Posted on October 31, 2010 by David Oxenford

Copyright Office Asks if Federal Protection Should be Extended to Pre-1972 Sound Recordings - What's the Impact on Internet Radio?

The Copyright Office has just released a Notice of Inquiry asking whether Federal protection should be extended to sound recordings recorded prior to 1972.  A sound recording is a song as recorded by a particular artist.  Sound recordings were first protected under Federal law in 1972.  Prior to that, unauthorized recordings or reproductions of an artist's recoding were policed under various state criminal and civil law.  While the Copyright Act has provided for the protection of pre-1972 sound recordings first registered in other countries, US sound recordings recorded prior to 1972, have not received Federal copyright protections.  Many have assumed that this also exempts pre-1972 sound recordings from royalty requirements under Section 114 of the Copyright Act - i.e. the royalties paid by Internet and satellite radio and other digital music providers under the statutory license.  How would a change in the law affect Internet radio operators?

That is one of the questions that is asked by the Notice of Inquiry.  Many Internet radio operators have not excluded pre-1972 recordings from royalty payments based on any exception that may exist for pre-1972 sound recordings, as the possibility has not been widely publicized.  Moreover, some copyright holders have suggested that the digitization of older songs may somehow bring pre-1972 recordings under the coverage of the Copyright Act, or that there may be state remedies that are somehow the equivalent of the Federal public performance right.  Others may just not want to go to the trouble of determining which copyrighted songs are subject to the Uruguay Round Agreements Act (making the non-US pre-1972 sound recordings subject to US Federal law).  The Copyright Office's Notice of Inquiry asks what impact the inclusion of pre-1972 sound recordings would have on many undertakings - including the archiving and restoration of sound recordings, and on the current benefits that copyright holders and others enjoy under state laws.  In addition, it asks about the benefits and issues that would arise under Section 114 of the Copyright Act - the section that sets out the statutory license under which most Internet radio companies operate.

This is a complicated issue, and Internet radio operators should carefully consider, with counsel, the issue of whether Section 114 royalties are due for pre-1972 sound recordings.  The issues raised in the Notice shows how complex this issue is, and the question of what to do with pre-1972 sound recordings cannot be resolved by the Copyright Office itself.  Any change in the Copyright Act to fully address the Federal laws that would apply to these sound recordings would have to be made by Congress.  The comments filed in this proceeding will help inform the record that will be created in connection with the Copyright Office making a recommendation to Congress about any suggested change in the law. Comments on this issue are due on December 20, with replies 30 days later. 
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Posted on March 29, 2009 by David Oxenford

With April 2 Webcasting Election Due for Broadcasters - A Look at the Record Label Waivers of the Performance Complement

As we have written, by April 2, broadcasters who are streaming need to file with SoundExchange a written election in order to take advantage of the SoundExchange-NAB settlement.  For broadcasters who make the election, the settlement agreement will set Internet radio royalty rates through 2015.  One aspect of this agreement that has not received much attention is the waiver from the major record labels of certain aspects of the performance complement that dictates how webcasters can use music and remain within the limits of the statutory license.  When Section 114 of the Copyright Act, the section that created the performance royalty in sound recordings, was first written in the 1990s, there were limits placed on the number of songs from the same CD that could be played in a row, or within a three hour period, as well as limits on the pre-announcing of when songs were played.  These limits were placed seemingly to make it more difficult for listeners to copy songs, or for Internet radio stations to become a substitute for music sales.  In conjunction with the NAB-SoundExchange settlement, certain aspects of these rules were waived by the 4 major record labels and by A2IM, the association representing most of the major independent labels.  These waivers which, for antitrust reasons, were entered into with each label independently, have not been published in the Federal Register or elsewhere.  But I have had the opportunity to review these agreements and, as broadcasters will get the benefit of the agreements, I can provide some information about the provisions of those agreements.

First, it is important to note that each of the 5 agreements is slightly different.  In particular, one has slightly more restrictive terms on a few issues.  To prevent having to review each song that a station is playing to determine which label it is on, and which restrictions apply, it seems to me that a station has to live up to the most restrictive of the terms.  In particular, the agreements generally provide for a waiver of the requirement that stations have in text, on their website, the name of the song, album and artist of a song that is being streamed, so that the listener can easily identify the song.  While most of the labels have agreed to waive that requirement for broadcasters - one label has agreed to waive only the requirement that the album name be identified in text - thus still requiring that the song and artist name be provided.  To me, no station is going to go to the trouble of providing that information for only the songs of one label - so effectively this sets the floor for identifying all songs played by the station and streamed on the Internet.

The agreements otherwise agree to waive the requirements that a webcaster play:

  • No more than 3 songs in a row by the same artist
  • Not more than 4 songs by same artist in a 3 hour period
  • No more than 2 songs from same CD in a row

However, these provisions are waived only insofar as the broadcaster does not "depart materially from today's range of typical over-the-air radio programming practices," citing specifically the practices of having DJs talk between songs and stations running commercials and PSAs between songs.  Presumably, if a station were to go all music, with no talk or no commercials for a long period, that would not be within the typical practices of over-the-air radio stations.  These waiver agreements also cover HD-2 stations, so stations should be careful that their formatics on these stations which are being streamed do not so totally depart from normal broadcast practices in such a way as to violate these waiver provisions.  (Note these waiver agreements do not cover Internet-only channels that a broadcaster may program on its website).

The waivers also do not allow the streaming of an entire CD.  In fact, the most restrictive of the provisions limit a broadcaster to streaming no more than half the songs from an album or CD at any time within a 3 hour period.  So the "6 album sides at 6" type of promotion may be permissible, as long as the station does not then play another song from the same CD in a proximate time period.

The agreements also provide for a waiver of a provision that many broadcasters are probably not even aware exists - a requirement under Section 112 of the Copyright Act that does not allow "ephemeral copies" of recordings to be kept for more than 6 months.  An ephemeral copy is a temporary copy of a sound recording made to facilitate a transmission.  For instance, a copy of songs from a CD made by a broadcaster to put the music into a station's hard drive music system would be an ephemeral copy that normally could not be retained for more than 6 months without negotiating a license with the copyright holders.  These waivers eliminate that six month limitation.

These waivers are different from the agreement with SoundExchange which covers all copyright holders.   The waivers cover only those labels who have signed a waiver agreement.  But, as the four major labels and the association representing the major independent labels have signed, most artists played by most radio stations will be covered by these agreements. 

Broadcasters who are planning to sign on to the NAB-SoundExchange agreement will have the extra benefit of these waiver agreements.  Broadcasters should carefully review these agreements and take advantage of them - an advantage that may give them rights on the Internet that other webcasters do not have.
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