The arbitration process governing SESAC’s performance license rates has determined that for the 2023-2026 licensing period, a blanket fee of 0.2824% of revenue — or a 10.4% increase from the prior period’s rate of 0.2557% of revenue — will be set, according to a press release from the Radio Music License Committee (RLMC).
The rate represents the amount SESAC, a performing rights organization (PRO), can charge stations in exchange for playing works from their repertory over terrestrial radio.
Each side characterized the final rate determination differently, with the RLMC claiming victory because the arbitration panel rejected SESAC’s efforts to more than double the rate, and also substantially expand the license revenue base. But SESAC says the arbitration award reflects a failure by the RLMC in its attempt to lower the rate.
The rate decision is retroactive to Jan. 1, 2023, which means that stations paying the SESAC interim licensing fee at 2022 rates will receive “a modest true-up adjustment.” The arbitration process governing SESAC’s rates came about as a result of a 2015 RMLC antitrust litigation settlement with SESAC that set forth a rate arbitration process for the next 20 years.
The RMLC announcement claims SESAC sought to justify its efforts to increase rates and expand the licensing revenue base by relying upon rates set for other music licensors.
Meanwhile, SESAC’s statement on the determination says the RMLC failed in its attempt to tie SESAC’s rates to those of BMI and ASCAP, the two U.S. PROs, which operate under consent decrees that mandate a rate trial in the Southern District of New York when negotiations fail.
“Despite the fact that no increase was warranted, the arbitration decision reported here constitutes a significant victory for RMLC-represented radio stations given SESAC’s demands, and comes at a challenging economic time for the industry,” RMLC chairman Ed Atsinger said in a statement. “The RMLC intends to continue to defend and protect the interests of its members at a time when all of the performing right organizations are seeking to aggressively increase their fees.”
In another aspect of the rate determination, the RLMC said that “long-form license terms are still being worked out but it is expected that the non-music format stations will continue to pay the same 77.5% discount” off of the above music stations’ headline rate. Mathematically speaking, that means the RMLC expects that the non-music rate fee will be set at 0.06354% of revenue, or a 10.5% increase from the prior rate of 0.0575%, Billboard estimates.
“The arbitration award reflects another failure of the RMLC to impose regulated rates on SESAC since SESAC and the RMLC concluded their settlement in 2015,” SESAC performing rights president and CEO Scott Jungmichel said in a statement. “The panel awarded SESAC an over 10% increase while rejecting the RMLC’s attempts to lower the rate, turn back the clock, and yoke SESAC to the regulated rates paid by ASCAP and BMI. In addition, the revenue base subject to the fee is significantly greater than the revenue upon which station groups had sought to pay under the 2017 award.”
