Broadcast Music, Inc. v. North American Concert Promoters Association

23-935 (L)
Broadcast Music, Inc. v. North American Concert Promoters Association
In the
United States Court of Appeals
FOR THE SECOND CIRCUIT
AUGUST TERM 2023
Nos. 23-935(L), 23-1004(XAP)
BROADCAST MUSIC , INC .,
Petitioner-Appellee-Cross-Appellant,
v.
NORTH AMERICAN CONCERT PROMOTERS ASSOCIATION,
Respondent-Appellant-Cross-Appellee.*
On Appeal from the United States District Court
for the Southern District of New York
ARGUED: MAY 20, 2024
D ECIDED: FEBRUARY 24, 2026
Before: WESLEY and MENASHI , Circuit Judges.†
* The Clerk of Court is directed to amend the caption as set forth above.
† Judge Beth Robinson, originally a member of the panel, recused and took
no part in the resolution of this appeal. The two remaining members of the
panel, who are in agreement, have determined the matter. See 28 U.S.C.

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Broadcast Music, Inc. (“BMI”) licenses musical works in
exchange for a fee. Because of BMI’s large share of the music licensing
market, it is subject to an antitrust consent decree that requires BMI
to set reasonable licensing fees and authorizes a court to determine a
reasonable fee if BMI and the prospective licensee are unable to agree.
North American Concert Promoters Association (“NACPA”) has
historically purchased blanket licenses covering all the musical works
in BMI’s repertory so that artists may perform the works at concerts.
During the last negotiation cycle, BMI and NACPA were unable to
agree on a rate and revenue base, and for the first time in the history
of the parties’ relationship, BMI petitioned the district court to resolve
the impasse. In 2023, the district court accepted BMI’s rate quote for
the 2014-2018 period and set a rate of 0.5 percent of NACPA’s gross
revenues for the 2018-2022 period. The district court also expanded
the definition of “gross revenues” to cover items not previously
included in the revenue base. NACPA appealed both decisions, and
BMI cross-appealed the denial of its motion for prejudgment interest.
We conclude that the district court imposed unreasonable rates.
First, the district court adopted a definition of the revenue base that
had no precedent in the history of the industry without a compelling
reason. The definition included revenue streams that do not reflect
the fair market value of the music and that involve significant
administrative costs without a corresponding benefit. Second, the
district court set a rate that depends disproportionately on less
comparable benchmark agreements. The district court relied on
agreements with unaffiliated individual promoters even though
NACPA has historically obtained significantly lower rates from the
§ 46(d); 2d Cir. IOP E(b); United States v. Desimone, 140 F.3d 457, 458-59 (2d
Cir. 1998).

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same counterparties. And it identified no change in economic
circumstances that would justify a rate more than double what
NACPA has historically paid to BMI and to the American Society of
Composers, Authors, and Publishers. Third, while we conclude that
the district court did not abuse its discretion by denying the motion
for prejudgment interest, the denial may have depended on the
erroneous rates. Accordingly, we vacate the judgment of the district
court and remand for further proceedings consistent with this
opinion.
S COTT A. EDELMAN (Atara Miller, Andrew L. Porter, on
the brief), Milbank LLP, New York, New York, for
Petitioner-Appellee-Cross-Appellant.
ANDREW GASS, Latham & Watkins LLP, San Francisco,
California (Joseph R. Wetzel, Latham & Watkins LLP,
San Francisco, California; Jennifer L. Giordano, Sarang V.
Damle, Blake E. Stafford, Latham & Watkins LLP,
Washington, D.C.; Benjamin E. Marks, Sarah Sternlieb,
David Yolkut, Weil, Gotshal & Manges LLP, New York,
New York; Samir Deger-Sen, Latham & Watkins LLP,
New York, New York, on the brief), for Respondent-
Appellant-Cross-Appellee.
Frank P. Scibilia, Donald S. Zakarin, Katie E. Garber,
Pryor Cashman LLP, New York, New York, for Amicus
Curiae National Music Publishers’ Association.
Jay Cohen, Hallie S. Goldblatt, Paul, Weiss, Rifkind,
Wharton & Garrison LLP, New York, New York; Clara
Kim, Richard H. Reimer, Jackson Wagener, American
Society of Composers, Authors and Publishers, New

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York, NY, for Amicus Curiae American Society of Composers,
Authors and Publishers.
Anne M. Voigts, King & Spalding LLP, Palo Alto,
California; David P. Mattern, King & Spalding LLP,
Washington, D.C.; Kenneth Steinthal, King & Spalding
LLP, San Francisco, California, for Amici Curiae Motion
Picture Association, Inc., Radio Music License Committee,
National Association of Broadcasters, Digital Media
Association, Exhibitions & Conferences Alliance, and
International Association of Venue Managers.
MENASHI , Circuit Judge:
This case involves the licensing of copyrighted musical works
to concert promoters for live performance. Petitioner-Appellee-Cross-
Appellant Broadcast Music, Inc. (“BMI”) represents over one million
songwriters, composers, and music publishers, and it licenses their
works to music users in exchange for a fee. Because of BMI’s large
share of the music licensing market, it is subject to an antitrust consent
decree that requires BMI to set reasonable licensing fees and
authorizes a court to determine a reasonable fee if BMI and the
prospective licensee are unable to agree. Respondent-Appellant-
Cross-Appellee North American Concert Promoters Association
(“NACPA”) has historically purchased blanket licenses covering all
the musical works in BMI’s repertory so that artists may perform the
works at concerts.
During the last negotiation cycle, BMI and NACPA were
unable to agree on a rate and revenue base, and for the first time in
the history of the parties’ relationship, BMI petitioned the district
court to resolve the impasse. In 2023, the district court accepted BMI’s

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rate quote for the 2014-2018 period (the “Retroactive Period”) and set
a rate of 0.5 percent of NACPA’s gross revenues for the 2018-2022
period (the “Current Period”). The district court also expanded the
definition of “gross revenues” to cover items not previously included
in the revenue base. NACPA appealed both decisions, and BMI cross-
appealed the denial of its motion for prejudgment interest.
We conclude that the district court imposed unreasonable rates.
First, the district court adopted a definition of the revenue base that
had no precedent in the history of the industry without a compelling
reason. The definition included revenue streams that do not reflect
the fair market value of the music and that involve significant
administrative costs without a corresponding benefit. Second, the
district court set a rate that depends disproportionately on less
comparable benchmark agreements. The district court relied on
agreements with unaffiliated individual promoters even though
NACPA has historically obtained significantly lower rates from the
same counterparties. And the district court identified no change in
economic circumstances that would justify a rate more than double
what NACPA has historically paid to BMI and to the American
Society of Composers, Authors, and Publishers (“ASCAP”). Third,
while we conclude that the district court did not abuse its discretion
by denying the motion for prejudgment interest, the denial may have
depended on the erroneous rates. Accordingly, we vacate the
judgment of the district court and remand for further proceedings
consistent with this opinion.
BACKGROUND
The owner of the copyright in a musical work has the exclusive
right to perform the work publicly. See 17 U.S.C. § 106(4). The
copyright owner may authorize another to perform the work by

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granting a license. See id. § 201(d)(2). In the United States, the owner
of a musical work confers on a Performing Rights Organization
(“PRO”) the right to license performances of the work, and the PRO
then issues licenses, collects fees, and distributes royalties to the
copyright owner. See BMI v. Columbia Broad. Sys., Inc., 441 U.S. 1, 4-5
(1979). The purchasers of performance licenses include “concert
promoters, commercial radio stations, broadcast television stations,
broadcast and cable television networks, internet websites,
commercial music services, concert halls, universities, airlines,
restaurants, bars and nightclubs.” Agreed Findings of Fact ¶ 2, BMI
v. NACPA, No. 18-CV-8749 (S.D.N.Y. Oct. 10, 2022), ECF No. 124-1.
The PRO typically issues a blanket license that allows the licensee to
perform any of the songs in the PRO’s repertory.
Four PROs control the market for music performance licenses:
BMI; ASCAP; the Society of European Stage Authors and Composers
(“SESAC”); and Global Music Rights (“GMR”). The district court
estimated that BMI, ASCAP, SESAC, and GMR hold repertories that
account for about 45.4 percent, 46.5 percent, 3.6 percent, and
4.5 percent of the total market, respectively. See BMI v. NACPA,
664 F. Supp. 3d 470, 474 (S.D.N.Y. 2023).
Because of the dominant shares of the license market that the
entities control, BMI and ASCAP operate under antitrust consent
decrees. See Final Judgment, United States v. BMI, No. 64-CV-3787
(S.D.N.Y. Nov. 18, 1994) (“BMI Consent Decree”); Second Amended
Final Judgment, United States v. ASCAP, No. 41-CV-1395 (S.D.N.Y.
June 11, 2001) (“ASCAP Consent Decree”).1 The BMI Consent Decree
1 BMI was first subject to a consent decree in 1941. See United States v. BMI,
1940-43 Trade Cas. (CCH) ¶ 56,096, 1941 WL 307851 (E.D. Wis. 1941). The
1941 consent decree was replaced with the current consent decree in 1966.
See United States v. BMI, 1966 Trade Cas. (CCH) ¶ 74,941, 1966 WL 181780

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requires BMI “to offer any prospective music user a license to publicly
perform the songs in its repertoire.” BMI, 664 F. Supp. 3d at 474.2 If
BMI and a prospective licensee cannot agree on a rate, then either
party may petition the district court to determine a “reasonable” rate.
BMI Consent Decree § XIV(A).
I
NACPA, formed in 1998, is an association of concert promoters.
“To qualify for NACPA membership, a promoter must stage at least
60 shows in a year, including at least 5 club shows, 5 theater shows
and 5 shows in venues with more than 10,000 seats.” Agreed Findings
of Fact ¶ 11. In addition to “execut[ing] every aspect of producing [an]
artist’s concert,” promoters are responsible for “negotiat[ing] with an
artist or their representative for their live performance rights, either
(S.D.N.Y. 1966). The BMI Consent Decree was amended at BMI’s request in
1994. “Among other things, the amendment added to the [BMI] Consent
Decree an automatic licensing provision and recourse to a rate court to
resolve rate disputes between BMI and licensees.” Agreed Findings of Fact
¶ 4. The ASCAP Consent Decree was first entered in 1941 and was amended
in 1950 to add automatic licensing and rate court provisions. See id. ¶¶ 21-
22. The ASCAP Consent Decree was amended in 2001.
2 See BMI Consent Decree § XIV(A) (providing that BMI “shall, within
ninety (90) days of its receipt of a written application from an applicant for
a license for the right of public performance of any, some or all of the
compositions in defendant’s repertory, advise the applicant in writing of
the fee which it deems reasonable for the license requested. … Pending the
completion of any such negotiations or proceedings, the applicant shall
have the right to use any, some or all of the compositions in defendant’s
repertory to which its application pertains, without payment of any fee or
other compensation, but subject to the provisions of Subsection (B) hereof,
and to the final order or judgment entered by this Court in such
proceeding”).

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for an individual engagement or a series of engagements or a tour.”3
According to NACPA, “because concert promoters typically do not
know all the songs the artist will perform, or which PRO (or PROs)
administers the license for each of those songs, promoters must in
practice secure blanket licenses from each of the four principal
domestic PROs … to avoid the risk of copyright infringement.”
Appellant’s Br. 13.
The structure of the concert promotion industry has changed in
the past few decades. Prior to the mid-1990s, the industry consisted
primarily of small, independent promoters, each of which
“exclusively function[ed] within [its] own market.” 4 Today, two
parent companies—Live Nation Entertainment, Inc. (“Live Nation”)
and AEG Presents, LLC (“AEG”)—control approximately 75 percent
of NACPA’s members. Live Nation, AEG, and affiliated entities pay
about 90 percent of the fees under NACPA’s license with BMI. The
business of Live Nation and AEG includes not only concert
promotion but also ticket servicing and venue ownership. 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.
BMI has issued blanket licenses to NACPA since NACPA was
founded. The first license, issued in 1998, required NACPA to pay a
3 Trial Transcript (10/31/22) at 587, BMI v. NACPA, No. 18-CV-8749
(S.D.N.Y. Dec. 23, 2022), ECF No. 182; see also Agreed Findings of Fact ¶ 12
(“[T]he industry practice is for promoters, rather than the performing artist,
to secure necessary licenses.”).
4 Trial Transcript (10/24/22) at 110, BMI v. NACPA, No. 18-CV-8749
(S.D.N.Y. Dec. 23, 2022), ECF No. 174.

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fee to BMI equal to 0.3 percent of “Gross Ticket Revenues” for
concerts in venues with under 10,000 seats and 0.15 percent for
concerts in venues with over 10,000 seats. App’x 543. The license
defined “Gross Ticket Revenues” as “the total monies received,
directly or indirectly, by [NACPA’s] Licensed Individual Member(s)
or their authorized representatives from all ticket sales per
attraction,” with exclusions for taxes, venue fees, ticket servicing fees,
and parking fees. Id. at 540. The license also gave NACPA a 10 percent
administrative discount provided that at least 80 percent of its
members signed on to the license. See id. at 539. “Blending the 0.15%
and 0.30% rates on a weighted basis based on fees paid to BMI,
NACPA paid an effective rate of 0.21% under the BMI historical
licenses, before the application of the administrative discount.”
Agreed Findings of Fact ¶ 72. BMI and NACPA entered into a new
license in 2006 on the same terms as the 1998 license, except that the
2006 license added a separate rate for music festivals. According to
BMI, festivals were not covered by the 1998 license. The 2006 license
was renewed several times before BMI provided notice in August
2013 that it would terminate effective December 31, 2013. “Since then,
the parties have been on an interim agreement and have engaged in
protracted negotiations for a new license without success.” BMI,
664 F. Supp. 3d at 476.
BMI’s current proposal, which it quoted to NACPA in an email
dated December 9, 2020, sets different terms for the Retroactive
Period and the Current Period. For the Retroactive Period, BMI
proposes keeping the historical revenue base—face value of tickets
sold—and charging a varying percentage fee based on the size of the
venue, as follows:

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administrative discount. NACPA argued that the rate should be
converted from a tiered structure to a simple unitary rate of 0.21 to
0.275 percent of gross ticket revenues. See BMI, 664 F. Supp. 3d at 477.
II
When the parties failed to reach agreement, BMI petitioned the
district court to determine a reasonable rate. Pursuant to a 2014
agreement, during the pendency of the negotiations and trial,
NACPA paid BMI an interim rate of 0.3 percent of the face value of
concert tickets for venues with fewer than 10,000 seats and
0.15 percent for venues with more than 10,000 seats.
The district court issued its opinion on March 28, 2023,
following a five-week trial. The district court first addressed the
Current Period. It explained that BMI had “attempt[ed] to justify its
proposed rate through the use of sixteen benchmarks which can be
put into three groups”: (1) licenses issued by BMI or ASCAP to
NACPA or non-NACPA promoters; (2) licenses issued by SESAC and
GMR to NACPA, non-NACPA promoters, or individual NACPA
members (Live Nation and AEG); and (3) licenses issued by foreign
PROs. Id. at 479.
To facilitate a comparison between the benchmark agreements
and BMI’s proposal, BMI’s economic expert, Professor Catherine
Tucker, applied several adjustments to the rate of each benchmark
agreement. First, Tucker converted all of the benchmark rates into
unitary rates: “[W]hile BMI’s proposed license stipulates a single rate
of 0.8 percent for all live concerts and festivals, certain benchmark
licenses contain a fixed fee per ticket, tiered rates based on venue
capacity, tiered rates based on event revenue, and/or different license

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rates for festivals and concerts.”5 “Therefore, to make these different
rate structures comparable to BMI’s single proposed rate for all live
concerts and festivals,” Tucker “convert[ed] all fixed fee, tiered, or
event-specific rates into a single, percentage-of-revenue rate.”6 She
did so “by weighting … each tier’s or event type’s unique rate by its
share of industry revenue and then calculating the weighted average
across these rates.”7
Second, because “the proposed license covers songs in BMI’s
repertoire,” Tucker “convert[ed] the rates that promoters negotiated
with other PROs to reflect differences in the monetized use of BMI’s
repertoire in live concerts relative to the monetized use of benchmark
PROs’ repertoires.” 8 Tucker reasoned that “if a promoter were
willing to pay $5 for access to ASCAP’s repertoire for a concert that
brought in $100 in revenue, and if the same concert used twice as
many songs in BMI’s repertoire, other things equal, that promoter
should be willing to pay BMI $10.”9
Third, because BMI’s proposed revenue base is broader than
the revenue base in the benchmark agreements—which uniformly
define gross revenue as the face value of tickets sold—Tucker
adjusted each rate downward to reflect royalty payments as a
percentage of the total face value of tickets sold, revenues from tickets
sold directly into the secondary market, fees above the face value of
5 Tucker Affidavit Appendix C ¶ 2, BMI v. NACPA, No. 18-CV-8749
(S.D.N.Y. Dec. 23, 2022), ECF No. 123.
6 Id.
7 Id. ¶ 4.
8 Id. ¶ 79.
9 Id.

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With respect to the revenue base, the district court held that
“sponsorship and advertising contributions must be excluded
because they do not reflect the music or its performance.” BMI,
664 F. Supp. 3d. at 479. But the district court included the other four
revenue categories that BMI proposed. First, the district court
concluded that “[d]efining the revenue base to include tickets sold for
the first time in a secondary market is a natural clarification of what
some promoters think the base already subsumes.” Id. at 484. Second,
the district court concluded that box suite and VIP package revenues
should be included because, although those sales “may include
charges in addition to the seat ticket, like for food or merchandise,”
the purchaser still “must pay the total price if she wishes to sit in these
premium seats and hear the music.” Id. Third, the district court held
that ticketing service fees should be included because the consumer
pays those fees when she purchases a ticket and “[t]here is virtually
no way to opt out of paying the fees.” Id.
The district court acknowledged NACPA’s concern that
“calculating the [revenue base] in this manner is unworkable because
promoters do not have access to all the revenue information,
specifically revenues for boxes and VIP packages.” Id. at 485. The
district court believed, however, that “[l]imiting the revenues to those
received by the promoters or a contractually related third-party helps
to alleviate those concerns, even if it does not produce perfectly
efficient administration.” Id.
To determine the reasonable rate to apply to this expanded
revenue base, the district court first concluded that BMI’s proposed
rate of 0.8 percent was unreasonable. Cf. BMI Consent Decree
§ XIV(A) (“[D]efendant shall have the burden of proof to establish the
reasonableness of the fee requested by it.”). The district court noted
that “[w]hen looking at the secondary implied rates, only the foreign

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licensing agreements have rates above or close to BMI’s proposed one
of 0.8%.” BMI, 664 F. Supp. 3d at 483. For that reason, “the
reasonableness of BMI’s proposed rate of 0.8% rests on the foreign
licensing agreements.” Id. The district court decided that “these
foreign licenses cannot be relied upon as valid benchmarks because
BMI failed to show that the foreign parties are similar to BMI and
NACPA and that the agreements were negotiated in similar economic
circumstances.” Id.
Instead, the district court concluded that “[a]ll the BMI and
ASCAP licenses are proper benchmarks” regardless of whether those
licenses were negotiated with NACPA or with non-NACPA
promoters. Id. at 486. The district court observed that the licenses
issued to non-NACPA promoters “arose in a market that reflects the
same degree of competition and economic circumstances, and they
cover the same rights.” Id. Moreover, “[a]lthough NACPA and non-
NACPA promoters differ in the scope of their business operations,
they are direct competitors for shows hosted in smaller venues.” Id.
The district court also concluded that “[t]he SESAC and GMR
licenses are appropriate benchmarks” because “[c]ompared to [the]
proposed license, the SESAC and GMR licenses are between similar
parties, for similar rights, and were negotiated in similar economic
circumstances.” Id. at 487. The district court explained that, because
SESAC and GMR are not subject to a consent decree that prevents
those entities from refusing a license to any music user, their
negotiations “approximate[] the dynamics of a direct licensing
negotiation between a music user and the individual music
publisher.” Id. The district court determined that “the fact that SESAC
and GMR operate free of a consent decree does not mean they are
extracting supercompetitive rates.” Id. at 488.

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Based on this analysis, the district court considered eleven
benchmarks, with the “range of the implied rates accounting for the
expansion in the gross revenue base includ[ing] rates of 0.21%, 0.23%,
0.34%, 0.36%, 0.37%, 0.51%, and 0.54%.” Id. Given the benchmark
rates, the district court determined that “[a] rate of 0.5% of the
expanded gross revenue base is … a reasonable one.” Id. The district
court decided that “[i]ncreasing the rate of a license for live concerts
better reflects the fair market value placed on licenses in music
intensive industries,” such as “commercial radio stations or virtual
live concert streaming services.” Id. The district court additionally
decided that BMI could not eliminate the 10 percent administrative
discount because NACPA had already performed the administrative
services that the discount was intended to remunerate. Id. at 489.
The district court adopted BMI’s proposal for the Retroactive
Period. The district court explained that this “quotation would align
the NACPA rates with the rates paid to BMI by non-NACPA
promoters during that time.” Id. “Having already found that the BMI-
nonNACPA benchmark is valid,” the district court concluded that
BMI’s proposal was reasonable. Id. At the same time, it disallowed
BMI’s proposal to eliminate the 10 percent administrative discount
for the Retroactive Period. Id.12
Following the entry of judgment, BMI moved for an award of
pre- and post-judgment interest. The district court granted the motion
for post-judgment interest but denied the motion for prejudgment
interest. The district court reasoned that the interim fee rate was
“correct for the time it [was] in effect” and for that reason BMI had
12 On appeal, BMI does not challenge the decision of the district court with
respect to the administrative discount for either the Current Period or the
Retroactive Period.

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not been wrongfully deprived of the time value of money. BMI v.
NACPA, 674 F. Supp. 3d 70, 73 (S.D.N.Y. 2023). The district court
clarified that its “determination of the final fee amount was designed
to be the entire embodiment of what constitutes a reasonable fee.” Id.
This appeal followed.
DISCUSSION
In its appeal, NACPA argues that the rates the district court
adopted for the Current Period and the Retroactive Period are
unreasonably high. NACPA also contends that the district court erred
by expanding the definition of the revenue base for the Current
Period. In BMI’s cross-appeal, BMI argues that the district court
abused its discretion by denying its motion for prejudgment interest.
NACPA maintains that it did not.
We agree with NACPA that the district court erred by
expanding the definition of the revenue base and set unreasonable
rates. While we conclude that the district court did not abuse its
discretion by denying the motion for prejudgment interest, the denial
may have depended on the rates the district court set. As a result, we
vacate the judgment of the district court and remand for further
proceedings consistent with this opinion.
I
“We review the rate set by the District Court for
reasonableness.” United States v. BMI (Music Choice IV), 426 F.3d 91, 96
(2d Cir. 2005). This standard requires us to ask (1) whether the rate is
substantively reasonable such that it is not “based on any clearly
erroneous findings of fact,” and (2) whether the rate is procedurally
reasonable such that “the setting of the rate, including the choice and
adjustment of a benchmark,” is not “based on legal errors.” Id.

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A
The parties disagree about how we should evaluate the
decisions of the district court to rely on the SESAC and GMR licenses
as benchmarks, to expand the revenue base for the Current Period,
and to depart from the rates previously negotiated by NACPA with
BMI and ASCAP. NACPA argues that such decisions are subject to de
novo review, and BMI maintains that we should review for clear error.
According to NACPA, “this [c]ourt has applied de novo review
to every one of the determinations challenged by NACPA in this
case,” including the “selection of benchmarks,” the “weighing of
benchmarks,” and the “revenue base.” Appellant’s Reply Br. 6. In
United States v. ASCAP, we said that “[d]eterminations by the district
court that particular benchmarks are comparable and particular
factors are relevant are questions of law reviewed de novo” but the
“factual findings as to each factor under consideration or those
underlying a proposed benchmark agreement, as well as findings
with respect to fair market value, are reviewed for clear error.”
627 F.3d 64, 76 (2d Cir. 2010). In United States v. BMI (Music Choice II),
we said that the district court “made a fundamental error” in
concluding that “retail price was not a good indicator of fair market
value” and should not be used as the revenue base. 316 F.3d 189, 195
(2d Cir. 2003). And in ASCAP v. Showtime/The Movie Channel, Inc.
(Showtime II), we said that “whether the price paid by a buyer may be
given less weight as a ‘comparable sale’ either because the price was
higher than would have obtained in a more competitive market or
was perceived by the buyer to be higher is a matter of law.” 912 F.2d
563, 569-70 (2d Cir. 1990).
In response to these authorities, BMI argues that the district
court made “factual determinations” when it decided to “adopt[]

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SESAC and GMR licenses as benchmarks,” to “order[] an expansion
of the revenue base to include the full retail cost of attending a
concert,” and to “set[] a rate at the high end of the benchmark range
that does not mirror the ASCAP/NACPA (and historical
BMI/NACPA) rate.” Appellee’s Br. 41. BMI observes that in
Showtime II we said that “[f]air market value is a factual matter, albeit
a hypothetical one,” and that the selection of an appropriate
benchmark is “a determination analogous to an evidentiary ruling
that would have occurred if the price of the [relevant] license had been
offered at a jury trial.” Showtime II, 912 F.2d at 569-71. According to
BMI, “NACPA does not identify the legal errors” in the opinion of the
district court “because there are none.” Appellee’s Br. 41. The district
court instead “applied the correct four-factor legal framework
articulated in Music Choice IV.” Id.
We conclude that we properly review these issues de novo. In
Showtime II, we analogized the determination of fair market value to
an evidentiary ruling but explained that we would nevertheless
accord plenary review to the legal issues involved in the
determination:
[T]he factual component of the issue before the [district
judge] does not render all aspects of his decision-making
subject to review under the “clearly erroneous”
standard. In making a factual determination, a decision-
maker might rely on legally impermissible factors, fail to
give consideration to legally relevant factors, apply
incorrect legal standards, or misapply correct legal
standards. In jury trials, such matters are normally
resolved by rulings on admissibility of evidence and by
jury instructions. In court trials, where the functions of
fact-finding and exposition of law are performed by the
same person, the line between the functions is not always

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distinct. For example, the line between admissibility of
evidence (law) and evaluation of the persuasive force of
evidence (fact) is often blurred. Nevertheless, an
appellate court is obliged to observe the law/fact
distinction as best it can and accord plenary review to
any aspect of a trial court’s decision that can fairly be
isolated as determining an issue of law.
912 F.2d at 569. We have articulated legal standards that govern the
selection and weighing of benchmarks and the definition of an
appropriate revenue base.13 The arguments that NACPA raises on
appeal concern whether the district court “fail[ed] to give
consideration to legally relevant factors” and “misappl[ied] correct
legal standards” when it adopted the SESAC and GMR licenses as
benchmarks, expanded the revenue base, and set a rate at the high
end of the benchmark range. Showtime II, 912 F.2d at 569. Because
these decisions “can fairly be isolated as determining an issue of law,”
we undertake a plenary review. Id.
B
If BMI does not meet its burden of proof on the reasonableness
of its requested rate, the district court must “determine a reasonable
fee based upon all the evidence.” Music Choice II, 316 F.3d at 194
(quoting BMI Consent Decree § XIV(A)). It must make that
13 See, e.g., BMI v. DMX Inc., 683 F.3d 32, 45 (2d Cir. 2012) (“In assessing
whether another agreement provides a valid benchmark, the district court
must consider whether the other agreement dealt with a comparable right,
whether it involved similar parties in similar economic circumstances, and
whether it arose in a sufficiently competitive market.”) (citing Music
Choice IV, 426 F.3d at 95); Music Choice II, 316 F.3d at 195 (“[A]bsent some
valid reason for using a different measure, what retail customers pay to
receive the product or service in question (in this case, the recorded music)
seems to us to be an excellent indicator of its fair market value.”).

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determination by “establishing the fair market value of the music
rights, in other words, ‘the price that a willing buyer and a willing
seller would agree to in an arm’s length transaction.’” Music Choice IV,
426 F.3d at 95 (quoting Music Choice II, 316 F.3d at 194).
In attempting to apply that precedent, district courts have
lamented “the problematic nature of the analysis envisioned and the
enigmatic task thrust upon a court that must undertake this
evaluation.” United States v. ASCAP (ABC/CBS), 831 F. Supp. 137, 143-
44 (S.D.N.Y. 1993). As one district court has explained:
[T]he market for blanket licenses appears to be one
whose natural consequence is the lack of broad-based
competition. To postulate what prices would prevail
were such a market “competitive” is perplexing in
theory, impractical in practice, and dubious in outcome
given the efficiencies obtained due to the aggregating
nature of the service rendered. Little can be adduced as
to the expected behavior of such a market were it
populated by multiple sellers. It is questionable whether
such a market could sustain many sellers; whether the
market would function efficiently and the price levels at
which its supply and demand would converge are even
more uncertain. In addition, limited evidence is
discernible as to the [marginal] costs [of issuing blanket
licenses] facing [the PROs]. Consequently, any rate-
setting standard that calls, in the abstract, for a theoretic
construct of a competitive market in blanket licensing
must confront the reality that there exists minimal
evidence as to what that market would look like, much
less the prices it would yield.
Id. at 144 (footnotes omitted). Scholars have similarly argued that,
from an economic perspective, there is no “indisputably correct
solution” to the problem of determining the fair market value of a

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blanket license because “[i]n the noncompetitive market of musical
performance rights … a competitive price will never emerge, and
there is no economically meaningful method of determining a
competitive price.”14
The district court faces three primary obstacles to completing
the task assigned to it under the consent decrees. First, because “there
is no competitive market in music rights,” the parties and the court
“lack any economic data that may be readily translated into a measure
of competitive pricing for the rights in question.” Showtime II, 912 F.2d
at 577.
Second, in a competitive market, the price of a product or
service should equal the marginal cost to the seller of producing an
additional unit of that product or service. But “the marginal cost of
additional consumption of musical compositions is zero or even
negative.” Sobel, supra note 14, at 33-34.15 As a result, “according to
economic theory, the ‘competitive’ price for music [licenses] would be
zero (or less).” Sobel, supra note 14, at 34; see also Cirace, supra note 14,
at 283-84 (“Because marginal cost is zero in the market of musical
14 John Cirace, CBS v. ASCAP: An Economic Analysis of a Political Problem,
47 Fordham L. Rev. 277, 277, 304 (1978); see also Lionel S. Sobel, The Music
Business and the Sherman Act: An Analysis of the Economic Realities of Blanket
Licensing, 3 Loy. L.A. Ent. L.J. 1, 33 (1983) (“[T]he natural market forces of
supply and demand do not operate normally in the music [licensing]
business.”).
15 The marginal cost to the PROs of issuing a blanket license could be
negative “because each time they issue an additional blanket license, a
potential copyright infringer is eliminated, and thus their copyright
enforcement expenses are reduced.” Sobel, supra note 14, at 37; see also
ABC/CBS, 831 F. Supp. at 144 n.17 (noting that a blanket license “lowers [the
PRO’s] monitoring cost”).

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performance rights … the competitive price theoretically would also
be zero.”). Setting BMI’s price at zero, however, would conflict with
the goal of compensating copyright owners for the right to use their
musical works.
Third, BMI and NACPA both have substantial market power,
so a negotiation between BMI and NACPA involves a bilateral
monopoly. See Cirace, supra note 14, at 281. “One distinctive feature
of a bilateral monopoly is that … price and output are indeterminate.”
Id. at 283; see also id. at 304 (“Given the wide range of possible prices
in bilateral monopoly bargaining, the court, if it did set a price, would
probably choose the historical price with minor adjustments.”).
In light of these features of the relevant market, a district court
cannot identify a unique “market value” for a BMI blanket license.
“Rather than speak in terms of competitive market pricing, when such
a term carries vague significance within the context of the blanket
license market,” district courts have considered it “more instructive
to view the [c]ourt’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 license[s].’” ABC/CBS, 831 F. Supp. at 144-45 (quoting
Showtime II, 912 F.2d at 576). The district court will therefore “consider
previous agreements voluntarily entered between the parties, or
those similarly situated, as the starting point of its analysis” and then
“account for alterations in the economic conditions confronting the
parties, as well as appraise variations in the nature and value of the
rights at issue.” Id. The district court will not “merely endorse as
appropriate for today the terms of compromises concluded
yesterday,” but it also cannot “ignore the history of the parties’
preferences as expressed in their prior agreements.” Id. at 145. In fact,
the “prices negotiated voluntarily in an arms-length transaction offer

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the only palpable point from which to proceed towards an estimation
of fair value for later periods.” Id.
II
The price of a music license equals a percentage rate of the
revenue derived from the licensee’s use of the music. In this case, the
parties disagree as to both the rate and the definition of the gross
revenue base.
Historically, music license agreements between PROs and
concert promoters have defined the gross revenue base as the face
value of concert tickets sold. BMI seeks to expand the revenue base
for the Current Period to include, in addition to the face value of
tickets sold, (1) “revenues received by the promoter from any tickets
sold in the first instance directly onto the secondary market (including
any amounts above the face value of the ticket),” (2) “any ticket
service, handling, or other fees above the face value of the ticket paid
by the consumer if received by the promoter,” (3) “box suite and VIP
package revenues attributable to live concerts and paid to the
promoter or a venue or artist with which the promoter has a
contractual relationship,” and (4) “sponsorship revenues attributable
to live concerts and paid to the promoter.” BMI, 664 F. Supp. 3d at
478.
BMI recognizes that “[h]istorically, the revenue base for concert
promoter PRO licenses included only the face value of the tickets
sold,” but it argues that this “expanded revenue base” is necessary
“[t]o account for changes in the concert industry.” Appellee’s Br. 31.
NACPA maintains that the gross revenue base should continue to be
defined as the face value of concert tickets sold. According to
NACPA, “every agreement in the history of the industry” has
adopted that definition and it would be impracticable for concert

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26
promoters to calculate gross revenue under the new definition that
BMI proposes. Appellant’s Br. 54.
The district court began its analysis with the proposition that
the gross revenue base should equal the “fair market value of the
music” measured by “[w]hat the consumer pays to attend the
concert.” BMI, 664 F. Supp. 3d at 479. The district court proceeded
from that proposition to the conclusion that the gross revenue base
for the Current Period must be “enlarged to include not only the face
value of tickets, but also the value of tickets sold in the primary
instance directly onto the secondary market, ticket servicing fees
received by the promoter, and revenues from box suites and VIP
package[s] that are attributable to live concerts and paid to the
promoter or a contractually related third-party.” Id. at 485. The
district court explained that “[e]ach of those categories reflect[s]
payments to ‘receive the product or service in question,’ a live concert,
which is ‘an excellent indicator of its fair market value,’ while
controlling for revenues that never flow to the promoters.” Id. at 484
(citation omitted) (quoting Music Choice II, 316 F.3d at 195).
The district court acknowledged NACPA’s argument “that
calculating the gross in this manner is unworkable because promoters
do not have access to all the revenue information, specifically
revenues for boxes and VIP packages.” Id. at 485. But the district court
reasoned that “[l]imiting the revenues to those received by the
promoters or a contractually related third-party helps to alleviate
those concerns, even if it does not produce perfectly efficient
administration.” Id.
We conclude that the decision of the district court to expand the
definition of the revenue base for the Current Period was
unreasonable for three reasons. First, the district court did not provide

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27
an adequate justification for adopting a definition that has no
precedent among the benchmark agreements that the parties
identified. The district court recognized that calculating the expanded
revenue base would create administrative costs for NACPA, but it did
not identify any corresponding benefits to the parties that would
offset the costs. The record indicates that there are no such benefits.
Second, even accepting the premise that the revenue base should be
measured by what the consumer pays to attend the concert—rather
than by the face value of concert tickets sold—the district court
included revenue categories that do not reflect what the consumer
pays for the concert. Third, the district court did not resolve the
objection that the expanded revenue base would be commercially
impracticable.
A
The district court considered twelve benchmark agreements—
including agreements by both regulated and unregulated domestic
PROs with NACPA and non-NACPA promoters as well as with
individual members of NACPA such as Live Nation and AEG. All of
the benchmark agreements defined the revenue base in the same way:
the face value of concert tickets sold with “customary deductions for
ticket servicing fees, taxes, facility fees, and parking.”16
The district court did not address the fact that none of the
domestic benchmark agreements the parties identified used anything
other than the face value of tickets sold to measure the revenue base.
Even assuming that the newly defined revenue base captured the
“fair market value of the music”—which, as explained in Part II.B., it
16 Memorandum in Support of Motion for Judgment as a Matter of Law at
44, BMI v. NACPA, No. 18-CV-8749 (S.D.N.Y. Dec. 20, 2022), ECF No. 171;
see also App’x 440-41.

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28
did not—the district court need not define the revenue base according
to an abstract notion of “what retail customers pay to receive the
product or service in question” if there is a “valid reason for using a
different measure.” Music Choice II, 316 F.3d at 195. In this case, there
was not only a valid but a compelling reason to define the revenue
base as the face value of tickets sold: every domestic benchmark
agreement that the district court considered defined the revenue base
that way.
Benchmarks play the paramount role in rate-setting
proceedings because it is impossible to identify an indisputably
correct market price based on economic principles. When the district
court adopts a rate, a revenue base, or a substantive license term that
has no precedent among the benchmark agreements it considered, it
must have a compelling reason for doing so.
The primary role of the district court in a rate-setting
proceeding is to serve “as a moderating influence” on the PRO and to
“minimize the likelihood that [its] evident market leverage may be
exerted to obtain unacceptably inflated price levels for its license[s].”
ABC/CBS, 831 F. Supp. at 144-45. If the industry has settled on a
particular definition of gross revenue—or another substantive license
term—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.
The economic context supports the conclusion that a district
court which aims to curb the regulated PRO’s excessive bargaining
power must ordinarily decide only the price of a music license while
holding the substantive terms, such as the definition of gross revenue,
fixed. As contract law scholars have explained:

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29
It is widely believed that parties exercise bargaining
power by requiring weaker contracting partners to take
unfavorable [substantive] terms. … But when bargaining
power is determined prior to contract formation, as is
common in business contexts, these views are incorrect.
Bargaining power instead is exercised in the division of
the surplus, which is determined by the price term.
Parties jointly choose the contract terms so as to
maximize the surplus, which the price may then divide
unequally.17
In other words, both PROs and promoters will prefer the set of
substantive license terms—including the revenue base definition—
that maximizes the total value created by the blanket license. The
party with the greater bargaining power will then seek a greater share
of that value by negotiating for a higher percentage rate. It is in
neither party’s interest to adopt a revenue base definition that
imposes administrative costs without adding to the total surplus that
the parties share. Consistent with these dynamics, PROs and concert
promoters have uniformly adopted a simple and easily administrable
revenue base definition—the face value of concert tickets sold—and
have negotiated varying royalty rates according to the relative
bargaining power of the parties.18
17 Alan Schwartz & Robert E. Scott, Contract Theory and the Limits of Contract
Law, 113 Yale L.J. 541, 554 (2003).
18 NACPA’s economic expert made a similar point in his trial testimony.
See App’x 346-47 (“I really don’t think there is such a thing as an
economically ideal revenue base. … [F]or any given amount of royalties
that are going to be paid, you can achieve that with a broad base and a
relatively low percentage or with a narrower base and a higher percentage.
So the choice of the base really is just a matter of convenience and
practicality in terms of tracking it. … [I]f the convenient and practical base
somehow yields too small a revenue stream, you can always deal with that

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30
The parties that negotiated the twelve benchmark agreements
concluded that the benefits, if any, of a broader or more complex
revenue base definition did not outweigh the administrative costs.
The district court offered no reason to believe that this negotiation
between BMI and NACPA should be the first to reach a different
conclusion. The district court admitted that its broader revenue base
definition “does not produce perfectly efficient administration.” BMI,
664 F. Supp. 3d at 485. But the district court did not identify any
corresponding benefits to justify these administrative costs or any
other reason to expect that broadening the revenue base will increase
the surplus from the licensing agreement.
BMI argues on appeal that failing to include all revenue streams
that flow to Live Nation and AEG in the gross revenue base would
allow those entities to play a “revenue shell game” to minimize
payments to PROs. Appellee’s Br. 34. According to BMI and some
amici, Live Nation and AEG have increased “junk” ticketing fees—
and thereby boosted revenue to their ticketing affiliates Ticketmaster
and AXS—without proportionately increasing the face value of the
tickets. In other words, Live Nation and AEG each seeks “to pretend
that songwriters should only be paid out of its unilaterally
determined promoter pocket while it stuffs revenues into its other
pockets.” Brief of Amicus Curiae National Music Publishers’
Association 12.
The district court did not adopt this “shell game” argument or
even mention the argument in its opinion. In any event, the argument
does not justify the departure from the uniform substantive terms of
the benchmark agreements. If Live Nation is manipulating revenues
in this way, the expanded revenue base definition may prevent Live
by increasing the royalty percentage.”).

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31
Nation from transferring value to itself and away from BMI and its
artists. But it would not increase the joint surplus from the blanket
license agreement; to the contrary, it would reduce the surplus
because it is costly to administer. BMI could preserve the larger
surplus by retaining the simpler definition and still receive
compensation for any losses that result from the promoters’ “shell
game” by insisting on a higher percentage rate. See supra note 18.
Adjusting both the rate and the base, by contrast, would allow
another sort of shell game that enables BMI to capture revenue
beyond the appropriate rate at the cost of an overall destruction of
value.
BMI argues that the expanded revenue base is necessary “[t]o
account for changes in the concert industry.” Appellee’s Br. 31. The
primary change is the advent of large and powerful promoters. Even
if the emergence of Live Nation and AEG has increased NACPA’s
bargaining power vis-à-vis BMI—which, as explained in Part III.C.,
seems unlikely—the relative bargaining power of the parties does not
ordinarily affect substantive contract terms such as the revenue base
definition; it affects only the price term, which in this case is the
royalty rate. See Schwartz & Scott, supra note 17, at 554.
In a real-world, arm’s-length negotiation, the PRO would have
no incentive to insist on a definition of the revenue base that increases
the administrative cost to music users without a corresponding
benefit—and that thereby reduces the total surplus value of the
licensing agreement. Meanwhile, if an expanded revenue base would
increase the total value of the deal, then a music user would agree to
it regardless of its bargaining power. But there is no apparent
justification for the district court to impose an unprecedented revenue
base against a party’s will. The district court acted unreasonably by

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32
departing from the industry-standard revenue base definition
without a compelling reason.
B
Even if it were appropriate to define the revenue base not by
reference to historical standards but according to the principle of
“[w]hat the consumer pays to attend the concert,” BMI,
664 F. Supp. 3d at 479, the definition adopted here does not conform
to that principle. The district court included categories of revenue—
from box suites and VIP packages—that do not reflect what the
consumer pays to attend the concert. The district court reasoned that
while “[b]ox suites and VIP packages may include charges in addition
to the seat ticket, like for food or merchandise,” a consumer “must
pay the total price if she wishes to sit in these premium seats and hear
the music.” Id. at 484.
In reaching that conclusion, the district court misinterpreted
our decision in Music Choice II. That case involved a company in “the
so-called residential music service industry, consisting of companies
providing music to cable and satellite TV subscribers.” Music
Choice II, 316 F.3d at 191. The district court had held “that retail
revenues of the cable / satellite operators did not properly reflect the
fair market value of the music because in paying the retail price the
subscriber was paying for materials and services not provided by the
author of the music, such as the machinery of transmission and
delivery to the subscriber’s home.” Id. at 194. For that reason, the
district court “concluded that the true value of the music is expressed
at the earlier stage where it is incorporated into Music Choice’s
programs and sold wholesale to the cable / satellite operators.” Id.
(internal quotation marks omitted). We vacated the judgment of the
district court and remanded for further proceedings. In doing so, we

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recognized that “to make the music available to its customers, the
retail seller must incur expenses for various processes and services
not provided by the owner of the music, such as the laying of cable,
the establishment of satellite systems, etc.” Id. at 195. But we said that
these retail expenses were “in no way incompatible with the
proposition that retail revenues derived from the sale of the music
fairly measure the value of the music” because “[t]he customer pays
the retail price because the customer wants the music, not because the
customer wants to finance the laying of cable or the launching of
satellites.” Id.
In this case, the district court decided that the perks of a box
suite or a VIP package resemble “the machinery of transmission and
delivery to the subscriber’s home” that we described in Music
Choice II. Id. at 194. The district court explained that while the retail
price of a box suite or a VIP package covers items whose “only
relationship to the music is in connection with its delivery to market,”
the price still “reasonably reflects the value of the music because the
customer is willing to pay it to hear the music.” BMI, 664 F. Supp. 3d
at 484.
The analogy to Music Choice II is misplaced. The customer who
buys a cable television package with a music channel “pays the retail
price because the customer wants the music, not because the customer
wants to finance the laying of cable or the launching of satellites.”
Music Choice II, 316 F.3d at 195. Those retail expenses represent the
cost of delivery to the consumer. The customer who buys a VIP
concert package, by contrast, pays the premium retail price precisely
because the customer does want to finance the delivery of additional
services, such as food and drinks, access to a box suite, a backstage
pass, or other benefits. The VIP customer pays more than other
customers to listen to the same music because the price of a VIP ticket

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involves a payment not only to attend the concert but also to receive
these additional benefits. The retail expenses associated with
producing a concert—which would reflect the cost of delivery to the
consumer—are already reflected in the price of a regular ticket.
BMI suggests that “[d]efining the revenue base to explicitly
include VIP revenues is also necessary to ensure consistency in
payment among promoters and across concerts” because “[e]ven
though NACPA … instructed its members in 2016 that such VIP
revenues should be included in the revenue base, concert promoters
took inconsistent positions on the inclusion of such revenues.”
Appellee’s Br. 57 (citation omitted); see also BMI, 664 F. Supp. 3d at 484
(noting that “[r]evenues from both [box suites and VIP packages] are
in some instances already being reported in the base”).19 BMI and
NACPA may freely agree to include VIP revenues in the gross
revenue base. But even on the assumption that the district court was
correct to theorize about an ideal revenue base that reflects the
principle of “[w]hat the consumer pays to attend the concert,” BMI,
19 It is unclear whether NACPA issued the instruction that BMI describes.
BMI identifies an email dated May 18, 2016, in which the sender—
presumably a representative of NACPA—states that “if a fan has no choice
and must pay for both the concert ticket + the cost to access another function,
the bundled revenue is part of the ‘total concert experience’ and should be
considered for license fee calculations.” Supp. App’x 419 (emphasis in
original). The email implies that if the fan may choose between a standard
ticket and a VIP ticket, then the extra cost of the VIP ticket would not be
included in the license fee calculations. The same email explains that “[t]he
spirit of our agreements [with BMI and ASCAP] is for license fees to be paid
on the dollar figure your office settles with the act for their musical
performance.” Id. at 418. Revenues from box suites and VIP packages are
generally paid to the venue rather than to the artist.

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664 F. Supp. 3d at 479, the inclusion of VIP revenues violates that
principle.
NACPA identifies another problem with the inclusion of box
suite revenues: box suites are “sold mostly through annual contracts
for all events hosted at a venue, including sporting events.”
Appellant’s Reply Br. 35. The district court purported to include only
those box suite revenues that are “attributable to live concerts.” BMI,
664 F. Supp. 3d at 485. But NACPA objects that “there is no way of
knowing how much of [the annual box suite] revenue is
attributable … to live music events, let alone to a particular concert.”
Appellant’s Br. 55-56. BMI responds that the trial evidence “showed
that box suites can be sold for individual concerts.” Appellee’s Br. 58.
Even if that is possible, however, the trial evidence established that
most box suite sales are made on an annual basis. See, e.g., App’x 203
(testimony of the CEO of AEG that “out of 300 suites, probably 294 of
them are on annual contracts”). And the venues rather than the
promoters apparently control whether box suites are sold on an
individual or annual basis.
The important point here is that the district court did not even
address the potential administrative difficulties in disaggregating live
concert revenue from annualized box suite sales. And a rate term
cannot be reasonable if the district court considered only its
correspondence to an abstract principle without regard to whether its
implementation would be administratively feasible and economically
rational.
C
NACPA argues that the expanded revenue base itself is
“commercially impracticable.” Appellant’s Br. 55. According to
NACPA, “[u]nrebutted testimony at trial made clear that NACPA

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36
promoters do not have access to the revenue data that would be
necessary to apply all of these expanded revenue categories to the rate
period at issue.” Id. The district court addressed this problem in a
single sentence: “Limiting the revenues to those received by the
promoters or a contractually related third-party helps to alleviate
those concerns, even if it does not produce perfectly efficient
administration.” BMI, 664 F. Supp. 3d at 485.
That conclusion indicates that the district court sought to
conform the revenue base definition to an abstract notion of what
properly counts as revenue regardless of whether that definition
would reduce the surplus value available to the parties. But there is
no single correct definition of the revenue base; the primary task of
the district court is to reasonably approximate the licensing
agreement that would result from an arm’s-length transaction
between a willing seller and buyer in which the exertion of “market
leverage” is “moderat[ed]” to avoid “unacceptably inflated price
levels.” ABC/CBS, 831 F. Supp. at 145. As explained above, it would
not be rational for the parties to agree to incur administrative costs
that have no corresponding benefit, so an agreement that imposes
such costs cannot be reasonable.
Even on its own terms, moreover, the statement of the district
court is unresponsive to the concern of commercial impracticability.
NACPA explains that its promoters do not have access to data about
revenues received by contractually related third parties rather than
by NACPA promoters. “The fact that the non-promoter entities
receiving such revenues may have a ‘contractual relationship’ with
promoters does not solve the promoters’ absence-of-data problem
when the promoters are not actually receiving the revenues.”
Appellant’s Reply Br. 36. BMI’s economic expert “opined that
promoters could include revenue reporting obligations in their

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37
contracts” to “alleviat[e] the practical difficulty.” Appellee’s
Br. 33 n.8. But that means the new revenue base definition requires
the promoters not only to modify industry-standard contracts but
also to ensure that venues comply with the new reporting obligations
and to verify the accuracy of the revenue figures the venues report. It
would not be rational for the parties to agree to a licensing agreement
that imposed such extensive costs as the rewriting of third-party
contracts and the establishment of a new data collection bureaucracy.
It is therefore unreasonable for a district court to impose it.
We conclude that the district court erred by expanding the
revenue base. First, the district court did not justify its unprecedented
departure from the industry-standard definition of “gross revenue,”
and the record indicates that no justification is available. Second, the
district court prioritized adherence to an abstract principle of “[w]hat
the consumer pays to attend the concert” but its definition did not
even conform to that principle. Third, the district court did not merely
fail to address the objection that the expanded revenue base would be
commercially impracticable but even acknowledged that it was
imposing inefficiencies without an economic justification.
III
The district court further erred in the benchmark analysis that
led it to adopt a rate of 0.5 percent. First, the district court failed to
assign weights to the benchmarks and implicitly accorded greater
weight to the SESAC and GMR benchmarks than to the BMI and
ASCAP benchmarks. Second, the district court erroneously
considered license agreements with non-NACPA promoters. Third,
the district court failed to identify any significant changes in the live
concert industry since the BMI and ASCAP benchmark agreements
were negotiated that would justify a higher rate.

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A
The district court “must determine the degree of
comparability” between the parties that negotiated each of the
benchmark agreements, on the one hand, and the parties before the
court, on the other. Music Choice IV, 426 F.3d at 95 (internal quotation
marks omitted). That comparability analysis will determine the
weight it assigns to each benchmark agreement. And the district court
may thereby “explain how it reached a particular rate sufficiently to
permit our review of the rate for reasonableness.” Id. at 99.
In this case, the district court did not indicate the relative
weights it assigned to the benchmark agreements it considered; nor
did it explain how it derived the rate of 0.5 percent from those
benchmarks. It listed the seven different implied rates reflected in the
twelve benchmarks it considered: 0.21 percent, 0.23 percent,
0.34 percent, 0.36 percent, 0.37 percent, 0.51 percent, and 0.54 percent.
And it “therefore” decided that a rate of 0.5 percent would be “a
reasonable one.” BMI, 664 F. Supp. 3d at 488.
An average of the implied rates for the twelve benchmark
agreements yields a rate of 0.44 percent. An average of the seven
different percentage rates represented among the twelve benchmarks
yields a rate of 0.37 percent. The BMI and ASCAP benchmarks all had
implied rates between 0.23 and 0.37 percent. To arrive at a rate of
0.5 percent based on the benchmarks, the district court must have
implicitly assigned greater weight to the benchmarks with higher
implied rates: the SESAC and GMR benchmarks.
If so, that was unreasonable. The district court correctly
recognized that “fairly negotiated prior agreements are the proper
starting point from which to determine reasonable fees for
subsequent periods.” Id. at 486 (quoting United States v. ASCAP, 157

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39
F.R.D. 173, 195 (S.D.N.Y. 1994)). And it correctly determined that
“ASCAP is indisputably BMI’s closest comparator” and that “[t]he
rights in question in the ASCAP agreement are essentially the same
as those NACPA seeks to license from BMI.” Id. In the agreements
“[f]or those similar rights, NACPA has paid ASCAP and BMI at near
parity in prior agreements.” Id. Based on these conclusions, one
would expect the district court to assign greater weight to the BMI
and ASCAP benchmarks.
The district court, however, explained that “unconstrained by
a consent decree, GMR and SESAC have been able to preserve the
legal monopoly power granted by the Copyright Act that rate-setting
is intended to incorporate” and that “[t]he analogous market in which
GMR and SESAC operate thus reflects the level of competition that
would be inherent in a direct licensing negotiation.” Id. at 487. Those
considerations—and the apparent decision of the district court to
assign greater weight to the SESAC and GMR benchmarks—suggest
that it adopted the argument that these benchmarks “provide 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” because “SESAC and GMR have no antitrust consent decree
mandating that those PROs grant a license to music users upon
request.” Brief of Amicus Curiae ASCAP 4.
This argument implies that—far from serving “to minimize the
likelihood” that the “evident market leverage” of the regulated PROs
will produce “unacceptably inflated price levels”—the consent
decrees have instead kept BMI’s and ASCAP’s rates artificially low.
Showtime II, 912 F.2d at 576. But we have said that “rate-setting courts
must take seriously the fact that they exist as a result of monopolists
exercising disproportionate power over the market for music rights.”
Music Choice IV, 426 F.3d at 96; see also Showtime II, 912 F.2d at 570

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(“Though the rate court’s existence does not mean that ASCAP has
violated the antitrust law, the court need not conduct itself without
regard to the context in which it was created.”). As long as the consent
decrees remain in place, 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. ABC/CBS,
831 F. Supp. at 145.
The district court suggested that the market shares of SESAC
and GMR “are more comparable to those of the large music
publishers that music users would have to negotiate with directly in
the absence of PROs.” BMI, 664 F. Supp. 3d at 487. But a publisher
with a catalogue similar in size to those of SESAC and GMR would
not necessarily charge a competitive price for a blanket license.
NACPA claims that “SESAC and GMR have repeatedly faced claims
that they have extracted supracompetitive fees in violation of the
antitrust laws.” Appellant’s Br. 40; see also id. at 11 & n.2. The district
court decided that the “realities” of extensive “negotiations between
SESAC, GMR, and promoters cannot be reconciled with NACPA’s
claim that the PROs are extracting rates that are anti-competitive.”
BMI, 664 F. Supp. 3d at 488. The fact that a PRO engaged in extensive
negotiations, however, does not show that it lacks market power. A
negotiation might begin with a demand for a higher supracompetitive
price and result in a lower but still supracompetitive price.20 The
district court said that “[t]he fact that promoters elected to buy a
blanket license for their own business goals and convenience does not
20 Market power does not determine bargaining power. See Schwartz &
Scott, supra note 17, at 553 (explaining that “[i]n standard bargaining theory,
bargaining power is a function” of “the parties’ relative patience” and “each
party’s disagreement point (or next-best option)”). And NACPA has its
own market power.

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establish that they did so under compulsion.” BMI, 664 F. Supp. 3d at
488. But a lack of compulsion does not establish that the seller is not
charging a supracompetitive price. A monopolist can raise its price as
long as the alternative to its product is sufficiently costly or
inconvenient.21
Other district courts have noted that “[t]he SESAC license has
historically been a benchmark of limited value because the public
knows little about the size of the SESAC repertoire” and therefore “it
is difficult to adjust a SESAC license rate to arrive with confidence at
an implied ASCAP rate.” In re Pandora Media, Inc., 6 F. Supp. 3d 317,
362 (S.D.N.Y. 2014). 22 Moreover, “SESAC’s small size, when
compared to ASCAP and BMI, not only amplifies any error in a
projection, but also reduces the incentive to resist SESAC’s rate
requests” because “the cost associated with resistance may not be
justified when a license fee is relatively small.” Pandora Media,
6 F. Supp. 3d at 362.23
21 Cf. Appellant’s Br. 39-40 (“[W]hile their repertories are small, their
licenses are still ‘must haves,’ meaning concert promoters have no option
to walk away from any negotiation with SESAC and GMR without taking
a license.”); BMI, 664 F. Supp. 3d at 488 (“[P]romoters opted to not ask
performers for their song lists before the show because doing so, and then
direct licensing, is, in the words of Mr. Marciano, ‘a lot of administrative
work. Not impossible, but it’s a lot of administrative work.’ Instead
promoters chose to negotiate heavily with GMR and SESAC.”) (citation
omitted).
22 In this case, NACPA’s economic expert explained that a difference of
four percentage points in estimating GMR’s market share doubled the
“implied royalty rate for BMI.” Affidavit of Adam B. Jaffe ¶ 187, BMI v.
NACPA, No. 18-CV-8749 (S.D.N.Y. Oct. 7, 2022), ECF No. 118.
23 See Brief of Amici Curiae Motion Picture Association, Inc., et al. 8
(arguing that the “impact” of SESAC’s and GMR’s “supra-competitive

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In light of these considerations, it was unreasonable for the
district court to assign greater weight to the SESAC and GMR licenses
than to the prior BMI and ASCAP agreements.
B
The district court additionally erred by treating agreements
with promoters unaffiliated with NACPA as comparable
benchmarks. The district court reasoned that “[c]ompared to the BMI-
NACPA license,” the agreements between BMI or ASCAP and non-
NACPA promoters “arose in a market that reflects the same degree of
competition and economic circumstances, and they cover the same
rights.” BMI, 664 F. Supp. 3d at 486. The district court added that
“[a]lthough NACPA and non-NACPA promoters differ in the scope
of their business operations, they are direct competitors for shows
hosted in smaller venues.” Id. The district court did not expressly
address the licenses between SESAC or GMR and non-NACPA
promoters, but BMI maintains that the district court implicitly
applied the same reasoning to those licenses. See Appellee’s Br. 54.
That reasoning was inadequate to establish comparability. The
ASCAP/NACPA and ASCAP/non-NACPA licenses covered
approximately the same period—2020-2021 and 2021, respectively—
but the implied rates differed by a significant amount: 0.14 percent.
See BMI, 664 F. Supp. 3d at 482. Similarly, the SESAC/NACPA and
SESAC/non-NACPA licenses were issued around the same time—
covering 2019-2024 and 2021, respectively—but the rates differed by
licensing practices on licensees has been cabined before the decision below,
in large part because (a) the actual prices, while inflated, are not so high as
to be ruinous to licensees given the comparatively smaller repertories
involved; and (b) no rate court until now had relied on SESAC or GMR rates
in setting rates for the much larger BMI and ASCAP repertories”).

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0.17 percent. Id. The difference in the rates indicates that the non-
NACPA promoters are not similarly situated to NACPA when
negotiating with PROs.24 NACPA explains that BMI has sought to
“realign” NACPA and non-NACPA promoter rates “since 2013” but
“has not been able to achieve that result through arm’s-length
negotiations.” Appellant’s Reply Br. 31. 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 PROs.
“NACPA is itself an aggregator” and “represents the interests of the
largest promoters.” Brief of Amicus Curiae National Music
Publishers’ Association 8. That difference makes the agreements with
non-NACPA promoters inappropriate benchmarks.
The parties do not address whether, if agreements with non-
NACPA promoters are invalid benchmarks, GMR’s agreements with
Live Nation and AEG remain valid benchmarks. Live Nation, AEG,
and their affiliates compose about 75 percent of NACPA’s
membership and pay about 90 percent of NACPA’s licensing fees
under its agreement with BMI. According to one amicus, “[f]or all
practical purposes, NACPA is Live Nation and AEG.” Id. at 14. All of
the GMR agreements that the district court considered—including the
agreements with Live Nation and AEG—have the same rates and rate
structure, which may suggest that the agreements are non-negotiated
form licenses. Yet witnesses from Live Nation and AEG testified that
the GMR licenses were heavily negotiated. 25 Roux originally
24 See also Appellant’s Reply Br. 30-31 (noting that in 2009 “BMI negotiated
higher rates for non-NACPA promoters compared to the prevailing rates
for NACPA members” and that this “differential treatment underscores
that NACPA and non-NACPA promoters are not similarly situated”).
25 The president of U.S. concerts at Live Nation, Bob Roux, testified that he
“actively negotiated Live Nation’s license with GMR” and “exchanged

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recommended that Live Nation negotiate a license agreement with
GMR “through NACPA” and agree to “GMR[’s] original ask” with
respect to the percentage rate. Trial Transcript (10/31/22) at 497. On
the one hand, the testimony suggests that the licenses between GMR
and Live Nation and AEG reflected a negotiated rate and that the
rates would have been similar if the licenses had been negotiated
through NACPA. On the other hand, NACPA negotiated a
significantly lower rate with SESAC—a PRO of similar size to GMR—
than the non-NACPA promoters obtained.
We leave this question for the district court to address in the
first instance. The district court should determine whether the rate
and rate structure in the GMR licenses with Live Nation and AEG
reflect what NACPA would have achieved in a negotiation with
GMR. If NACPA would have negotiated a significantly lower rate
with GMR, then the two agreements would not be comparable
benchmarks. If the rate and rate structure in the two licenses reflect
what NACPA would have obtained in a negotiation with GMR, then
the agreements would be comparable benchmarks. This exercise is
admittedly hypothetical. Apparently, GMR was unwilling to
negotiate with NACPA because of NACPA’s 6 percent administrative
discount. See Agreed Findings of Fact ¶ 62 (“GMR does not license
with NACPA. GMR refused to negotiate with NACPA and instead
engaged in direct negotiations with individual promoters.”). But
drafts” and “had dozens of phone calls” with GMR representatives. Trial
Transcript (10/31/22) at 505. Roux said that the resulting deal “was reached
after many months of negotiations” and “was fair” to both GMR and Live
Nation. Id. at 506-07. The chairman and CEO of AEG, Jay Marciano, testified
that “AEG Presents tr[ied] to negotiate a better deal than the one it
eventually signed with GMR.” Trial Transcript (11/2/22) at 840-41, BMI v.
NACPA, No. 18-CV-8749 (S.D.N.Y. Dec. 23, 2022), ECF No. 186-87.

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projecting the outcome of a hypothetical negotiation is the purpose of
the rate-setting proceeding. See Showtime II, 912 F.2d at 569 (“Fair
market value is a factual matter, albeit a hypothetical one.”).
Assuming that the GMR licenses with Live Nation and AEG are
appropriate benchmarks, the GMR licenses with non-NACPA
promoters remain inappropriate even if the licenses include the same
rate. In any event, because all six GMR licenses cover a similar period
and contain identical quantitative terms, it is unnecessary to include
all six as benchmarks. Doing so would risk introducing bias into the
rate determination. Even the two possible GMR benchmarks—the
agreements with Live Nation and AEG—deserve less weight relative
to the BMI and ASCAP benchmarks.
C
The district court did not identify any relevant changes in
economic circumstances that justify its departure from the prior rates
negotiated by NACPA with BMI and ASCAP. The district court
gestured toward changes in the live concert industry because of the
emergence of Live Nation and AEG, but it did not explain why those
changes justified a higher rate. Moreover, the BMI and ASCAP
benchmarks mostly postdate the emergence of Live Nation and AEG.
The district court expressly found that “[t]here is no evidence in the
record that the economic circumstances in 2018” when the
ASCAP/NACPA license was negotiated “are significantly different
from the present day.” BMI, 664 F. Supp. 3d at 486.
On appeal, BMI does not offer a persuasive reason why the
emergence of Live Nation and AEG as dominant players in the
concert promotion industry would justify a departure from the
historical rate. The argument is that “[f]or all practical purposes,
NACPA is Live Nation and AEG, and those entities all have

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46
substantial market and negotiating power.” Brief of Amicus Curiae
National Music Publishers’ Association 14. But as the bargaining
power of BMI’s counterparty increases, the counterparty should be
able to insist on a lower rate in an arm’s-length negotiation. In fact, it
appears that the emergence of Live Nation and AEG did not enable
NACPA to obtain a lower rate in its last negotiation with ASCAP.
BMI’s economic expert testified that the 2018 ASCAP/NACPA license
reflected “quite a large increase” from prior years. Supp. App’x 185.26
The record does not establish that the consolidation of the live concert
industry afforded NACPA additional bargaining power. It may be
that, even before the emergence of Live Nation and AEG, NACPA
already represented more or less all concert promoters, so BMI and
ASCAP already had to negotiate rates with a monopsonist.
BMI argues that—in 2018 when the ASCAP/NACPA license
was negotiated—ASCAP knew “that BMI was likely to commence a
rate proceeding against NACPA. Accordingly, ASCAP negotiated for
an early termination right. By securing this right, ASCAP positioned
itself to benefit if BMI was successful in litigation, without incurring
the substantial costs that BMI would incur.” Appellee’s Br. 23
(citations omitted). The implication is that ASCAP did not necessarily
believe in 2018 that the rate to which it agreed represented a fair rate.
The district court did not adopt this theory; to the contrary, it decided
that “[t]he ASCAP-NACPA license is a valid benchmark.” BMI,
664 F. Supp. 3d at 486. Moreover, BMI conceded before the district
court that the 2018 ASCAP/NACPA rate reflected “what the parties
26 According to NACPA, “ASCAP’s new rate reflected a 21% increase over
the prior effective rate for the 2018-2019 period and an additional 19.5%
increase for the 2020-2021 period—increases that translate into several
millions of additional dollars paid by NACPA to ASCAP.” Appellant’s
Reply Br. 10 n.2.

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thought Judge Cote would do in a rate court proceeding.” 27 That
concession conflicts with the contention that ASCAP expected BMI to
obtain a higher rate in its rate-setting proceeding.
Moreover, the argument does not make sense from an
economic perspective. If ASCAP believed that the rate in the 2018
ASCAP/NACPA agreement was unfairly low and that BMI would
obtain a higher rate in its rate-setting proceeding, then ASCAP would
have insisted on—and likely would have obtained—a higher rate in
its own negotiation. That outcome not only would have allowed
ASCAP to collect more revenue; it also would have increased the
likelihood that BMI would obtain a higher rate in the rate-setting
proceeding by providing a higher benchmark rate.
The district court suggested that “[i]ncreasing the rate of a
license for live concerts better reflects the fair market value placed on
licenses in music intensive industries.” BMI, 664 F. Supp. 3d at 488.
The district court explained that “[l]icenses in music intensive
industries, like commercial radio stations or virtual live concert
streaming services, have higher rates because music is at the heart of
the product being offered by the business.” Id. By contrast, “in a less-
music intensive industry, like television sporting events or talk radio,
the music is supplemental to the consumers’ primary purpose and
thus the rate owed to BMI’s affiliates for their contributions is
smaller.” Id. at 488-89. Because “it is indisputable that music is
essential to a live concert,” the district court concluded that “[t]hose
who contribute to the musical compositions should be compensated
accordingly.” Id. at 489. Yet the commercial conditions in the “music
intensive industries” cannot be comparable to the live concert
27 Post Trial Memorandum at 55, BMI v. NACPA, No. 18-CV-8749 (S.D.N.Y.
Jan. 1, 2023), ECF No. 209.

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48
industry because music users such as radio stations and streaming
services pay rates of up to 2.5 percent—far higher than what even the
regulated PROs are able to charge for performance licenses.28
Based on the considerations we have identified, the comparable
benchmark agreements are the BMI/NACPA license, the
ASCAP/NACPA license, the SESAC/NACPA license, and possibly
the GMR/Live Nation and GMR/AEG licenses. The primary rates for
these agreements are 0.21 percent, 0.27 percent, 0.40 percent, and
0.63 percent, respectively. An average of these four rates yields a rate
of 0.38 percent. If the BMI and ASCAP benchmarks were to receive
double the weight of the SESAC and GMR benchmarks, then the
resulting rate would be 0.33 percent.
Accordingly, a well-supported rate for the new BMI/NACPA
license would be significantly lower than the rate imposed by the
district court, but it may be higher than the rate for the preexisting
BMI/NACPA license. To arrive at such a rate, the district court “must
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.” Music Choice IV, 426 F.3d at 95,
99 (internal quotation marks omitted). We remand for the district
court to do so.
IV
The district court adopted BMI’s rate quote for the Retroactive
Period that extends from January 1, 2014, to June 30, 2018. The parties
28 See Trial Transcript (10/25/22) at 154-55, BMI v. NACPA, No. 18-CV-8749
(S.D.N.Y. Dec. 23, 2022), ECF No. 176; see also Pandora Media, 6 F. Supp. 3d
at 372 (“The headline rate for the ASCAP-Pandora license for the years 2011
through 2015 is set at 1.85% of revenue for every year of the license term.”).

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do not devote as much argument to that decision on appeal,
presumably because the parties’ proposed rates do not differ much.
NACPA’s economic expert estimated that BMI’s rate quote for the
Retroactive Period implied a unitary rate of 0.28 percent, and NACPA
itself sought a rate of 0.23 percent. See App’x 372. In addition, the
district court left the revenue base for the Retroactive Period “defined
to include only the face value of the ticket (exclusive of all fees and
other charges).” BMI, 664 F. Supp. 3d at 477. The district court
reasoned that BMI’s rate quote for the Retroactive Period was
reasonable because it “would align the NACPA rates with the rates
paid to BMI by non-NACPA promoters during that time,” and the
district court had “already found that the BMI-nonNACPA
benchmark is valid.” Id. at 489; see also Appellee’s Br. 66 (“For over a
decade, BMI licensed NACPA and non-NACPA promoters at the
same rates. BMI’s rate quote for the Retroactive Period returns that
alignment.”) (citation omitted).
As explained above, the district court unreasonably relied on
licenses with promoters unaffiliated with NACPA. The comparable
benchmarks indicate that an arm’s-length negotiation would not
result in an alignment of NACPA rates with those negotiated by non-
NACPA promoters. And it is unsurprising that NACPA, which
represents many concert promoters, would have the market power to
negotiate a lower rate. It was unreasonable for the district court to
adopt a rate quote for the Retroactive Period on the ground that it
would align NACPA rates with non-NACPA rates.
V
BMI argues in its cross-appeal that the district court erred by
denying its motion for prejudgment interest. We have held that “[t]he
decision to award prejudgment interest is governed by the equities,

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reflecting ‘considerations of fairness’ rather than ‘a rigid theory of
compensation.’” SEC v. Contorinis, 743 F.3d 296, 308 (2d Cir. 2014)
(quoting Blau v. Lehman, 368 U.S. 403, 414 (1962)). The decision to
award prejudgment interest “should be a function of (i) the need to
fully compensate the wronged party for actual damages suffered,
(ii) considerations of fairness and the relative equities of the award,
(iii) the remedial purpose of the statute involved, and/or (iv) such
other general principles as are deemed relevant by the court.”
Wickham Contracting Co. v. Local Union No. 3, 955 F.2d 831, 833-34 (2d
Cir. 1992). “Awards of prejudgment interest must not result in over-
compensation of the plaintiff,” however, and are disfavored when
“the statute itself fixes damages deemed fully compensatory as a
matter of law.” Id. at 834.
The BMI Consent Decree provides that during the pendency of
any rate negotiation or rate-setting proceeding, “the applicant shall
have the right to use any, some or all of the compositions in [BMI’s]
repertory … without payment of any fee or other compensation.”
BMI Consent Decree § XIV(A). However, “either the applicant or
[BMI] may apply to [the district court] to fix an interim fee pending
final determination of what constitutes a reasonable fee.” Id. § XIV(B).
If the district court fixes an interim fee, BMI must then issue a license
“providing for the payment of a fee at such interim rate from the date
the applicant requested a license.” Id. Once the district court makes
its decision, “the reasonable fee finally determined by [the district
court] shall be retroactive to the date the applicant requested a
license.” Id. The consent decree does not specify whether BMI is
entitled to prejudgment interest if the reasonable fee the district court
ultimately sets is higher than the interim fee.
Rather than petitioning the district court to fix an interim fee,
the parties in this case agreed in 2014 to an interim fee of 0.3 percent

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of gross revenue—defined as the face value of tickets sold—for
concerts held in venues seating under 10,000 and to an interim fee of
0.15 percent for concerts held in venues seating over 10,000. See BMI,
674 F. Supp. 3d at 72. The 2014 agreement does not specify whether
BMI would be entitled to prejudgment interest if the reasonable fee
ultimately exceeds the interim fee.
The district court decided that even though the parties had
negotiated an interim fee agreement rather than petitioned to fix an
interim fee, there was “no reason to ignore the relationship between
the interim fee and final fee as outlined in the Consent Decree.” Id.
at 73. It explained that “Article XIV clearly states that the interim fee
controls until the final fee is determined and can be retroactively
applied. That calls for a simple substitution of the interim rate by the
new rate, not a new rate plus interest, as though the new higher rate
had been known since back then.” Id. In other words, “[t]he interim
fee rate is correct for the time it is in effect: it is not a down payment
on some larger amount.” Id.
The district court concluded that prejudgment interest was not
warranted because prejudgment interest compensates a plaintiff for
the lost time value of money a defendant wrongfully retains, and it
was not wrongful for NACPA to pay only the interim fee until the
district court determined a reasonable fee. Cf. Waterside Ocean Nav. Co.
v. Int’l Nav. Ltd., 737 F.2d 150, 154 (2d Cir. 1984) (explaining that an
“award of pre-judgment interest” allows “a person wrongfully
deprived of his money [to] be made whole for the loss”). The district
court clarified that its “determination of the final fee amount was
designed to be the entire embodiment of what constitutes a
reasonable fee, not merely some figure to which additional
embellishments, such as interest, could be attached.” BMI,
674 F. Supp. 3d at 73. For that reason, “[a]n award of prejudgment

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interest at this juncture would overcompensate BMI at NACPA’s
expense.” Id.
We conclude that the district court did not abuse its discretion
when it denied the motion for prejudgment interest. That the
“reasonable fee” the district court ultimately sets is higher than the
interim fee does not necessarily mean that the interim fee was
unreasonable; there may be a range of reasonable fees. If the interim
fee was reasonable, then no money has been wrongfully withheld
from BMI, and it has not suffered an injury that requires
compensation through prejudgment interest. The district court did
not expressly state that the interim fee was reasonable in retrospect,
but it did explain that its final fee determination was the “entire
embodiment” of a reasonable fee. In other words, the district court
determined that the final fee, applied retroactively, provided BMI
with reasonable compensation for NACPA’s use of the licensed
performance rights during the pendency of the negotiation and the
rate-setting proceeding without the addition of prejudgment interest.
The explanation of the district court made clear that it denied
prejudgment interest because either (1) the interim fee was reasonable
in retrospect, or (2) some component of the final “reasonable fee”
would compensate BMI for the time value of money. Either way, the
addition of prejudgment interest would overcompensate BMI. Those
reasons provided a sufficient justification for the denial.
We do not hold that the consent decree requires the district
court to follow the approach of retroactively substituting the final fee
for the interim fee. District courts have awarded prejudgment interest
in other cases. See, e.g., ABC/CBS, 831 F. Supp. at 166. But the district
court did not abuse its discretion here.

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Because we vacate the judgment based on the
unreasonableness of the rates the district court adopted, however, the
district court may reconsider whether to award prejudgment interest
on remand after it arrives at a final fee determination.
CONCLUSION
There is no single correct way to “establish[] the fair market
value” of a blanket license to the repertory of a PRO. Music Choice IV,
426 F.3d at 95. Nevertheless, the district court must exercise “a
moderating influence” that avoids “unacceptably inflated price
levels” and “account[s] for alterations in the economic conditions
confronting the parties.” ABC/CBS, 831 F. Supp. at 145. It must set a
fee that is “reasonable” and “based upon all the evidence.” BMI
Consent Decree § XIV(A). To do so, the district court will rely on prior
agreements negotiated by the same or similarly situated parties
unless changed economic circumstances compellingly show that
those agreements are obsolete. And the district court will “explain
how it reached a particular rate sufficiently to permit our review of
the rate for reasonableness.” Music Choice IV, 426 F.3d at 99.
In this case, the district court adopted a revenue base definition
that had no precedent in the history of the industry without a
compelling reason. It included revenue streams that do not reflect the
fair market value of the music and that involve significant
administrative costs without a corresponding benefit. The district
court did not expressly assign weights to the benchmark agreements
it considered but implicitly accorded greater weight to less
comparable benchmarks. It relied on agreements with unaffiliated
individual promoters even though NACPA has historically obtained
significantly lower rates from the same counterparties. And it
identified no change in economic circumstances that would justify a

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rate more than double what NACPA has historically paid to BMI and
ASCAP.
Under these circumstances, we conclude that the rates the
district court adopted were unreasonable. The district court did not
abuse its discretion by denying the motion for prejudgment interest,
but the denial may have depended on its prior determination of the
rates. We vacate the judgment of the district court and remand for
further proceedings consistent with this opinion.

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