Despite Lower Rates, SESAC Claims Victory


Even though SESAC acknowledges the money it will receive from radio will be less than it was before the arbitration, the PRO is still claiming victory. Here’s why.

SESAC CEO John Josephson told Variety. “While it’s true that the aggregate amount of money we will receive has gone down, there is one very significant element of the award that must be considered: we now have an independently adjudicated rate that implies a value for rates of music in radio at approximately 50% above the current ASCAP rate.”

Josephson tells Radio Ink it will be ironic if the RMLC’s litigation efforts against us leads to a situation in which the value of our relatively small share of the radio market is reduced by roughly the same proportion that the much larger share of the market currently represented by ASCAP and BMI is increased.

From the SESAC press release Monday: “For the first time, an independent panel has set the value of music’s contribution to radio, and it calculated that value at a level substantially above rates negotiated under the shadow of the rate courts. Based on reports that have appeared in the trade press regarding ASCAP’s recent settlement with the RMLC as well as published estimates of ASCAP’s market share, SESAC believes that the rates reflected in its arbitration award are approximately 50% higher than ASCAP’s—which is the rate the RMLC has been trying to impose on the music industry. SESAC has agreed to use commercial arbitration to resolve license fee disputes with the RMLC, whereas ASCAP remains subject to a Consent Decree with the US Department of Justice. SESAC believes that the Consent Decrees impose restrictions that may prevent rightsholders from realizing the fair market value of their works.”

The RMLC says the SESAC release is misleading. SESAC’s claim that the arbitrators’ decision represents a substantial premium over the rate that ASCAP is now offering stations as a result of the recent RMLC-ASCAP negotiations is highly misleading in light of SESAC’s own arguments to the arbitrators during the hearing. The outcome is nowhere near the status quo result SESAC sought.

Asked for comment, the RMLC’s Co-Chairmen, Ed Christian and John VerStandig, said in a joint statement:   “binding rate arbitration for SESAC was a giant first step for the industry. The arbitration decision reported here constitutes a significant correction in the level of SESAC’s fees and many RMLC-represented stations will now experience substantial financial relief in the form of fee credits dating back to the beginning of 2016 (totaling tens of millions of dollars across the industry by our estimates). The RMLC intends to continue to defend and protect the interests of its members at the next arbitration (for the 2019-22 period), which is right around the corner.”


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