SESAC on Friday completed its first rate arbitration with the Radio Music Licensing Committee, with the music PRO touting its success in increasing its rate relative to its market share. Even its fees were lowered, in aggregate, as a result of the proceeding. The arbitration panel awarded SESAC a fee of 0.2557 percent of radio station net advertising revenue.
Based on the fact that SESAC had only about a tenth of the market share at the time of the industry’s dominant player, ASCAP, at the time of the computation – about four percent to ASCAPs 45-50 percent, adjusted for SESAC’s market share, ASCAP’s actual fee of 1.73 percent would be 0.173 percent of station net revenue. By that calculation, SESAC is proclaiming an arbitrated rate “approximately 50% higher” than the radio industry rates commanded by ASCAP. BMI receives roughly the same 1.73 percent rate, and the two control market share of some 85 percent.
The RMLC strongly disputed SESAC’s characterization. “The RMLC-Represented Stations were awarded a more-than-60% discount off of the SESAC radio station license rate card,” the group’s executive director RMLC Bill Velez said. “The substantial fee reduction applies for the license period January 1, 2016 through December 31, 2018. “SESAC had offered stations that chose not to arbitrate only a 5% discount.” Stations participating in the arbitration “that overpaid SESAC on an interim basis since 2016, will now receive a combined credit worth tens of millions of dollars,” Velez added.
SESAC does not dispute that the payout it is receiving from radio is actually lower than what it was getting prior to the arbitration, when the performing rights organization billed using a rate card. “It’s about our rate relative to our market share,” SESAC chairman and CEO John Josephson tells Variety. “While it’s true that the aggregate amount of money we will receive has gone down, there is one very…