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As we reported last week, the FCC has adopted a Report and Order establishing rules for the closed captioning of video programming delivered via Internet protocol (i.e., IP video), as required by the 21st Century Communications and Video Accessibility Act (CVAA). DWT has now released an advisory with further details about the new rules, which is available here. The new rules govern TV stations, cable systems, broadcast and cable networks and virtually every other professional video program producer who is now, or will be in the future, making programming available online. The rules also impose new requirements on hardware (such as set-top boxes, PCs, smartphones DVD players, Blu-ray and tablets) designed to receive or play back video programming transmitted simultaneously with sound and integrated software.

With rules that are so wide-reaching, everyone involved in these businesses needs to understand what the new rules entail.  A summary of the Commission's Order follows below, and please see our advisory for complete details about the new rules. Consistent with CVAA's mandate, the FCC has adopted rules that:

• Extend to all full-length video programming previously distributed on television with captions to require that captioning appears when such programming is displayed online via IP;
• Establish a two-year transition for uncaptioned, archival IP-delivered content that is shown on TV with captions after the new rules’ effective date;
• Require video programming owners to send caption files for covered IP video to video programming distributors and video programming providers along with the program files, or alternatively, inform the distributors–using a mechanism agreed to by the parties–that captions are not required for a particular program;
• Require video programming distributors and video programming providers to enable the rendering or pass-through of all required captions to the end user;
• Require captioning of covered IP video to be of at least the same quality as the captioning that the programming had when it appeared on TV;
• Establish deadlines by which categories of covered IP video must be captioned, as follows:
  • Programming that is prerecorded and unedited for online distribution, when subject to the new requirements, must be captioned within 6 months of the rules’ effective date;
  • Programming that is aired live or “near-live” on TV, when subject to the new requirements, must be captioned within 12 months of the rules’ effective date;
  • Programming that is prerecorded and edited for online distribution, when subject to the new requirements, must be captioned within 18 months of the rules’ effective date;
• Adopt the Society of Motion Picture and Television Engineers (SMPTE) Timed Text format (SMPTE ST 2052-1:2010: “Time Text Format (SMPTE-TT)” 2010 as a safe-harbor interchange and delivery format, but stop short of requiring all covered entities to use this standard;
• Decline to adopt categorical exemptions other than that mandated by the CVAA (i.e., consumer generated programming. which is statutorily exempt);
• Establish procedures by which video programming providers and video programming owners may petition for exemptions from the new requirements based on economic burden;
• Accommodate de minimis failures to comply with the new captioning obligations;
• Adopt procedures for complaints alleging violations of the new rules;
• Decline to adopt specific forfeiture amounts, opting instead to penalize violations based upon the facts and circumstances of each case;
• Permit entities to comply with the new requirements by alternate means; and
• Impose requirements for devices subject to the closed captioning requirements.

Given the scope of the new rules, there will undoubtedly be questions and requests for clarification that arise along the way.  We wll continue to track these new rules and provide further updates on this important issue. 

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This afternoon, the FCC released its long-anticipated Report and Order (R&O) setting forth the Commission’s new closed captioning rules for IP-delivered video programming, pursuant to the 21st Century Communications and Video Accessibility Act (CVAA). 

As we explained when the rules were first proposed in September, the CVAA directed the FCC to establish how and when certain IP-delivered video programming must be captioned, as well as the closed captioning capabilities for devices used to view video programming. The R&O adopts closed captioning requirements for owners, providers, and distributors of IP-delivered video programming; a safe harbor technical standard and delivery format for IP video captions; a staggered compliance schedule; complaint rules; and requirements for manufacturers of devices used to view the video programming at issue.

We are currently reviewing this comprehensive rulemaking, and will post our in-depth review next week, both here and on our DWT Advisories page.

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Do you allow the posting of content created by third parties on your website (e.g. videos, audio files, or even written comments)?  Do you run any on-line service where you collect information provided by third parties (whether that be a dating service, auction site or other classified service)?  If you do, you probably know that you are safe from copyright claims for infringing content that is posted by those who are not your employees or agents if you follow certain steps.  We have written about these steps to give you the "safe harbor" from copyright liability for "user-generated content" before.  The steps include requirements that you not encourage or profit from the infringing content, that you have terms of use for your service that forbid users from posting infringing content, and that you take down infringing content when you receive notice from copyright holders that it has been uploaded to your site or service by a third party.  To take advantage of this safe harbor from liability, services are required to register with the Copyright Office the name of someone in their company who can be served with "take-down notices" from copyright owners.  The process of registration is now proposed to be changed in a Notice of Proposed Rulemaking just issued by the Copyright Office.  Comments on this notice can be filed through November 28. Replies are due by December 27.

The safe harbor was created by the Digital Millennium Copyright Act, adopted in 1998.  Since that time, the registration of agents to receive take-down notices has been governed by interim rules.  Services register by sending a paper form and a filing fee to the Copyright Office, and that information is manually entered by the Copyright Office into a list that is available on the Copyright Office website.  From experience, the time from the filing of such a registration to its appearance on the Copyright Office's website can take several weeks or more.  The Copyright Office, in its Notice, states that it has done some informal checks on the information in its database of registered agents, and found that the list contains duplicate registrations, registrations for companies or sites that are no longer in operation (services are supposed to tell the Office when they stop their operations), and many outdated addresses (services are supposed to update their agents as employees change, but apparently they sometimes forget).  The NPRM proposes to move to an electronic registration system, which will automatically request a verification of the registered information on a regular basis.  In making this proposal, the Copyright Office asks for public comment on a number of issues.

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The dates for comments on the FCC proposed rules for the captioning of Internet Video have been set.  Comments are due on October 18 with replies due on October 28.  An associated Federal Register publication also notes that comments can be filed with the Office of Management and Budget about the compliance of the information collection requirements contained in the proposed rules with the Paperwork Reduction Act. OMB comments can be submitted through November 28.  As we wrote last week, this proceeding is of importance to television stations and cable operators, as the rules will initially apply to video that has already been captioned to meet some other FCC rule, and is later repurposed for the Internet.  It is also important to all operators of websites that distribute such video programming.  A more detailed summary of the proposals in this proceeding is available in our Davis Wright Tremaine advisory on the NPRM.  The full text of the FCC proposals is available here.

This proceeding is on an extremely fast track, as Congress has charged the FCC with adopting rules by January to implement the statutory obligations set out in the Twenty-First Century Communications and Video Accessibility Act of 2010.  Already, groups representing the hearing impaired as well as certain Internet video aggregators have visited the Commission to lobby for their particular positions on the proposals.  Those representing the hearing impaired community have been very active in this proceeding, as well as in connection with the filing of objections to television stations who do not meet their obligations to provide video accessibility through captions or other written information during over-the-air programming providing emergency information (see our note here on an FCC reminder on that subject).  TV stations and other video providers need to be similarly active in explaining to the FCC what can and cannot be done technologically in a cost-effective manner to meet the needs of these citizens.  The just announced comment deadline provides video producers with that opportunity. 

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Putting TV or cable programming onto the Internet may soon not be as easy as it once was, as the FCC has just issued its Notice of Proposed Rulemaking on the captioning requirements for online video.  The proposals advanced by the Commission are summarized in our firm's Advisory on the subject, here.  These rules are proposed pursuant to a Congressional mandate that requires captioning of television programming that has already been captioned pursuant to an FCC rule, when that programming is later shown on the Internet.  This obligation was adopted as part of the 21st Century Communications and Video Accessibility Act ("CVAA") which, among other things, looks to make Internet video programming accessible to the hearing impaired.  Programming that has run on TV stations or cable systems, and is later delivered through the Internet, will apparently be under the captioning obligations, subject to any exceptions adopted by the FCC in this proceeding.  The legislation requires that rules be adopted in January, and that implemention begin 6 months thereafter. Thus, there is a very quick comment period - with comments due 20 days after the NPRM is published in the Federal Register, and replies 10 days later.

The proceeding asks about who should be covered by the rules, and what exemptions to the requirements should be adopted.  For instance, it asks whether the exemptions that apply to TV captioning (including exemptions for small channels with less than $3 million in annual revenue) should be carried over to the Internet.  The report also asks what devices should be covered by the regulations that will be adopted.  Will these rules apply to smartphone and tablets, as well as to standard computer screens?  It also asks a number of technical questions about how the captioning should be implemented, though the FCC does not propose any single captioning standard.  These are all important issues for a requirement that may soon become a reality for traditional video providers looking to put their content online.  Thus, review our advisory and the NPRM itself, and comment by the deadline that will soon be set.  Obviously, where the FCC comes out on these questions may significantly impact the development  of online video, and could set a precedent for a further expansion of the captioning obligations in the future.  Watch this proceeding as it develops in coming months. 

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If your station programs to children under the age of 13 or maintains a website or online presence directed to children under age 13, you should be aware of new rules proposed by the Federal Trade Commission (FTC) that will affect both the types of information you are allowed to collect from children and the manner in which it is collected.  The proposed rules, summarized here, would modify the Children's Online Privacy Protection Rule enacted by the FTC to enforce the Children's Online Privacy Protection Act (COPPA) enacted by Congress in 2000.

COPPA requires parental consent whenever personal information is collected from children under the age of 13.  The proposed rules, which would be the first changes made by the FTC since COPPA was enacted, are intended to reflect the recent popularity of social networking, smartphones and the availability of geolocation information.

Stations that have websites or apps dedicated to youth sports leagues or other children's activities could well be subject to these requirements, summarized in our recent Client Advisory available here.  Interested parties may file comments on the new rules by November 28, 2011.

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As our colleague Brian Hurh wrote today on our sister blog, www.broadbandlawadvisor.com, the Video Programming Accessibility Advisory Committee has released its Report to the FCC on the closed captioning of IP-video programming as required by the 21st Century Communications and Video Accessibility Act passed last October.  A copy of the report released today is available here.  As we explained earlier here, the Accessibility Act directed the Commission to enact rules that would require that once a television program is published or exhibited on television with closed captions, any subsequent distribution of that programming on the Internet must include closed captions.

The Accessibility Act requires that the FCC revise its closed captioning rules within 6 months of the Committee's report, thus, new FCC closed captioning rules must be in place no later than January 13, 2012.  (The report is dated July 13, 2011, though it appears to have been released July 11.)  The report proposes the following compliance schedule based on the date the FCC's revised rules are published in the Federal Register:

• Within 6 months: programming that has been prerecorded and unedited for Internet distribution;
• Within 12 months: live and near-live programming
• Within 18 months: programming that has been prerecorded and substantially edited for Internet distribution.

In addition, the report sets forth the Committee's recommendations for performance objectives, technical requirements, and technical capabilities and procedures related to closed captioning on the Internet.   The report also contains a discussion on new technological developments such as emerging protocols and other innovations that may affect the delivery of Internet closed captioning in the future.

While today's Report makes certain recommendations, it is up to the Commission to now act expeditiously in order to commence a rule making proceeding, solicit comments, and actually promulgate new rules regarding captioning of video over IP.  The Advisory Committee's report is an important (and necessary) step towards captioning rules for certain types of Internet video, and we will continue to follow the Commission's actions in this area.

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As broadcasters pursue their digital future, new legal issues arise to greet their entry into the on-line world and to add to the challenges posed by the new media. Over the last few years, we’ve have written extensively about music rights and their impact on webcasters, broadcasters, and other digital media companies. We’ve talked about patent law issues that have faced digital media companies. And we’ve discussed other content issues, like FTC online sponsorship disclosure requirements, that have arisen from time to time. But the one issue that now seems poised to dominate the legal conversation in coming months (or years) is that of privacy. This past week, we saw Pandora announce that it has received a subpoena from a Federal grand jury in connection with an investigation into the use of information collected from various mobile apps, and whether users of these apps were aware of the use of their private information. Other companies apparently received this same request.  This investigation is but the tip of the iceberg on privacy issues facing media companies operating in the digital world - challenges coming from the courts and from legislative and administrative initiatives in Washington.

Everyone knows that one of the great benefits of the Internet and the many services available on-line and through mobile apps, is the ability to personalize so as to provide a unique listening or viewing experience for every user. Instead of being limited to the linear programming that a broadcast service provides to all users at the same time, users can tailor their digital media experience to give them what they want and, as wireless broadband penetration increases through smart phones and other devices, almost whenever they want it. In some cases, the costs of providing an individualized service, because of bandwidth needs, royalties and license fees and for other reasons, the cost per each additional listener is often higher than that incurred by the traditional media. And online users thus far have been unwilling to tolerate the commercial advertising load that a traditional media experience might provide. To meet these higher marginal costs, and the lower spot loads, many digital media companies have looked to personalization of advertising to allow for higher advertising rates on the theory that advertising will be more efficient if you can guarantee that it will be targeted to reach its intended audience – geographical, demographic or based on expressed interests. As digital media companies have sought to refine the targeting available through their advertising, privacy issues have arisen.

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Broadcasters are inevitably moving toward a digital future - exploiting new Internet and mobile platforms to supplement their traditional over-the-air operations.  Last week, I conducted two sessions in Salt Lake City for the Utah Broadcasters Association, one on the legal issues to be considered in connection with broadcasters' use of the digital media, and a second updating broadcasters on all the legal and regulatory issues that they face from Washington with their over-the-air operations.  Slides from the digital media presentation, Broadcasters Online: Legal Issues in the Cyber Jungle, are available here, and those from the broadcast update, the Top Ten Washington Issues that Should Keep Broadcasters Awake at Night, are available here.

To show how quickly things move in Washington, since the seminar, there have been two new developments that relate to topics discussed at the seminar.  On the day of the seminar, the Commission's Enforcement Bureau came out with a policy statement about a certification that broadcasters need to include in all of their advertising contracts certifying that the advertising was not sold with a discriminatory purpose - as there will be a specific question about the certification in all license renewal applications.  We have summarized the requirements for the clause to be included in the advertising contract here. 

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As our colleague Brian Hurh wrote recently on our sister blog, the www.broadbandlawadvisor.com, a federal district court last week granted a preliminary injunction prohibiting the mere retransmission of broadcast television programs over the Internet, without more.  The order is not only important for its confirmation of a 2008 Copyright Office decision rejecting Internet retransmission of video programming under Section 111 of the Copyright Act, it also reaffirms the “quid pro quo” of compulsory licensing – that one cannot merely retransmit programs over the Internet (or any other medium, for that matter) without acquiescing to federal regulation.  See WPIX, Inc. et al v. ivi, Inc., Case No. 1:10-cv-07415-NRB (S.D.N.Y., Feb. 22, 2011).

The order stems from a preliminary injunction sought by national broadcasting networks and local stations, Major League Baseball and several motion picture studios against a single defendant, ivi, Inc.  ivi’s business consisted of capturing over-the-air broadcast programming in several major markets and retransmitting it over the Internet to ivi subscribers across the country.  

The central issue was whether ivi could lawfully retransmit such programming over the Internet pursuant to a “compulsory license” under Section 111 of the of the Copyright Act (17 U.S.C. § 111).  In a brief but informative history of Section 111, the Court explained that the compulsory license was created to allow the then-nascent cable industry to retransmit over-the-air programming to subscribers in exchange for a statutory license fee paid to the Copyright Office.  That bargain, however, also required cable operators to willingly submit to the FCC’s jurisdiction.  According to the record, ivi refused to adhere to this bargain, instead arguing that its Internet video service was outside the purview of the FCC because it was transmitted over the Internet.  The Court flatly rejected this argument, holding that ivi not only was not a cable system eligible for a license, it could not both benefit from a compulsory license while at the same time avoid obligations under federal law.

In essence, the Court’s decision reinforces the notion that there is, and has always been, a balance between the development of new video technologies and respecting the copyrights of content owners.  Cable operators accomplished this through the Section 111 compulsory license; the Internet has yet to discover a balance of its own. 

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The Commission today released an Order conditionally designating 9 companies to be database administrators for white spaces devices.  As we wrote in our article describing the FCC's recent decision on reconsideration of its White Spaces order, these administrators will be responsible for maintaining a database of all users of the TV spectrum who must be protected from interference from white spaces devices.  Protected entities include TV stations, LPTV stations and TV translators, cable and satellite receive locations, certain wireless microphone users, and the paths between TV stations and translators.  Each database must maintain all of this information, so that white spaces devices can determine what channels must be protected in areas in which they are operating. 

The conditional nature of the designation reflects the fact that these administrators had requested designation in late 2009, before the recent Order on Reconsideration which adopted the new requirements that all white spaces devices must communicate with these administrators instead of relying on any sort of spectrum sensing.  Thus, the FCC is requiring the proposed administrators to update their filings to reflect that they can meet the new requirements for the maintaining the database.  One of these new requirements is one of security - so that it can be ensured that the users will have an accurate data base from which to operate, without fear of tampering or other abuses.  The FCC will also require that each administrator attend an education session conducted by the FCC, and to go through a rigorous testing period - with tests conducted by the FCC to make sure that the administrator's service will actually provide the necessary information to protect incumbent TV spectrum users from interference from white spaces devices.

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The NAB Radio Show in Washington two weeks ago was a upbeat reflection of the present state of the broadcast industry.  But sandwiched around that conference, in the last three weeks, I have spoken at three digital media conferences - and as someone who has grown up on over-the-air radio, and based a career on representing radio stations, the discussions at these conferences raised many questions about the future of the radio industry. At the Radio and Internet Newsletter (RAIN) Summit East in DC, prior to the NAB Radio Show, I gave a summary of the royalty issues facing Internet Radio operators. At the Future of Music Policy Summit in DC the next week, I spoke on a panel on the Future of Radio. And at the Digital Music Forum West in Los Angeles last week, I moderated a panel on music licensing issue for digital media companies. At each of these conferences, the focus was on the digital media, not on over-the-air broadcasting, and many times the question was raised as to whether traditional radio was still relevant in the digital age. I’m not sure how many times I was asked, when I told someone that I am a lawyer who represents radio stations, what I plan to do next when my clients are extinct? Even in media-related industries, many seem to regard radio broadcasters as old-school – a throw back to some other entertainment era. Yet, what surprised me was how these same people who questioned the relevance of radio were all able to talk about what songs were or were not being played on the local rock station, or about the crazy thing some local DJ said that morning and the contests running on radio stations in their market, or about the story on NPR that kept them in their car seats when they were sitting in their driveway at home the night before.

At each of these conferences, in listening to the discussions of the issues facing all the new media (like how to make money), the dark view of radio seemed overblown.  Radio still seems to be a vital medium, especially if it can emphasize the advantages that it has. Harnessing the power of radio with digital media creates platforms that neither has on its own. In many ways radio, of all the traditional media, is best able to use its place in the media landscape to expand in the digital world. Radio has always excelled in reaching niche audiences, in much the same way that the Internet now does. By playing to its strengths, whether that be music, news, talk or sports, or some combination thereof, radio can expand its connection and provide broader and deeper services to its listeners, and serve its audiences like never before.  And all the digital media companies seem to recognize this potential, but seem to be discounting radio's ability to capitalize on its advantages. 

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Dave Oxenford this week conducted a seminar on legal issues facing broadcasters in their digital media efforts.  The seminar was organized by the Michigan Association of Broadcasters, and originated before a group of broadcasters in Lansing, but was webcast live to broadcasters in ten other states.  Dave addressed a variety of legal issues for broadcasters in connection with their website operations and other digital media platforms.  These issues included a discussion of service marks and copyrights, employment matters, music on websites, the use of social media, privacy, and sponsorship disclosure.  The slides used in the Lansing presentation are available here.    During the seminar, Dave also mentioned that stations with websites featuring user-generated content, to help insulate themselves from copyright infringement that might occur in the content posted to their website by their audience, should take advantage of the registration with the Copyright Office that may provide safe harbor protection if a station follows the rules and takes down offending content when identified by a copyright holder.  The Copyright Office instructions for registration can be found here.   

One of the most common issues that arise with radio station websites is the streaming of their programming.  In August, Dave gave a presentation to the Texas Association of Broadcasters providing  a step-by-step guide to streaming issues, with a summary of the royalty rates paid by different types of streaming companies.  That summary to Internet Radio issues is available here.  Additional information about use of music on the Internet can be found in Davis Wright Tremaine's Guide to The Basics of Music Licensing in a Digital Age.   Dave also presented this seminar at the Connecticut Broadcasters Association's Annual Convention in Hartford on October 14.

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Last week, the Department of Commerce's Internet Policy Task Force asked for comments on the relationship between the protection of copyrighted content on the Internet and the effect of such protections on technology innovation and the expectations of consumers.  The purpose of the inquiry is to develop a report to be circulated among the various government departments that have power over the enforcement of copyrights and the development of rules and regulations that deal with copyrighted materials - to essentially develop government policy in this area.  While the request for comments dwell on the concerns about copyright infringement that are raised by many Internet applications, the proceeding will obviously be controversial among media companies.  Many of these companies are concerned about the unauthorized use of their content on various websites, while other media companies (or divisions of the same media companies who are concerned about the unauthorized use of content) are concerned about too tight restrictions on the use of copyrighted content and how that will impact various websites, especially those that feature user-generated content.

As we have written before, the Digital Millennium Copyright Act allows Internet companies to allow users to post material on their websites, without fear of liability, if they take certain precautions - including adopting terms of use warning users that they need to observe the intellectual property rights of others, not otherwise encouraging infringing uses, registering with the Copyright Office to provide a contact person at the website operator that a copyright owner can contact if they believe that their content is being used improperly, and taking steps to take down improper content if the website operator is notified of the infringing use.    This Commerce Department's notice asks if this "safe harbor" provision has served the public interest, or if adjustments to this regime should be made.  Obviously, many websites that have grown businesses based on user generated content (e.g. many of the social networking and video-sharing sites) and will be very concerned with a proposal to alter their safe harbor and require them to take on a greater burden of reviewing content for potential copyright violations, while many content owners, who have complained about the inability to monitor all of these sites, may be looking for these reforms.   Obviously, there will be conflicting views on these proposals.

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Broadcasters have a host of other legal issues that they should consider in connection with their digital presence.  At last week's Maine Association of Broadcasters Annual Convention in Bangor, Dave Oxenford addressed these issues, including service marks and copyrights, employment matters, music on websites, the use of social media, privacy and sponsorship disclosure.  A copy of Dave's presentation on the Legal Issues in the Cyber Jungle is available here.    Dave also mentioned that stations with websites featuring user-generated content, to help insulate themselves from copyright infringement that might occur in the posts from their audience members, should take advantage of the registration with the Copyright Office that may provide safe harbor protection if a station follows the rules and takes down offending content when identified by a copyright holder.  The Copyright Office instructions for registration can be found here.   

One of the most common issues that arise with radio station websites is the streaming of their programming.  In August, Dave gave a presentation to the Texas Association of Broadcasters providing  a step-by-step guide to streaming issues, with a summary of the royalty rates paid by different types of streaming companies.  That summary to Internet Radio issues is available here.  Additional information about use of music on the Internet can be found in Davis Wright Tremaine's Guide to The Basics of Music Licensing in a Digital Age. 

Dave will be presenting a version of the Cyber Jungle presentation to the Michigan Association of Broadcasters on October 12, a presentation that will be webcast to several other states.  Information and registration for that seminar is available here.

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The FCC's long-awaited White Spaces decision, revisiting its authorization of the operation of unlicensed wireless devices in the television spectrum (see our summaries of the intial order here and here), has finally been released.  The FCC decision and associated comments of the Commissioners promise Super Wi-Fi, or Wi-Fi on Steroids, and a host of other wireless digital marvels, without significantly interfering with the incumbent users of the spectrum (principally TV stations and wireless microphone users).  In this order on reconsideration, the FCC addresses many issues raised by many parties to the proceeding - some suggesting that the FCC has not sufficiently protected the incumbent users, while others arguing that the limitations on wireless users are too onerous.  For broadcasters, some of the highlights of the decision include:

• No change in the interference protections given to TV broadcasters.  Some had suggested the use of various alternative propagation methods to be used instead of the standard FCC method of predicting the protected contours of television stations.  The FCC rejected these proposals, finding that alternatives would not be more accurate in predicting potential interference.  One minor correction including in the database that will be used by wireless devices to protect stations from interference will be included - information on a television station's antenna beam tilt.
• No change in the protection of LPTV station protected contours.  LPTV advocates had suggested that greater protection was required for LPTV stations that were still operating in an analog mode.  This was rejected by the Commission, given the impending digital transition for LPTV (see our summary of the LPTV digital transition, here)
• Greater protection was afforded to cable headends, TV translator receive sites, and the receive locations for Satellite television providers (like DISH and DIRECTV) and other Multichannel Video Providers (MVPDs), so that existing television reception, no matter how it is received will be protected.  The current rules provide that such sites within 80 km from the edge of a television station's protected contour can register in the database to be used by white spaces devices to determine where they can operate.  The Commission recognized that sites beyond that 80 km distance may also need protection.  Such sites can petition the FCC for waiver of the 80 km distance within 90 days of the effective date of this order, and the FCC will seek comment on whether or not to accord the site protection.  New sites need to register within 90 days of being put into service. 

Some of the other issues addressed by the Commission, including a big change in how these devices will operate to prevent interference, are summarized below.

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FCC Commissioner Meredith Atwell Baker recently delivered a speech in Washington, DC, where she addressed calls for the government to take action to assist the traditional media deal with the economic issues brought about by the new media.  From time to time, there have been calls for the government to assist the traditional media, either through some sort of direct subsidies, or through regulatory changes that could assist in their news coverage to make these entities competitive in the new media world.  While the Commissioner's speech did not detail those efforts, calls have, for the most part, not suggested direct government subsidies to support traditional news media sources.  Instead, more indirect efforts have been suggested to insure that these media sources continue to serve their communities.  Calls have been made to change tax laws to allow newspapers to operate as nonprofit entities (while still soliciting advertising).  In a draft FTC option paper, there was a suggestion of taxing commercial media to provide more support to noncommercial public broadcasting entities.  Other proposals have been more direct - simply mandating more news and public affairs programming from broadcasters (with little or no discussion of the source of the revenues for such mandates).  In her speech, the Commissioner noted that some suggestions may be forthcoming from the FCC's own Future of Media report due at the end of the year (see our summary of the issues that they are exploring here), but she seemed to rule out these types of proposals, instead suggesting that the Commission could assist companies meet the new media challenge by loosening FCC restrictions on ownership.

The Commissioner suggested that no government action to bail out the media is necessary to preserve service to the public - citing the many examples of how that service is provided through new media sites that serve all sorts of communities and community groups - providing timely and detailed information on specific topics, often on a neighborhood level.  We have made that same point on these pages - the new media is already filling any void that may exist in local media coverage.  Some of these sites are produced by old media companies - as TV stations, newspapers and others develop microsites targeted to very local needs and interests.  Other sites are totally independent - developed by local interest groups or new media entrepreneurs.  So how can the Commission help these sites to develop?

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So you want to start streaming your radio station on the Internet?  Or maybe you want to start a whole new Internet radio station.  In a session at last week's Texas Association of Broadcasters Annual Convention in Austin, Dave Oxenford talked about the legal considerations starting an Internet radio station, while Chris Dusterhoff of Bryan Broadcasting in Bryan/College Station, Texas talked about some of the technical and business issues in doing so.  A copy of Dave's PowerPoint presentation from that session is available here.  The presentation addresses some of the issues that you need to consider, including the music royalties that will be required from most webcasting operations. 

In addition to the issues involved in streaming your signal on the Internet, broadcasters have a host of other legal issues that they should consider in connection with their digital presence.  Issues that arise with service marks and copyrights, with employment issues, social media, privacy and sponsorship disclosure were all addressed in Dave's presentation on the Legal Issues in the Cyber Jungle.  A copy of his PowerPoint presentation is available here.  Dave also mentioned that stations with websites featuring user-generated content, to help insulate themselves from copyright infringement that might occur in the posts from their audience members, should take advantage of the registration with the Copyright Office that may provide safe harbor protection if a station follows the rules and takes down offending content when identified by a copyright holder.  The Copyright Office instructions for registration can be found here.   Additional information about use of music on the Internet can be found in Davis Wright Tremaine's Guide to The Basics of Music Licensing in a Digital Age. 

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Congress last week adopted a bill important to all US media companies that produce content that can be received overseas.  This would include anyone with content on their website (including user generated content) that could potentially give rise to a legal judgment overseas.  As explained in detail in Davis Wright Tremaine's memo on the act - the Securing the Protection of our Enduring and Established Constitutional Heritage Act (“SPEECH Act”) - companies and individuals were bringing lawsuits, many in London, against publications from the United States, finding liability for speech that would be protected by First Amendment principles here.  Other US companies were facing liability for user generated content posted on their website that would be protected under Section 230 of the Communications Decency Act from libel actions in the United States.  This practice was caused "libel tourism", as people would go in search of the country where their case would be strongest - knowing that US law would not sustain their claims.  These cases often resulted in liability even if the US publisher had only minimal distribution in the foreign country where the case was brought.  Before this legislation, when parties were successful in foreign litigation, they could enforce their foreign judgments in US Courts against US citizens or companies, and the US parties would have no defense, as US courts would normally not re-try a final decision from a foreign court.  This legislation gives US Courts, before a foreign judgment involving speech matters can be enforced in the US, the authority to review the judgment to make sure it would have been permissible under US law.  Read the DWT memo, here, for more information about this important legislation. 

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Davis Wright Tremaine attorneys David Oxenford and Rob Driscoll conducted a seminar -  Using Music in Digital Media: Business and Legal Issues - on June 16, 2010 in New York City.  The seminar was presented to attorneys from committees of the New York State and New York City bar associations.  In the seminar, Dave and Rob discussed the music licensing issues that can arise when music is used in digital media - touching on everything from royalties for the streaming of music by Internet radio stations, to the use of music in video productions or in advertisements that may be displayed online, to the occasional use of music by a business on its website to enhance the "stickiness" of that site.  The PowerPoint presentation from the seminar is available here.  Many of the issues that were covered in the seminar are discussed in Dave and Rob's memo the on The Basics of Using Music in Digital Media, available by clicking on this link.

Another topic that was discussed was the use of music in user-generated content, and how website operators can avoid liability that may arise from the posting on their sites of content using music and other copyrighted materials by users over whom the site owner has no control.  The Digital Millennium Copyright Act provides protection for those who host sites where such content is posted, but certain formalities need to be observed by the site owner to insure that they receive the law's full protection.  Site owners cannot encourage the posting of copyrighted content unless the appropriate clearances have been obtained, they cannot have actual knowledge of the infringing content, they cannot receive a direct financial benefit from the infringement, and they must act promptly to remove infringing content if notified that it is on their site.  To make this notification possible, to provide a "safe harbor" under the DMCA, a website owner needs to place a notice on its website in a "location accessible to the public," and register with the Copyright Office, the name of a person to be contacted by a copyright owner if the owner finds its content being used on the site without permission.  This notice must provide the contact person's address, phone number and email address.  Information about registering the contact person with the Copyright Office, a list of those website operators who have registered, and a link to the form to be used to register a contact person, can be found here.

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David Oxenford, Bob Corn-Revere, David Silverman, Brendan Holland, and others from Davis Wright Tremaine's media and communications practice will be in Las Vegas, Nevada from April 10-15 for the 2010 NAB Show.  The NAB convention is an annual event and a focal point for engineering, legal, and business issues for the broadcasting and greater media worlds.  Bob Corn-Revere will be speaking at the American Bar Association Conference, Representing Your Local Broadcaster, on April 11, on a panel on new technology and the dangers it poses for journalists reporting from disaster areas or other scenes where immediate verification of information is not possible - the panel is called:  "Clear and Present Danger, Guiding Journalists Through the Catastrophic Perils."  David Oxenford, on the morning of April 12, will be speaking at the NAB Show on a panel called, "Copyright Licensing: Seeking a Bridge Over Troubled Waters", a panel dealing with the proposed broadcast performance royalty, streaming fees, the current ASCAP and BMI negotiations, and other copyright issues that arise in day-to-day operation of a broadcast station.  Dave will also be moderating a panel at the Radio and Internet Newsletter's RAIN Internet Radio Summit, to be held in conjunction with the NAB Show, at the Renaissance Hotel on April 12.  Be sure to join us at these and other events in Las Vegas.

To help you attend the Show, we have been offered some discounts and free admissions for our readers.  The RAIN Summit, Internet Radio's main event, has offered readers of the Broadcast Law Blog a 30% discount on admission to the conference.  That conference includes a full day of discussion of Internet radio topics, and will feature many of the industry's biggest names.  From past experience, this always a great event with much great information, important for anyone with any interest in Internet radio and digital media.  The Summit features great networking opportunities, with a box lunch and post-conference reception.  An Exhibit Hall pass to the NAB Show is also included for RAIN attendees

For those not interested in Internet radio, we can still get you into the NAB Show's Exhibit Hall - for free!  The NAB has offered our readers free access to the Exhibit Hall at the show. This free Exhibits-Only pass includes:

• Access to the Exhibit Hall at the Show
• Access to the Opening Keynote and State of the Industry Address
• Access to Info Sessions on the Convention floor
• Content Theater and Destination Broadband Theater

To find out how to register for these discounted offers, click on the Continue Reading link below.

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Using music on your website, employees on Facebook or twitter, doing podcasts?  Everyone needs a guide to the legal issues that you may face as broadcasters move their content to new platforms.  At the Convention of the Oklahoma Association of Broadcasters, held in Oklahoma City on March 18-19, David Oxenford conducted a seminar on Legal Issues for Broadcasters Operating in a Digital World – dealing with legal issues that broadcasters need to take into account when moving their content and presence beyond their over-the-air signals.  The PowerPoint presentation used in that seminar is available here.  Other issues that were discussed in that session include:

• Use of music on websites (see our guide to Music Rights for Digital Media Companies here)
• Domain name issues (see our recent post on new domain names here)
• FTC guidelines on disclosing consideration given to bloggers and other users of social media sites (see our post on that subject here)
• Legal issues that arise from the social media (see Davis Wright Tremaine's webcast on the social media, here)
• Issues in connection with user generated content (see our posts here)

In addition, David conducted a separate seminar on FCC issues facing broadcasters.  A copy of the PowerPoint from that presentation is available here.  Issues discussed in that session included:

• The FCC's National Broadband Plan and its impact on television broadcasters (see our post here)
• The proposed broadcast performance royalty (or performance tax, see our post here)
• The FCC proceeding on the Future of Media (see our posts here and here)
• The recent Citizens United decision and its impact on political broadcasting rules (see our description of that case here, and our Political Broadcasting Guide, here)
• A variety of fines imposed on stations for violations of FCC rules - a summary of many of the recent fines can be found here.

 Broadcasters and others interested in the Digital Media should watch our Blog for future developments on all these issues and the many other legal matters of importance to their businesses. 

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The .co top level domain (TLD) is being opened to the general public, and one can envision a run on registrations similar to that experienced for .com.  It is easy to see why the Colombia country code, formerly available in that country only, may become very popular in the US and elsewhere.  For one thing, .co is the standard abbreviation for "company."   It is also a very common misspelling of .com.  It has been estimated that google.co gets 15,000 hits per day by mistake.   From April 26 until June 10, a window will open in which only registered trademark owners will be able to register their marks in the .co TLD.  Beginning in July, however, .co will be opened to the general public.  We suggest that any companies with registered marks protect those marks in the .co TLD in April, and those that do not should register their call signs, company names or nicknames as soon as possible in July.  If someone else registers your call sign or company name in the .co TLD before you do, it could be very difficult and costly to recover it.

It is difficult to believe that the first .com domain name was registered just 25 years ago this week.  By the end of 1985, only five .com domain names had been registered.   Ten years later there were 120,000 .com domain names.  Now, there are nearly 85 million registered .com domain names.  Beginning sometime next year (2011), ICANN (the Internet Corporation for Assigned Names and Numbers) is expected to allow companies to buy their own TLDs (meaning that your company name could follow the "dot" in a URL), although the cost is expected to be close to $200,000 per TLD.  However, Canon has already announced that it intends to apply for .canon, and it is expected that other large companies will follow suit.

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The FCC today released its National Broadband Plan to Congress, and in it spelled out its suggestions for the future of television. Facilitating the deployment of ubiquitous, dependable wireless broadband service is identified as a fundamental goal of the Commission’s proposals. The authors of the Commission’s report have viewed the problems experienced by some wireless broadband providers in major markets as indicative of a coming shortage in wireless capacity. Specifically, the Commission is concerned that as more and more applications for wireless broadband are deployed, the capacity of existing wireless spectrum will be exhausted, foreclosing opportunities presented by wireless broadband. And, as detailed below, the Commission sees the television spectrum as providing a significant part of the answer to that perceived spectrum shortfall.

The opportunities for broadband are many, in the view of the authors of the study. The Commission sees growing demand and future applications for wireless broadband not just in the areas of entertainment and commercial applications, but also in education, health, energy conservation, civic involvement, and public safety, among others. However, the Commission fears that sufficient spectrum will not be available to meet all of these needs.

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Broadcasters need to be aware that ASCAP, BMI and SESAC (the "performing rights organizations" or PROs) don't cover them for all uses of music - especially uses that may be made on station websites.  Offering downloads, podcasts, and streaming video featuring music all require specific permission from music rights holders.  And, as we wrote just last week, incorporating music into recorded commercials also requires specific permission from rights holders - not just your routine payment to the PROs.  As music usually has two different classes of rights holders - those that hold the rights to the musical composition (the lyrics and music in the song, usually held by a publishing company), and the rights to the "sound recording" or "master recording" (usually held by the record companies), knowing who to ask for what rights can sometimes be complicated.  To help explain some of the basic issues of where to go for what rights, Davis Wright Tremaine has put together a Guide to the Basics of Music Licensing, available here. 

The Guide also addresses some of the controversial issues in music licensing, and the question of "fair use", a concept often cited but also often misunderstood.  So check out ourGuide for a basic introduction to the law governing music rights issues. 

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David Silverman participated on a panel discussing the legal aspects of social media at the Great Lakes Broadcasting Conference in Lansing, Michigan on March 3, 2010. His PowerPoint presentation focused on the risks and benefits of using Twitter, Facebook and other social media in the employment context, including use by broadcasters. There are a number of laws that impact both the protection and vulnerability of social media. The bottom line is that stations need to determine the extent to which social media use will be permitted and/or encouraged in the workplace and then develop a social media policy that will delineate the ways in which station employees can use social media with regard to station matters, while at work or at home.  A copy of David's PowerPoint presentation from the session is available here. 

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The FCC announced an extension of the comment filing deadline in its proceeding looking at the Future of the Media (see our summary here). At the same time, the Steven Waldman, the Special Assistant to Chairman Genachowski, made a public appearance at the FCC's open meeting last week to explain what is intended by this study - and from his comments and those of the Commissioners, this will be a wide-ranging investigation looking at how FCC and other government regulations can insure diversity in the media so that citizens and communities can "get the information that they need."  In Commissioner Copps comments, this includes looking at what public interest obligations are appropriate for the new digital media.  Comments in this proceeding, which were to be filed in March, are now to be submitted by May 7, 2010.

The appearance of Mr. Waldman (whose appointment we wrote about here) came at the very end of a long Commission open meeting where extensive discussions were held on reforming the FCC's internal decision-making processes and about the broadband deployment report which has consumed the FCC for many months, and which will be delivered to Congress in the next few weeks.  But, while short, the discussion with Mr. Waldman was interesting as he highlighted the plans for his task force.  He opened his comments by initially noting how this was a time of great change in the media, where there is "incredible diversity" brought forth by the new technologies, but that there was also a "collapse" of traditional business models, which could bring about the end of "accountability journalism" (presumably journalism from reputable journalistic sources with some degree of accountability and reliability).  Because of these perceived changes, according to the comments made at the meeting, this task force was established to determine what the government can do to make sure that communities get the information that they need.

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On December 1, 2009,  FTC revised Guidelines went into effect updating policies dealing with advertising using testimonials and endorsements, specifically affecting celebrity endorsements and sponsorship disclosure.  These revised guidelines directly impact the established practices of broadcasters and new media companies.  These revised endorsement and testimonial guidelines effectively ban the old standard “results not typical” disclaimer so commonly in use in connection with a great deal of testimonial advertising, confirm independent liability for the “endorser” (including celebrities) for false product or service claims, and expand and clarify the need for disclosure of “material connections”, that is consideration (money and other “freebies”) received by new media companies in connection with reviews or other online coverage of products or services.  It is vital that media companies, in particular new media, understand the key provisions of these guidelines to make sure that they don’t become a target of any FTC enforcement action.  The FTC has indicated that for now at least, its focus will be on enforcement in the new media world (bloggers, social media, viral campaigns) and other “non-traditional” advertising (celebrity guests on news and entertainment shows, endorsements by media personnel such as on-air DJ’s).

Like all FTC Guidance concerning advertising, the revised guidelines are specific regulations, but instead they set out standards (in essence a safe harbor) that outline how the FTC will review advertising to determine if it is “false and deceptive” or otherwise misleading to the consumer in violation of Section 5 of the FTC Act.  The revised guidelines provide specific examples as to how they will apply to insure sufficient disclosure so that the listener has all the background necessary to be able to evaluate the strength of the endorsement for him or herself.  For broadcast advertising, the new guidelines make clear that endorsers can themselves be liable for misleading statements made during a product pitch.  So a radio announcer paid to try a diet plan or some other product and to report about its results on the air needs to be sure not only that his statements are truthful, but that the “results” claimed are in line with what the advertiser can actually prove for the product through clinical study and research.  The radio pitchman cannot turn a blind eye to claims that are inherently incredible.  In the past, a simple disclosure that "your results may vary" or "these results are not necessarily typical" was sufficient.  Today, that disclaimer is no longer enough.  Instead, the new guidelines state that any testimonial about the results of using a product be accompanied with a disclosure of the results that a typical user can expect to get from the product.  So the announcer must be informed as to what results can be expected by the typical user, and that these results are objectively verifiable, so that the proper disclosure can be made.  As the announcer (or the station) can now be liable for statements made in such testimonials, stations should take care to be prepared to make the required disclosures. 

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Only a day after asking over-the-air television broadcasters to justify their existence and why some or all of their spectrum should not be reclaimed by the FCC to be used for wireless broadband (and giving interested parties only until December 21 to not only justify their existence, but also to come up with technical means by which the spectrum could be more efficiently used, business plans for their future use of the spectrum, and a survey of the competing needs for that spectrum - see more detail below), the FCC issued another request for comments, asking how current video devices could be made more accommodating to Internet video.  These comments, also due on December 21, seemingly bring consumer electronics manufacturers and multi-channel video providers into the FCC's rapidly-expanding evaluation of the video industry and its future.  As the comments filed in connection with these two requests will no doubt lead to proposals to be included in the FCC's February report to Congress on strategies for broadband deployment, these quickly prepared filings could help determine the future of the video industry for the foreseeable future.

The new proceeding, looking for a "plug and play" model of consumer video devices that can access conventional television delivery systems and the Internet, starts with the statement that Internet video is "tremendously popular" and a prediction that, as it expands, new applications for such video will be found.  The Commission says that it sees Internet video as one way of spurring broadband adoption.  How to best promote the plug and play model for consumer video devices that can access the Internet is the crux of the comments that the FCC seeks.  The Commission first asks whether there are currently video devices that allow televisions to view not only the programming provided by multichannel video providers (e.g. cable and satellite), but also Internet video that may be available through an Internet service provided by that same MVPD, stating that it was not aware of such devices.  Next, the Commission asks what would be necessary to develop such devices, and what rules the Commission could adopt to possibly require capabilities in set top boxes and other devices to provide this universal access to video programming of all sorts.  The third area of inquiry from the Commission asks about standards that could be adopted to make Internet video and video from other sources interact with all other home audio and video equipment, including DVRs, to bring about the "digital living room."  And finally the Commission asks what stands in the way of plug and play devices that will work with all networks by which video is delivered.

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At more and more broadcast conventions, station owners have been asking questions about their legal liability for the use of social media.  What is their liability for the use of Facebook, Twitter, MySpace or other services?  Could owners have liability if their station maintains its own page on which friends and followers may post statements which are defamatory or which could otherwise give rise to a lawsuit?  Can an employee's actions on his or her own pages be attributed to the station?  Should stations restrict the use of social media by their employees on company time, or can that itself give rise to liability?  These are the same questions being asked by employers in other industries, and Davis Wright Tremaine is conducting two free on-line seminars on December 9 and December 15 to answer these questions.

While these seminars are not directed exclusively to broadcasters, they will address topics that broadcasters will find helpful in answering their questions on the use of social media.  Specific topics to be discussed include:

• Social media mechanics: How does social media work and what are employees doing on these sites?
• Employer liabilities: What new types of legal risks are created by employees using social media? How can employers protect themselves?
• Expectations of privacy: Do employers who blog or use social media in the workplace still enjoy a right to privacy? What can employers lawfully do to monitor or control online activities?
• Social media policies: What are the options and what should it contain? Is it necessary for your company to have a written policy?
• Managing defamation: If you or your company is defamed online, what can you do? What should you do?

More information on these free on-line seminars is available here.  To register for these free seminars, go the the registration site here.

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DWT attorneys David Oxenford and Ronnie London both spoke at the Future of Television - East Conference held in New York City on November 18-19, 2009. Dave delivered introductory remarks to the Conference, and participated with Shelly Palmer, Host of MediaBytes, in a discussion "What's the Industry Buzz.". Dave discussed the role of Washington in the Future of Television, outlining the issues facing "television" in its broadest sense - including broadband deployment, net neutrality, the battle over the spectrum, privacy, piracy and content protection, and content regulation.  The slides from his presentation are available here.

Ronnie was a panelist on a panel called The Future of Online Video, participating in a discussion with several CEOs of online video companies.  Ronnie discussed issues including FTC disclosure obligations, sponsorship identification requirements, and privacy concerns for companies offering on-line video.

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The Commission is worried about the future of the broadcast media, and they are trying to figure out what they can do.  The last two weeks have been full of news about actions being taken by the FCC which may or may not lead to a reshaping of broadcasting as we know it.  We wrote about the discussion of re-purposing some or all of the television spectrum for wireless broadband users.  We also told you about the workshops to be held this week as the first step in the Commission's Quadrennial review of it multiple ownership rules - looking at whether to allow more media consolidation to help broadcasters compete in the new media landscape or, conversely, whether there should be a reexamination of the existing rules to make them more restrictive against big media.  Last week, the Commission announced two more actions - the appointment of a Senior Advisor to FCC Chairman Julius Genachowski to study "the future of media in a changing technological landscape", and a workshop on "Capitalization Strategies for Small and Disadvantaged Businesses."  What is the impact of all of these actions?

The appointment of the Senior Advisor, Steven Waldman, is perhaps the most interesting action.  Mr. Waldman, the founder of the website Belief.net (recently sold to News Corp), is charged with determining how the FCC can assure that the media will serve the public interest in the 21st century, and that "all Americans receive the information, educational content, and news they seek."  He is instructed to work with all Bureaus to determine how best to implement these ambitious goals.  It is interesting that, while one might be inclined to look at this with the assumption that his charge is to look at broadcasting, the public notice announcing his appointment and his charge does not once use the word "broadcast" or "broadcasting."  Instead, it talks almost exclusively about the new media and technology and the potential that they have for serving the public good.

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On Friday, the Commission formally began a rule making proceeding regarding children and electronic media.  Aware of the vast opportunities, but also the potential risks inherent in today's (and tomorrow's) electronic media, the Commission is seeking to gather information about the extent to which children are using media today, the benefits and risks of the various technologies, and the ways in which society can improve the benefits while minimizing the risks.  Formally entitled "Empowering Parents and Protecting Children in an Evolving Media Landscape", the proceeding is aimed at building a record to inform and guide the Commission's future actions in this area. 

Clearly, these are big picture questions the FCC is dealing with at this stage, but with Friday's Notice of Inquiry the Commission seeks to break the issues down into several areas of inquiry and solicit comment from interested parties.  For example, with respect to the potential benefits, the Commission has identified six principle benefits it sees from electronic media and seeks input about each, including:  (i) improved access to educational content; (ii) ability to acquire technological literacy necessary in a global economy; (iii) ability to develop new skills in the use of technology and the creation of content; and (iv) facilitating new forms of communication with family and peers.  With respect to risks, the Commission has noted a range of potential dangers ranging from the possible exposure to child predators to the impact of excessive or exploitative advertisements.  The Commission's item also asks broad societal questions, such as whether there is a minimum level of media literacy that is required to participate effectively in modern society, and if so, how do we ensure that future generations gain the necessary exposure to electronic media.  At this stage of the process, the Commission is truly asking questions rather than proposing specific rules.  And in fact, there may be potential issues related to regulation in some of these areas, including First Amendment problems in connection with restricting access to indecent material in different types of electronic media. 

Just as an aside, the Notice quietly notes that the Commission previously released Notices of Proposed Rule Makings involving interactive television and embedded advertising on television, respectively.  While the FCC does not incorporate those open matters into this new proceeding, it does invite parties wishing to update the record on issues regarding embedded advertising in broadcast and cable television or interactive television to file ex parte submissions in the earlier dockets. 

The deadline for submitting Comments in this proceeding will be 60 days after publication of the Notice of Inquiry in the Federal Register, with Reply Comments due within 90 days of publication.  Comments may be filed with the Commission on paper, or online using the FCC's newly revamped Electronic Comment Filing System. 

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In the next few days, concerns about the protection of children from indecency and violence could lead to a report from the FCC to Congress urging use of the V Chip and other parental controls in devices other than television sets.  Remarks several weeks ago by FCC Chair Julius Genachowski suggesting that the FCC might want to look at content regulation beyond the broadcast medium, a view reiterated in an interview yesterday in TV NewsCheck, also suggest that  concerns about the exposure of children to indecency and other troubling programming on cable, online and by wireless devices may lead the FCC into unprecedented extensions of its regulation of entertainment content beyond the broadcast media.  An article today from Bloomberg News confirms that the FCC will be starting an inquiry to see if the television program ratings should be extended to cable and wireless entertainment services.  This extension of Federal regulation to protect children is occurring at the same time that similar concerns are being expressed by state legislatures, including the adoption of a recent law in Maine that effectively prohibits direct marketing to minors.

The report due this week follows a Notice of Inquiry issued by the Commission in March, as required by the Child Safe Viewing Act, legislation passed by Congress.  The law required that the FCC solicit public comment on "advanced blocking technology", the next generation of the V Chip, to see if these technologies can and should be extended to video programming other than broadcast television, including online communications, wireless communications (including video delivered to mobile  devices), DVRs and other video recorders, DVD players, and cable television.  The FCC Notice also asked why the current V Chip has seemingly not been used much by parents.  The FCC even asks if rules should be extended to video games - which were not specifically named in the legislation.  This would seemingly extend the FCC's jurisdiction far beyond its current limits.  The FCC's report is due by August 29. 

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The question of when a digital music service is “interactive” and therefore requires direct negotiations with a copyright holder in order to secure permission to use a sound recording is a difficult one that has been debated since the Digital Millennium Copyright Act was adopted in 1998. In a decision of the Second Circuit Court of Appeals released today, upholding a jury decision in 2007, the Court concluded that Yahoo’s Launchcast service (now operated by CBS) is not so “interactive” as to take it outside of the statutory royalty despite the fact that the service does customize its music offerings to the tastes of individual listeners. To reach its decision, the Court went through an extensive analysis of both the history of the sound recording copyright and of the details of the criteria used by Launchcast to select music for a stream sent to a specific user. By determining that the service is not interactive, the service need only pay the SoundExchange statutory royalty to secure permission to use all legally recorded and publicly released music.  Had the service been found to be interactive within the meaning of the statute, the service would have to negotiate with each sound recording copyright holder for each and every song that it wanted to use on its service to get specific rights to use each song - potentially resulting in hundreds of negotiations and undoubtedly higher fees than those paid under the statutory license.

The issue in the case turned on an analysis of the DMCA’s definition of an interactive service.  The statute defines an interactive service as one where a user can select a specific song or “receive a transmission of a program specially created for the recipient.” It is clear that Launchcast did not allow a user to request and hear a specific song.  But, by specifying a genre of music, and by specifying favorite artists and songs and rating other songs played by the service, a listener could influence the music that was provided to it.  Was this ability to influence the music sufficient to make it an “interactive service” and thus take it out of the coverage of the statutory royalty?

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The Advertising industry recently published self-regulation guidelines for "behavioral advertising," i.e. advertising that is targeted to the user based upon data regarding that user’s activities across various Web sites.  The Federal Trade Commission has been urging the industry to develop such standards for some time.  These practices have also attracted considerable attention on Capitol Hill.  To summarize the new guidelines, Davis Wright Tremaine has published an Advisory, summarizing the new guidelines.  You can find the advisory here. 

Any company engaging in any behavioral advertising on their websites, including broadcasters and other digital media companies, should pay attention to these guidelines.  As noted in the memo, Congress continues to consider other regulatory steps to govern such advertising.  The more effective industry self-regulation is, the less the need for government intervention. 

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As you may have heard, Facebook is going to allow users to register names in their Facebook URL, replacing the former random ID numbers.  This policy, announced in a Facebook blog post earlier this week will become effective on a first come, first served basis beginning Saturday, June 13 at 12:01 am.  This new policy creates the danger that Facebook users may try to register as their user name words or phrases that could infringe on a company name, trademarked slogan, or even a broadcast station's call signs.  To prevent others from using your company's name, call sign or other trademark, Facebook has created a form allowing rights holders to register their marks ahead of time.  To protect your intellectual property in the easiest manner possible (without the need for costly infringement lawsuits of other actions), companies should take advantage of the procedures outlined by Facebook itself, and register with the company.

A couple of caveats:  

1. User names have to be at least five alphanumeric characters.  This means that four letter call signs cannot be used as user names unless used with a suffix or frequency.  Since periods are the only punctuation allowed, acceptable user names might be WXYZ.FM, or FM98.1, for example. 
2. In order to prevent someone from using your trademark in advance, it appears that it must be a registered mark.  However, a separate form appears to allow intellectual property rights holders to reclaim a user name, even if it is not a registered trademark.  Thus, if your company name, mark or call sign is unregistered, you can either register it as your own Facebook user name or wait until someone else does that and complain after the fact.  You do not need to be a Facebook user to submit the intellectual property rights forms described above.

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This past week, I attended the BIAfn Winning Media Strategies Conference in Washington, DC.  During the course of the conference, there was much talk about how broadcasters and publishers need to provide unique service to their communities in order to survive in the competitive media marketplace.  The point was made over and over again that, in each market there are unique attributes and personalities that a station should be covering in its programming, and should be exploiting even more broadly through their digital assets, to tie it to its community.  Only by doing so will the station be able to survive in the new media environment - and by doing so, the station may be able to thrive.  In fact, I was stuck by a statement by USC's Adam Clayton Powell III that domination of the local online and digital media marketplace was "the broadcasters to lose."  In other words, the broadcaster has such unque promotional abilities with its current audience that it can establish its brand in the online and in the mobile world far easier than other media players.  But there were also the repeated warning that there is more and more competition for this local digital market from new entrants and other media entities and that, if the broadcasters did not take advantage of their current advantage, the local service would come from someone else.  What most stuck me was that there was no question that the superservice to local needs would be coming from someone - broadcaster or not - as a result of marketplace developments, not because of any government mandate.  The broadcaster has to adapt to and compete in this new media marketplace or become culturally and economically irrelevant.  The broadcaster needs to serve the local market to meet these challenges, not because some Washington agency has ordered him to do so.  And the broadcaster needs to serve his community in a way that the public will find compelling, not in a way that the government thinks is best.

At BIAfn, the presentation that made the greatest impact was probably that of Greenspun Media from Las Vegas, which has reinvented a secondary newspaper and a Low Power TV station as an on-line powerhouse, uncovering the aspects of the community that would draw the largest audience and covering that information in great detail.  The Las Vegas Sun site not only covers hard news, but also the gaming industry, University of Las Vegas sports and even state government issues in a way that its audience seems to find interesting.  Even a history of Las Vegas, in great detail, is included.  And video plays a big part of the site, with the company in development of a hip news and events program, 702.tv, that will soon be a daily program on the television station and online (featuring local "celebrities" doing the weather, including strippers and Neil Diamond sound-alikes).  While some attendees at the conference thought that Las Vegas presented unique opportunities that might not be available in all communities, many were immediately speculating on the opportunities in their own communities to find unique personalities and events that could be developed on-air and on-line in ways to maximize their connection with their audience. 

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Yesterday, the Detroit Free Press and the Detroit Morning News, which operate their publication and distribution operations through a joint operating agreement, announced that they will cut back on the physical publication of their papers - publishing full editions delivered to homes only three days a week.  On other days, the papers will publish an abbreviated version, available only on newsstands.  The papers will not abandon news coverage the remainder of the week, but will instead concentrate on their on-line presence, showing the power of the Internet to disrupt traditional media.  As we said years ago in one of our first posts on this blog - New Media Changes Everything, and it seems that this is just another indication of how true that is.  The broadcast media, particularly radio, has often looked at the advertisers served by the daily paper as a ripe source of new business, and may well see the Detroit change as a major business opportunity.  But does it also change the FCC's consideration of the multiple ownership rules applicable to radio and television cross-ownership with newspapers?

The FCC's multiple ownership rules prohibit the ownership of a broadcast station and a "daily" newspaper that serve the same area.  The rules define a daily paper as one that is "published" at least four days each week, and is circulated "generally in the community."  Here, the Detroit papers arguably will not meet that 4 day a week requirement - at least for a publication that is generally circulated throughout the community.  Of course, some may argue that the abbreviated newsstand copy constitutes a daily publication but one would assume that, sooner or later, even that will disappear.  Thus, while there has been so much controversy about the Commission's decision of one year ago (summarized here) deciding that combinations of broadcast properties and newspapers in Top 20 markets were presumed to be permissible, while those in smaller markets were not, one questions whether this still makes any sense in today's marketplace where seemingly few can profitably publish a daily paper in most markets, and no one seems to want to rescue the many papers that have fallen on hard times. 

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The FCC this week released the details of its "White Spaces" decision, authorizing the use of both fixed and mobile unlicensed devices within the television spectrum.  In theory, these devices are supposed to be able to sense the existence of television signals so that they can operate on other frequencies and avoid creating interference.  However, as an extra safety measure, the FCC has also required that these devices connect at least once a day with a database of all other protected users of the television spectrum and, by used of geo-location technology, determine what other users are in the area where the "TVBD" (television band device) is being used and operate on frequencies which protect those other users.  Our firm has prepared a memo outlining the full decision.  The Davis Wright Tremaine memo can be found here.  When one reviews the full text of the FCC decision, it becomes pretty clear that we should not look for such devices anytime soon.

While the Commission's order actually discussed in some detail the question of whether these devices should be permitted to operate before the end of the digital television conversion in February 2009, given the issues that still need to be resolved, this discussion really appears to be an academic one.  First, devices that meet all of the FCC requirements have to be designed and built, and type-accepted by the FCC labs.  In a recent article by Shelly Palmer in his well regarded blog on television issues, he suggests that many engineers are convinced that these devices simply will not work.  When one reviews the FCC requirements, one can see why that might be the case.

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Last week, President-elect Barack Obama delivered his first weekly radio address since he was elected President.  The broadcast made news, not only for its content, but also because it was streamed on the Internet, particularly on You Tube, but also retransmitted on many other websites.  The fact that the Internet makes such transmissions not only possible, but so easy and so widely available demonstrates one of many reasons why all the worry about the return of the Fairness Doctrine is unwarranted.  With access to so many diverse opinions not only on the radio but also through all of the new technologies, why should the government care that one radio station may not cover all sides of a controversial issue?  If one station does not put on a strongly held viewpoint on an important issue, you can bet that someone who holds that viewpoint will find some way to transmit it to others. 

The return of the Fairness Doctrine has been the great invisible monster in the room since the election - with many commentators, particularly conservative ones, worrying that the Democratic Congress will attempt to reinstate the Fairness Doctrine.  Off-hand comments such as those made by Senator Schumer on Fox News, have fueled this speculation, even though the Obama campaign has specifically rejected such a return.  The Fairness Doctrine is one grounded in scarcity of the electronic spectrum - from the fear that if one side of an issue was allowed to dominate one of the few means of communicating with the population of a community, it would effectively be able to stifle the ability of those with contrasting viewpoints to get their message out.   But, to use a phrase that is becoming increasingly popular - that thinking is so 20th Century.

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We’ve previously written about the value of music in connection with the royalties to be paid by Internet Radio and the performance royalty (or "performance tax" as it's labeled by the NAB) proposed for broadcasters. One of the questions that has always been raised in any debate about royalties, and one often dismissed by the record industry, is to what extent is there a promotional value of having music played on the radio or streamed by a webcaster.  In discussions of the broadcast performance royalty, record company representatives have suggested that, whether or not there is promotional value of the broadcast of music, that should have no impact on whether the royalty is paid. Instead, argue the record companies, the creator of music deserves to be paid whether or not there is some promotional value. The analogy is often made to sports teams – that the teams get promotional value by having their games broadcast but are nevertheless paid by stations for the rights to such games. The argument is that music should be no different. That contention, that the artist deserves to be paid whether or not there is promotional value may be tested in connection with what was once thought to be an unlikely source of promotional value for music – the video game Guitar Hero.

Guitar Hero, in its various versions released over the last few years, has proven to be a very effective tool for the promotion of music – with various classic rock bands experiencing significant sales growth whenever their songs are featured on a new version of the game. The use of a sound recording in a video game is not subject to any sort of statutory royalty – the game maker must receive a license negotiated with the copyright holder of the recording – usually the record company.  In previous editions of the game, Guitar Hero has paid for music rights. However, now that the game has proved its value in promoting the sale of music, the head of Activision, the company that owns the game, has suggested in a Wall Street Journal interview that it should be the record companies that are paying him to include the music in the game – and no doubt many artists would gladly do so for the promotional value they realize from the game. 

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Today, the National Music Publishers Association ("NMPA"), DiMA, the RIAA and other music publishing groups issued a press release announcing a settlement of certain aspects of the current Copyright Royalty Board proceeding to determine the royalties due under Section 115 of the Copyright Act for the mechanical royalty for the reproduction and distribution of the musical work (i.e. the composition - the words and music of a song).  According to the Press Release issued by the parties, this agreement covers interactive streaming and limited-time downloads, setting a royalty of 10.5% of revenue, less any amounts due for performance royalties (to ASCAP, BMI and SESAC, which also reimburse composers of music).  While many press reports (at least some of which have already been pulled) have concluded that this is a settlement of the Internet Radio royalties proceeding - that is wrong.  The Internet radio royalty proceeding involves Section 114, not Section 115, of the Copyright Act.  Section 114 deals with a royalty paid to the performers, not the composers.  Section 114 compensates performers and the copyright holders in the performance for the public performance of their works, not for the mechanical royalty for reproduction and distribution covered by Section 115.  And Section 114 covers non-interactive streaming - where users cannot dictate the songs that they want to hear - unlike the services, on-demand streams and limited time downloads, involved in this settlement which allow users to select the songs that they want to hear.  So don't believe what you read - the Internet radio royalties are still very much a subject of dispute, and services like Pandora are not yet saved by any sort of settlement. 

According to the press release, the one benefit to Internet radio under this agreement is that the parties conclude that there is no royalty due to the music publishers for any copies made in the transmission of non-interactive streaming.  The Copyright Office recently began a proceeding to ask if such royalties were due (about which we wrote here).  So, even  were the Copyright Office to determine that there was a Digital Phonorecord Delivery (a "DPD") made during the Internet radio streaming process, at least for the length of this agreement (assuming that it is approved by the Copyright Royalty Board), no royalty will be assessed.  We will write more about this settlement once we have seen the full terms - but wanted to post this notice to alert readers that, contrary to press reports, the Internet Radio proceeding has not been settled. 

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Each election season brings new issues for broadcasters. In recent years, broadcasters are more and more frequently dealing with requests for political uses of the a station’s website. For the most part, unlike a broadcast station that is subject to the full panoply of the FCC’s political rules, those rules largely don’t apply to station websites (some FEC rules, will not be discussed here, may apply to websites). About the only informal pronouncement to come out of the FCC on the use of a station website is that, if the website is sold to one candidate as part of a package with broadcast spot time, then the same offer should be made to competitors of the candidate. This is not an application of FCC’s the rules to the Internet, but instead just a restatement of a long-standing FCC policy that, if one advertiser gets extra benefits that come with the purchase of ad time, and those benefits would be of value to a candidate, they should also be offered to the candidate, and that equal opportunities demands that all candidates for the same office be treated alike.

While the freedom from reasonable access, lowest unit rates, and equal time may seem like a boon to broadcasters, that freedom comes with a price. For instance, the “no censorship rule,” which forbids a station from editing the content of a candidate’s spot or rejecting that spot based on its content (unless that spot violates a Federal felony statute), does not apply to Internet spots. Because candidate spots broadcast on a station cannot be censored, the station has no liability for the content of those spots. So the station is immune for libel and slander, or copyright violations, or other sources of potential civil liability for the content of a candidate’s broadcast spots. But since these spots can be censored or rejected on the station’s website, a station could have theoretical liability for the content of the Internet spot even though the broadcaster could run the exact same spot on the air without fear of any liability. For instance, just recently, according to the Los Angeles Times, CBS asked You Tube to remove a McCain spot attacking Senator Obama as the spot used a copyrighted clip of a Katie Couric commentary without permission. Had that spot been running on a broadcast station, the station would have been forbidden from pulling the spot (and would have no liability for the copyright violation).

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We've written extensively about the FCC's proposals to turn back the hands of time, and return to the regulatory scheme that existed prior to the early 1980s by mandating that broadcasters serve their local communities - in a manner dictated by the FCC.  In the 1980s, the FCC decided that it did not need to micromanage the programming of broadcasters, as marketplace forces would ensure that stations met the public interest.  If they did not provide the services that people wanted, the FCC reasoned in the 1980s, the people would stop listening or watching - hurting the broadcaster who was not serving its community in the pocketbook.  While the FCC is now looking to retreat from this position - apparently believing that the market is no longer capable of insuring that broadcasters serve their communities, evidence that the marketplace will provide localism is now available on that most unregulated of media - the Internet.  Tomorrow, the Huffington Post, a website that had heretofore concentrated on national stories, will be launching a version of its product targeted to Chicago and, according to a story on American Public Media's Marketplace, it will be expanding by providing local service in many other markets in the next 18 months.

This is not the only evidence that the Internet is going local.  Local news sites are springing up in many communities. quite often with no ties to "established" media.  Micro-targeting of on-line ad sales shows that marketers know that, if they offer a local product, they need to reach local people to buy that product, and the Net more and more can provide that targeting.  Many websites, from registration information, IP address or other identifying information, greet users of a site with localized information - weather, TV listings or event information for the particular user's hometown.  Thus, while the FCC seems to believe that that marketplace is incapable of guaranteeing local content to serve local communities, the actions of companies on the Internet demonstrate that, if there is a need for a local service, it will be provided - more efficiently and in a way more likely to provide the public with the service that it demands - if it is left to the market to provide.  The Internet does not seem to need the government to dictate how that local service is provided - nor should the broadcaster.  Particularly now, with the broadcast industry hurting economically and facing more competition than ever before, the FCC's actions to seek mandated localism seems to be the wrong solution to a nonexistent problem - and one that will hopefully fade away in the coming months. 

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The Federal Communications Commission voted 3-2 on to issue an order imposing regulatory controls on the Internet. The ruling concerns a network management technique used by Comcast for its high-speed Internet service that had the effect of giving slightly lower priority to some peer-to-peer (P2P) upload sessions so that the latency-sensitive applications of the vast majority of its Internet customers would remain uninterrupted. The Commission ruled that the practice—which Comcast previously announced would be phased out this year—violated the Commission’s “network neutrality” policy guidelines and amounted to discriminatory “blocking” and “monitoring” of Internet content, as well as “interference” with consumers’ “right to access” lawful Internet content. While not fining Comcast, the Commission instead orders Comcast to report on the technique, submit a compliance plan for terminating it by year-end, and describe to the FCC and the public the specifics of what new management techniques will be implemented. Noncompliance, warns the Commission, will be subject to future injunctive relief and additional enforcement actions.   Additional details of the FCC's announcement, and specific concerns about this ruling, can be found in our firm's advisory bulletin about this decision.  The Press Release on the FCC action can be found here.

While the full text of this decision is not yet available, the New York Times ran a story summarizing its effects.  The statements of the Commissioners on this decision are also available.  The dissents approach the issues from somewhat different perspectives.  Both express the hope that these kinds of objections could have been resolved by industry organizations - Commissioner McDowell's statement going into great detail about the lack of notice and precedent for the decision, and the potential impact that the decision will have on network management practices and voluntary decisions of Internet management organizations.  Commissioner Tate raises questions of what the decision will do to attempts to design technological systems that can sniff out adult content for purposes of protecting children from such content.  It's interesting that the FCC's own proposed rules for portions of the 700 mhz band include such requirements for the monitoring of adult content.

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Congress years ago tried to regulate indecency on the Internet through the Child Online Protection Act, through regulation of content that was harmful to minors.  Because of the sweeping nature of the restrictions, the Courts have repeatedly invalidated the law.  We wrote in March 2007 about a Federal District Court decision invalidating the law (this post also details the provisions and prohibitions of the Act).  Now, the Third Circuit Court of Appeals has upheld the District Court ruling, finding that the law violated the First Amendment rights of website operators, as the government had not shown that the Act's restrictions were the least restrictive means of accomplishing the government's objectives - protecting children.  According to the Court's findings, voluntary filters would accomplish the same ends, and allow adults to view adult material which might be harmful to children under the Act's definition but which is not legally obscene and is therefore constitutionally protected .  Our law firm's  Advisory Bulletin on the Third Circuit's decision can be found here.  The Third Circuit decision is available here.

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Broadcasters and other digital media companies have recently been focused on the royalties that are to be charged by the record labels for public performance of a sound recording in a digital transmission (under the Section 114 compulsory license administered by SoundExchange).  In a Notice of Proposed Rulemaking issued this week, the Copyright Office tentatively concludes that there could be yet another royalty due for streaming - a royalty to be paid to music publishers for the reproductions of the musical compositions being made in the streaming process under Section 115 of the Copyright Act.  This notice was released just as the Copyright Royalty Board is concluding its proceeding to determine the rates that are to be paid for the Section 115 royalty.  While there have been reports of a settlement of some portions of that proceeding, the details of any settlement is not public, so whether it even contemplated noninteractive streaming as part of the agreement is unknown.

How did the Copyright Office reach its tentative conclusion?  First, some background.  The Office for years has been struggling with the question of just what the section 115 royalty covered.  Traditionally, the royalty was paid by record companies to the music publishers for rights to use the compositions in the pressing of records.  This was referred to as the "mechanical royalty" paid for the rights to reproduce and distribute the composition used in a making copies of a sound recording (a record, tape or CD).  These copies were referred to as "phonorecords."  However, in the digital world, things get more complicated, as there is not necessarily a tangible copy being made when there is a reproduction of a sound recording.  Thus, Congress came up with the concept of a Digital Phonorecord Delivery (a "DPD") as essentially the equivalent of the tangible phonorecord.  But just what is a DPD?

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In several recent speeches and press releases, FCC Commissioner Jonathan Adelstein has challenged the FCC to do more in the regulation of children's programming.  In a recent Press Release, the Commissioner outlined proposals including the following:

• Improve the V-Chip and other program blocking technologies
• Improve ratings information for television programming - including potentially having third parties review programming for its suitability to children as opposed to the television programmers themselves doing the ratings
• In the context of a proceeding on Embedded Advertising that has been rumored for quite some time, look at how such advertising is used in children's programming
• Restrict interactive advertising directed at children.
• Convene a summit to explore these issues

In addition to these proposal, the Commissioner gave a recent speech to the Media Institute in which he expanded on these ideas, and also lengthened this agenda to include further Commission action to define and restrict violent programming.  He also expressed his regrets over the recent decision overturning the FCC's fines for fleeting expletives and urged that action be taken to overturn this decision (see our post here on the FCC's appeal of that decision).  And in yet another recent speech, he emphasized the proceeding on Interactive advertising in children's programming, remarking on how the Commission has a pending proceeding that has been pending and unresolved for several years.  He cited the Commission's tentative conclusion to ban such ads, as broadcasters form a "portal" for children's entrance to the Internet.  While the Commissioner expressed that the FCC had little jurisdiction to do much on the Internet itself (but see our recent post as asking whether the FCC may soon get more power over the Internet), he felt that restrictions on the links to the Internet from television programs would be useful in protecting children. 

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A recent Washington Post article highlights a bill that was recently introduced in Congress suggesting that the FCC bring back their rules for audio descriptions of video programming - rules which were thrown out by the Courts several years ago as being beyond the scope of the Commission's authority without explicit Congressional authorization.  But not only does this bill propose to give that missing Congressional approval to the FCC to re-introduce video description requirements for broadcast television, but it would authorize the FCC to introduce these rules, and closed-captioning requirements, on all video screens, including MP3 players, wireless devices and other video devices getting their programming through the Internet or other digital technologies.  With this bill, and various other proposals that have surfaced in recent months, it seems more and more likely that, as the Internet becomes even more important in the provision of broadcast-like programming in the future, the FCC may be called on by Congress to impose broadcast-like restrictions on that programming.

The full text of the recent bill, introduced by Congressman Markey, Chair of the House Subcommittee on Telecommunications and the Internet, can be found here.  A summary of the bill is also available on Congressman Markey's website.  The bill deals first with the accessibility of telephones and other communications devices, before setting out the provisions dealing with the captioning and video description requirements for broadcast and Internet video devices.  The bill first asks the FCC to study and report to Congress on the issues with captioning and video description on video devices, and then asks the FCC to adopt rules governing these matters, making video programming placed on the Internet that was either broadcast on a television stations or which is "comparable" to broadcast programming to be subject to these rules.  The idea is to make all TV-like programming subject to the rules, no matter what device it is viewed on.  Presumably, if adopted, the law would allow the FCC to make exemptions for certain types of programming (just as it currently allows exemptions from the current closed captioning requirements for small entities that have insufficient resources to caption a program).  The bill also requires that the FCC make sure that program guides and emergency information are available to those with hearing or visual difficulties, and that the navigation devices on video receivers can  be worked by those with disabilities.  So the FCC would have much to do to comply with this law, if adopted, and all within an 18 month period.

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A decision by a US District Court in New York was just released, setting the rates to be paid to ASCAP for the use of their composers' music by Yahoo!, AOL and Real Networks.  The decision set the ASCAP rates at 2.5% of the revenues that were received by these services in connection with the music portions of their websites.  These rates were set by the Court, acting as a rate court under the antitrust consent decree that was originally imposed on ASCAP in 1941.  Under the Consent Decree, if a new service and ASCAP cannot voluntarily agree to a rate for the use of the compositions represented by ASCAP, the rates will be set by the rate court.  The Court explained that they used a "willing buyer, willing seller" model to determine the rates that parties would have negotiated in a marketplace transaction  - essentially the same standard used by the Copyright Royalty Board in setting the rates to be paid to SoundExchange for the use of sound recordings by non-interactive webcasters (see our post here for details of the CRB decision).  The ASCAP decision, if nothing else, is interesting for the contrasts between many of the underlying assumptions of the Court in this rate-setting proceeding and the assumptions used by the Copyright Royalty Board in setting sound recording royalty rates.

First, some basics on this decision.  ASCAP represents the composers of music (as do BMI and SESAC) in connection with the public performance of any composition.  This decision covered all performances of music by these services - not just Internet radio type services.  Thus, on-demand streams (where a listener can pick the music that he or she wants to hear), music videos, music in user-generated content, karaoke type uses, and music in the background of news or other video programming, are all covered by the rate set in this decision.  Note that the decision does not cover downloads, presumably based on a prior court decision that concluded that downloads do not involve a public performance (see our post here).  In contrast, the CRB decision covered the use of the "sound recording" - the song as actually recorded by a particular artist - and covers only "non-interactive services," essentially Internet radio services where users cannot pick the music that they will be hearing.

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The Senate Commerce Committee held a hearing this week on the Future of the Internet, dealing principally with the issue of net neutrality - whether Internet Service Providers treat all content carried through their facilities equally.  This issue principally involves questions of whether ISPs can charge big bandwidth users for their content to be transmitted through the ISPs facilities, or to be transmitted at preferred speeds.  The testimony of Chairman Martin at the hearing raised several issues - issues both about what he said and what some reports perceived him to say.  Some reports had him saying that the FCC did not need to regulate indecency on the Internet - though I never heard that question asked. But he did say that he did not have trouble with ISPs blocking illegal content such as child pornography and illegal file-sharing, which raises the question of whether some might look to ISPs to become copyright police - blocking access to material that does not have copyright clearances.  And, with the hearing being held on the same day as a media company purchased a company that can identify copyrighted material by reviewing that content when transmitted on the Internet - is that possibility coming closer to being a reality?

In recent weeks, there have been several trade press reports about government regulation of indecency on the Internet.  I've seen at least two trade press reports on Chairman Martin's testimony before the Commerce Committee, claiming that he said that no government regulation of indecency on the Internet was necessary.  I did not hear any reference to indecency regulation in his testimony (a written version of his statement is available here, and you can watch the entire testimony, here).  Instead, that testimony was about whether Congress needed to pass laws to allow the Commission to enforce its net neutrality principles.  Nonetheless, the press seems to believe that Internet indecency is an issue which might be targeted by regulation.  A recent study finding that the majority of Americans think that FCC regulation of indecency should be extended to the Internet has also been cited in several reports.  However, despite the seeming interest in regulation of the Internet, there are serious constitutional concerns about any such regulation.  In fact, as we wrote here, numerous attempts to regulate indecency on the Internet have been overturned by the Courts on constitutional grounds, as the government could make no showing that the regulations were the least restrictive means for restricting access to adult content.

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Website operators who allow the posting of user-generated content on their sites enjoy broad immunity from legal liability.  This includes immunity from copyright violations if the site owner registers with the Copyright Office, does not encourage the copyright violations and takes down infringing content upon receiving notice from a copyright owner (see our post here for more information).  There is also broad immunity from liability for other legal violations that may occur within user-generated content.  In a recent case, involving the website Roommates.com, the US Court of Appeals determined that the immunity is broad, but not unlimited if the site is set up so as to elicit the improper conduct.  A memo from attorneys in various Davis Wright Tremaine offices, which can be found here, provides details of the Roommates.com case and its implications.

In the case, suit was filed against the company, alleging violations of the Fair Housing Act, as the site had pull-down menus which allowed users to identify their sex, sexual orientation, and whether or not they had children.  Including any of this information in a housing advertisement can lead to liability under the law.  The Court found that, if this information had been volunteered by users acting on their own, the site owner would have no liability.  But because the site had the drop-down menus that prompted the answers that were prohibited under the law, liability was found.

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While US webcasters may think that they have legal issues - whether it be the Internet radio music royalties that have been such a concern (see our coverage, here) or the copyright and other liability issues that surround user-generated content on various websites (see our story here), they face nothing like new rules that were recently adopted for webcasters in China.  The new rules require government permits from two separate Chinese government agencies before webcasting operations can begin.  In addition, the rules appear to require ownership and control of webcasting operations by state-owned companies.  A memo on these new rules, prepared by attorneys from Davis Wright Tremaine's Shanghai office, can be found here.

These rules apply to streaming audio and video delivered to mobile and wireless devices.  The rules also require yet another permit for sites that contain news content, and require taping of programs (a proposal made by our own FCC in connection with broadcast programs to monitor for indecency) to monitor for program content that may offend government requirements.  Clearly, it's a different system than that in place in the US - one which website operators interested in an operation in China should study carefully.  Again, details can be found in the memo prepared by the attorneys in our Shanghai office.

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As the nation's television stations move closer and closer to the February 17, 2009 termination of analog broadcasting, plans are well underway to re-use the channel that these stations must surrender after that date.  Currently, most television stations operate on two channels, their traditional analog channel, and a transition channel on which they have been allowed to transmit their digital signal until the end of the digital transition.  As we wrote here, the FCC has assigned to all stations a final channel on which they will operate once the transition is complete (usually the transition channel or the original analog channel).  After February 17, 2009, the television stations will only broadcast on their final digital channel, and their other channel will be returned to the FCC.  All television operations will be consolidated in Channels 2 through 51, allowing the re-use of Channels 52-69.  Some of those returned channels have already been auctioned off (see our post here about some of the operations on those channels), and the FCC has recently announced auction rules for the remaining channels.  Our firm has just issued an Advisory setting out the important dates for participation in that auction - the so-called 700 MHz auction.  That advisory is available, here.

As these channels have excellent propagation characteristics, it is believed that they will be highly sought, with some estimates that the nationwide channels may bring several billion dollars into the Federal treasury.  Rumored uses include various forms of broadband access, either through open systems where consumers will pay for access as they do for any Internet access, but content providers will not have to pay, to more closed systems where the licensees determine what content will be provided.  As set out in the Advisory, at least some degree of openness to new devices that connect to the network is guaranteed on some portion of this spectrum under the Commission's orders.  But ultimately how much of that spectrum is used for closed systems transmitting video or audio entertainment (sounds like broadcasting) remains to be seen.   The more things change....

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Website operators planning to allow visitors to post their own "user generated content" can, for the most part, take solace that they will not be held liable for third-party posts if they meet certain criteria.  The Communications Decency Act provides protection against liability for torts (including libel, slander and other forms of defamation) for website operators for third-party content posted on their site.  The Digital Millennium Copyright Act provides protection against copyright infringement claims for the user-generated content, if the site owner observes certain "safe harbor" provisions set out by the law.  The requirements for protection under these statutes, and other cautions for website operators, are set out in detail in our firm's First Amendment Law Letter, which can be found here.

 As detailed in the Law Letter, the Communications Decency Act has been very broadly applied to protect the operator of a website from liability for the content of the postings of third parties.  Only recently have courts begun to chip away at those protections, finding liability in cases where it appeared that the website operator in effect asked for the offending content - as in a case where the owner of a roommate-finder site gave users a questionnaire that specifically prompted them to indicate a racial preference for a roommate - something which offends the Fair Housing Act.  However, as set forth in the Law Letter, absent such a specific prompt for offending information, the protections afforded by this statute still appear quite broad.

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On Friday, the FCC issued a public notice promising further testing of "white spaces" devices.   As we've written before, these devices are being promoted by many of the largest tech companies as ways to make more efficient use of the television spectrum by using low power wireless devices within that spectrum in places where those devices would not interfere with the operation of television reception.  The National Association of Broadcasters and other television groups have opposed allowing such operations for fear that they will cause interference to broadcast stations.  Especially during the digital transition, when listening habits are just being worked out and new digital televisions are just being purchase and installed by users, and because interference to a digital television station does not result in "snow" as in the analog world, but instead no picture at all, broadcasters fear that these devices could severely impact the success of the digital transition. 

In August, as we wrote here, the FCC released the first results of its interference studies, finding the potential for severe interference to television broadcasters.  While broadcast groups trumpeted these tests as proof of their fears, many of the tech companies claimed that the testing was flawed, using at least one device that was malfunctioning.  The tech companies essentially asked for a "do over," while the broadcasters argued that, even if a tested device was malfunctioning, that malfunction itself was enough to demonstrate that the devices are not reliable enough to protect television operations during this sensitive transition.

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Fred Thompson's formal announcement of his candidacy on the Tonight Show on Wednesday has focused more attention on the FCC's Equal Opportunities doctrine.  We wrote about the issue, here, highlighting the fact that evolving FCC policy has found that more and more broadcast programming is exempt from the Equal Time rules, as it is considered to be bona fide news interview programming.  The Hearst Argyle television stations around the country last night ran a segment in their news programming on that issue - a segment in which I was interviewed.  That segment can be viewed, here - a genuine bona fide news interview if ever there was one.

The television segment is also interesting in that it asked the question whether the FCC's rules will ever be expanded to the new media.  While the rules do apply to some new media (like satellite radio), extending them to the Internet seems unlikely.  How could such rules ever be applied to the hundreds of thousands of individualized web sites spread across the Internet.  The Federal Election Commission has been struggling with issues of whether it should extend its campaign spending and contribution limits to the Internet, most recently in announcing a decision that favorable comments about candidates made in blogs are not campaign contributions subject to FEC rules.  The FEC took the position that blogs are media outlets exempt from FEC regulation - much like the FCC's decisions expanding the scope of the news interview exception from the Equal Opportunities doctrine.  People get their news and opinion from more and more diverse sources, and the government seems to be correctly moving in the right direction of allowing this diverse political discussion to flourish free from the hand of regulation.

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The FCC announced today that the Office of Engineering and Technology will be hosting a meeting to describe and discuss the findings announced recently regarding the testing of prototype equipment proposed for use in the so-called TV "white spaces".  As we reported yesterday, the FCC's Office of Engineering and Technology recently issued two reports finding that the prototypes of these TV white spaces devices that had been made available for testing appeared to interfere with television signals.  The FCC has asked for comment on its reports, with initial comments are due by August 15, and reply comments due by August 30.  

Given the significance (and contentious nature) of the issue, the Commission has now announced that it will hold a meeting to answer questions, provide an overview of the tests it conducted, and consider suggestions for further testing to evaluate the performance of TV white space devices.  The FCC's meeting will be held on Thursday August 16, 2007 at 1 PM at the Commission’s testing lab in Columbia, Maryland.  Parties interested in attending the meeting should send an e-mail to Patricia.Goff@FCC.gov, identifying the organization and how many individuals plan to attend.  According to the FCC, space is limited.   A copy of the FCC's public notice with the full details is available here. 

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Two weeks ago, we wrote about the FCC’s proposal for the auction of the 700 MHz band – the portions of the spectrum that will be reclaimed from television operators after the digital transition.  These channels will be used to provide some form of wireless broadband service. The Commission made its decision on the use of this spectrum last week, reserving at least some of the spectrum for “open access” uses – where the provider will not be able to restrict the devices that can access the network, nor limit or block services that run on the network, as long as the devices and services do not cause damage to the network.  In theory, this will encourage the creation of numerous new devices and services to capitalize on the open wireless network being provided.  While the Commission has not released the full test of this decision yet, a memo from our firm, describing some of the decisions announced at the FCC open meeting and in the subsequent public notice, can be found here.

Whether the provisions that the Commission adopted will be sufficient to entice some of the Internet “content” companies, like Google, to bid, remains to be seen. But this “beachfront spectrum” will no doubt introduce some exciting new uses as it begins to come into operation in the next few years - providing more people more wireless access to mobile content - and more competition to those traditional wireless industries that many consumers have forgotten are both wireless and mobile - those provided by traditional broadcasters. 

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As the digital television transition continues, broadcasters have been concerned about the proposals made by a number of the major computer companies seeking the right to operate low power wireless devices in the spectrum used by television stations – in the so-called "white spaces" between channels. Because of the potential for interference, television obviously don’t operate on every channel in every city. The proposal by the tech companies, about which we wrote here, would allow unlicensed wireless devices to operate at low power within this spectrum, provided that such devices were “smart” enough to detect television signals and to avoid the use of channels that would interfere with these signals. Last week, the FCC’s Office of Engineering and Technology issued a report finding that the prototypes of these devices that had been made available for testing appeared to interfere with television signals. The report did note, however, that this testing should not be viewed as the end of the story on this issue, as further refinements to the devices might be able to eliminate the interference. The FCC has asked for comment on this report. Public comments are due on August 15, with replies on August 30.

The white spaces debate has been a very contentious one. The tech companies who favor it have argued that the efficient use of the television spectrum, and the congestion in other portions of the spectrum used by unlicensed devices, mandate attempts to allow these devices to operate in the television band on the condition that they do not interfere with TV uses. These companies contend that they should be able to create devices that can sense television stations and avoid interference to these stations.

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Last week, the US Court of Appeals in the Ninth Circuit released a decision, finding that the operator of a web site had not given its customers adequate notice of the change in the terms of use of its website. The site had posted the changes on its website, but had not provided specific notice of the changes (though emails, letters or even click through notices) to adequately assure that the user was aware of the changes or had consented to those changes. A post on our firm”s Privacy and Security Blog explains the meaning of this decision to web site operators, and suggests ways in which the operators of web sites can avoid the issues raised by the court decision. For broadcasters or other companies hosting websites, who may from time to time change the terms of use of the site, it worth reading the explanation of the decision as posted on our Privacy and Security blog.

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If you are a broadcaster, you know that it's not going to be a good day when you walk into a hearing on the possible extension of the performance royalty in sound recordings to over-the-air broadcasters and see buttons saying "I Support a Performance Right NOW" on the lapels of every other witness on the panel - including the Register of Copyrights, Marybeth Peters.  But that was the scene in Washington, as the House Judiciary Committee's subcommittee on Courts, the Internet and Intellectual Property held a hearing as to whether the right to collect a royalty for the public performance of a sound recording (the actual song as sung by a particular artist, as opposed to the underlying musical composition) should be paid by broadcasters.  Broadcasters in the United States have paid only a royalty on the public performance of the composition (to ASCAP, BMI and SESAC), and have never paid a royalty for the public performance of the sound recording.  The lack of a sound recording royalty has always been justified in the past on the theory that the artists and copyright holders in the sound recording benefit more than composers through the airplay of the sound recording, as they receive the bulk of the proceeds from CD sales, and the performers benefit from the promotion of live performances.  As they benefit from the promotion provided by the airplay of the song, there is no need for any sort of performance royalty.  As the music and radio businesses have both thrived in the United States - more so than anywhere else in the world - it seemed that this arrangement was mutually beneficial.

But, in recent years, the consensus over this mutually beneficial arrangement seems to have broken down.  Starting in 1995, a performance right in sound recordings has been imposed on digital services, including the royalty on Internet radio which has recently been so controversial (and about which we have written so much, here).  And, with the recent downturn in the record companies' business, additional sources of revenue are being sought - thus the RIAA and SoundExchange, the collective that receives sound recording performance royalties, have started a Congressional push to require the collection of royalties from over-the-air radio.  And that push was reflected in the hearing held on Tuesday before a House Committee that seemed clearly to favor the imposition of this royalty on broadcasters.

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There are no items on the agenda for next week's FCC meeting from the Media Bureau, so one might think that the "broadcast" community could ignore this meeting.  However, there is one matter that will be considered that may well have an effect on the media landscape for the foreseeable future.  That is the adoption of service rules for the 700 MHz spectrum - the remaining portion of the spectrum to be reclaimed from television broadcasters after the digital transition.  Part of that spectrum has already been reclaimed and is beginning to be used by companies such as Qualcomm offering digital multimedia services such as the MediaFLO system, about which we have written before.  The remaining portion of the spectrum that will be auctioned by the Commission by January 2008 and has the potential to provide significant high-speed digital wireless services to the public.   However, anyone reading the communications press would realize that there is a major controversy over how that service will be provided.

The argument is over whether service will be provided on the new spectrum in an open manner - in essence a wireless high speed connection to the Internet where any service can get direct access to the consumer - or whether it will function more like the current systems run by the existing wireless carriers, where the carriers will be able to control the content that will be delivered to the consumer.  This is, by no means an easy decision, and it is currently being debated in Congress and at the FCC.

 

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As reported in Digital Music News and other publications on Friday, Clear Channel Communications dropped its waiver of music royalties from its on-line agreement signed by musicians submitting songs to the Company in hopes that their music would be played on the Company's radio stations.  In writing about this decision, most publications attribute the decision to the petition filed with the FCC by the Future of Music Coalition and other public interest groups arguing that the waiver requests constituted a form of payola - the giving of something of value (the waiver of the right to receive a royalty) in exchange for the playing of music.  However, on close inspection, that would appear to be a misunderstanding of the royalty, as there would seem to be no royalty that would be affected by the waiver in connection with the playing of this music by radio stations, and therefore there would be no payola over which the FCC has any jurisdiction.

According to the Future of Music petition, Clear Channel's promise to play new music was made in connection with the payola settlement that it and other companies entered into with the FCC, and was apparently contained in a side letter filed with the FCC, as it was not spelled out in the settlement agreements themselves. See our analysis of the settlement agreements, here.  The side letter promised that the Company would dedicate a certain amount of radio airplay on the Company's radio stations to new local music.  However, such play would not implicate any music royalties - so a waiver of royalties would not confer any benefit on the Company.  Broadcast stations pay no royalty for the use of a sound recording - thus the waiver that Clear Channel requested was without any value as there was no royalty to waive.  While broadcast stations do pay a royalty for the composition (the underlying words and music of a song), stations play flat fees to ASCAP and BMI that are a function of the station's market size and power - not a function of how many songs are played.  Thus, as there is no sound recording royalty and a flat fee for the composition royalty unaffected by any waivers, the waiver did not confer any benefit to the Company in connection with its broadcast operations.  Thus, there where would appear to be no payola issue over which the FCC would have any jurisdiction.

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Should artists waive their rights to performance royalties in order to get airplay on broadcast or Internet radio stations? That questions has come to the fore based on a click-through agreement that Clear Channel included on a website set up to allow independent bands to upload their music for consideration for airplay by its stations. While artist groups, including the Future of Music Coalition, condemned that action, there are always two sides to the story, as was made clear in a segment broadcast on NPR’s Morning Edition, in which I offered some comments. As set forth in that segment, artists may be perfectly willing to allow unrestricted use of a song or two in order to secure the promotional value that may result from the airplay that might be received. For the broadcaster or Internet site seeking such permission, getting all rights upfront may well be an important consideration in deciding whether or not to feature a song – especially in the digital media.

Critics of the waiver made much of the fact that the site was set up at least partially to meet Clear Channel’s informal commitment made as part of the FCC payola settlement to feature more independent music, even though that commitment was not a formal part of the settlement agreement.  (See our summary of the payola settlement, here).  Even to the extent that the informal commitments made by the big broadcasters encompassed making time available to more independent musicians, the critics ignore the fact that the companies do not need any waiver of any sound recording performance royalty in connection with the over-the-air broadcast of those songs, as there currently is no public performance right in a sound recording for over the air broadcasting (though artists and record lables are now pushing for such a royalty, see our story here). Thus, the use of the waiver was only for the digital world – which was not covered by the FCC's jurisdiction over payola promises or the promises to increase the use of independent music. So, effectively, the company is being chastised for trying to minimize their costs on giving the music even greater circulation through their digital platforms than they initially promised.

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Just when Internet music companies were starting to understand one set of royalties applicable to the use of music on the Internet through the controversy over the Copyright Royalty board decision on royalties for the public performance of sound recordings in a digital delivery system, the Copyright Office held a hearing on Friday to discuss an entirely different royalty - the "mechanical" royalty for the use of the "musical work" in making a "phonorecord."  In plain English, the copyright holder in the publishing rights in a musical composition (the underlying words and music in a song) is entitled to a royalty when a copy of a song using that composition is made.  While that doesn't sound too complicated, when copies are made in the digital transmission of music over the Internet (and even in other digital media), all sorts of questions arise.  And in the conversations on Friday, questions were raised as to whether the obligation to pay a royalty for making a digital copy even applied to the streaming of a song on the Internet or possibly even the playing of a song on an HD Radio station.  These stations already pay (to ASCAP, BMI and SESAC) for the public performance of a musical composition, but the mechanical royalty is for a different right, and is collected by a different group, and the question being raised was whether a different royalty is also due when music is used a digital context.  This is also different than the SoundExchange royalty that is paid for the public performance of a sound recording (a particular song as recorded by a particular artist).

The Copyright Office held this Roundtable to update the record in a proceeding begun by a Notice of Inquiry issued in 2001 to try to determine how to apply in a digital world the mechanical royalty and the compulsory license for that royalty under Section 115 of the Copyright Act.  That section applies to the use of a composition in the making of a record or CD.  The artist or record company would have to pay the publishing company a flat fee per copy to obtain the rights to use the underlying song.  That fee is currently about 9 cents per copy, though the Copyright Royalty Board is is in the midst of a proceeding that is to determine whether that royalty should be changed.  When applied to the making of a physical copy, that concept is not hard to understand (though, as set forth below, it is not easy to administer).  But, in a digital world, questions arise as to when the obligation to pay a royalty arises.

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With July 15 now less than a month away, the new Internet Radio music royalties are still scheduled to go into effect.  Congressional legislation is slowly being considered, and a Motion for Stay to put the regulations on hold pending appeal has been filed (see our post here).  Some discussions on settlement have also taken place, though no deals have been done.  Without some action, payments under the new rules will soon be due.  See our memo, here, for more details on the CRB decision, and all of our posts on this issue, here.  While the legal and legislative actions are still proceeding, and the clock is counting down, the coverage in the popular media continues to grow.  In two recent discussions of the issue, SoundExchange spokesmen seem to blame Internet Radio for the current woes of the recording industry and to justify the high royalty rates through comparisons to the illegal pirating of copyrighted music.  All of these issues will be discussed at a seminar that I am moderating later this week at the Digital Media Conference in the Washington DC area.

One example of SoundExchange's recent claims can be found in a series of articles found on the Los Angeles Times website featuring a "Dust-up" exchange of viewpoints on the Internet radio issue,  between Kurt Hanson, owner of Internet radio broadcaster Accuradio and the publisher of the Radio and Internet newsletter, and Jay Rosenthal, a Board member of SoundExchange.  Mr. Rosenthal, in attacking the value of Internet radio as a promotional tool, said that while webcasters might excite people about new music, most new music is now illegally downloaded so that the promotion doesn't actually help the artists.  But, as Kurt Hanson points out, that would essentially be an excuse for never promoting any music in any venue - in fact it seemingly would be an excuse for shutting down the recording industry.  If music promotion just leads to illegal file sharing sites, and little or no music is ever to be sold again, why bother?  Does the recording industry really expect to make up for lost sales by receiving royalties from Internet radio?  Yet the same point seems to be made by SoundExchange President John Simson in a piece done by the PBS program NOW.  That program focused on the Internet Radio station Radio Paradise and how its popular, eclectic music mix will be silenced if the new royalties go into effect.  In that story, Simson also points to illegal downloading as causing the woes of the music industry, seemingly implying that this justifies outrageous royalties - yet offers nothing to tie downloading to Internet radio.

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In recent years, patent issues have arisen in many areas affecting online media.  In a recent decision, the Supreme Court decided that lower Courts have more discretion to review whether a patent should be rejected for "obviousness."  To be valid, a patent must cover some degree of innovation, and should not be simply an idea that would be obvious to the normal person when looking at a particular situation.  If the claimed invention would be "obvious" to a person looking at the particular circumstances and using common sense, the Court found that a patent could be rejected.  A memo from our law firm on the details of the decision can be found, here.

As set forth in the memo, the extent to which this decision will affect existing patents and pending disputes remains to be seen.  In the on-line media world, patent issues have been arisen for many companies.  For instance, there have been patents claims asserted against companies providing on-demand digital media, pop-up billing screens, ad insertion technologies and even on-line contests.  This decision may not affect these patent claims or any of the hundreds of others that have been the subject of dispute among digital media companies.  But continuing litigation in this area should be monitored to see if developments affect any patent claims that may be asserted against technologies that your company may be employing.

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In a ruling released last week, a US District Court Judge issued a ruling finding that a download of a recorded musical work does not give rise to a "public performance" requiring a payment to ASCAP, BMI or SESAC.  If this decision is upheld on appeal, it could mean that one less fee would have to be paid in connection with on-demand downloads - which would also affect podcasts and video downloads made available by broadcasters on their websites.  However, there are many issues that must be understood about this ruling, so broadcasters should not impetuously rush to provide downloads and podcasts without first securing the bundle of rights necessary for such performances.

First, it is important to understand the issue that was presented in this case.  The case did not involve streaming of programming - so it has no effect on Internet radio royalties.  It involves only downloads - where a copy of a specific work is downloaded to a single consumer's computer at the request of that consumer.  This is what happens when a consumer buys a song from iTunes, or downloads a podcast made available by a broadcaster.  There is no question that, to provide such a download or podcast containing music, a service needs to get permission from the copyright holder in the "sound recording," the song as recorded by a particular artist.  This is typically received from the record company which holds the copyright.  In addition, there is a requirement that the rights to the composition must be obtained for purposes of the making of the making of a "reproduction" and a "distribution" of the underlying composition.  This is typically obtained from the publishing company or a clearinghouse such as the Harry Fox agency.  A service that provides downlaods of music can alternatively pay a statutory royalty for the composition, though that requires following a somewhat cumbersome process of filings set out by the Copyright Office and requiring specific notice to the copyright holder in the publication.

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The Copyright Office last week released a wide-ranging Notice of Inquiry, asking many questions about the statutory licenses that allow cable and satellite companies to retransmit broadcast television signals without getting the specific approval of all the copyright holders who provide programming to the television stations. The notice was released so that the Copyright Office can prepare a report to Congress, due June of 2008, in which it will present its views as to whether the various statutory licenses still perform a necessary function, and whether any reforms of the current licenses are necessary. To complete its report, the Notice asks many questions about how these licenses currently work, whether the licenses function efficiently, and whether they should be retained, modified or abolished in favor of marketplace negotiations. The Notice even asks whether the existing statutory licenses should be expanded to take into account the different ways video programming is now delivered to the consumer, including various Internet and mobile delivery systems. Thus, virtually anyone involved in the video programming world may want to be part of this proceeding. Comments are due July 2 and reply comments are due September 13.

The cable and satellite statutory licenses were adopted by Congress to allow these multi-channel video systems to retransmit broadcast  signals. Without these licenses, the individual owners of copyrighted material – including syndicated,  network, sports, and music programming -- would have to be consulted to secure necessary copyright approval before the television signal could be retransmitted. As the multi-channel video providers would, in many cases, not even know who held all these rights, they instead pay a statutory license which is collected, pooled, and then distributed to the various rights holders in proportions agreed to by those copyright holders or, in the absence of agreement, set by the Copyright Royalty Board.

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In a recent press release, Clear Channel Communications announced an agreement with mSpot Radio to provide the programming of over 100 Clear Channel radio stations to mobile phone users.  Interestingly, this announcement comes in he thick of the battle over the new royalty rates for the streaming of music on the Internet.  In recent pleadings seeking rehearing of  the decision of the Copyright Royalty Board setting those rates, SoundExchange (the collective that collects the royalties on behalf of Copyright owners and musicians) raised only one issue.  The sole issue on which SoundExchange requested clarification was whether the royalties that were recently adopted would apply to mobile phone transmissions of programming containing music. 

A brave move in light of the current royalty decision - one perhaps reflecting the desire to have radio programming everywhere a listener wants it, or one that foresees revenues from the wireless phone companies compensating the parties for the costs involved.  It will be interesting to see how this roll out of radio stations on mobile phones progresses.

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The U.S. District Court for the Eastern District of Pennsylvania, in a decision released last week, permanently enjoined on First Amendment grounds enforcement of the Child Online Protection Act ("COPA").  That Act sought to require website operators to restrict access to portions of their websites where there is material that would be "harmful to minors."  The decision is the latest development in litigation that is nearly a decade long over COPA - a law that has never taken effect but rather has been preliminarily enjoined virtually since its enactment - which has been part of legal challenges to Congress' efforts to regulate online sexually oriented content.  This litigation has already twice been to the Supreme Court.  The most recent opinion makes it likely the issue will go to the Supreme Court a third time (following an intermediate appeal to the Third Circuit).  If the law ever were to survive review, a broad range of websites, including not only those involving sexually oriented adult content, but also potentially many other sites including those covering news events or sex education, would have to change how they do business online.

At the center of the challenged law is COPA's "harmful to minors" standard, the application of which to Internet speech was struck down by the Court.  COPA makes it a crime for commercial websites to make material that is "harmful to minors" publicly available, and it exposes alleged violators to up to $50,000 in fines and six months' imprisonment.  As a practical matter, COPA would require website operators that offer content that might fall within the "harmful to minors" standard, which is an adapted version of the legal test for whether material is unlawfully obscene, to restrict access by requiring use of a credit card or similar account mechanism, a digital certificate that verifies the age of website visitors, or some other technologically reasonable measure that can restrict website access based on age.  Parties challenging and/or opposed to the law say the harmful-to-minors standard is vague and sweeps too broadly, and that statute is an overly restrictive approach to dealing with minors' potential access to online sexually oriented content, especially given the less restrictive alternative of filtering software that can block such access.  The Court found COPA was invalid on several legal grounds.  These include that it is not narrowly tailored and the government failed to satisfy the legal requirement of showing the content-based restriction is the least restrictive means of serving its asserted interest in protecting minors, and that COPA is vague and overbroad.

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We have been covering the controversy over the rise in the royalties for all those who are providing an Internet radio service, whether they be over-the-air broadcasters streaming their signals on the Internet or pure webcasters whose stations are only available on the web.  Our previous postings on the topic can be found here.  Today, National Public Radio's program, On the Media, is airing an interview that they did with me on this topic.  You can listen to the Interview, here. 

A number of major media sources are doing stories on the impact of these royalties on small webcasters.  The Wall Street Journal yesterday ran a story focusing on the impact on the royalties on small webcaster, WOXY.  That story can be found here (subscription required for full story).  The Boston Globe also ran a story focusing on two Boston area webcasters.  As those stories set forth, while all webcasters are hit hard by the royalty, small independent webcasters face the most immediate crisis, as their royalty obligations will exceed their total revenues.  The first royalty payment under the new royalty rates is due on May 15, so the clock is ticking for these webcasters.

Requests for rehearing to be filed with the Copyright Royalty Board will be filed on Monday, so coverage of this story will continue.

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In a curious bit of timing, on the day after the NTIA released its Order setting out the process for providing consumers coupons to finance their purchase of converter boxes to allow their analog televisions to continue to receive a signal after the digital transition, a coalition of high-tech companies visited the FCC to promote the use of the television spectrum to provide a wireless broadband Internet service.  We wrote about the FCC proceeding to allow these uses, on a non-interference basis, here, when the FCC launched its "white spaces proceeding." 

The proposal by many of the leading high-tech companies, including Microsoft, Intel, Google and other computer manufacturers, would allow smart devices to operate in the television band to send and receive wireless Internet signals, without interfering with television users.  The NAB has expressed concerns about whether these devices could in fact operate without interference to television stations.  In a Washington Post story, it was reported that the companies provided the FCC with a prototype device for testing, and stated that the devices could be ready for consumers by 2009 - perfectly timed for the end of the digital television transition.

This is a proceeding that all television broadcasters should watch carefully.

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As we wrote on Friday, the Copyright Royalty Board released to the parties their decision setting the sound recording music royalties for Internet radio for the years 2006-2010 - and the rates will be increasing significantly (absent success on appeal or in settlement discussions). The rates and appeal process are set out in our post on Friday.  The parties have until Monday, March 5 at noon, to request that the Board keep portions of the decision that contain confidential proprietary information out of the public record. Thus, the text of the decision is not yet public. Nevertheless, many parties are asking for more specific information about the decision and its impact. Certainly, when the decision is public, everyone will want to make their own judgments. But, until that time (which should be soon as the Board was careful to avoid using any significant amount of confidential information), I offer some observations about the decision (from my vantage point as a party who represented some of the webcasters involved in the proceeding), as well as thoughts on some of the questions that I have seen posted on various discussion boards this weekend.

First, it is essential to understand exactly what this decision covers. The Board’s decision covers only non-interactive webcasters operating pursuant to the statutory license. Our memo, here, discusses the statutory licensing scheme, and what a webcasting service must do to qualify to pay the royalties due under this statutory license. Essentially, a webcaster covered by this decision is one which operates like a radio station – where no listener can dictate which artists or songs he or she will hear (some limited degree of consumer influence is permitted, but a webcaster must comply with the restrictions set out in our memo).  Also, the webcaster cannot notify their listeners when any specific song will play. The decision does cover the Internet transmissions of the over-the-air content of most broadcast stations. 

The royalties are paid to SoundExchange – a nonprofit corporation with a Board made up of representatives of artists and the record companies. The royalties go to the copyright holders in Sound Recordings and the performers on those recordings ( the copyright holder is usually the record label. Royalties are split 50/50 – and the artist royalties are further divided 45% to the featured artist and 5% to any background musicians featured on the recording). 

The decision by the Board was the result of a long proceeding – which began in 2005. A summary of the proceeding can be found in our posting, here. Satellite radio also has to pay similar royalties, as do services that provide background music to businesses ("business establishment services"). Separate proceedings are underway to determine rates for these services.

With that background – here are some more thoughts on the decision – obviously in very summary form. The Board is charged with determining the royalty rates that would be determined by a willing buyer and a willing seller in a marketplace transaction. The Board was clear in the decision that it would look simply for evidence of what such a deal would be – it would not look at policy reasons why certain groups of webcasters (including small commercial webcasters or noncommercial webcasters) should get some special rate.

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Yesterday's New York Times featured an article on radio's increasing use of Internet video to promote their on-air programs, to extend their brand, and to increase the connection with their listeners.  This is another manifestation of the theme we wrote about earlier this week in connection with this year's RAB Convention, where the emphasis was on radio broadcasters maximizing and leveraging their digital assets.  But, in doing so, stations must be alert for the legal issues that this extension can raise.

For instance, we have written before about the concerns about using copyrighted music in video productions without permission from the record company or other copyright holder in the musical performance.  Stations should not make their own music videos without securing authority from a copyright owner of the song that they are featuring (from both the artist and the composer).  If stations are asking listeners to post their own video on the station's website - like a local YouTube - the station must be prepared to take down any video using copyrighted material if the station is asked by the copyright holder.  And the station should adopt Terms of Use for its site, warning users not to post copyrighted material without permission.  The station should also not encourage the use of copyrighted material without permission - for example, it should not give prizes to the producers of the best music video for the website unless it has obtained permission for the use of the particular song or songs that are to be used by contestants.

Remember, the Internet magnifies all sorts of intellectual property issues by making it possible for copyright and trademark owners to monitor infringement far beyond the coverage contours of the broadcast station. 

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I've just returned from this year's Radio Advertising Bureau convention in Dallas.  In reflecting on the convention, and in discussing it with many who were in attendance, the consensus was that this was not your Father's RAB convention.  I was surprised by how little discussion there was of traditional radio at the conference.  The sessions weren't the typical ones about how to make the most money from selling your cluster of radio stations in combination, or how to compete against the newspaper or the Yellow Pages, or how to get the most out of your sales staff.  Instead, virtually every session talked about leveraging your digital assets.  There were discussions of using your website, streaming, podcasts, text messaging, and  audio on cell phones to increase the financial performance of broadcast stations.  There were discussions of HD Radio and some of the opportunities that service might offer if and when it starts getting consumer acceptance.  All in all, it seemed as if radio (or at least those planning the convention sessions) had received the message that the industry needs to take advantage of its ability to drive traffic to new technologies, and drive that traffic to new media sources that stations themselves create. 

In the past, there seemed to be a fear about discussing these new technologies.  It was almost as if the technologies weren't discussed, they'd go away.  But at the RAB, and at many of the conventions of the state broadcast associations that I have attended over the last year, broadcasters seemed to have decided that they need to embrace the new media.  While the old fear had been that these new media sources would cannibalize the current broadcast audience, everyone seems to now recognize that the audience is going to use these technologies no matter what - so the broadcaster might as well be the one cannibalizing its own audience.

While legal and regulatory issues do not tend to be the primary topic of discussion at the RAB Conference, as in almost any broadcast discussion, they do come up.  Here too, the discussion was digital.  For instance, in the speech by NAB President David Rehr outlining the priorities of the NAB for the year, only the effort to authorize FM translators for AM stations (which we wrote about here), was not a "digital" topic.  The other issues discussed by Mr. Rehr included pushing the FCC for final rules for digital radio, monitoring the actions of satellite radio companies XM and Sirius, and finally, the issues that arise out of the Perform Act.  The Perform Act is a copyright bill introduced in the Senate last month that would affect digital royalties for music used on the Internet, place restrictions on services promoting the promotion and sale by digital music providers of devices that disaggregate songs contained in a digital stream, and require copy protection technologies to be employed by digital music providers.  Hardly the exciting stuff that makes for an applause line in a convention speech.  While we will write more about the Perform Act in a separate posting, the major concern for broadcasters is that the sponsor, California Senator Diane Feinstein, suggested in her remarks that the performance royalty on sound recordings which now applies to satellite radio and webcasting (which we have written about many times including here), should also apply to broadcast radio.  And that is a big enough issue - one that could hit broadcasters directly in the pocketbook - that it demands the industry's attention in every forum. 

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The FCC yesterday adopted two orders approving the initiation of operations by Qualcomm of its MediaFLO wireless multimedia system on television channel 55 in the Richmond/Norfolk area of Virginia, and in St. Louis Missouri.  Qualcomm purchased the nationwide rights to use Channel 55 in an FCC spectrum auction several years ago.  At the end of the digital transition, channels 52 and above will no longer be used by television broadcasters, but instead will be used for wireless services (as well as some public safety users).  The channels between 52 and 59 have already been auctioned, and can be used if they don't cause interference to current television users.  In these two cases, Qualcomm was able to reach agreements with broadcasters in adjacent markets to agree to accept minimal amounts of interference so that Qualcomm could initiate its MediaFLO service.  The FCC found that the minimal interference to these stations would not significantly affect television viewers, and granted Qualcomm authority to commence operations.

According to the Qualcomm website, their MediaFLO service will provide interactive audio and video to handheld devices - essentially mobile phones optimized for multimedia content.  While the website seems to imply that this will be a closed system with content provided by a limited number of providers or partners, it will operate with a IP type technology, which could allow a more open system in the future.  Other users are apparently planning to use these channels for high speed wireless Internet services.  So, perhaps ironically, as free over-the-air TV abandons these channels in the next two years as the digital transition nears its end, a new subscription audio and video service will take its place.  Progress?

 

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In a recent article from the Boston Globe, an interview with the new manger of WBZ-TV in Boston stressed the importance of the stations call letters.  The article talks about the connection that the local audience had to the well-known station call letters , and how the station had suffered to some degree by de-emphasizing those call letters while using other station branding.  That story, to me, raises the question of whether stations have taken the necessary steps to protect their brand by protecting the use of their call letters.

Since 1983, the FCC has left disputes about the use of confusingly similar call letters to local courts.  Thus, if a competitor picks a set of call letters that could confuse the public about the relationship of their station to yours, you may need to sue to stop that use.  And now, when stations often keep alive formats that have been dropped by moving the formats onto Internet Radio Stations or to HD Radio subchannels, the call sign may well live on even after it has been dropped from a primary on-air station.  Thus, it needs protections other than those provided by the FCC.

In 1983, the FCC stated that stations had a sufficient interest in call letters to obtain a service mark.  A service mark gives the call letters the protection of Federal law, and may impose penalties on a competitor who tries to infringe on those call letters.  To protect that brand, the investment of a few hundred dollars to file a service mark application may well be worth it, and something that more stations should consider.

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In recent weeks, the FCC has been vigorously defending its indecency rules in Court.  First, oral arguments on the FCC's actions against Fox and NBC for "fleeting utterances," one-time unscripted airing of profanities during television coverage of live award programs, were held the week before Christmas - with a decision possible in the upcoming months.  At the same time, briefs are being filed in the case involving Janet Jackson and the Super Bowl clothing malfunctions.  But, with more and more video moving on-line, where the FCC's indecency rules don't reach, who is the FCC really protecting?

A recent article in the New York Times (subscription required for full archived content) reported on NBC's Saturday Night Live posting on the Internet an unedited copy of a partially censored animated feature that aired on its program.  If viewers can access complete, unedited content of a television program online, and that online content can be promoted on the air, unless there is some great expansion of the FCC's power in regulating on-line activity, it seems that the FCC's indecency crackdown doesn't accomplish much.  But, with the pending court actions, it may well be that the FCC's ability to regulate indecency shrinks before it increases.

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While recent press reports talk about the growth of Internet Radio and the increasing presence of terrestrial radio companies on the net, the amount of the music royalties that will have to be paid by Internet radio companies for the 2006-2010 period remains unresolved.  The trial phase of the proceeding to set the rates, held before the Copyright Royalty Board, is now completed, and the upcoming decision of the Board may have a profound impact on the economics of the Internet radio industry.  Final briefs in the case were filed with the Board in December, and an oral argument was held on Thursday, December 21.  With the completion of the argument, the decision is now in the Board's hands, and the amount of the royalties for the use of the sound recordings will be decided by the Board on or before March 4. 

In the on-line world, and in most digital communications channels other than over-the-air digital broadcasts, a royalty for the use of the "sound recording" (the actual recording made by a particular artist) must be paid in addition to the royalty for the use of the composition (i.e. the underlying words and music) that is paid to ASCAP, BMI and SESAC.  Our summary of the royalty rates that Internet radio stations should currently be paying can be found on our firm's website, here.  As we make clear in that memo, the rates that are currently being paid expired at the end of 2005, so the rates that are adopted in the current proceeding will be retroactive to January 1, 2006.

The proceeding to determine the new rates has been underway for more than a year.  Written cases were filed by the parties in October 2005.  Discovery, including depositions and document discovery, took place in the early part of 2006.  A trial began in May and lasted through the first week in August, with a rebuttal phase that ended the week after Thanksgiving.

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Two articles published today talk about on-line media, and the growing importance of local content in advertising and audience growth.  These articles emphasize the long-term importance for broadcasters to capture the local audience that they have controlled over-the-air for so long as that audience makes the transition to the world of Internet media.  This growth of on-line media covering local events and issues, and chasing local advertising dollars, may also figure into the current multiple ownership debate as it tries to assess the dominance of the broadcast media, the new competitive forces, and how much ownership regulation is still necessary.

One article, in today's Washington Post, explores the transition of certain Gannett newspapers to on-line sources of micro-news covering all sorts of community events that the printed paper and the broadcast news programs would usually ignore.  The broad coverage of very local events in the community, together with user-generated content posted to the site, and reader contributions to investigative journalism conducted by the paper, are intended to involve the whole community in the web version of the paper.

The second article, from today's New York Times, talks about how search engine Ask.com is introducing a service called AskCity, using search technology on a local basis to highlight local business and events, and to tap into local advertising dollars.  These two articles highlight how the Internet can and will be a local medium, with which the broadcaster will have to compete to an even greater degree in coming years.

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Google's recent announced plans to purchase You Tube has ignited a veritable blizzard of discussion about potential copyright litigation that could result from the user-generated content that forms the backbone of the You Tube experience.  For broadcasters who have been venturing into the on-line world, this discussion highlights the cautions that they should exercise in dealing with their own websites.

The issue has been raised as so many of the videos posted on You Tube contain copyrighted material, often used without permission from the Copyright holder.  While You Tube has reached agreements with some record labels and broadcast networks for use of their copyrighted material in exchange for some revenue sharing, other rights holders have not yet reached agreements.  Discussions of the purchase and the issues raised by the use of this copyrighted material can be found in many publications, including those in the Wall Street Journal and a discussion with the Electronic Freedom Foundation's Fred von Lohmann on SearchBlog.  These discussions focus on the defense from the Digital Millennium Copyright Act that gives bulletin board-type services exemptions from copyright liability if they do not encourage the violations, and act promptly to remove any material that they have been notified is in violation of the Copyright laws. 

Whether or not the DMCA fully protects Google, the discussion highlights the need for broadcasters to use care in their use of user-generated material on their website.  While broadcasters need not shun all user-generated content, they need to make sure that they have done their diligence.  Broadcasters should review the terms of use on their sites, making sure that they warn those who may post home-grown videos that they should not contain copyrighted material without permission of the owner.  If notified that their sites nevertheless contain copyrighted material for which no permission has been given, they should promptly take steps to remove the offending material.  And, if feasible, the broadcasters should even consider ways to identify infringing material and to remove such material.  And they should watch developments with You Tube and other similar sites.

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The NAB Radio Show held the week before last, in conjunction with the Radio and Records Convention, was notable in its attention to new media. It’s been years since the NAB has devoted so much time to new media issues (remember the Streaming at NAB sessions that were held at the radio show early in the decade?).  And the new media sessions have perhaps never been as central to the Convention. Sessions on streaming, podcasting, downloads, blogging and just generally dealing with the media competition abounded at the convention.

The emphasis on the new media was perhaps most evident and presented most starkly in a pre-convention Summit put on by Jacobs Media. There, one presenter, Gordon Borrell of Borrell Associates, Inc., talked about the reach of media and information on the Internet, and just how prevalent it has become – even in reaching fighting for local advertising dollars – perhaps the one place that over-the-air broadcasters thought was most securely their own. Mr. Borrell pointed to websites such as those run by the Cape May Herald and the Lawrence County Kansas Journal-World as ones which show the power of the Internet to contribute to or eclipse their traditional sponsoring media (he said that the Lawrence site did over a million dollars a year in on-line revenue),. Even sites with no traditional media  partner, like Hartford.com, were said to be generating hundreds of thousands of dollars in local advertising revenue. What was perhaps most surprising was his assertion that in 40% of markets, there is an on-line site that has greater advertising revenue that the most successful radio station in the market.

Another presenter, Jason Calacanis, CEO of Weblogs,  went so far as to suggest that the principal purpose of today’s radio station should be using the station to drive traffic to the station’s website before the station itself became obsolete. Videos of the Jacobs Media Summit are available on-line, here.  While many others found this view to be extreme (Jack Isquith of AOL Music, in a session on streaming held several days later, talked at one point of the “elegance” of radio’s ability to reach local mass audiences more efficiently than on-line media), the whole convention seemed to be in agreement that radio needs to concentrate on the new media and develop their web presence. 

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