After more than three years of negotiations, the Radio Music License Committee (RMLC) has settled on a new music licensing agreement with both ASCAP and BMI. The deals include higher rates for both organizations. But in a tradeoff for broadcasters, both deals not only cover the current license term but also the next, which was set to begin in 2026. That means nearly all stations will have more cost certainty, which will help both sides avoid another long and expensive legal fight for the upcoming term.

BMI Gets Long-Term Deal

The new BMI agreement, which is retroactive to Jan. 1, 2022, and will be in place through December 2029, represents what the performance-rights organization calls a “historic” rate increase for songwriters that reflects BMI’s growing share of the music played by radio stations.

“BMI sought a rate that reflected our market-leading share of the music performed on radio stations across the country, and I’m pleased to say we achieved our largest rate increase ever for the radio industry,” BMI President/CEO Mike O’Neill says. “This new deal ensures BMI’s songwriters will be more fairly compensated for the performance of their music on this incredibly important platform.”

The rate-setting process had dragged on for so long that the RMLC and BMI took the unusual step of not only reaching a settlement for the current term but also including a deal that covered the new term period of 2026 through 2029. That eliminates the possibility of another lengthy and expensive legal battle in the near future.

“Negotiation is always better than litigation, and we’re pleased to have worked together with the RMLC to achieve this outcome,” O’Neill says in the announcement.

Court documents early in the process showed BMI was seeing a 66% increase in royalties for composers in its repertoire. While it is getting a double-digit rate hike, it is about a third that size.

The previous deal with BMI that was finalized in 2020 required stations to pay 1.78% of their annual gross revenue for on-air spins. Under the new license, commercial radio stations will pay BMI a blanket license fee equal to 2.14% of gross revenue in 2022, rising gradually to 2.2% in 2026. That rate will then hold steady through 2029. This represents a 20% increase over the prior rate, which had been in effect under a deal reached in 2020. The agreement calls for a per-station minimum fee of $773 for the years 2022 through 2029.

The new deal also continues to include a built-in standard 12% deduction on gross broadcast radio revenue, which remains unchanged from the prior arrangement. And new media deductions will range from 25% to 30% depending on how the digital revenue is generated.

The new rate structure not only applies to terrestrial broadcasting but also to stations’ digital simulcasts, archived programming, and podcasts containing BMI repertoire. The agreement also sets rules for how digital revenues are calculated, including deductions for ad placements on websites, apps, and embedded in digital streams.

Stations Owe For 2022, 2023, 2024

The interim agreement under which radio stations have been allowed to continue playing BMI artists since the prior contract expired Dec. 31, 2021 held the previous rates in place. That means broadcasters will now need to retroactively make up for the difference in lower rates paid. Stations will be required to pay supplemental amounts owed for 2023 to 2024, based on the new rate. To ease the financial burden, BMI has agreed to allow these retroactive payments to be spread across 18 monthly installments beginning in October.

Rates may be higher, but Salem Media Group Executive Chairman Ed Atsinger, who chairs the RMLC, sees benefits to reaching an “amicable agreement” with BMI and ending the long-running rate court proceeds. “We feel that this agreement provides the radio industry with the ability to plan for the long-term while avoiding substantial litigation costs and uncertainties associated with the rate court process,” Atsinger says.

Some 8,895 stations are either represented by RMLC directly or have otherwise agreed to be bound by the licenses negotiated by RMLC. To cover its administrative costs, RMLC will also assess stations an annual fee beginning in 2025, ranging from $28.50 for the smallest licensees to $1,080 for stations paying BMI $20,000 or more annually.

U.S. District Court Judge John Cronan still needs to give the settlement final approval. A court conference is scheduled for Sept. 3.

ASCAP Secures Higher Rates

The RMLC has also reached a new royalty agreement that covers songwriters represented by ASCAP. Terms are being kept confidential, although ASCAP says the deal includes year-over-year increases in the percentage of revenue rate paid by stations. It also says the settlement “better reflects” how Americans are listening to over-the-air and streaming radio, while also recognizing the “distinctions” between the terrestrial radio industry and internet music services like Spotify.

“This deal locks in an important royalty stream for our members at higher rates,” ASCAP CEO Elizabeth Matthews says. “It will deliver enhanced benefits, payments and financial certainty to ASCAP songwriters, composers and publishers, which is important to ensuring their creative and economic health and security now and in the future.”

Similar to BMI, it is expected that stations will need to make retroactive payments to ASCAP for the last few years.

Big Four Deals Now Done

The settlements with ASCAP and BMI mean the radio industry now has licensing deals with all four of the major performance right organizations. The industry last year reached a deal with SESAC covering a four-year license period of 2023 to 2026. It gave that organization modest increases in its rates that were more than double what it wound up receiving.

Earlier, the RMLC in 2022 also reached a deal with Global Music Rights to pay more, while GMR agreed to give stations a broader scope of rights and more flexibility as they expand their reach to new digital platforms.