With April 2 Webcasting Election Due for Broadcasters - A Look at the Record Label Waivers of the Performance Complement
As we have written, by April 2, broadcasters who are streaming need to file with SoundExchange a written election in order to take advantage of the SoundExchange-NAB settlement. For broadcasters who make the election, the settlement agreement will set Internet radio royalty rates through 2015. One aspect of this agreement that has not received much attention is the waiver from the major record labels of certain aspects of the performance complement that dictates how webcasters can use music and remain within the limits of the statutory license. When Section 114 of the Copyright Act, the section that created the performance royalty in sound recordings, was first written in the 1990s, there were limits placed on the number of songs from the same CD that could be played in a row, or within a three hour period, as well as limits on the pre-announcing of when songs were played. These limits were placed seemingly to make it more difficult for listeners to copy songs, or for Internet radio stations to become a substitute for music sales. In conjunction with the NAB-SoundExchange settlement, certain aspects of these rules were waived by the 4 major record labels and by A2IM, the association representing most of the major independent labels. These waivers which, for antitrust reasons, were entered into with each label independently, have not been published in the Federal Register or elsewhere. But I have had the opportunity to review these agreements and, as broadcasters will get the benefit of the agreements, I can provide some information about the provisions of those agreements.
First, it is important to note that each of the 5 agreements is slightly different. In particular, one has slightly more restrictive terms on a few issues. To prevent having to review each song that a station is playing to determine which label it is on, and which restrictions apply, it seems to me that a station has to live up to the most restrictive of the terms. In particular, the agreements generally provide for a waiver of the requirement that stations have in text, on their website, the name of the song, album and artist of a song that is being streamed, so that the listener can easily identify the song. While most of the labels have agreed to waive that requirement for broadcasters - one label has agreed to waive only the requirement that the album name be identified in text - thus still requiring that the song and artist name be provided. To me, no station is going to go to the trouble of providing that information for only the songs of one label - so effectively this sets the floor for identifying all songs played by the station and streamed on the Internet.
The agreements otherwise agree to waive the requirements that a webcaster play:
- No more than 3 songs in a row by the same artist
- Not more than 4 songs by same artist in a 3 hour period
- No more than 2 songs from same CD in a row
However, these provisions are waived only insofar as the broadcaster does not "depart materially from today's range of typical over-the-air radio programming practices," citing specifically the practices of having DJs talk between songs and stations running commercials and PSAs between songs. Presumably, if a station were to go all music, with no talk or no commercials for a long period, that would not be within the typical practices of over-the-air radio stations. These waiver agreements also cover HD-2 stations, so stations should be careful that their formatics on these stations which are being streamed do not so totally depart from normal broadcast practices in such a way as to violate these waiver provisions. (Note these waiver agreements do not cover Internet-only channels that a broadcaster may program on its website).
The waivers also do not allow the streaming of an entire CD. In fact, the most restrictive of the provisions limit a broadcaster to streaming no more than half the songs from an album or CD at any time within a 3 hour period. So the "6 album sides at 6" type of promotion may be permissible, as long as the station does not then play another song from the same CD in a proximate time period.
The agreements also provide for a waiver of a provision that many broadcasters are probably not even aware exists - a requirement under Section 112 of the Copyright Act that does not allow "ephemeral copies" of recordings to be kept for more than 6 months. An ephemeral copy is a temporary copy of a sound recording made to facilitate a transmission. For instance, a copy of songs from a CD made by a broadcaster to put the music into a station's hard drive music system would be an ephemeral copy that normally could not be retained for more than 6 months without negotiating a license with the copyright holders. These waivers eliminate that six month limitation.
These waivers are different from the agreement with SoundExchange which covers all copyright holders. The waivers cover only those labels who have signed a waiver agreement. But, as the four major labels and the association representing the major independent labels have signed, most artists played by most radio stations will be covered by these agreements.
Broadcasters who are planning to sign on to the NAB-SoundExchange agreement will have the extra benefit of these waiver agreements. Broadcasters should carefully review these agreements and take advantage of them - an advantage that may give them rights on the Internet that other webcasters do not have.