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This week, I was given 15 minutes at the RAIN (Radio and Internet Newsletter) Summit in Nashville to summarize all of the legal issues that are important to digital audio companies including webcasters and podcasters.  While getting everything into a presentation that short entailed some speed talking and the briefest description of many very complicated…

On Friday, the US District Court judge who oversees the administration of the BMI Consent Decree rejected the recent Department of Justice interpretation that the antitrust consent decree required that, when BMI licensed music to music users, that license would embody the full musical work, not just a fractional interest that might be held by the songwriter who was the BMI member. DOJ’s decision stemmed from its review of the ASCAP and BMI antitrust consent decrees, which was initiated by ASCAP and BMI.  While ASCAP and BMI initiated the review looking for certain relief from provisions of the Consent Decrees that govern their operations (see our summary of the initial proposals here), in its decision, which we wrote about here, the DOJ decided that the only clarification of the consent decree that it would put forward was one that required 100% licensing by ASCAP and BMI.  100% licensing means that, if a song was licensed as part of the repertoire of ASCAP or BMI, the licensee would get rights to all of that song, even if there were multiple songwriters some of whom were not affiliated with ASCAP or BMI.  This interpretation was rejected by Judge Stanton, the Judge who oversees the BMI consent decree.  His decision can be found on the BMI website, here.

The Judge’s decision seems to be premised not on the policies and practicalities of licensing by ASCAP and BMI, but instead simply from an interpretation of the language of the BMI consent decree itself.  Moreover, the decision itself does not necessarily conclude that songs to which BMI holds less than a full right will necessarily be excluded from the BMI repertoire, only finding that “[i]f a fractionally-licensed composition is disqualified from inclusion in BMI’ s repertory, it is not for violation of any provision of the Consent Decree.”  The decision basically says that the rights conveyed by the BMI licenses to the songs in its catalog, and even the validity of the rights to even license any song in its repertoire, are not consent decree decisions, but instead decisions that are left to be determined in civil proceedings interpreting property and contract rights.  Seemingly, the Judge’s decision ends up raising more questions than it answers. 
Continue Reading BMI Judge Rejects DOJ Conclusion that Consent Decree Requires 100% of Songs – What Does that Mean for Music Services?

The press has been full of reports over the last few weeks about Pandora and Amazon negotiating deals with record labels over music royalties, and some observers have expressed confusion – why don’t these services just rely on the rates set by the Copyright Royalty Board at the end of last year? The answer, as we have written many times before (see e.g. our articles here and here) is that the CRB rates apply only to noninteractive webcasters (companies that provide radio-like services where the listener cannot designate what song he or she will hear next). The services that rely on the CRB rates (which we summarized here and here) must abide by specific rules, including something called the “performance complement” which limits how frequently the service can play a particular artist or a particular song. Even the number of times that a listener can skip a song has been set by caselaw and industry practice (see our article here) – the fear being that if you allow unlimited skips the service becomes more like an interactive one.

So a service that wants to provide listeners with the ability to set up their own playlists or to choose to play songs on demand cannot rely on the license available through the CRB decision (the so-called “statutory license” – so named as the license and the CRB rate-setting process were created by a statute passed by Congress). Similarly, services relying on the statutory license cannot cooperate to allow copying of the songs that they play – so even setting up a service to allow the temporary caching of an Internet radio service so that listeners can hear it when they are offline, most likely cannot be done by simply paying the CRB-established rates. So what do music services that want to provide more functionality do?
Continue Reading Pandora and Amazon Negotiating Agreements with Record Labels – Why They Don’t Just Rely on the CRB Rates?

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 DOJ yesterday issued its long-awaited review of the ASCAP and BMI antitrust consent decrees. We wrote about the issues raised by the DOJ in its initial inquiry here. The questions that had been advanced in DOJ’s initial notice included (1) whether to allow music publishers to partially withdraw their catalogs from one of the PROs (Performing Rights Organizations) to negotiate directly with some class of music users (principally a review to determine if certain big publishers could negotiate digital rights directly, while allowing ASCAP or BMI to continue to license less lucrative and more difficult-to-administer music users like bars, restaurants and retail establishments), (2) whether to strengthen the payment and enforcement rights of the PROs (including questions of how services should be paying before rates for a class of user are established, and whether rate courts were appropriate for all disputes over rates), and (3) whether the PROs should be allowed to license more than just the public performance rights (perhaps getting into licensing mechanical rights, as their Canadian counterpart SOCAN and their US competitor SESAC are now doing – see our article here). The DOJ’s report decided to hold off on addressing any of these questions, and instead focused solely on one issue – requiring that the PROs offer full-work licensing on all songs within their catalogs (which the DOJ raised in a second request for comments about which we wrote here).

Already, there has been much angst within the PRO and publishing worlds about this decision, while there has generally been relief among the users of music that there were no fundamental changes in the way that music is licensed through the PROs. But just what are the issues with full-licensing of musical works?

The concept is basically that, when a user pays ASCAP or BMI for the right to use their catalog, the user should get all of the rights they need to publicly perform all of the songs in that catalog. Most users probably already assumed that they were getting all of those rights when they paid the PROs their monthly fees. But the DOJ discovered that there was a basic conceptual question about just what the user was getting when they paid their license fee – and that question could prove even more problematic were the DOJ to agree to some of the requested more fundamental changes in the consent decrees, such as allowing partial withdrawal of catalogs by publishers. The question is whether a user gets all the rights to the songs that are listed in a PRO’s catalog, or merely the “fractional interest” that is owned by the songwriter or publisher who is a member of that PRO.
Continue Reading DOJ Recommends No Changes in ASCAP and BMI Consent Decrees, And Requires Full-Work Licensing – How It Affects Music Users

The Canadian performance rights society SOCAN (essentially the Canadian version of ASCAP, BMI and SESAC) has announced the purchase of Audiam, a private company that specialized in representing composers trying to maximize their music rights collections – both for performance rights and mechanical royalties – worldwide. Audiam also claims to provide a comprehensive database of rightsholders to both musical compositions and sound recordings – a valuable commodity in and of itself, as there is no uniform public registry for such rights. This follows SOCAN’s purchase of MediaNet, a company that specializes in obtaining clearances for music (including sound or master recordings – the musical compositions that SOCAN has traditionally licensed as recorded by a particular singer or band) so as to provide those rights to digital music stores or services, eliminating the need for these services to separately negotiate terms with sound recording performance rights holders. This consolidation under one roof of public performance and mechanical rights to musical compositions, along with rights to sound recordings, promises at some point in the future, a one-stop shop where music users (including digital music services like Spotify or Deezer, and perhaps even smaller music users like podcasters) can obtain all the rights that they need to use music in their businesses.

This same goal seems to be the motivation behind SESAC’s acquisition in recent years of the Harry Fox Agency (which also handles mechanical licensing – the rights to make reproductions of musical compositions needed for downloads and even on-demand streams) and Rumblefish, a digital service providing clearances for the use of sound recordings in videos, commercials and for other purposes. This same drive to consolidate music licensing services was also, to some degree, behind the push for revisions to the ASCAP and BMI antitrust consent decrees, as ASCAP and BMI wanted the clear right to license mechanical rights as well as the public performance rights they now provide. Even the publisher withdrawals from ASCAP and BMI by major publishing companies that are affiliated with major record labels may have had similar ideas behind them as some have speculated that these major music companies could bundle the licensing of sound recordings and musical compositions (see our article here where we made the same observation).
Continue Reading SOCAN Buys Audiam – The Consolidation and Fragmentation of Music Rights – What Does it Mean for Music Services?

Usually, on these pages, I’m trying to give my views on legal issues for media companies. Today, I’ll ask for your views on today’s news – as least as it affects media companies.  We write extensively here about US music rights issues, and we have noted how US media companies with an online presence need…

SoundExchange last week filed an appeal of the Copyright Royalty Board’s decision on webcasting royalties (a decision which we summarized here and here), as reported by a number of trade press articles. Most of these press reports did not note that this was not the only appeal filed. At least two other parties, IBS (Intercollegiate Broadcasting System – representing college and high school broadcasters) and the NRB-NMLC (National Religious Broadcasters Noncommercial Music License Committee – representing noncommercial religious broadcasters) also filed notices of appeal. So what is next now that these appeals have been filed?

The Notices of Appeal that were just submitted to the US Court of Appeals are just “notice” documents – filed to give notice to the other parties, the CRB and the court that these parties will pursue an appeal as they think that the CRB decision was not justified. No detail as to the substance of the appeal need be submitted at this time. Those details will be advanced when the parties file briefs setting out the specifics of their arguments challenging the CRB decision. The exact date for the submission of those briefs won’t be set for months, when the case makes its way onto the Courts docketing schedule. So don’t expect briefs to be filed until the Fall, with an oral argument before the Court to follow. The arguments are simply ones where lawyers for the parties get up before a three-judge panel and make brief presentations about the legal issues involved in the case (and answer the questions of the Judges). No new evidence is taken – at this point the proceeding is just one between lawyers, arguing as to whether the CRB decision was justified. What does the Court review?
Continue Reading Appeals Filed of Copyright Royalty Board Decision on Webcasting Royalties – What’s Next?

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

E-Cigs and vape shops have become a new advertising category for many broadcast stations over the last few years. Unlike ads for cigarettes, little cigars, and smokeless (chewing) tobacco, which are effectively banned on broadcast stations, there are currently few Federal rules on e-cigs. Ads currently cannot make health claims about the product (so the ads cannot say that they are healthier than smoking cigarettes, nor can an ad even make the claim that e-cigs help users stop smoking). While some states have placed some additional restrictions on sales that carry over into advertising (e.g. age restrictions on sales), the Federal government, until this week, had passed on imposing more sweeping regulation on the industry.

In a “Final Rule” issued by the Food and Drug Administration yesterday (to be published in the Federal Register on Tuesday), a number of new requirements were adopted for tobacco products generally, and e-cigs were included in the FDA’s definition of tobacco products. So, too were cigars, pipe tobacco and tobacco used in water pipes or hookahs – tobacco products not covered by the over-the-air advertising ban that applies to cigarettes and smokeless tobacco. The new rules have a number of implications for the e-cig industry generally, including bans on sales to those under 18 and requirements that the FDA conduct “pre-market review” and approval of any new tobacco product introduced to the market in February 2007 or later. Of particular note for broadcasters are new requirements for health warnings in advertisements for all tobacco products, including e-cigs.
Continue Reading New Federal Advertising Rules on E-Cigs and Other Tobacco Products Adopted – To Become Effective within Two Years