Broadcast Performance Royalty

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SESAC is the one major performing rights organization whose rates have not, until now, been subject to judicial review as part of an antitrust consent decree.  Perhaps because of that fact, broadcast stations have often complained about the rates they charge for the music that they license, as there is currently no cap on what SESAC can charge, and there is no requirement that SESAC treat all similar licensees in the same way.  In fact, because of this dissatisfaction, both the TV and Radio Music License Committees have filed antitrust suits against SESAC seeking relief from the rates they charge.  In a settlement announced this past week, the Television Music Licensing Committee has entered into a settlement by which SESAC will pay the TVMLC $58.5 million and agree that, over the next 20 years, SESAC will negotiate license agreements with TVMLC.  Under the agreement, if rates can’t be reached as a result of negotiations, SESAC and the TVMLC would submit to an arbitration process to arrive at the appropriate rates.  The full settlement can be found on the TVMLC website, here. 

Under the terms of the settlement, commercial TV stations (except for those owned by Univision, which appear to have opted out of the class of stations covered by the TVMLC settlement) will have their SESAC obligations covered for the rest of this year and next, including website SESAC music use and use in digital multichannel programming.  In 2015, TVMLC will negotiate with SESAC over rates for the period from 2016-2019.  If no rates are agreed to by the parties, an arbitration panel will set the rates.  The same process will continue for 4 year periods through 2035, as long as ASCAP and BMI are also subject to either rate court or arbitration review of the rates charged by those organizations.  While the Department of Justice is reviewing the ASCAP and BMI consent decrees that require rate court review of royalty rates charged by these groups (see our article here), it appears that they are not asking for an end to all rate review.  Instead, they are asking that the review be done by an arbitration panel, not the US District Court that currently reviews such rates.  So it would appear likely that the “out” in the deal would not give SESAC an escape from this agreement to be bound by arbitration any time soon.
Continue Reading TV Music Licensing Committee Settles Antitrust Action with SESAC over Music Licensing Rates and Terms – Radio Watches and Wonders if It Can Get a Similar Deal

As the summer of copyright comes to an end, the music licensing issues which arose causing me to repeatedly write about this extremely contentious season in copyright law are by no means finished (see the most recent of our Summer of Copyright articles here).  In fact, on the first full day of autumn, we received a very interesting decision out of a US District Court in California on the lawsuit brought by Flo and Eddie against Sirius XM, finding that the music service improperly failed to pay royalties for the public performance of pre-1972 sound recordings from the duo’s former band, the Turtles (a copy of the decision can be found in this Billboard article).  As we have written before, Flo and Eddie brought suit against Sirius XM, arguing that the service needs to get permission to make public performances of these recordings and, by not doing so, it violated their California state law copyrights. 

Pre-1972 sound recordings first registered in the US are not covered by Federal law, so the current mechanism for Sirius XM to pay for the digital public performance of sound recordings (paying a royalty, set by the Copyright Royalty Board, to SoundExchange) does not exist.  To the surprise of many (including this author) the Court concluded that there is in fact a public performance right in pre-1972 sound recordings under California state law, and went on to conclude that Sirius XM violated its obligations under the law to pay for the use of music.  This decision, on a summary decision motion, may quite well be appealed.  The issue is also before many other courts, both in California and elsewhere.  But this decision is certainly worth review, as it could have an impact not only on digital services, but also on any other company that publicly performs such recordings – including other digital music services, bars and restaurants, stadiums, and potentially even broadcasters.
Continue Reading Court Rules in Favor of Flo & Eddie in California Suit Against Sirius XM for Public Performance of Pre-1972 Sound Recordings – What Does This Decision Mean for Broadcasters, Digital Media Companies and Other Music Users?

As we wrote in our previous articles on the music licensing issues being considered during this summer of copyright (here, here and here), one of the concerns driving many of the proposed reforms is the current demand of songwriters and publishing companies for a larger share of the music royalty pie.  In licensing the public performance of musical compositions, ASCAP and BMI represent the vast majority of songwriters, with SESAC representing far fewer writers (together ASCAP, BMI and SESAC are referred to as the “PROs,” the performing rights organizations).  ASCAP and BMI, having such a significant representation of musical compositions, have for over 50 years been subject to antitrust Consent Decrees that limit their operations and oversee the rates that they set for the use of their music.  Among the many requirements under the consent decree are those that obligate ASCAP and BMI to license all users of music who are similarly situated under the same rates and standards, and the oversight of a “rate court” to determine whether rates are reasonable whenever either of the PROs can’t agree on the amount of those rates with a class of music users.  In June, the US Department of Justice asked for public comment on several aspects of the consent decrees, and whether modifications of the decrees were called for.  Comments on the DOJ notice are due today.  Why was this proceeding started, and what is the DOJ looking at?

In two recent hearings examining music licensing, the motivations for ASCAP and BMI to seek changes in the consent decrees were discussed.  The first proceeding was a Copyright Office roundtable held in Nashville in June, in which I was a participant.  There, representatives of ASCAP discussed potential changes to the laws dealing with music licensing. The second was at the two part House Judiciary Committee hearing on music licensing held in late June.  ASCAP and BMI representatives in these forums suggested that there were several objectives in their seeking these reforms, and several specific changes that were requested in the Consent Decrees.  These include the following:

  • Replacing the rate court judges who determine rates when ASCAP or BMI don’t reach an agreement with a company that uses music (currently US Federal District Court Judges in the Southern District of NY) with an arbitration panel.
  • Instead of setting “reasonable rates” as required under the current consent decrees, the PROs request that a new standard be used to set rates – the willing buyer willing seller standard currently used in setting Internet radio sound recording performance royalty rates.
  • Allow publishers to withdraw some of their compositions from the PROs for licensing to certain classes of companies – specifically to withdraw so that the publishers can negotiate with digital media companies at rates that are not overseen by a rate court, while still leaving those same compositions with the PROs to collect from business establishment services (retail businesses that use “background” music) and potentially over the air radio stations – companies where there are lots of licensees who pay small amounts, making it difficult for anyone but a large, well-established company like ASCAP or BMI to pursue
  • Allow ASCAP and BMI to do more than simply license the public performance rights to music services – most likely allow them to provide reproduction and synch rights to the music that they license.
  • To impose interim royalties on any service that asks to be licensed, until an appropriate rate for that service can be set

What prompted this desire to change the consent decrees, and what will the DOJ be doing with the information it collects?
Continue Reading The Summer of Copyright Part 4 – The Department of Justice Reviews the ASCAP and BMI Consent Decrees – What Should Broadcasters and Music Services Know?

The House of Representatives Judiciary Committee last week finished its second hearing on music licensing (written witness statements and a link to the webcast can be found here).  Congressional hearings usually are not in-depth proceedings looking to establish detailed facts as done in a hearing in a court proceeding.  Instead, they are formalized proceedings where parties get to make their canned statements setting out positions on issues.  Congressional representatives themselves make statements setting out their positions on the issues, and ask pointed questions to selected witnesses to reinforce those positions.  Minds are rarely changed, and the truly undecided are rarely illuminated on the issues.  But the hearings do serve to set out the issues that are going to be considered by the Committee in ultimately crafting legislation.  And last week’s hearing did just that – highlighting the issues likely to be considered in legislation promised by the Committee Chair, Representative Goodlatte, who promised an omnibus bill on music licensing, dubbed the “Music Bus,” to address the many issues on the table.

Note that any bill that is ultimately introduced will address many seemingly minor issues – details of process and procedure that don’t make the headlines.  But the big issues are the ones that will cause the most industry argument before the lawyers work out the details.  It’s also important to note that it is very late in the legislative calendar right now, with the Senate not putting the same emphasis on copyright issues as it the House.  With elections coming up in the Fall, and scheduled upcoming summer recess, Congress has much must-pass legislation that will fill up their legislative days before the next Congress is sworn in in January.  The start of a new Congress means that all legislation will have a fresh start.  Thus, any Omnibus bill that is introduced this year will most likely not become law, but instead will set the agenda for discussions for next year in the new Congress.  Certainly, there may be more limited bills that sponsors may try to get stuck on other legislation that must move before the end of the Congressional session, so interested parties will remain vigilant during the final days of this session of Congress.  But what are the issues that are on the table for inclusion in any Music Bus?
Continue Reading The Summer of Copyright, Part 2 – The House Judiciary Committee Plans Omnibus Music Licensing Bill – The “Music Bus”

This is the summer of copyright – as seemingly every government agency with any connection to media issues is looking at music licensing and other copyright issues.  Much press was given to the House Judiciary Committee hearing held last week.  But the Congressional committee’s consideration of copyright issues is but one of the many places where issues of importance to broadcasters and digital media companies are being reviewed.  The Copyright Office is doing its own review of the music royalty landscape (see our articles here and here), and I had the privilege of participating in their first roundtable discussion of these issues in Nashville the week before last.  Also holding hearings on copyright issues is the Commerce Department in connection with their Green Paper, which we summarized here and here.  The Copyright Royalty Board is starting its consideration of the recordkeeping requirements for webcasters and other digital music users (here and here), and also has begun the proceeding to determine the rates to be paid by webcasters for the public performance of sound recordings for the period of 2016-2020 (here and here).  And there is proposed legislation on pre-1972 sound recordings (the RESPECT Act), songwriters’ royalties (the Songwriters Equity Act) and another bill proposing to limit the collection of retransmission consent fees by TV companies that also own radio stations and don’t pay performance royalties to musicians.  On top of all that, law suits are pending in various courts on these and related issues, and the Department of Justice just announced a proceeding to review the consent decrees governing ASCAP and BMI that have been in place for over 50 years. I could easily cover nothing but music issues on this blog, and still not have enough time to write about all the pending proceedings, much less any new ones that may arise as I’m trying to catch up on all that has gone before.  But let’s start with one of the fundamental issues driving a significant part of this review.

Perhaps surprisingly, one of the principal drivers of much of this review of the Copyright laws is not whether there should be a performance royalty for sound recordings paid by broadcasters to record companies and performers for music played over the air, or even issues about the amount of royalties paid to recording artists and labels in the digital world – though much of the trade press (particularly the broadcast trade press) seems to focus on these issues, and to present them as the drivers of all of these reform proposals.  Certainly these issues are alive and important – but the area where there seems to be the most passion, and the strongest lobbying effort for copyright reform of music licensing deals not with performers and labels, but instead with the amounts that songwriters get paid for their use of music – with the debate focusing on how much they get paid by digital services for music streaming, and by the record labels for making “reproductions” of their compositions.
Continue Reading The Summer of Copyright and Music Licensing Part 1 – Songwriters Demand A Bigger Share

On Friday, the Copyright Office extended by one week the deadline for comments on its wide-ranging proceeding on the current music licensing regime and whether reforms are necessary or appropriate.  We wrote about the proceeding and the many questions that it raises here.  Comments are now due on May 23.  Comments can be filed on the Copyright Office website, here. 

In addition, the Copyright Office announced a series of three roundtable discussions to be held at different sites across the country – in Nashville, Los Angeles and New York.  At these roundtables, stakeholders in the music industry and interested members of the public can address the issues raised in the Inquiry.  Interested parties who want to be considered for guaranteed participation in the round table discussions need to sign up by May 20, using the form available here.  At that same link, the discussion topics for these roundtables are set out – covering the broad range of music royalty and licensing issues raised in the Inquiry.  Clearly, this is an important proceeding in which many in the music and media industries will want to participate – but it is just one of many proceedings that may affect the way that broadcasters and digital media services use music in the future.
Continue Reading Copyright Office Announces One Week Extension for Comments on Music Licensing Inquiry and 3 Roundtable Discussions of the Issues – Just One of Many Proceedings Affecting Music Rights and Royalties

This week brings news that a Virginia broadcaster has brought suit to have a court declare that broadcasters who stream their signal on the Internet, but limit the reception of the signal to within 150 miles of their transmitter site, should not have to pay royalties to SoundExchange.  As we have written before, when Congress adopted the digital performance royalty for sound recordings in the late 1990s, there was an absolute exemption from the sound recording performance royalty for broadcast transmissions, embodied in Section 114(d)(1)(A).  That exemption is not limited by the 150 mile rule.  However, there is another section of the law, Section 114(d)(1)(B), that also exempted from royalty payments retransmissions of broadcast transmissions.  The law exempted from the 150 mile limit those retransmissions done by other broadcast stations.  Thus, FM translators, for instance, can rebroadcast their primary station beyond the 150 mile rule without triggering a sound recording performance royalty.  So what was the section on the 150 mile zone for retransmissions intended to cover?

This issue was raised back in the early days of webcasting, when questions were raised as to whether simulcasting of broadcast transmissions were covered by the 150 mile rule.  There was some thought that it was in the early days of Internet radio.  In the first webcasting decision (the one conducted by a Copyright Arbitration Panel – or CARP, before the Copyright Royalty Board came into existence), evidence was cited that Yahoo! Music, growing out of Mark Cuban’s Braodcast.com which built its business on the retransmission of broadcast station’s over-the-air signals, had set up its royalty structure negotiated with the record labels to take into account that broadcast simulcasts would be exempt.  But the Librarian of Congress issued a ruling rejecting that premise for a number of reasons.  See the decision here.  These included that, because Internet retransmissions of broadcast signals could not be geographically limited, they could not be encompassed within the 150 mile exception of 114(d)(1)(B).  The Librarian read the exception as encompassing only retransmissions that could be limited to being wholly within the 150 mile zone.  The Librarian also looked at Section 112, and did not find a similar exception in that section which grants a statutory license for the ephemeral copies made in certain transmissions, and thought that such an exemption would be necessary for the retransmission of broadcast signals on the Internet. (We have discussed ephemeral rights before, see e.g. here and here). There the issue sat until the case filed last week.
Continue Reading Broadcaster Asks Court to Declare that Internet Simulcasts of Radio Station Exempt From SoundExchange Royalties If Geo-Limited to a 150 Mile Zone

This blog usually covers legal and policy issues, not product reviews.  And this article will at least try to relate policy decisions to a product review, but mostly it’s to share a cool new feature on my phone.  To explain, I am one of those holdouts still using a Blackberry.  In dealing with new media clients, I almost feel like I have to make excuses for still using a Blackberry, but as an attorney who travels frequently and writes many emails from the road, the physical keyboard really makes a difference – at least to me.  I can at least say that I did upgrade to the Q10 last year – the Blackberry that has the physical keyboard, but also has a new faster operating system that relies much more on touch commands for everything but the actual typing.  This week, I received what I consider a gift from Blackberry, as I’m also a big radio fan.  While I listen to Internet radio and use digital music services, I also still really enjoy listening to over-the-air radio.  This week, my Blackberry Q10 received an upgrade to its operating system and, with that upgrade, the phone’s FM chip was activated.  Now, my ATT phone gets over-the-air radio – becoming the modern equivalent to the transistor radio – a radio in my pocket at all times.  Of course, being a lawyer, the whole question of activating FM chips in mobile phones brings up policy issues, as it has been in and out of many policy arguments over the last few years.

First, a qualification must be made for international readers of this blog.  The question of an active FM chip in a mobile phone is an issue in the US, but not in many other countries of the world, where FM reception on mobile phones has been standard for many years.  In the US, that has not been the case.  While the chips are built into most phones, they are not activated.  Some suggest that the chips are not activated because the carriers want to encourage data usage through the use of online audio, but the carriers simply say that there is no consumer demand for the activation of the feature.  No matter what the reason, the chip has not been activated in most US phones, and thus policy issues from time to time arise as to whether it’s activation should be mandated or encouraged by government action.
Continue Reading Activating the FM Chip in Mobile Phones – As Blackberry Steps Up, a Policy and Product Review

The Copyright Office recently issued a Notice and Request for Public Comment on a study that they have commenced on music licensing in all of its forms.  We’ve written about the complexity of the music licensing process many times, and about proposals for reform.  Many of these proposals have been issued in connection with the speeches of Copyright Register Maria Pallante’s discussion of copyright reform (see our article here), and the subsequent Green Paper on Copyright issued by the Patent and Trademark Office (see our article here).  This Notice appears to be one more step in this overall review of copyright underway throughout the administration and in Congress.  The Notice released by the Copyright Office is wide-ranging, and touches on almost every area of controversy in music licensing.  Comments are due on May 16, and the Copyright Office promises to hold roundtable discussions to further explore the issues in music licensing.

The issues on which the Copyright Office asks for comments deal both with the licensing of the musical composition or musical work (the words and music of a song) and the sound recording (the song as actually recorded by a particular artist).  The request deals with both the public performance right for musical compositions, usually licensed through ASCAP, BMI and SESAC, and the rights to make reproductions of the works, which are usually licensed by the music publishers, sometimes through organizations like the Harry Fox Agency.  On the sound recording side of the music world, the rights are usually licensed by the record company except for the public performance royalties paid by non-interactive music services, which are collected in the United States by SoundExchange. 
Continue Reading Copyright Office Begins Wide-Ranging Inquiry Into Music Licensing

We recently wrote about FCC issues that will be facing broadcasters in this new year.  While broadcasters will no doubt be busy keeping track of what the FCC is up to, they also need to have their eyes on other government agencies, as there are numerous issues that may come from Congress and the other regulatory agencies in DC that could affect their bottom lines.  So, with a watchful eye on the FCC for the issues we wrote about earlier in the month, what other issues should broadcasters be watching for from all of the other regulatory power centers in DC? 

While this is an election year, and that makes many big pieces of legislation unlikely, the discussions that occur in 2014 on these issues may pave the way for action late in the year, or in 2015 after the new Congress is in place and before the Presidential election in 2016 commands everyone’s attention.  Here are some of the issues of interest to broadcasters likely to be on the DC agenda in 2014:
Continue Reading What’s Up in Washington For Broadcasters in 2014? — Part 2, Issues beyond the FCC Including Ad Taxes, Music Royalties, Privacy Reforms, and More