Hey Alexa – Remind Me How Much You Are Increasing My SoundExchange Music Royalties

At almost every broadcast conference, there is a discussion of using Alexa, Google Home and other smart speakers and digital assistants to increase the reach of broadcast radio stations. Discussions of how to get listeners to tune in and how to monetize the listeners on these new platforms are regularly included. But rarely is there a discussion of the music royalty impact of transitioning radio listeners to these digital platforms. Given these continuing discussions about smart speakers, and the apparent lack of focus on royalty issues, I thought that it was worth re-running this article that I posted earlier this year.

In the last year, the popularity of Alexa, Google Home and similar “smart speaker” devices has led to discussions at almost every broadcast conference of how radio broadcasters should embrace the technology as the new way for listeners to access radio programming in their homes. Broadcasters are urged to adopt strategies to take advantage of the technology to keep listeners listening to their radio stations through these new devices. Obviously, broadcasters want their content where the listeners are, and they have to take advantage of new platforms like the smart speaker. But in doing so, they also need to be cognizant that the technology imposes new costs on their operations – in particular increased fees payable to SoundExchange.

Never mentioned at these broadcast conferences that urge broadcasters to take advantage of these smart speakers is the fact that these speakers, when asked to play a radio station, end up playing that station’s stream, not its over-the-air signal. For the most part, these devices are not equipped with FM chips or any other technology to receive over-the-air signals. So, when you ask Alexa or Google to play your station, you are calling up a digital stream, and each digital stream gives rise to the same royalties to SoundExchange that a station pays for its webcast stream on its app or through a platform like TuneIn or the iHeartRadio. For 2018, those royalties are $.0018 per song per listener (see our article here). In other words, for each song you play, you pay SoundExchange about one-fifth of a cent for each listener who hears it. These royalties are in addition to the royalties paid to ASCAP, BMI, SESAC and, for most commercial stations, GMR. Continue Reading

FCC Reminder About Activation of the Online Public Inspection File – Potential Impact of Noncompliance at License Renewal Time

By David Oxenford on November 6, 2018 Posted in FCC Fines, General FCC, License Renewal, Programming Regulations, Public Interest Obligations/Localism, Website Issues

By March 1 of 2018, all radio stations were to have activated their online public file. We wrote about how that activation should be done here, and answered other questions about the online public file for radio here. Yet, from my own review, and from what I have heard from engineers who conduct reviews of broadcaster’s FCC compliance for the Alternate Broadcast Inspection Programs sponsored by state broadcast associations, there remain stations that have not yet complied with the requirement. The FCC yesterday issued a reminder to all stations that their files are supposed to be live, and said that the FCC itself will be activating the file for any station that has not already done so by November 15. If they have to activate your public file, they may note that they had to do so, and that may have consequences for license renewals that will be filed for radio starting next year.

For any stations that have not activated their file, you really need to go to that file now and make sure that it is active and that all the required material is in the file. While the FCC will be automatically uploading copies of documents that are electronically filed at the FCC, every station has certain obligations where their own employees need to upload information into the file. For instance, every full-power station needs to upload on a quarterly basis its Quarterly Issues Programs Lists. As we wrote here, these lists are particularly important as they are the only way in which a licensee reports on how it served its community. With license renewals for radio starting in June 2019, a review of the online public file will likely be part of the FCC’s review of the renewal application. Not having these lists, or not having activated the file at all, will likely lead to FCC fines. So check out your online public inspection file, make sure that it is active, and that the information is complete and accurate. Failing to do so may end up costing substantial sums should the FCC find your compliance lacking – which they now can do from the comfort of their own computer, any time of any day.

FCC Opens Settlement Window for Mutually Exclusive LPTV and TV Translator Applications from the Special Displacement Window

By David Oxenford on November 1, 2018 Posted in Incentive Auctions/Broadband Report, Low Power Television/Class A TV

The FCC on Tuesday released a Public Notice announcing a settlement window for mutually exclusive applicants in the Special Displacement Window (about which we wrote here and here) where LPTV stations and TV translators displaced by the incentive auction (either because they operated on channels above 37 that will no longer be used for television in the compacted TV band, or because some full-power or Class A TV station that had to move to accommodate the smaller TV band was put onto a channel that interferes with their current operations). When two or more applicants filed in the displacement window for channels that cannot co-exist without causing each other destructive interference, they are considered to be mutually exclusive, and are covered by this window. Appendix A of the public notice lists displacement applications that are mutually exclusive.

The public notice advises that parties with mutually exclusive applications may resolve their mutual exclusivity by an engineering amendment to resolve the mutual exclusivity or through a legal settlement filed between October 30, 2018 and 11:59 pm EST on January 10, 2019. Absent settlement, the mutually exclusive displacement applications will go to auction after the close of the settlement period. Continue Reading

Demands to Pull Attack Ads in the Closing Days of the Election – What is a Station to Do?

By David Oxenford on October 31, 2018 Posted in Political Broadcasting

As we approach Election Day, the political ads seem to be getting more and more frequent, and often more and more nasty. We provided this overview of what a station should do when it gets an attack ad two years ago, and the ads have not become kinder in the intervening period, so we will publish it again (with a few revisions). With the rise in the number of attack ads in this last week before the election, stations are facing more and more demands from candidates who are being attacked, asking that the ads be pulled from the airwaves because the content is not truthful or otherwise presents a distorted picture of reality. What do stations do when confronted with these claims?

We have written about this issue several times before (see, for instance, our articles here and here). In some cases, the stations can do nothing – if the attack is contained in an ad by a candidate or the candidate’s authorized campaign committee. If a candidate in his or her own ads attacks another candidate, the station cannot pull the ad based on its content. Ads by candidates and their authorized campaign committees are covered by the Communication Act’s “no censorship” provision, meaning that the station cannot (except in very limited circumstances) pull the ad based on its content (see more on the “no censorship” provision here). Because the station cannot pull the ad based on its content, the station has no liability if the candidate’s attack ad defames their opponent. In fact, we have heard of cases where a non-candidate group runs an attack ad containing claims that the target of the ad claims are untrue, where stations pull the ad, and where the claims soon reappear in the ads of the candidate who the third-party supported. When they objectionable claims are in a candidate’s own ads, the only remedy of the candidate that is being attacked is to sue the candidate who ran the ad. But what about allegedly false claims made in ads by third parties – like PACs, unions, political parties or other non-candidate groups? Continue Reading

November Regulatory Dates for Broadcasters – EAS Form Three, LPTV and FM Repacking Reimbursement Costs, and FM Translator Long-Form Applications

By David Oxenford on October 29, 2018 Posted in AM Radio, Emergency Communications, FM Radio, FM Translators and LPFM, General FCC, Incentive Auctions/Broadband Report, Low Power Television/Class A TV

November is perhaps the month with the lightest schedule of routine FCC regulatory filing obligations – with no requirements for EEO Public File Reports, Quarterly Issues Programs or Children’s Television Reports. Nor are there other routine obligations that come up in the course of any year, though during November of 2019, broadcasters will be preparing for next year’s December 1 Biennial Ownership Report deadline. So does that mean that there are no dates of interest this month for broadcasters? As always, there are always a few dates of which you need to keep track.

The one November date applicable to all broadcasters is the requirement for the filing of ETRS Form Three, which gives a detailed analysis of the results of the nationwide EAS test conducted on October 3. Stations should have filed Form Two on the day of the test reporting whether or not the test was received. They now need to follow up with the more detailed Form Three report by November 19. See our article here for more information. Continue Reading

FCC Adopts Change in Rules Eliminating Broadcasters’ Obligations to File Certain Contracts

By David Oxenford on October 24, 2018 Posted in FCC Fines, General FCC, Multiple Ownership Rules, Programming Regulations

The FCC yesterday adopted an Order eliminating the requirement that broadcasters file with the Commission copies of certain contracts, agreements and other documents relating to ownership and control – instead relying on the obligations to either upload the documents to a station’s online public file, or to place a list of the documents in the public file (with information listing the parties involved, and the dates of execution and of expiration). If a station relies on a list of documents in the online public file, the documents themselves must be provided to any member of the public (or to the FCC) within 7 days of a request. We summarized the draft of this order here, and that article provides a list of many of the required documents. The order adopted yesterday includes all of the substantive proposals in the draft order that were included in our summary. Note that the changes need to be approved by the Office of Management and Budget under the Paperwork Reduction Act and published in the Federal Register before becoming effective – so watch for announcements of the effective dates at some point in the future.

FCC Seeks Comments on Reimbursable Repacking Expenses for LPTV, TV Translators, and FM Radio

By David Oxenford on October 23, 2018 Posted in FM Radio, Incentive Auctions/Broadband Report, Low Power Television/Class A TV

The FCC yesterday released a Public Notice asking for comments on a “Catalog of Expenses” that would be reimbursed to licensees of LPTV and TV translator stations, as well as FM broadcasters, who are impacted by the repacking of the TV spectrum following the TV incentive auction. We wrote here about the FCC’s Notice of Proposed Rulemaking looking to establish rules for that reimbursement process (note that reply comments in that proceeding are due October 26). What this Notice does is put out for review the FCC’s best guess as to what it would cost to accomplish certain tasks caused by the repacking – whether it would be for replacement equipment or necessary professional services. The Catalog sets out an expected price range. If a licensee’s costs fall outside the estimated price range, before any reimbursement could be made, additional documentation and justification would be required.

Thus, these estimates are important to ease the reimbursement process. Any licensees who are likely to have to rely on this reimbursement should review the estimates and comment if they think that the FCC has missed the mark. Comments are due by November 21, with replies due December 6.

Two Week Extension of C-Band Satellite Dish Registration Deadline

By David Oxenford on October 18, 2018 Posted in General FCC, Tower Issues

The FCC yesterday announced a two-week extension of time, through October 31, 2018, for the registration of C-Band earth stations used by many radio and TV stations to receive programming. As we have written before, the FCC is trying to determine what users are in the C-Band (aka the 3.7-4.2 GHz band) as it is trying to maximize its use and may want to consolidate or otherwise modify protections afforded to existing users. Any user not registered by the deadline may not be protected against any future users of the spectrum. Because of the large influx of earth station applications filed near the deadline (which had been yesterday), the International Bureau Filing System (IBFS) in which the registrations were to have been filed experienced intermittent difficulties that prevented some applicants from filing their registrations. Thus, for those who waited until the last minute to file (or were affected by Hurricane Michael), you now have an additional two weeks – but we certainly would not count on any further extensions.

Another EEO Audit – This Time for Cable – Reminds Broadcasters to Observe Their EEO Obligations

By David Oxenford on October 18, 2018 Posted in Cable Carriage, EEO Compliance/Diversity, FCC Fines

Earlier this month, the FCC announced another of its regular EEO audits, though this time it’s just for cable systems and other MVPDs who, like broadcasters, have EEO obligations. The FCC will audit 5% of all broadcasters and cable companies each year to assess their EEO compliance, so be prepared in case you are next. Broadcasters were last audited in June (radio stations only – see our article here), so their turn will come again. While the FCC has allowed broadcasters to meet their EEO outreach obligations solely through online sources (see our article here), that does not mean that they have stopped enforcing the rules (see our warning here) – even fining a group of stations late last year year when they had not kept adequate records of their EEO performance (see our article here). So avoid trouble should you be selected in the next set of random EEO audits – observe your outreach and paperwork obligations.

Music Modernization Act Becomes Law – Mechanical Rights To Become Easier Just As Performance Rights May Become More Difficult

By David Oxenford on October 15, 2018 Posted in Broadcast Performance Royalty, Intellectual Property, Music Rights

Last week, after passage by both chambers of Congress and signature by the President, the ‘‘Orrin G. Hatch–Bob Goodlatte Music Modernization Act’’ became law. The law underwent a few changes on its journey to approval, adding new provisions in the Senate to those which we summarized here upon its initial passage by the House. The Act retained its same principal purposes. The driving force behind the Act was the desire to simplify the payment of “mechanical royalties” by digital music services for the reproduction and distribution of the millions of musical compositions that they use in the songs that they serve up to more and more consumers across the country. That simplification was accomplished through the creation of a new collective through which these royalties will be paid – essentially a one-stop shop where the statutory royalty will be paid. The collective will have the responsibility for finding the copyright holders and songwriters who share in the royalties – removing the need for the music services to have to identify and pay all of the appropriate rightsholders, a process that has resulted in legal claims for hundreds of millions of dollars against these services for not being able to find all the parties who are supposed to be paid for the mechanical royalties.

The general layout of the system for dealing with the payment of these royalties, through a collective to be established, remains essentially the same as in the initial House Bill. Other provisions were added in the Senate (and then approved again by the House) dealing with matters including pre-1972 sound recordings, Sirius-XM royalties, and the ability of existing music organizations to continue to do direct licenses for mechanical and other rights outside the new statutory system. We may write about those issues later. But the Senate addition likely to have the most significance for the most music users was one having nothing to do with mechanical royalties, but instead with the performance royalty for music works (musical compositions) that is paid by music services, radio stations, bars and restaurants and any other location that plays music that is heard by the public at large. The new language added by the Senate requires that, before the Department of Justice recommends any changes to the consent decrees governing ASCAP and BMI, the DOJ must first notify Congress of any changes that it will be suggesting to the courts that administer the decrees, so that Congress can decide if it wants to take action to block or modify any such changes. Why is that significant? Continue Reading