Category Archives: BMI

If “Ambient” Music Is “as ignorable as it is interesting,” Can It Be Worth $15mm?

ESPN recently initiated a rate proceeding with performing rights organization BMI. ESPN claimed that the rate BMI was seeking was above market and asked the federal district court for the Southern District of New York, which has continuing jurisdiction over the consent decree between BMI and the Department of Justice to determine “reasonable” rates. BMI has responded (attached below) and claims it is simply asking ESPN to continue paying the same percentage of revenue rate to which it agreed 10 years ago.

BMI claims that ESPN utilizes a BMI blanket license to cover so-called “incidental and ambient” music performances, such as in broadcasts of live sporting events; e.g., at Heinz Field the Pittsburgh Steelers sometimes play Styx’ “Renegade” during commercial breaks when the Steelers are on defense to “hype” the crowd. If the Steelers are on Monday Night Football and ESPN breaks back to the game before “Renegade” has stopped playing, for the purpose of music copyright licensing ESPN has “performed” that song, for which it must have a license. This is true even though Heinz Field already has its own license to perform that song to the fans sitting in the stadium to watch the game. In a bit of litigation hyperbole BMI argues that “ambient stadium music is a critical component of the broadcast that allows ESPN to attract viewers by making them feel like they are sitting in the stadium cheering on their favorite team.” How can something that is “ambient” (e.g., “as ignorable as it is interesting”) also be a “critical component” of a broadcast?

So how much does BMI want ESPN to pay for this ambient but “critical component”? $15 million per year. That figure is the product of ESPN’s annual revenue ($11b in 2014) multiplied by 0.1375%, the lowest rate among the rates charged for cable television broadcasts (“music intensive” programming networks pay 0.9% of gross revenue, “general entertainment” programming networks pay 0.375% of gross revenue, and “news and sports” programming networks pay 0.1375% of gross revenue.).

However, in 2005, the last year of ESPN’s prior license with BMI, ESPN’s annual revenue was “just” $5b. 1 This is one of the problems with a percentage of revenue royalty rate: while it may be that ESPN viewed its “incidental and ambient” music performances on live broadcasts of sports to be “worth” $6.875mm annually, it does not mean that those same performances are “worth” more than twice that amount. This is especially true at a time when ESPN’s revenues are declining rapidly and content acquisitions costs are increasing. 2

BMI’s answer is below:

Espn v Bmi (Bmi Answer)

  1. http://www.bloomberg.com/news/articles/2005-10-16/in-the-zone
  2. “ESPN’s subscriber losses, which have seen it lose nearly 8.5 million homes in the last 4 1/2 years, according to Nielsen estimates, or down about 8 percent, are at a rate that is declining faster than the rest of the industry.” http://awfulannouncing.com/2015/espn-make-3-billion-lost-revenue-increased-fees.html

Brilliant Article DMX’s Rate Cases against ASCAP and BMI

I ran across the below article by Carly Olson, a 3L at Northwestern, about DMX’s rate proceedings against ASCAP and BMI.  Ms. Olson wisely (and prophetically) concludes that the Second Circuit should affirm the district court opinions in DMX’s favor.  I couldn’t agree more.  And, thankfully, neither could the Second Circuit!

Check out the article here.

Did You Ever Wonder How BMI Calculates Your Royalties?

An interesting battle is raging in the Central District of California, pitting Broadcast Music Inc. (“BMI”) against one of its own publishers, Deyon Davis (through his publishing company Cinematic Tunes, Inc. (“CTI”)).  The dispute is over royalties BMI paid to Davis for performances of his works on two seasons of the reality show So You Think You Can Dance and one season of the reality show Superstars of Dance.  BMI claims that the cue-sheets on which it relied in making payments to Davis were falsified, at the request of Davis, resulting in over-payments of $1.5 million—nearly $725,00 paid to him individually, nearly $530,000 paid to Deyon Davis Music, and more than $270,000 paid to CTI.  Davis claims that he had nothing to do with the allegedly falsified cue-sheets and that “BMI unlawfully assumed the role of ‘judge and executioner’ with respect to the parties’ dispute, purporting to adjudicate the dispute in its favor and then engaged in self-help by seizing Counterclaimants’ subsequently earned royalties to satisfy its ‘judgment.'”

The war of words is fierce.  In his counterclaim, Davis calls BMI “a bully. BMI deceptively lures unsuspecting songwriters and publishers into its playground (BMI ‘s performing rights licensing and royalty system) with the promise of fun (the fair calculation and payment of royalties) and then spends the day bossing them around, beating them up and taking their toys.”

In its Motion to Dismiss Davis’ Counterclaims, BMI notes Davis’ “fraud-based criminal
convictions” and describes Davis’ actions as “intentionally undertaking to deceive a not-for-profit-making music licensing company into paying you considerably more than your share of royalties to the direct detriment of your fellow songwriters, composers, and music publishers, and then refusing to return any of those royalties when you get caught…”, which BMI characterizes as “dishonest.”

Interestingly, the publisher agreement on which BMI bases it’s breach of contract claim contains a broad mandatory arbitration provision, including exclusive jurisdiction in New York. (see attached).  It’s not clear why BMI choose to file suit in the Central District of California, except that some of the parties in the case were not BMI-affiliated writers or publishers.  I think I would have filed a motion to compel arbitration.

Davis’ Counterclaims
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BMI’s Motion to Dismiss
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BMI’s Publisher Agreement with Davis
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