PHILADELPHIA (CN) - A Nashville-based music-licensing company monopolizes the rights to tens of thousands of songs, forcing radio stations to pay "supracompetitive prices" for a blanket license, a station collective claims in Federal Court.
The Radio Music License Committee, which represents some 10,000 U.S. radio stations, claims SESAC Inc. portrays itself as a performance-rights organization in the vein of Broadcast Music Inc. (BMI) and the American Society of Composers, Authors and Publishers, or ASCAP, which protect their members against copyright infringement.
But in reality, the committee says, SESAC "is a cartel that has illegally monopolized an essential repertory of copyrighted music, that has quashed all competition with and among its 23,000 copyright-holding affiliates, and that uses its monopoly to coerce the U.S. radio industry and other consumers into paying SESAC supracompetitive prices."
SESAC's repertory includes music in a wide range of genres, including top 40, pop, hip-hop, rock, country, Spanish, blues, jazz, big band, folk, contemporary Christian, gospel and others, the lawsuit says.
"To achieve its unlawful objective, SESAC ensures that it is, as a practical matter, the exclusive purveyor of licenses for a critical mass of copyrighted musical works," the lawsuit states. "By creating an artificial bottleneck to such copyrighted material, SESAC can and does charge monopoly prices, unconstrained by the antitrust consent decrees that have bound the two other U.S. performing rights organizations, ASCAP and BMI, for more than seventy years."
The plaintiff says SESAC creates these bottlenecks by: "(1) strategically hand-picking its affiliates so that it has exclusive licensing authority over musical works that U.S. radio stations cannot reasonably avoid broadcasting; (2) threatening U.S. radio stations with hefty copyright infringement fines for broadcasting works in the SESAC repertory without a proper license; (3) obscuring the musical works within its repertory, making it impossible for broadcasters to determine with confidence whether a particular musical work falls within SESAC's repertory or not; (4) refusing to sell non-blanket licenses to radio stations; and (5) eliminating price competition between and among it and its affiliates."
Under U.S. law, a station's failure to secure a license to broadcast artists' work exposes it to fines of up to $150,000 per infringed work for each act of infringement, according to the lawsuit.
"SESAC's creation of a bottleneck to public-performance-right licenses for the works in its repertory contributes no efficiency benefits of any kind," the committee claims. "Instead, SESAC extracts monopoly rents for copyrighted music that would otherwise be available at competitive rates."
The Radio Music License Committee's lawsuit comes on the heels of an antitrust class action filed against SESAC by local television stations in late 2009. That lawsuit is still pending.
The committee seeks an order declaring SESAC in violation of the Sherman Antitrust Act and barring it from charging "supracompetitive prices," the same condition placed on ASCAP and BMI.
It is represented by Peter Moo of White & Williams in Philadelphia.