BMI-Frequently Asked Questions
Why did the RMLC reach this agreement with BMI?
The last BMI radio station license agreements expired at the end of 1996. Since that time, radio stations have been paying license fees to BMI on an interim basis (meaning that the fees paid were subject to adjustment once final terms were reached by negotiation or litigation between BMI and the RMLC).
After several years of unsuccessful negotiations, at the end of 1999 the RMLC commenced litigation before the BMI "rate court" asking the court to set reasonable BMI license fees and terms for radio stations. During the litigation BMI sought a substantial increase in the percentage of revenues stations had been paying, retroactive to 1997. The RMLC did not believe any increase was warranted, and instead sought licenses that did not tie fees to station revenues. Moreover, the RMLC sought to have Internet streaming "folded in" to the broadcast license.
After several years of pretrial discovery and shortly before the case was scheduled to be tried, BMI and the RMLC came to terms on final license agreements covering the period 1997-2006.
For many years the RMLC has heard from stations of different sizes and different markets across the country that the music licensing system that tied royalties to station revenues was undesirable because such revenues were automatically shared with BMI regardless of whether this had anything to do with music. Moreover the RMLC was of the view that the amount of music being used by radio stations was either flat or on the decline and that it was illogical to continue to have music license fees increase in direct correlation to increases in station revenues. The system that we have now agreed upon - a flat fee for six years - eliminates BMI as a revenue partner with the radio industry. The Committee believes that over the long term this change in royalty fee structure will result in lower music license fees for the radio industry.
What are the terms of the new BMI-RMLC agreement?
The new BMI/RMLC agreement finalizes licenses fees for radio stations at the interim fee levels that have previously been paid for the years 1997-2000. For the period 2001-2006 BMI will be entitled to receive license fees from the radio industry in the total amount of roughly $1.046 billion payable to BMI under the following schedule:
2001 - $149 million
2002 - $158 million
2003 - $163 million
2004 - $176 million
2005 - $192 million
2006 - $208 million
This is for both blanket and per program licenses. By setting a flat fee for this period of time, we have established a ceiling above which BMI fees cannot go.
How do I know if my station is bound by this new agreement?
Nearly all commercial stations other than those represented by the National Religious Broadcasters Music License Committee are bound by the new agreement. Many stations authorized the RMLC in writing to represent them in negotiations and or litigation with BMI and nearly all other stations have entered into interim license agreements with BMI under which they agreed to be bound by the outcome of the negotiation and litigation conducted by the RMLC.
How does the BMI-RMLC agreement differ from prior BMI licenses with the radio industry
Throughout history radio station license fees to BMI were calculated as a percentage of each station's advertising revenues, with a variety of deductions and complicated reporting requirements (like a tax return), which were subject to audit by BMI. The new agreement sets flat industry-wide fees owing to BMI which are allocated among stations based upon a formula under which each station's fees are determined based upon its prior fees to BMI and an incremental amount that is audience based.
How do I find out what my fees are?
Each station's allocated share of the industry-wide fees payable to BMI starts with the amount due to BMI under the prior interim license. For 2001 and 2002, that is also the end of the calculation. In other words, if you have paid the fees that are due under the interim license for 2001-2002, no further payments will be required (except that BMI retains the right to audit such payments for these years). For 2003, each station's fees have been calculated pursuant to the formula that is posted on this site. In summary, the 2003 fee begins with the 2002 fee plus an increment of approximately 3.4%. For 2004-2006 each station's fee will be calculated each year pursuant to the methodology that is outlind in the follwing documents:
The RMLC has already notified stations of their 2003 fees. The RMLC is also in the process of determining each station's fees for calendar year 2004 and expects that stations will be notified of their 2004 fees in October 2003. Stations' fees for the years 2005-2006 will be determined in or around October of the preceding year.
How do I know I am being treated fairly?
In addition to seeking to keep fees as low as possible, one of the RMLC's objectives, as it always has been, has been to make sure that stations of different sizes and in different types of markets are treated in an equitable manner. The RMLC is comprised of representatives of large and small radio station owners in markets of varying sizes throughout the U.S. The RMLC members have worked closely with RMLC staff, counsel and outside consultants to develop a formula designed to limit dislocations from the fees stations previously paid to BMI, while migrating toward a system in which fees are calculated based upon station audiences. Every effort was made to minimize any disparities in treatment with respect to stations that are similarly situated. The RMLC believes that this new system is fairer than one that simply applies a percentage of revenues to each station regardless of whether the revenues generated are driven by the music played.
How are fees calculated for a per program licensee?
For 2001, 2002 and 2003 per program fees are calculated in the same manner described above. For 2004-2006 we have modified and simplified per program licenses by providing for four different levels of fees to be paid based on the number of "weighted programming periods" which the station broadcasts with any feature uses of BMI music. We have continued to use a weighted 15 minute programming period as was the case in the pre-existing per program licenses. Stations that use no BMI feature music will pay BMI a base fee calculated on a flat dollar basis instead of a percentage of station revenues and stations that play some music will pay BMI a feature fee similar to the fee paid in the pre-existing per program license but based on three different "tiers" of music use (meaning how many weighted programming periods contain BMI music).
It bears noting that, like prior BMI per program licenses, the new per program license is usable only by those stations that make limited feature uses of BMI music. One of the RMLC's unrealized objectives in this negotiation and litigation was to obtain a per program license that can be used by a greater number of radio stations, including stations with predominantly music formats. This remains a subject for future negotiations.
Suppose my station changes the number of weighted programming periods containing BMI feature music? How does this affect the station's per program licenses fees?
Stations operating under the per program license will have the opportunity twice a year to revise their per program fees to account for changes in the amount of BMI feature music usage, effective January 1 and/or July 1 of each year. Stations that fail to adjust their per program fees to account for such changes in BMI feature performances may be subject to penalties under the license.
What happens to stations that misrepresent their music usage in order to pay lower fees?
Every music license fee system can be abused. With a flat rate system like the one we have adopted, if a station deliberately underpays, by definition, the rest of the industry overpays. It is therefore important that each station approach its designation of license form or music use category with honesty and integrity, and the new license contains provisions to penalize stations (through the payment of significantly higher fees) that are caught cheating.
Will my station be able to switch from a BMI blanket to a BMI per program license or visa versa?
Stations will be permitted to switch between blanket and per program licenses as of January 1 and July 1 of each year beginning as of January 1, 2004. A station's ability to change from a blanket to a per program license is contingent upon the station using BMI feature music in no more than the requisite number of weighted programming periods, as explained in the fee allocation methodology.
If I am a new station how are my fees calculated?
New stations are assigned minimum levels of blanket or per program license fees which are subject to adjustment once the station reaches prescribed minimum audience levels, at which point the station's fees will be calculated on a price per listener basis.
How are industry-wide fees affected by changes in the number of stations covered by the license?
BMI is entitled to keep any incremental payment made by stations in their first year of license. For each year thereafter these stations' fees become part of the agreed industry-wide payment, which will incrementally reduce fees for the remaining stations.
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