The U.S. Second Circuit Court of Appeals Tuesday vacated a 2023 ruling that had granted BMI in 138% increase in licensing fees for live performances.
The original decision by U.S. District Judge Louis Stanton had raised the blanket license rate to 0.5% of gross revenue - a move BMI then hailed as a historic victory for songwriters. But the appeals court ruled that this rate was "unreasonable" and based on a flawed definition of "gross revenue."
Why the Court Reversed the Decision
The Second Circuit panel found that the lower court overstepped by expanding the revenue base to include revenue streams that have "no precedent in the history of the industry." This included:
- Secondary market ticket sales (scalping/resale revenue).
- VIP packages and box suites.
- Service fees collected by promoters.
The court said that these streams don't accurately reflect the fair market value of the music being performed and impose "significant administrative costs" on promoters without a clear benefit to the creators.
BMI Responds: "Unwavering in Our Belief"
In its official response, BMI expressed disappointment with the ruling but noted what it sees as a silver lining: the court confirmed that free market rates should still be considered when setting fees.
BMI pointed out that even the appeals court suggested a range of reasonable rates that would still be 50% to 80% higher than the historical rates. "We are unwavering in our belief that our songwriters, composers, and publishers deserve more," BMI stated, adding that they are evaluating further appellate options.
What’s Next?
The case heads back to the Southern District of New York. Judge Stanton has been tasked with recalculating a "reasonable" rate with a clearer justification.
While the final number will likely be lower than the 0.5% BMI wanted, it is almost certain to remain higher than the old rates, leaving the industry with many unanswered questions.
Sources: Courthouse News, BMI Statement, Court Opinion.
