Broadcast Performance Royalty

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Just a few weeks ago, we wrote about the Radio Music License Committee (RMLC) filing a lawsuit against Global Music Rights (GMR) alleging that GMR was violating the antitrust laws by offering an all or nothing blanket license for rights to play the songs written by certain songwriters now represented by this new performing rights organization. RMLC was seeking to impose some oversight over the rates being charged for GMR royalties. This would be similar to the controls over the rates of ASCAP, BMI and SESAC, whose rates can only be imposed following an agreement with a copyright holder or, where there is no voluntary agreement, by a determination by a court (for ASCAP and BMI) or an arbitration panel (for SESAC) that the new rates are reasonable. Now, GMR has filed its own lawsuit against RMLC (though it claims that its suit is unrelated to the one that RMLC filed against it) alleging that it is RMLC that is violating the antitrust laws (and certain California statutes) by forming a “cartel” of buyers, i.e. commercial radio stations who are refusing to deal with GMR individually but instead are looking to RMLC for the negotiation of a license agreement that will cover the entire industry. What are the issues presented by this dueling litigation?

The RMLC suit is premised on the concept that any time multiple products from independent marketplace competitors (in this case the songs of multiple songwriters) are packaged together and sold at an all or nothing price, there is the potential for obtaining prices higher than would be obtained on the open market. For example, while a contemporary hits formatted radio station could potentially decide that the price of Adele songs are too high and pull those songs from its playlists, it is not able to do so if that song is bundled with songs written by Pharrell Williams, Bruno Mars, Beyoncé, Kanye West, Brittany Spears and Katie Perry (all of whom are listed on the GMR website as being part of its repertoire) so that the radio station either takes all the songs from all of those writers or none at all. While it might be able to get away with not playing one or two of these artists, if it has to pull them all, listeners will notice. If the station wants to keep playing in the format that it has selected, it has to pay the bundled rights fee asked by the representative performing rights organization.
Continue Reading GMR Sues RMLC – Claims Antitrust Violations for Negotiating Royalties on Behalf of the Radio Industry – What Are the Implications?

RMLC, the organization that represents most commercial radio stations in the US in negotiating music license agreements for the public performance of musical compositions, has filed an antitrust lawsuit against GMR (Global Music Rights). GMR is a new performing rights organization (PRO), founded by music industry heavyweight Irving Azoff.  As we wrote here and here, GMR has signed agreements to represent songs from the catalogs of many prominent songwriters, including Adele, Taylor Swift, some of the Beatles, Madonna, Jay Z and many other big names.  RMLC (the Radio Music License Committee) is asking in its lawsuit that, initially, GMR be enjoined from licensing its catalog of songs for more than a rate that represents the pro rata share of its catalog to those of the other PROs while its broader antitrust action is litigated to establish an appropriate mechanism for determining those rates in the future.

Currently, the two largest PROs, ASCAP and BMI, are subject to antitrust consent decrees that govern their operations – decrees that the Department of Justice recently refused to substantially modify at the request of these groups (see our articles here and here.).  SESAC recently entered into a settlement of with RMLC, following an antitrust action similar to the one filed Friday against GMR, imposing restraints on SESAC’s ability to unilaterally impose its rates on radio stations, requiring instead that such rates be set by arbitrators if they cannot be voluntarily negotiated (see our articles here and here).  The songs in the GMR catalog are covered by ASCAP, BMI and SESAC licenses through the term of the current licenses with those organizations, but those licenses for radio all expire this year (see our article here).  Thus, RMLC argues that, if there is no injunction, starting January 1, 2017, a radio station will either be forced to pay whatever rates GMR demands for songs that are being withdrawn from the catalogs of ASCAP, BMI and SESAC, or risk being sued for copyright infringement (and potential damages of up to $150,000 per infringement). 
Continue Reading RMLC Files Antitrust Lawsuit Against GMR And Seeks to Enjoin New Music License Fees on Radio Stations

The NAB has announced agreements with Sony and Warner Music Groups to waive certain of the statutory requirements for broadcasters who stream their over-the-air signals on the Internet.  The NAB had entered into similar agreements with all of the major labels and major independent labels back in 2009 (see our summary here).  But those agreements expired at the end of 2015, giving rise to fears among some broadcasters that some standard broadcast programming could not be streamed on the Internet (see our article here about those concerns).  These agreements, at least as to Sony and Warner, mitigate those fears.  This article provides a summary of some of the most important aspects of the new waivers.

These waivers cover requirements set forth in the Copyright Act which broadcasters, especially those who stream, may have difficulty meeting.  Generally, the waivers provide the following:

  • Relief from the statutory requirements as to “ephemeral copies” of sound recordings that require that such recordings can be kept for no longer than 6 months.  If that rule was to be applied strictly, stations that make a copy of a sound recording in furtherance of their streaming (or for their over-the-air broadcasts), by for instance making a copy of a song so that it can be stored in their digital music storage systems, could keep those copies for only 6 months.  After that time, the station would be required to delete any copy of a song and re-record it if they wanted to keep a copy in their music library for another six months.
  • The agreements waive the performance complement, which would otherwise limit a station that is streaming its signal from playing more than 2 songs from the same CD or album in a row, or playing more than 3 songs in a row from the same artist, or from playing more than 4 songs from the same artist (or from the same box set) in a 3-hour period.  The waivers allow stations to exceed these limits, only if they continue to play music in a manner consistent with normal broadcast operations.  However, even with the waiver, no station can play more than half an album consecutively.
  • The waivers allow stations to announce upcoming artists, only if they don’t announce the specific times that specific songs will be played.
  • The waivers allow some relief from the obligation that a broadcaster streaming their on-air programming on the Internet identify in text on their website or mobile app the name of the song that is playing, the artist who performs the song, and the album from which that song is taken.  That relief is limited to circumstances where, from time to time, a station can’t easily provide such textual information.

Continue Reading NAB Announces Agreements with Sony and Warner to Waive Performance Complement and Other Statutory Requirements for Broadcasters Who Stream Their Signals

SESAC was, until recently, the only one of the three major performing rights organizations (PROs) that was not subject to an antitrust consent decree – meaning that it could set the rates that it wanted without any oversight by any court or other judicial body. For practical purposes, that ended when the radio and television industries separately sued SESAC claiming antitrust violations. Both the radio and TV industries felt that the SESAC royalties were too high in relation to those charged by ASCAP and BMI given the far greater amount of music controlled by these two larger PROs. As we wrote here (television) and here (radio), both antitrust cases ended with settlements where SESAC agreed that its rates would be subject to review by an arbitration panel to assure their reasonableness, if voluntary negotiations between the groups representing the industries and SESAC were not successful in arriving at mutually agreeable rates. So far, it appears that the rate-setting process for radio and TV are going in different directions.

The TV Music License Committee and SESAC have announced that they have reached an agreement in principle as to rates for the TV industry. See the press release here. While the agreement has not been finalized or made public, if negotiations of the final documents are successful, the TV industry and SESAC appear to avoid having their rates set by the arbitration process. So far, that does not seem to be the case for the radio industry.
Continue Reading Update on the SESAC Royalty Arbitration Proceedings with the Radio and TV Industries

While this summer has perhaps not brought the big headlines in trade press about copyright issues involving broadcasters – particularly in the area of music rights – there still are many issues that are active. I addressed some of those issues in a presentation earlier this month at the Texas Association of Broadcasters Annual Convention. I did my presentation in conjunction with a representative of SoundExchange, where he covered the nuts and bolts of the obligations of broadcasters and webcasters to file royalties for the noninteractive digital performance of sound recordings (e.g. webcasting and Internet radio). While the rates for 2016-2020 are on appeal (see our articles here, here and here), these rates are effective pending appeal and webcasters need to be paying under them. In the Texas presentation, I covered some of the many other copyright issues that are on the horizon, many of which we have written about in the pages of this blog. The slides from my presentation are available here. They provide an outline of many of the pending matters.

The presentation covered the controversy about the Department of Justice decision on the ASCAP and BMI consent decrees, about which I wrote about here. That controversy continues, as the PROs seek judicial or legislative relief from the new DOJ requirement for 100 per cent licensing of split works (see my article for an explanation of what that means). In the interim, the radio industry is negotiating new royalties with both of these organizations, as the current license agreements expire at the end of this year (see our article here).
Continue Reading What’s Up With Music Rights for Broadcasters and Webcasters? – A Presentation on Pending Issues

The question of whether state laws about pre-1972 sound recordings could give copyright holders a claim against broadcasters for the over-the-air public performance of these recordings was answered in a novel manner in a decision rendered by a US District Court in California. The evidence before the Court showed that CBS, the broadcaster being sued, had played digitally remastered versions of the pre-1972 songs, not the original analog pre-1972 recordings. The Court, based on evidence provided by the sound engineers who remastered the digital versions of the songs, found that there was enough originality in the remastering process for the digital versions to be copyrightable as “derivative works.” A derivative work is a separate work, based on the original, which can itself be copyrighted if there is some creativity in the new work. As the remastered derivative work was created after 1972, the Court decided that it was covered under Federal law. As Federal law provides no royalty for the public performance of a sound recording by an over-the-air broadcaster, the Court granted CBS summary judgement in the suit brought against it, dismissing the claims of the copyright holders (the text of the decision is embedded in this Hollywood Reporter article about the case).

The question of whether digitized versions of old recordings are sufficiently creative to merit their own copyrights (whether they are “original works of authorship”) has been debated in copyright circles for some time. Here, the Court looked at a summary of the law that had been prepared in a Circular distributed by the Copyright Office, which listed certain criteria that could be applied in determining whether a re-recorded work had sufficient creativity to merit a copyright. The Court also looked at specific evidence offered by recording engineers that showed how they used independent creative judgment in deciding to enhance certain elements of the recording in the digital version and to suppress others. The testimony showed that the digital version was the result of more than simply hooking the analog source material to a digital recorder and distributing the result. Human intervention in deciding how to materially change the original work to produce a new digital work was found by the Court – deciding that this was a classic version of a derivative work, authorized by the Copyright holders themselves when they commissioned the digital versions of the recordings. Thus, these works were entitled to their own copyright – a copyright that arose when the work was created after 1972.

We wrote about this issue in our article here, an article that primarily dealt with pending appeals of the question of whether there really is a state law public performance right in pre-1972 sound recordings. We wrote there about the fact that Sirius XM and some webcasters have not raised the CBS defense, as they have argued that no such royalties are due on pre-1972 sound recordings and have not been making such payments to SoundExchange (the Court in the CBS case said that CBS was apparently making such payments). Of course, the issue was not raised in those cases as to whether these companies were playing analog versions of the old recordings, or new digitally remastered works that may be entitled, if the current decision is upheld, to new copyrights (in fact, as we wrote here, the Copyright Royalty Board itself has approved of Sirius XM not making payments for pre-1972 recordings, without addressing what constituted such a recording). What implications does this decision have on other cases where this issue has been raised?
Continue Reading US District Court Finds Digitally Remastered Pre-1972 Sound Recordings Are “Derivative Works” Covered By Federal Law – Dismisses Suit against Broadcaster Seeking Over-the-Air Performance Royalties

The “performing rights organizations” – ASCAP, BMI and SESAC – don’t get as much attention in these pages as do the royalties paid to SoundExchange for the use of “sound recordings.” The PROs collect for the public performance of the “musical work” or the musical composition – the words and music of a…

Pre-1972 sound recordings are back in the news. Yesterday, the US Court of Appeals for the Second Circuit decided to defer its consideration of an appeal of a District Court’s decision that NY law included a public performance right for pre-1972 sound recordings. The Court deferred its decision until it can get a definitive answer as to whether or not such a right exists under NY state law. To get that definitive answer, the Court of Appeals referred the question to the NY State Court of Appeals (the highest court in New York State) asking it to issue an opinion as to whether the right exists.   Reading the order referring the case to the NY state court, there are a number of interesting issues addressed, including a discussion that could help decide the ramifications for over-the-air broadcasters who play these recordings.

First, we should provide a reminder about what the case here is all about. This case was brought by Flo and Eddie, members of the 1960s band The Turtles, who alleged that Sirius XM (and Pandora in a separate case) owed them royalties for playing pre-1972 sound recordings on their music services (see our article on the filing of the suit, here). Pre-1972 sound recordings first copyrighted in the United States are not covered by Federal law (see our article here and here about a Copyright Office inquiry on whether they should be brought under Federal law). While most states have laws prohibiting the reproduction of those recordings (e.g. prohibiting bootlegging of the recordings), none has an explicit statutory grant of a public performance right such as that collected by SoundExchange for post-1972 works. Sirius XM has thus excluded performances of pre-1972 sound recordings from the royalties that it has paid to SoundExchange (with the blessing of the Copyright Royalty Board in their last proceeding, see our story here). And allegedly Pandora has done the same. In this case, Flo and Eddie argued that in fact state law did convey a public performance right in sound recordings. Many observers (including this author) suggested that this argument would not succeed given that finding that a general performance right existed would be contrary to US law, and could subject all sorts of businesses that have never paid royalties for public performances of sound recordings, from over-the-air radio stations to bars and restaurants, to a performance royalty only when they played oldies. Nevertheless, Flo and Eddie were successful with their arguments in lower Federal Courts in California and New York (see our articles here and here), but a court in Florida denied their claims, finding that there is no performance right in pre-1972 sound recordings in that state (see our article here). The Court of Appeals decision yesterday was on the appeal of the NY decision referenced above. Why did the Court of Appeals need to send this case to the NY state court system?
Continue Reading Appeal of Public Performance Rights in Pre-1972 Sound Recordings Referred to NY State Court for Interpretation – What Issues Might Radio Broadcasters Be Facing?

In tomorrow’s Federal Register, the Copyright Royalty Board will announce the commencement of three new proceedings to set music royalties for the 2018-2022 five-year period – each involving a different music right. The Board will begin a proceeding dealing with the digital public performances of sound recordings by satellite radio and “pre-existing subscription services” – the royalty that Sirius XM pays to record labels and performing artists for its performance of their songs on their satellite service, and the rates that cable radio pays for those same uses (see the draft notice here). Our summary of the last proceeding for satellite radio and pre-existing subscription services can be found here. Sirius XM was also a participant in the recent webcasting case, but only for its streaming service.  The statutory royalties at issue here are set by Sections 112 and 114 of the Copyright Act, the same sections that govern the webcasting royalty.

The second proceeding deals with the “mechanical royalty” or the making and distribution of “phonorecords.” That is the proceeding to establish what publishers and songwriters receive when there is a reproduction of their song. Traditionally, that was the royalty paid by a record company to the publisher or songwriter when a “cover version” of a song was made – a flat fee per copy of the song (whether a physical record or CD or a digital download). In recent years, the proceeding has expanded to include royalties paid by on-demand streaming services for their use of music. This is the royalty that has recently been much in the news in connection with the David Lowry lawsuit against Spotify. The CRB pre-publication version of that order is here (and our articles discussing the last decision on that royalty are here and here). This is one proceeding where the record labels and the digital music services are actually more or less on the same side – litigating against the publishing companies and songwriters over how much is paid for the use of the words and music of a particular song.  This proceeding is under Section 115 of the Copyright Act. 
Continue Reading Copyright Royalty Board Set to Begin 3 New Royalty Proceedings – Mechanical Royalty, Sirius XM Satellite Royalty, and Noncommercial Broadcasting Over-the-Air Royalties

November is another of those months with no regular filing obligations – no EEO public file and Mid-Term reports, no noncommercial ownership reports, and no quarterly issues programs lists or children’s television reports. EEO public file reports and noncommercial station ownership reports, being tied to renewal dates, will be back in December. See our Broadcaster’s Calendar, here, for information about the states where stations have such obligations. For all commercial radio and TV stations, November also means that they should be completing their Biennial Ownership Reports, which are due on December 2 (extended from the November 1 due date by FCC action noted, see our article here). Those reports submit a snapshot of broadcast station ownership as of October 1, so they can be filed at any time in November.

The end of November also brings the effective date of the requirement that TV stations convert the text of their emergency alerts run in entertainment programs (like weather alerts) into speech, with that audio to be broadcast on the station’s SAP channel. See our articles here and here on that requirement.
Continue Reading November Regulatory Dates for Broadcasters – Incentive Auction and Biennial Ownership Report Preparation, Reg Fee Comments, Music Issues, Text to Speech Emergency Information and More