Broadcast Performance Royalty

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The Copyright Royalty Board yesterday announced in the Federal Register, here, that the sound recording royalty rates paid to SoundExchange will be increasing next year.  In December 2015, when the CRB set the current royalty rates that apply from January 1, 2016 through December 31, 2020 (see our articles here and here),…

In a decision this week, the Florida Supreme Court rejected claims by Flo & Eddie (of the 1960s band the Turtles) that there was a common law public performance right in pre-1972 sound recordings in the state of Florida (the opinion is available here). The Florida court, after examining numerous avenues of argument, concluded that the establishment of such a right was a legislative task. A judicial declaration that the right existed would, in the Court’s words, “have an immediate impact on consumers beyond Florida’s borders and would affect numerous stakeholders who are not parties to this suit.” It would also upset settled expectations, as the determination that there was a right would effectively create a sound recording performance right greater than that which has ever been recognized in the US – far broader than the limited right granted under Federal law to cover digital performances of sound recordings. The Court went on to conclude that other claims raised by Flo & Eddie were similarly unavailing. The Court found that any reproductions made in the transmission process by Sirius XM (the defendant in the case) were not entitled to composition as they were transitory and made only for purposes of the transmission, not for public consumption (and as Florida law specifically permitted limited reproductions by radio broadcasters and the Court considered Sirius to fit that definition). And, as there was no violation of any rights of the plaintiffs, the use of the recordings could not constitute unfair competition or conversion.

This case reached the Florida Supreme Court when it was certified by the United State Court of Appeals which was reviewing a District Court decision reaching the same conclusion as did the Florida Supreme Court – that there was no performance right under state law for pre-1972 sound recordings (see our summary of the District Court decision here). The Supreme Court’s decision in Florida is similar to that reached by the Court of Appeals in New York (the state’s highest court), about which we wrote here, determining that there was no NY state law public performance right in pre-1972 sound recordings. As we’ve written many times, pre-1972 recordings are not governed by Federal law, which was only extended to cover reproduction rights in sound recordings in that year, leaving all pre-1972 rights in sound recordings with the states. Georgia and Illinois have reached similar decisions in slightly different cases (see our article here on the Georgia decision). In California, where a District Court found a public performance right in pre-1972 sound recordings, we are awaiting word from its Supreme Court as to whether such rights exist in that state (see our article here on the certification of this question to the California Supreme Court).
Continue Reading Florida Supreme Court Rejects Public Performance Right in Pre-1972 Sound Recordings – What’s Next?

The alphabet soup of organizations that collect royalties for playing music has never been easy to keep straight, and today royalty issues sometimes seem even more daunting with new players like GMR (see our articles here, here and here) and arguments over issues like fractional licensing that only a music lawyer could love (see our articles here and here). But there are certain basics that broadcasters and other companies that are streaming need to know. Based on several questions that I received in the last few weeks, I’ve been surprised that one of the issues that still seems to be a source of confusion is the need to pay SoundExchange when streaming music online or through mobile apps. For the last 20 years, since the adoption of the Digital Millennium Copyright Act, anyone digitally transmitting noninteractive music programming must pay SoundExchange in addition to ASCAP, BMI and SESAC (and more recently GMR) for the rights to play recorded music – unless the service doing the digital transmission has directly secured the rights to play those songs from the copyright holders of the recordings – usually the record labels.  Why is there this additional payment on top of ASCAP, BMI and SESAC?

SoundExchange represents the recording artists and record labels for the royalties for the performance of the recording of a song (a “sound recording” or a “master recording”).  ASCAP, BMI, SESAC and GMR by contrast represent the songwriters who wrote the song (not the performers) and their publishing companies.  When you play music on your over-the-air radio signal, you only pay for the public performance rights to the underlying musical composition or “musical work” as it is often referred to in the music licensing world – the words and music of the song.  This money goes to the songwriters and their publishing companies (the publishing companies usually holding the copyright to the musical composition). But, in the digital world, for the last 20 years, anyone who streams music, in addition to paying the songwriters, must pay the performers who recorded the songs and the copyright holders in the sound recordings (usually the labels).  That is the royalty that SoundExchange collects.
Continue Reading Are You Streaming Your Radio Station? Reminder that Broadcasters Need to Pay Royalties to SoundExchange as well as ASCAP, BMI and SESAC

Summer is coming to an end, but the legal obligations never take a vacation, and September brings another list of regulatory deadlines for broadcasters. While the month is one of those without the usual list of EEO Public File obligations or quarterly FCC filing obligations, there still are a number of other regulatory deadlines for which broadcasters need to be prepared.

For commercial broadcasters, the September date that should be on everyone’s mind is the deadline for the payment of annual regulatory fees. As we wrote here, there is an FCC order circulating among the Commissioners that should be released any day, setting the amounts of the regulatory fees and the deadline for their payment. These fees will almost certainly be due in September, prior to the start of the government’s fiscal year on October 1. So stay alert for the announcement of the window for paying these “reg fees.”
Continue Reading September Regulatory Dates for Broadcasters – Including Reg Fees, Nationwide EAS Test, Must-Carry Letters, Lowest Unit Rate, Translator and Repack Deadlines and GMR License Extension

Last week, I participated in a discussion about music royalties for broadcasters at the Texas Association of Broadcasters Annual Convention in Austin. Speaking on the panel with me were the heads of the Radio Music License Committee and the TV Music Licensing Committee. These are the organizations that represent most commercial broadcasters in their negotiations with ASCAP, BMI and SESAC for public performance licenses for “musical works” or “musical compositions” – the underlying words and music to any song. In our discussion, there was a general summary of the licenses needed for the use of music by broadcasters, a summary of the status of some of the current royalty negotiations, and questions about other issues in music licensing. As this discussion raised a number of issues that I have covered in articles posted on this blog, I thought that it might be worth highlighting some of that past coverage so that those interested in any topic can read a bit more on these subjects.

The TV industry seems to have far fewer issues than radio, perhaps because radio is so much more music-dependent. While there is music in many TV programs, some of it is cleared (i.e. licenses have been negotiated) by the program providers (including some networks), so that stations need only worry about licenses for programming where the music has not been pre-cleared. Thus, TV stations have alternatives of blanket licenses for all programming (principally used by affiliates of networks where music has not been pre-cleared) or per-program fees where stations pay for music only in programs or program segments where music has not been licensed by the program suppliers.
Continue Reading Looking at Music Royalty Issues for Radio and TV Broadcasters

Global Music Rights, commonly known as GMR, is the newest Performing Rights Organization (PRO) in the US music business, licensing public performance rights to musical compositions of songwriters as diverse as various members of the Eagles to Pharrell Williams to George Gershwin. As we wrote here, in December, they offered a temporary license to the radio industry to allow radio stations to play their music if the stations pay a royalty reportedly based on a percentage of what stations pay to ASCAP and BMI. That license, which was accepted by many radio stations, expires at the end of September. Many stations were concerned as to what would happen on October 1, and whether they could continue to play GMR music. This week, that question was answered when it was announced that GMR has offered to extend the license for another 6 months at the same rates stations are now paying.

While this extension may answer the question of what happens on October 1, it certainly does not resolve all GMR issues. It seems pretty clear that, unless there is a major breakthrough, GMR and the Radio Music License Committee (the organization that negotiates performance royalties for commercial radio operators) will not come to an agreement on rates before the end of September. As we wrote here, RMLC has sued GMR, asking that a court make them subject to an antitrust consent decree much like SESAC where rates, if they cannot be voluntarily negotiated, would be set through arbitration (see our article on the results of the recent RMLC-SESAC arbitration here). GMR has countersued (see our article here), and litigation continues as it may well for years absent a settlement.
Continue Reading GMR Offers Commercial Radio 6 Month Extension of Interim License to Play Their Songs

It was announced this week that SESAC’s royalties for radio for the period starting at the beginning of 2016 through the end of 2018 have been slashed – being reduced to less than half what they were in 2015.  This decision came out of an arbitration process that resulted from the settlement of an antitrust lawsuit that the Radio Music License Committee (RMLC) brought against SESAC (see our article here for a summary of the settlement).  Yet, despite the significant reduction in the royalties for radio operators, both sides declared victory (see RMLC press release here and press reports on SESAC’s reaction here).  Can both be right?  While the decision of the arbitrators is not public so we can’t know for sure the reasoning behind the result, it might be that there is something to each of these claims.

For radio, the victory is clear.  For commercial radio broadcasters, the royalties were significantly decreased, retroactive back to the beginning of 2016 year for stations that had elected to have RMLC represent them in this lawsuit.  Some stations had been enticed by an offer made by SESAC at the beginning of 2016 offering stations a new SESAC license at rates 5% less than they were in 2015 (see our article here).  Those stations may not qualify for the much greater royalty reduction available to the majority of commercial stations that opted into RMLC representation and are covered by the arbitration result.  The new SESAC royalties will also cover the use of SESAC music on broadcaster’s streaming platforms and HD broadcasts, uses for which broadcasters had previously had to pay SESAC separately.  Of course, stations still need to pay public performance royalties for musical compositions to ASCAP, BMI and, in many cases, GMR and public performance royalties for sound recordings, when streaming recorded music, to SoundExchange.
Continue Reading SESAC Royalties for Commercial Radio Slashed By More Than Half – Both SESAC and RMLC Claim Victory in Arbitration

The CLASSICS (Compensating Legacy Artists for their Songs, Service and Important Contributions to Society) Act was introduced in Congress last week to try to clear up some of the ongoing disputes over the public performance rights of pre-1972 sound recordings. Through litigation, certain copyright holders (including, most notably, Flo and Eddie of the 1960’s band The Turtles) have been seeking compensation from digital and analog music services for the public performance of pre-1972 sound recordings. These sound recordings are not covered by Federal law. As the obligation to pay SoundExchange only applies to recordings covered by Federal law, some digital services were not paying for the performance of these songs. The artists that have brought suit have contended that state laws did create an obligation to pay for the public performance of these recordings, even though there were no specific statutory provisions establishing those rights. Thus far, New York, Florida, Georgia and Illinois have found there to be no right of compensation under state laws (though some of these cases are on appeal). By contrast, California found that there was a right for compensation, though that case, too, is on appeal.

The CLASSICS Act looks to resolve these issues by pre-empting state lawsuits and establishing that services cannot play these recordings without either getting a direct license from the copyright holder to do so, or by paying SoundExchange royalties under the statutory license at the fees set by the Copyright Royalty Board. If a digital music service pays SoundExchange royalties and obeys the rules that apply to such royalties, it is not infringing on the rights of the copyright holder. It can also directly license these rights, but must pay half the license fee to SoundExchange to be distributed to the artists who performed on the recording (in the same manner that half the fees paid under the statutory license are distributed to the artists).
Continue Reading CLASSICS Act Introduced to Provide Pre-1972 Sound Recording Public Performance Clarity – What Issues Does It Leave Unresolved?

In the last month, there have been two bills introduced in the US House of Representatives seeking to impose a performance royalty for sound recordings on broadcast radio stations in the US. The bill introduced yesterday, The PROMOTE Act (standing for the Performance Royalty Owners of Music Opportunity to Earn Act – whatever that may mean, can be found here), seems to have garnered more attention, perhaps as it was promoted by its principal sponsor, California Congressman Darrell Issa, as giving performing artists the right to decide whether or not their music is played by radio stations. In fact, it does not do that, instead merely setting up a royalty system similar to that in place for Internet radio operators, allowing broadcasters to play music only if they pay royalties on “identical” rates and terms as do webcasters.

The PROMOTE Act proposes to add to the Copyright Act’s Section 106 enumeration of the “exclusive rights” given to copyright holders a provision stating that sound recording copyright holders (for most popular releases, that is usually the record company) have the exclusive right to authorize the performance of recorded songs by broadcast radio stations. That is in addition to the existing right to authorize the playing of these songs by digital audio transmissions (e.g. webcasters, satellite radio and digital cable services). But, like with the right to play music by digital services, that right to prohibit the playing of recorded songs is not absolute. Instead, like for the digital services, through a proposed amendment to Section 114 of the Copyright Act, broadcasters will have the right to play the songs if they pay a royalty set by the proposed legislation at “rates and terms” “identical” to those paid by webcasters. Let’s look at these issues more closely.
Continue Reading New Congressional Attempts to Impose a Performance Royalty for Sound Recordings on Broadcast Radio, Including the PROMOTE Act – What Do They Provide?

The Copyright Office is now a part of the Library of Congress, with the Register of Copyrights (the head of the Copyright Office) appointed by the Librarian of Congress. As part of its plans to review the Copyright Act, the House Judiciary Committee asked for comments earlier this year about structural reform of the Copyright…