October 2008

According to numerous press articles, including this one in Multichannel News, the FCC has begun an investigation into several commentators on TV news programs to see if they were receiving payments or other consideration for presenting a particular viewpoint on military issues on which they were interviewed.  According to press reports, the FCC has…

In a recent decision, the FCC adopted new rules for AM station proofs of performance that make the process much simpler.  We wrote about this proposal when it was advanced, here.  The order adopted a week ago allows stations installing new series fed AM directional antennas to avoid the time-consuming and expensive process of…

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. Continue Reading Will Guitar Hero Show the Promotional Value of Music and Change the Music Royalty Outlook?

We’ve written much about the FCC Localism proceeding and the potential for some resolution of that proceeding in the near term. At the NAB Radio Show, held the week before last, FCC Chairman Kevin Martin suggested that broadcasters should voluntarily agree on a localism plan before there is any change in the administration at the FCC, suggesting that a future FCC may be less willing to compromise than the current one. Of course, a voluntary plan does not mean a code of conduct that broadcasters could unilaterally adopt and voluntarily agree to abide by, but instead it appears to be a request for standards that are voluntarily agreed to by broadcasters and then turned into some version of mandatory rules by the FCC. In a recent article in TV Newsday, some details of what the Chairman would like to see, and what he has apparently suggested to several state broadcast associations, are set out.

According to the article, a significant piece of the Commissioner’s suggested plan would include a requirement (or an option) for broadcasters to meet a mandatory localism obligation by funding investigative journalism conducted by journalism schools at various universities throughout the country. Apparently, stations that funded such journalism, or which aired the stories produced, would get some sort of localism credit. But what would this mean, and how would it impact broadcasters?Continue Reading FCC Seeks Solution on Localism – What’s Being Requested?

Both the House and the Senate have now approved the Webcaster Settlement Act of 2008, which will become law when it is signed by the President. Just what does this bill do? It does not announce a settlement of the contentious Internet Radio royalty dispute, about which we have extensively written here. It does not change the standard for judging Internet radio royalties, as had been proposed in the Internet Radio Equality Act, introduced last year and now seemingly dead in the waning days of this Congress, and in the Perform Act, about which we wrote here (the IREA and the Perform Act proposed different standards – the first more favorable to webcasters and the second more favorable to SoundExchange). These issues will seemingly be left to be disputed in a future Congress. Instead, the Webcaster Settlement Act seems to only adopt a simplified process for the approval of settlements that may be reached by the parties on or before February 15, 2009 – a settlement process that had been previously used in the Small Webcaster Settlement Act (the language of which this bill amends).

What is the significance of these new settlement processes? Under current law, any settlement between any group of webcasters and SoundExchange could only be binding on the entire universe of sound recording copyright holders if that settlement was approved by the Copyright Royalty Board. If an agreement is not binding on all copyright holders, then the reason for the statutory royalty – being able to pay one entity and get access to all the music in the world – would not be met.  The current procedures for approving settlements seem to contemplate such settlements only before a decision on royalties is reached by the CRB.   While some have speculated that the Court of Appeals that is currently considering the CRB appeal could remand the case to the CRB to effectuate a settlement and force the CRB to address it, that is by no means certain. For instance, the large webcasters, through their organization DiMA, reached a settlement with SoundExchange to cap minimum fees at $50,000 per webcaster. In their briefs filed with the Court of Appeals, both DiMA and SoundExchange have asked the Court to remand that aspect of the case to the CRB for adoption – yet that request has been opposed by the Department of Justice acting on behalf of the CRB. Thus, voluntary settlements may not be easy to obtain.Continue Reading Webcaster Settlement Act – What Does It Mean?