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In the Federal Register last week was a notice that SoundExchange intends to audit the royalty payments of Pandora for its Internet radio service. As we wrote at the beginning of the year, SoundExchange routinely decides to audit representative companies in various segments of the digital music industry. In January, for instance, they issued notices of audits for a number of broadcasters, pure webcasters, and other digital music services (see our post here about the audit notices released in January). These audit notices are usually released at the beginning of the year though, from time to time, we’ve seen SoundExchange decide later in the year to audit a particular service (see our article here).

What is involved in an audit? We wrote about the royalty audit process here. SoundExchange issues notice of an audit, and that notice must be published in the Federal Register. SoundExchange selects an auditor who, under the rules of the Copyright Royalty Board, must be a CPA. The auditor reviews the books and records of the service and issues a report, to which the service can respond. Neither the audit report nor the response are filed with the government or otherwise made public. The results of the audit are provided to SoundExchange for any appropriate action they may take. Under the audit rules, if a service has underpaid SoundExchange by more than 10%, in addition to any late fees it owes, it also has to pick up the cost of the audit. This audit notice reminds all digital music services to accurately measure their audiences and properly report to SoundExchange, as it is always possible that their royalty payments can be reviewed. As this notice makes clear, just because they were not targeted in January does not mean that they will not be reviewed at some other point during the year.
Continue Reading Copyright Royalty Board Announces Additional Webcaster Audit by SoundExchange – Reminder to Carefully Maintain Your Royalty Records as They Can be Reviewed at Any Time

We wrote here about the Congressional proposal to make the Register of Copyrights a Presidential appointee subject to Congressional approval, rather than a selection of the Librarian of Congress. That bill, HR-1695 (an updated version of which is available here), despite some expressed concerns from certain advocacy groups about the potentially making that position…

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 Georgia Supreme Court this week issued a decision holding that the streaming of pre-1972 sound recordings by iHeart Media does not violate the state’s criminal statutes against the “transfer” of recorded sounds without the permission of the owner of the master recording. While many trade press articles have lumped this decision in with the ongoing litigation about the public performance right in pre-1972 sound recordings, this case is actually dealing with a different issue – and does not even mention the words “public performance” that were the center of debate in the Flo & Eddie cases against Sirius XM and Pandora, leading to the decisions that we wrote about in New York (here and here), California (here), and Florida (here).

What is at issue in the Georgia case is a criminal statute similar to those found in many states that prohibits the unauthorized transfer of various recordings, including pre-1972 sound recordings, without permission of the owner of the master recording. The plaintiff in this case, argued that the illegal transfers violated criminal law, and thus gave rise to a claim of civil liability under state racketeering statutes which provide for civil recovery against a defendant engaged in multiple criminal activities. By finding that there was no criminal violation here, the Georgia Supreme Court effectively ended the racketeering claim.
Continue Reading New Wrinkle in Pre-1972 Sound Recording Cases – Georgia Supreme Court Holds that iHeart Streaming Does Not Violate State Criminal Statute

The music battle continues over the question of whether state laws provide a public performance right in pre-1972 sound recordings. While, as we wrote here and here, the highest court in New York has determined that there is no such right in that state ending the litigation there, cases continue in other states, notably California (where a Federal Court determined that there was a state right, see our summary here) and Florida (where the Federal Court determined that there was not, see our summary here). The Florida case has been referred to that state’s highest court for an advisory ruling on the state of the state’s law on the issue, and earlier this week, the same thing happened in California. The US Court of Appeals for the 9th Circuit, which was hearing an appeal of the Federal District Court decision that there was a performance right under California law, decided to turn to the experts in California state law – the California Supreme Court – and ask for an interpretation of California law to determine if there is indeed a public performance right in these pre-1972 recordings.

Flo & Eddie, the performers behind the 1960s band the Turtles, stirred up a major music rights controversy several years ago by their high-profile lawsuits against music services including Sirius XM and Pandora as to whether there is a state law public performance right in pre-1972 sound recordings (see our article here on the first of these suits). Those recordings are not covered under Federal Copyright law, so Flo & Eddie had the novel idea of bringing state law actions to enforce a purported state law performance right in these recordings – even though no such right had been enforced against any music service in the 45 years since Federal Copyright law decided to cover all new US sound recordings, and even though Federal law did not itself create any performance right in sound recordings until 1995, and then limited it solely to digital performances under a very carefully crafted statutory license scheme. Even though no state law explicitly states that there is a performance right in these pre-1972 law, in California, the band has relied on a very general statutory grant of property rights in pre-1972 sound recordings to conclude that this broad grant included a performance right – even though there were no indication as to how such a performance right would function, or what limitations would apply, as are specified under Federal law. The US Court of Appeals, in its order referring this question to the California Supreme Court, noted the general nature of this statutory grant, and asked the state court for an interpretation as whether it really is meant to include a performance right.
Continue Reading More on Flo & Eddie: Federal Court Certifies to California State Court Question of Whether There is a Public Performance Right in Pre-1972 Sound Recordings

This week, the US Court of Appeals essentially ended Flo and Eddie’s New York case against Sirius XM where it tried to establish a public performance royalty in pre-1972 sound recordings. The Court of Appeals sent the case back to the US District Court with instructions that it be dismissed, finding that a December decision by New York’s state Court of Appeals resolved all issues in the case. As we wrote just before Christmas, the New York Court of Appeals determined that there was no public performance right in pre-1972 sound recordings under New York state law. That decision resulted from a certified question from the US Court of Appeals which was reviewing the decision of a federal District Court which had found that such a right exists. An issue in a Federal case is certified or referred to a state court when there are issues of state law that control the determination of the Federal case. As pre-1972 sound recordings are not covered under Federal law, state law controls the rights accorded to such recordings, thus the certified question was necessary in this case to determine the state of the law on this issue in New York state (see our article about the referral of the public performance issue in this case to the NY Court of Appeals, here, an article that also discusses more broadly the status of pre-1972 sound recording litigation and related issues).

This week’s federal Court of Appeals order was very direct, relying on the state court decision that there was no public performance right to end the case. It did briefly address the remaining arguments of Flo and Eddie by finding that no issues still remained as to liability for copies of the sound recordings made during the digital transmission process (server, buffer and cache copies) or on any claim of unfair competition. Basically, the Court found that any copies made in the transmission process were fair use necessary to engage in the legal performance, and there was no unfair competition issue as the performance was legal, hence not unfair in the eyes of the law.
Continue Reading Flo and Eddie NY Suit on Pre-1972 Sound Recordings Ordered Dismissed By Court of Appeals – No Issues with Copies Made in the Transmission Process

While there is a new administration in charge at the FCC, there are still those regular regulatory dates that broadcasters must face, as well as dates unique to pending proceedings that arise from time to time. Before we get to the February dates, we should remind broadcasters of those January 31 dates that they should be considering, including the deadline for signing up for the Interim License Agreement for those radio stations playing music represented by the new performing rights organization GMR (see our articles here and here). January 31 is also the deadline for payment of SoundExchange yearly minimum fees by webcasters (including broadcasters who stream their music on the Internet), as well as the date for comments to the House Judiciary Committee on the structure of the Copyright Office (see our article here) and with the Copyright Office on the qualifications for a new Register of Copyrights (see our article here).

With the start of February, there are routine regulatory dates for broadcasters dealing with EEO requirements. Commercial and Noncommercial Full-Power and Class A Television Stations and AM and FM Radio Stations in Arkansas, Kansas, Louisiana, Mississippi, Nebraska, New Jersey, New York, and Oklahoma that are part of an Employment Unit with 5 or more full-time employees, must place in their public file (or upload to their online file for TV and radio stations that have already converted) their EEO Public File Reports. Stations also need to put a link to the EEO Public File reports on the home page of their websites, if their station has a website (meaning they have to have a webpage for their most recent report if they have not converted to the online public file). For Radio Station Employment Units with 11 or more full-time employees in Kansas, Nebraska, and Oklahoma and Television Employment Units with five or more full-time employees in Arkansas, Louisiana, and Mississippi, FCC Mid-Term Reports on Form 397 must be submitted to the FCC by February 1. We wrote about FCC Mid-Term Reports here.
Continue Reading February Regulatory Dates for Broadcasters – EEO Reports and Comments on Ownership, EEO and Copyright Issues

Each year, we write about SoundExchange issuing notices of their intent to audit various digital music services to review their royalty reporting and payment.  This year is no different, with Federal Register notices recently being issued to audit certain companies in various services, including satellite radio, webcasters, broadcasters who stream, and business…

At the beginning of each year, we publish our broadcaster’s calendar of important dates – setting out the many dates for which broadcasters should be on alert as this year progresses.  The Broadcasters Calendar for 2017 is available here.  The dates set out on the calendar include FCC filing deadlines and dates by which…

Here we are at the start of a new year, and right away we have numerous regulatory deadlines for broadcasters. By the 10th of the month, all broadcast stations need to have placed in their public inspection files (online for TV and for those radio stations that have already converted to the online public file, and paper for the remaining radio stations), their Quarterly Issues Programs lists, documenting the issues of importance to their communities and the programs broadcast in the last quarter addressing those issues. TV stations have quarterly Children’s Television Reports due to be filed at the FCC by the 10th, addressing the programming that they broadcast to meet the educational and informational needs of children. Commercial TV stations should also add to their public file documentation to demonstrate their compliance with the commercial limits in programming addressed to children.

For TV stations, on the 1st of the year, new obligations became effective for online captioning. “Montages” of clips from TV programs, where all of those clips were captioned when broadcast, also need to be captioned when made available online. By July 1, clips of live and near-live programming must be captioned; however, they may be posted online initially without captions as long as captions are added to clips of live programming within 12 hours and to clips of near-live programming within eight hours after the conclusion of the TV showing of the full-length programming. For more on this requirement, see our article here.
Continue Reading January Regulatory Dates for Broadcasters – Quarterly Issues Programs Lists and Children’s Television Reports, Ownership and EEO Comments, Copyright Issues and More