanket license. UM. But you know, there's a difference between being the kind of license that they're willing to grant as opposed to
the rates that they want. You know, as CAPA and B M I together represent a you know, it's been reported in the high nineties of music content that's out there, and you know, the reason they became subject to the consent decrees when they did was because of the percentage of the market that they controlled. UM. In this case, GMR represents a tiny portion of the market, really truly tiny, seventy or so odd songwriters, UM, with a small catalog.
And it would be I think difficult to say that, UM, when you're when you're not operating in the size that as CAPA and B M I R, that you are wielding monopolistic power by simply not being willing to license your content at a at a rate that you're not You're not okay with UM. You know, on some level, a copyright owner is allowed to license their content at
whatever rate they see fit. Um, and they you know, and other areas of of music, uh sorry, other areas of like TV and film and book and the like. You know, you can't imagine someone like a Steven Spielberg or or someone like a J. K. Rowling being forced to license their content in particular ways and subject to some kind of oversight. Um. That just wouldn't make sense to anybody. And so it's so it's fascinating how people
think of music differently. You know, not all songs are equal in terms of their commercial viability and in terms of the amount of money that can be commanded for their use. Um. So I think absolutely it could be the case that let's say the uh this, these all settle and a higher rate is agreed to, and you know, life would move on just fine. Um. So I don't think them paying the station's paying a higher rate for this particular premium content is going to break the system.
I think the opposite. We'll have to leave it there. I want to thank you both that. Sarona Elton, a professor at the University of Miami Frost School of Music. At intellectual property litigator Terence fross A partner at Captain Uchen Rosamond. Thanks for being on Bloomberg. Law coming up. If you ever call or email people abroad, beware because the government could be listening or reading without getting a warrant. I'm June Grosso with Michael Best. Coming up, we'll be
talking to Professor Noah Feldman. This is Bloomberg