Antitrust Law Daily Wrap Up, ANTITRUST—2d Cir.: Rate court will have to reconsider BMI concert performance rates, (Feb 26, 2026)

By Matthew Hersh, J.D.

The court overseeing the performance royalty for live music failed to take into account the monopoly power of the music licensing powerhouse.

The New York federal court that is charged with overseeing the rates that concert promoters have to pay Broadcast Music, Inc. (BMI) for the use of copyrighted music in live performances, set that rate too high and will have to reconsider its decision, the U.S. Court of Appeals for the Second Circuit has held. The court of appeals, in reversing and remanding the case, found that the so-called “rate court” wrongly used as benchmarks performance rights agreements that were negotiated in a free market and thus failed to consider that BMI, like its sister heavyweight the American Society of Composers and Performers (ASCAP), was constrained in negotiations by a longstanding antitrust consent decree (Broadcast Music, Inc. v. North American Concert Promoters Association, No. 23-935 (2d Cir. Feb. 24, 2026)).

The rate dispute arises between two music performance heavyweights. On the one side is BMI. Anybody who wants to perform music publicly, whether live or recorded, must obtain a license from the owner of the underlying musical composition. (And in the case of recorded music, the owner of the sound recording, but only musical compositions are at issue here.) Four organizations control the market for those licenses: BMI, ASCAP, the Society of European Stage Authors and Composers (SESAC), and Global Music Rights (GMR). Importantly, because BMI and ASCAP each control nearly half the market, the two entities have been operating under antitrust consent decrees since the 1940s. Those decrees are administered by a specialized “rate court” in the Southern District of New York.

On the other side of the dispute is the North American Concert Promoters Association, an association of large-scale concert promoters. Two companies, Live Nation Entertainment and AEG Presents, own or control approximately 75 percent of NACPA’s members and pay the lion’s share of NACPA’s license fees. The business of Live Nation and AEG includes not only concert promotion but also ticket servicing and venue ownership. Indeed, Live Nation and AEG own the ticket servicing companies Ticketmaster and AXS, respectively. Ticketmaster and AXS charge service fees on most concert tickets sold; the fees typically amount to about 20 percent of the face value of the ticket.

NACPA and the four professional rights organizations, including BMI, have traditionally worked collectively to negotiate licenses for live concert performances. (Because concert promoters can never be sure in advance exactly what songs will be played and who owns the rights to that song, NACPA and other concert promoters prefer to obtain licenses from all four rights organizations.) From 1998 through 2013, that license required NACPA to pay 0.30% of gross ticket revenues for large venues and 0.15% for smaller venues. But since then, the parties have not been able to agree on a rate—leaving it up to the rate court to determine how much NACPA should have to pay for performances in the years since.

The rate court imposed two different sets of rates for two different time periods. For the years 2014-2018, the court imposed a sliding scale of rates between 0.15% and 0.80% depending on the size of the venue. For the period 2018-2022, the court simply imposed a flat rate of 0.50% of NACPA’s gross revenues during that time period. The district court also expanded the definition of “gross revenues” to cover items not previously included in the revenue base.

NACPA appealed both rate decisions, leading to this opinion.

Standard of review. The court of appeals reversed the rate court decision and remanded to that court for further review. Before reaching that conclusion, the court of appeals found that it was not obligated to give deference to the district court’s determination of rates. To the extent that the district court made run-of-the-mill factual determinations such as the existence and content of other potential benchmark agreements and the like, those determinations would be reviewed for clear error. But to the extent that the rate court made decisions such as “the selection of benchmarks, the weighing of benchmarks, and the [definition of the] revenue base,” the court of appeals noted, those determinations were “questions of law” to be “reviewed de novo” on appeal.

BMI’s market leverage as a starting point. The court also made clear as a preliminary observation, before diving into the evidence, that the rate court’s role was not to identify a specific “market value” for a BMI blanket license. Indeed, the court emphasized, traditional rules of economic analysis made that all but impossible here. For one thing, because performance licenses of this nature have traditionally been issued with the supervision of the rate court, the court noted, “there is no competitive market in music rights”—nor is there “any economic data that may be readily translated into a measure of competitive pricing for the rights in question.” For another, the court noted, BMI and NACPA “both have substantial market power, so a negotiation between BMI and NACPA involves a bilateral monopoly.” In light of these features of the relevant market, the court of appeals noted, “a district court cannot identify a unique ‘market value’ for a BMI blanket license.”

As a result, the court of appeals emphasized, rather than speak in terms of “competitive market pricing,” it was better to consider the rate court’s role as “a moderating influence on BMI [or ASCAP] that serves to minimize the likelihood that its evident market leverage may be exerted to obtain unacceptably inflated price levels for its licenses.” As a result, the court noted, the proper starting point for the analysis was to consider previous agreements voluntarily entered between the same parties “or those similarly situated.” To be sure, the court noted, a rate court should not “merely endorse as appropriate for today the terms of compromises concluded yesterday.” But by the same token, the court of appeals noted, the rate court cannot “ignore the history of the parties’ preferences as expressed in their prior agreements.” At bottom, the court of appeals noted, “the prices negotiated voluntarily in an arms-length transaction offer the only palpable point from which to proceed towards an estimation of fair value for later periods.”

Revenue base. In light of the above factors, the court of appeals found the rate court’s determination could not stand. In fact, the court of appeals emphasized, the district court erred both in calculating the rate that NACPA should pay as well as the revenue base to which that rate should be applied.

The court began with the revenue base. Prior agreements between BMI and NACPA, the court of appeals noted, applied the royalty rate only to the face value of tickets sold. But the rate court in this case expanded that revenue base to include (1) revenue received from sales directly into a secondary market, even if those revenues exceeded the face value of the tickets, (2) ticket service, handling, and other fees above the face value of the ticket paid by the consumer, (3) box suite and VIP package revenues, and (4) sponsorship revenues. But including these factors in the definition of applicable revenue, the court of appeals concluded, was simply wrong.

For one thing, the court of appeals noted, none of the domestic benchmark agreements the parties identified used anything other than the face value of tickets sold to measure the revenue base. “If the industry has settled on a particular definition of gross revenue,” the court of appeals noted, “the role of the district court will presumptively be confined to determining whether the percentage rate quoted by the PRO is reasonable, holding the revenue base definition and other license terms fixed.” Given that the calculation of the four newly added factors would simply “increase[] the administrative cost to music users without a corresponding benefit,” the court of appeals concluded, there was no good justification for diverging from past practices in this manner.

Moreover, the court noted, the income streams added by the rate court would have overcompensated BMI for non-music revenue. For example, the court of appeals noted, purchasers of box suites and VIP packages attend the same concert and listen to the same music; they pay a premium price for “the delivery of additional services, such as food and drinks, access to a box suite, a backstage pass, or other benefits.” The retail expenses associated with producing a concert, the court of appeals emphasized, “are already reflected in the price of a regular ticket.” There was no reason for BMI to get a slice of the premium revenue as well.

Finally, the court of appeals noted, the expanded revenue base was also commercially impracticable. This was for the simple reason, the court noted, that “promoters do not have access to the revenue data that would be necessary to apply all of these expanded revenue categories.” To be sure, the court of appeals noted, one could get around this by “limiting the revenues to those received by the promoters”—even if that does not produce “perfectly efficient administration.” But once again, the court of appeals noted, it could “not be rational for the parties to agree to incur administrative costs that have no corresponding benefit.” Thus, a rate order that imposes such costs, the court concluded, also “cannot be reasonable.”

Benchmark analysis. The district court further erred in the benchmark analysis that led it to adopt a rate of 0.5 percent, the court of appeals found. For one thing, the court of appeals noted, although the district court identified seven different ostensibly comparable rates reflected in the twelve benchmarks it considered, it chose a higher figure than it would have reached by simply averaging those rates. To arrive at a rate of 0.5 percent based on the benchmarks, the court of appeals noted, the district court “must have implicitly assigned greater weight to the benchmarks with higher implied rates.” If so, the court noted, “that was unreasonable.”

The problem with the district court’s approach, the court noted, was that it gave higher weight to benchmark live music agreements with GMR and SESAC—the two rights organizations not constrained by an antitrust decree—rather than was ASCAP and BMI. The district court reasoned, the court of appeals noted, that these agreements provided “the best evidence of the price that a willing licensee and a willing licensor would agree to in an arm’s-length transaction in a competitive free market.” But once again, the court of appeals noted, the goal here was not to approximate an arm’s-length transaction in a hypothetical free market because the market was not free—ASCAP and BMI had monopoly-like power. “As long as the consent decrees remain in place,” the court of appeals noted, “it is not within the discretion of the district court to decide that BMI’s market power no longer warrants the moderating influence of the rate-setting framework.”

The district court additionally erred, the court of appeals found, by treating agreements with independent promoters unaffiliated with NACPA as comparable benchmarks. Those agreements typically had higher rates than those for NACPA, the court observed—but there was a good reason for that. “It is not surprising that NACPA—which negotiates on behalf of a large group of promoters—has more leverage than other promoters in negotiations” with rights organizations, the court noted. After all, the court observed, “NACPA is itself an aggregator and represents the interests of the largest promoters.” That difference, the court concluded, “makes the agreements with non-NACPA promoters inappropriate benchmarks.” (Whether agreements with other large promoters such as Live Nation or AEG could serve as appropriate benchmarks, the court of appeals added, was not decided by the district court in its brush with the issue and should be considered on remand).

Finally, the court of appeals noted, all was not necessarily lost for BMI. Based on the considerations the court of appeals laid out, the court noted, the proper comparable benchmark agreements yielded an average rate of 0.38 percent. If the BMI and ASCAP benchmarks were to receive double the weight of the SESAC and GMR benchmarks, the court of appeals noted, then the resulting rate would be 0.33 percent—still higher than the pre-existing 0.30%. “Accordingly, a well-supported rate for the new BMI/NACPA license would be significantly lower than the rate imposed by the district court,” the court of appeals noted, “but it may be higher than the rate for the preexisting BMI/NACPA license. Ultimately, though the district court would have to determine the degree of comparability of the benchmarks and “explain how it reached a particular rate sufficiently to permit our review of the rate for reasonableness.”

The Case is No. 23-935.

Judge: Menashi, S.

Attorneys: Scott A. Edelman (Milbank LLP) for Broadcast Music, Inc. Andrew Gass (Latham & Watkins LLP) for North American Concert Promoters Association.

Companies: Broadcast Music, Inc.; North American Concert Promoters Association

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