Next Wednesday, July 25, I will be speaking at the Podcast Movement Conference in Philadelphia, as part of the Broadcasters Meet Podcasters Track, discussing legal issues that broadcasters need to consider as they move some of their content into podcasts. One of the topics that I will be discussing will be the music royalty obligations of podcasters who use music in their programs. A month ago, we wrote about how broadcasters’ streaming royalties are affected by smart speakers like the Amazon Alexa and Google Home, as these speakers play the digital streams of a radio station’s programs where SoundExchange royalties must be paid, as opposed to the over-the-air signal of the station, where no such royalties are owed. These smart speakers may have an impact on podcasters royalties, affecting who needs to be paid in connection with the use of music in podcasts.
When I initially started to write about issues of music use in podcasts, my emphasis was on the need to secure direct licenses from performers and composers (or their record companies and publishing companies) for the rights to make reproductions and distributions of music in podcasts. When digital content is downloaded, it triggers rights under copyright law implicating the reproduction and distribution rights of copyright holders (see our article here), as opposed to their public performance rights – the rights with which broadcasters are most familiar as those are the rights that they obtain when paying Performing Rights Organizations ASCAP, BMI, SESAC and GMR in connection with their over-the-air broadcasts and those PROs plus SoundExchange in connection with noninteractive digital streaming. When podcasts were something that were downloaded, just like the purchase of a download of a song from the iTunes music store, it was the reproduction and distribution rights that were triggered, and conventional wisdom was that the PROs had no role to play in the licensing of downloaded media. As technology has changed, the analysis of what rights you need to use music in podcasts may well be changing too. The direct licensing of music for your podcast is still needed – but a public performance right may well also be necessary.
Alexa, Google Home and similar devices are accelerating a trend that was already evident over the last few years – a larger and larger percentage of podcasts are not being downloaded to a smartphone or other digital audio listening device for later consumption, but are instead being streamed for immediate listening. In connection with digital music services like Spotify, it has become accepted that an on-demand stream triggers both a public performance and a reproduction. The conclusion that there is a reproduction in an on-demand stream is a driving premise of the pending Music Modernization Act (see our article here). And, when the Copyright Royalty Board decides royalties for the reproduction of the musical works (the musical composition, i.e. the words and notes of a song), which are subject to the Section 115 compulsory royalty for the “mechanical right,” the Copyright Royalty Judges usually express that royalty as an “all-in” number – the digital music services pay a mechanical royalty that is a percentage of its revenue minus the amount paid to the PROs for the performance rights (see our article here on the latest CRB decision).
Does the fact that performance rights are now part of the equation for podcasts impose any new costs on the podcaster, if that podcaster is already getting a direct license for the music that it uses? Perhaps not, but a broadcaster needs to carefully assess the rights that it has to all music that it plans to use in its podcasts. For a podcaster who is commissioning music from a composer and performer for use in the podcast, hopefully the agreement with the musician covers all rights necessary to podcast, including both the public performance and reproduction rights. Some services that have recently begun to crop up to license music or other sound effects for podcasting (so far, mostly independent music and some background and production music, but hopefully expanding to major labels in the future), have cleared all these rights too.
But if you are, for instance, importing production music that has been licensed solely for broadcast use into your podcast, the provider of that music may well not have cleared the public performance rights for podcasting (as the “composers” of production music often retain the public performance rights – the broadcaster never noticing because these rights are covered by the broadcaster’s blanket licenses with ASCAP, BMI, SESAC and GMR, but the composers retaining another source of revenue from their works as they collect from the PROs when their creations are heard over-the-air). Broadcasters need to be careful to assess exactly what rights they have to the music and other sound elements that they are importing into their podcasts, to avoid having rights obligations to the PROs that may not be covered by any rights fees that they have already paid.
That will be a big part of my message in my talk at Podcast Movement – when a broadcaster moves any content obtained from its broadcast platform to a podcast, it needs to make sure that it has all the rights necessary to do so. None of these royalty questions are easy and straightforward, and the laws are about as clear as mud. The Music Modernization Act, while looking to simplify some payment processes for on-demand music services, does not specifically address podcasting, nor does it come close to making copyright obligations understandable to the lay person (even if that person wants to dissect the 169 pages of legislative language in the amended Music Modernization Act approved by the Senate Judiciary Committee a few weeks ago). So consult your lawyer about these issues. And, if you are in Philadelphia next week stop by and say hi, and we can have an exciting discussion of podcasting music rights in person!