Posted on February 14, 2010 by David Oxenford

Warner Music Says No More Music for Streaming - What's It Mean for US Webcasters?

According to British press reports, Warner Music's CEO Edger Bronfman Jr. stated that it will cease making its music available to advertising supported streaming music sites.  This has prompted some questions about how this decision would affect services such as Pandora, Slacker, Accuradio and other Internet radio companies - would it deny them access to substantial amounts of music?  In fact, as these US services operate under a "statutory license", created by Congress, they get access to all legally recorded music in exchange for the payment of a royalty established by the Copyright Royalty Board.  Essentially, under this statutory license (otherwise known as a "compulsory license"), a copyright holder cannot deny access to companies operating under the license, as long as those companies comply with terms of the license, and pay the established royalty.  Thus, even if the Warner Music decision really is true, this decision should have little or no impact on US Internet Radio stations operating under the compulsory license.

What would it affect?  Presumably it could hurt services that don't rely on the statutory license.  Internet Radio operators who want to rely on the statutory license must meet a set of requirements set out by statute in order to qualify for the license.  We've written about those obligations before here, in connection with the waiver of some of these requirements in the royalty settlement between SoundExchange and the NAB.  Services operating under the license must meet the "statutory complement", meaning that they cannot play more songs from an artist or CD in a given time period than allowed by the law, specifically:

  • 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

In addition, Section 114 of the Copyright Act sets out other limitations on a service operating under the statutory license.  The service must provide the name of the artist, song and CD in text on its site, to the extent technically possible, while the song is playing.  There are also certain restrictions about tying the music being played to commercial content on the site, and requiring that sites take steps to prevent digital piracy.  And, most importantly, the service cannot be "interactive."

The question of what is and what is not interactive is not an easy one, as we wrote in connection with the recent court decision determining that the Yahoo! Launchcast service was not interactive within the meaning of the statute, despite having some degree of user influence.  But some services are clearly interactive - where a user can designate the song or artist that is to be played, or set up his or her own playlist, or otherwise specify what they want to hear when they want to hear it.  Services that allow this kind of on-demand listening, including many of the so-called "subscription services" where you can effectively order up the music that you want to hear, must directly negotiate with the copyright holders for the rights to use the music that they play.  And because they must get specific permission from the copyright holder, they may not necessarily get all the access to all the music that a user might want to hear.  Sometimes a label will restrict access, sometimes a band will require in their label agreements that no digital access be provided.  That's one of the reasons that some of these services don't feature all the music that a user might want to hear - no Beatles, no Metallica, and other gaps in the music that they provide.  Thus, if Warner or any other record company decided that they didn't want to provide access to the music to which they have the rights, they could do so.

So, while non-interactive Internet radio services would not, in the US, be affected by such a decision, some on-demand services may well be affected, if the press reports about this decision are true (and applicable world-wide).  And we'll leave the debate about the wisdom of any such decision to others to debate.

 
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Posted on May 31, 2007 by David Oxenford

FCC Issues Rules on Digital Radio - With Some Surprises that Could Eventually Impact Analog Operations

The FCC today issued the long-awaited text of its decision on Digital Audio radio - the so-called IBOC system.  As we have written, while adopted at its March meeting, the text of the decision has been missing in action.  With the release of the decision, which is available here, the effective date of the new rules can be set in the near future - 30 days after its publication in the Federal Register.  With the Order, the Commission also released its Second Further Notice of Proposed Rulemaking, addressing a host of new issues - some not confined to digital radio, but instead affecting the obligations of all radio operations.

The text provides the details for many of the actions that were announced at the March meeting, including authorizing the operation of AM stations in a digital mode at night, and the elimination of the requirements that stations ask permission for experimental operations before commencing multicast operations.  The Order also permits the use of dual antennas - one to be used solely for digital use - upon notification to the FCC.  In addition, the order addresses several other matters not discussed at the meeting, as set forth below. 

The additional actions taken by the FCC and announced in the Order include the following:
  • Holding that a party that does a time brokerage agreement for more than 15% of any digital stream offered by another station has an attributable interest in the full station.  Thus, an owner who has a full complement of stations that he owns in a market cannot exceed the multiple ownership limitations by programming a digital over-the-air stream of another broadcaster in his market.
  • Rejected all objections to full-powered operations by grandfathered super-powered stations and short-spaced stations, finding that such a limitation was beyond the scope of this proceeding, and that no compelling reason for these limitations had been shown - but promised to monitor the situation.
  • Delayed consideration of whether noncommercial stations could use some of their digital capacity to offer commercial programming.
  • Permitted time brokerage of digital channels under the same rules that apply to a station's main analog channel.
  • Found it premature to adopt rules for the full transition to digital operations -  and adopted no obligations for any minimum operations in digital.  So the choice of whether to operate digitally is fully up to the broadcaster.
  • Limited operation of subscription services on digital channels to those specifically authorized following a request for experimental authority, until after the Commission completes consideration of the comments filed in response to its Further Notice.
  • Applied most standard programming obligations to digital streams - including the political rules and sponsorship identification (including payola rules).
  • Applied EAS rules to digital radio channels just as they apply to analog channels.
  • Adopted station identification rules requiring that the station use its main station call letters, followed by the community of license, and some identification, either orally or in text on the digital receiver,  that a listener is listening to a digital stream (e.g. "This is WXYZ digital channel 1, Anytown, USA").  As with a station's normal legal ID, the frequency of the station can be inserted between the call letters and the city of license.

In addition to these rules, the FCC adopted a Second Further Notice of Proposed Rulemaking.  Not only does this Further Notice address the issues listed above of allowing the commercial use of some digital capacity of noncommercial stations, and allowing the use of subscription services on digital streams, but it goes much further.  It suggests a number of revisions to FCC rules  - some of which would apply to analog as well as digital operations.  These include:

  • A proposal that public files for radio stations be kept digitally on a station's website.
  • The possible use of a standardized disclosure statement for reporting the public interest performance of broadcasters.
  • The possible elimination of relaxed main studio and program origination requirements, which no longer require the origination of any programming at a main studio.
  • A possible requirement that stations be manned, cutting back on recent Commission rulings that allow for unmanned, automated operations during nighttime and weekend hours.  in particular, the FCC points to the automation of EAS and how that has led to some problems in cases of off-hours emergencies.

Addressing these most important issues will need careful attention from broadcasters, as these issues may well impact all stations - not just those who choose to operate digitally.  Comments will be due 60 days after the Order is published in the Federal Register.  Replies will be due 30 days later. 

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