Just when you think that the year will come to a quiet end, something always seems to pop up. Today, the Copyright Royalty Board announced a Notice of Proposed Rulemaking that would change the reporting requirements for services that pay royalties for the use of sound recordings to SoundExchange. The proposed new rules would require that Reports of Use submitted by services relying on the statutory royalty contain "full census reporting" of all songs played by any service. Services would include all users of music who pay royalties due under Sections 112 or 114 of the Copyright Act – including Internet Radio, satellite radio, digital cable radio, digitally transmitted business establishment services, and radio-like services delivered by other digital means, including deliveries to cell phones. This reporting requirement would replace the current system, about which we wrote here, that only requires reporting for two weeks each quarter. Under the new rules, an Internet radio service would have to submit the name of every song that they play to SoundExchange, along with information as to how many times that song played, the name of the featured artist, and either the recording’s ISRC code or both the album title and label. Comments on this proposal are due by January 29.
Currently, the quarterly reports are filed electronically using an ASCII format and using either an Excel or Quattro Pro spreadsheet template as created by SoundExchange. The Board asks for comments as to whether there are technological impediments to providing this information in this manner, and if other changes should be made to more easily facilitate the delivery of this information. The Copyright Royalty Judges who make up the CRB expressed their opinion that the full census reporting is preferable to the limited information now provided, so that SoundExchange does not need to rely on estimates or projections to insure that all artists are fairly compensated when their works are played. Using census reporting, all artists can be paid based on how often their songs are actually played.
The CRB did note that there is still the need for some approximation for certain services that pay the royalties. For instance, as satellite radio (Sirius XM) and digital cable radio do not have the technology to compute how many listeners are listening to every song, they have to come up with some proxies for that number based on how often the song was played. In the Internet radio world, small webcasters already had agreed to census reporting in the Small Webcasters Settlement Act, and the requirement was carried forward under the unilateral deal extended by SoundExchange to some small webcasters last year (see our article here). Large webcasters agreed to this reporting as part of their deal to limit the minimum fees which would have otherwise been due under the CRB decision (see our summary here).
Where this change is likely to have the most impact is in connection with the operations of broadcasters who also stream their programs on the Internet. Noncommercial broadcasters, such as college radio stations, have repeatedly complained that their small staffs to not have the ability to maintain these electronic records, especially where the stations are volunteer-programmed by DJs who select their own music on the spot. Some of the most creative and eclectic of broadcasters may have the most problem with this rule. Commercial broadcasters have also had difficulty with the reporting requirements, especially when dealing with syndicated programming, where the syndicator does not provide the necessary information about the recordings that it includes in its programming to the stations that carry such programs. Some of the current systems used for paying the royalties have had difficulty tracking the number of "performances" (songs played times the listeners to each song) played by broadcasters using syndicated programming, and these problems will only be magnified by the adoption of this proposal.
Parties that will be impacted by this proposal should start gathering their information now, and be prepared to file comments on the proposed increase in reporting information by the January 29 deadline. If there are improvements that can be made in the system, now is the time to ask.