Call it just a recessionary recess, but radio stations strapped by the tough (but finally improving) advertising market breathed a sigh of relief today. In a continuing battle between the Radio Music License Committee (RMLC) and ASCAP over the music license fees paid by radio stations to the composers represented by ASCAP, US District Court Judge Denise Cote ruled that while the dispute is being resolved, the interim payments due ASCAP will be reduced by some $40 million dollars compared to the 2009 ASCAP fees.
The seeds of the dispute were first planted years ago, in economic boom days, when ASCAP fees were based upon a percentage of a radio station’s revenues. The radio industry sought to slow the rapid rise in ASCAP fees resulting from economic growth in the radio industry. To accomplish this, the RMLC and ASCAP ultimately agreed on a flat rate fee structure not directly connected to station revenues.
You can guess what happened next. The economy plummeted, radio revenues plummeted, but the ASCAP flat rate fees did not. Suddenly those fees represented an ever larger percentage of station revenue, with the result that playing music was becoming a very pricey part of station operations. There are also additional complications in a digital world. Does your ASCAP license cover your station’s audio stream on the Internet and elsewhere? How about those new HD multicast streams you’re now transmitting?
With the hope of addressing the growing impact of ASCAP fees, as well as these related issues, the RMLC and ASCAP entered negotiations over the fees to be paid by radio stations in 2010 and beyond. When no agreement could be reached, the RMLC commenced a rate proceeding in the US District Court. While it may be years before that proceeding is concluded, the interim rate set by Judge Cote represents the rate that will apply going forward. It supersedes the temporary 7% rate reduction agreed to by the RMLC and ASCAP earlier, but is not retroactive to January 1, 2010. It will continue to apply until the rate proceeding is concluded and a new rate is established, at which point the new rate will be applied retroactive to January 1, 2010, and any upward or downward adjustment for fees already paid will be made.
In the meantime, radio stations should begin seeing reductions in their ASCAP bills in the coming months, which will provide a welcome bit of relief to cash-strapped stations.