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The Copyright Royalty Board Decision on the royalty rates to be paid for the public performance of sound recordings by Internet radio companies – webcasting royalties – was published in the Federal Register today. We wrote about that decision setting the royalties here and here. The publication in the Federal Register gives parties to the proceeding 30 days in which to file an appeal of the decision. Appeals are heard by the US Court of Appeals in Washington DC.

While we have written about some issues with the decision raised by small webcasters about there not being a percentage of revenue royalty, as that issue was not raised before the CRB as no small webcasters participated, that is not an issue that the Court will consider – as the Court looks to whether the decision was arbitrary and capricious based on the evidence adduced at trial, or whether the decision was without substantial evidence in the record. It is focused on what was argued at trial, rather than what was not. Similarly, the issues about the performance complement waivers for broadcasters, which we also wrote about in the same article, are statutory issues that need to be addressed by waivers from copyright holders, not by a court appeal. Noncommercial groups have also expressed disappointment in the decision.
Continue Reading Copyright Royalty Board Webcasting Royalty Decision Published in the Federal Register – Appeals Due in 30 Days

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?

The recent Copyright Royalty Board decision (see my summary here) setting the rates to be paid by Internet radio operators to SoundExchange for the rights to publicly perform sound recordings (a particular recording of a song as performed by an artist or band) still raises many questions. Today, Jacobs Media Strategies published on their blog an article I wrote on the topic – discussing 5 things that broadcasters should know about music royalties. While the content of the article is, to some who are accustomed to dealing with digital music rights, very basic, there are many to whom the additional guidance can be helpful. The subject of music rights is so confusing to those who do not routinely deal with the topic – even to those who work in radio or other industries that routinely perform music and to journalists and analysts that write about the topic. Thus, repeating the basics can still be important. For those who click through from the Jacobs blog to this one, and for others interested in more information on the topics on which I wrote, I thought that I’d post some links to past articles on this blog on the subjects covered in the Jacobs article. So here are the topic headings, and links to where you can find additional information.

The new royalties set by the CRB represent a big savings for broadcasters. I wrote how the royalties represent a big savings for most broadcasters who simulcast their signals on the Internet. I provide more details about the new rates and how they compare to the old ones here.
Continue Reading 5 Things Broadcasters Should Know About SoundExchange Music Royalties

March appears to be another busy month on the FCC’s regulatory calendar.  While March is one of those months where there is not the usual assortment of EEO public file reports, quarterly issues programs lists or children’s television reports and noncommercial ownership report obligations (see our Broadcasters’ Regulatory Calendar here for some of these dates), it is a month with many other significant regulatory dates.  For instance, this month brings the scheduled start of the TV incentive auction as stations make binding commitments as top whether they will accept the FCC’s opening bids in the reverse auction.  It also brings deadlines for comments in a number of other proceedings that may affect broadcasters, including the FCC’s proceeding on AM radio revitalization and the Copyright Office’s look at the safe harbor for user-generated content.  In addition to comment periods, the lowest unit rate periods that apply during the 45 days before a Presidential primary are in effect in many states, plus March brings other deadlines including those for the first filing date for monthly SoundExchange Reports of Use under the new Internet radio royalty rates.  All make for a month where broadcasters need to watch regulatory developments very closely.

So let’s start with the incentive auction.  As we wrote just a few days ago, March 29 is the deadline for TV broadcasters to make a binding commitment to accept the FCC’s initial offer to buy their spectrum.  TV broadcasters who filed applications to participate in the Incentive Auction back in January were merely leaving the door open to their participation.  The March 29 deadline is the real legally binding commitment to surrender their spectrum at the price that the FCC has offered for their stations.  To make sure that broadcasters understand what they are doing, and how to make their commitments, as we wrote in our article, the FCC has set up an online tutorial on the system and will be holding a workshop about the process.  So if you have a TV station interested in taking advantage of the FCC’s offer to buy out your frequency, this is the month that the commitment needs to be made.
Continue Reading March Regulatory Dates for Broadcasters – Including Incentive Auction Commitments, New Webcasting Royalties, and Comments on AM Revitalization and Copyright Safe Harbor for User-Generated Content

The text of the Copyright Royalty Board decision on Internet Radio Royalties for 2016-2020 was released last Friday. While it is 203 pages long, the basis for the decision is relatively simple. As required by the Copyright Act, the Copyright Royalty Judges looked at all of the evidence presented to determine what rate a willing buyer and a willing seller would agree to in a marketplace transaction. In looking at that evidence, they decided that the best evidence for that rate was two deals actually done in the marketplace – one deal between Pandora and the independent record label organization Merlin and another between iHeartRadio and Warner Music. As these were deals for the very rates to be decided by the Judges – the rates for the public performance of sound recordings by noninteractive streaming companies – the Judges determined that these two deals best evidenced the value put on streaming royalties by actual players in the marketplace. Looking at the per song per listener rates specified in those deals, and making a few adjustments based on other consideration included in the deals (particularly in the iHeart deal), the Judges arrived at a per song per listener rate for each deal, and determined that they set the bounds of the reasonable rates for nonsubscription webcasting. Taking into account that approximately 2/3 of the music played by webcasters is from major labels like Warner as opposed to that from the independent labels such as those that were part of the Merlin group, the Judges gave the rates from the iHeart deal greater weight in determining where within the zone of reasonableness the rates should fall. Thus, the Board determined that the rate for nonsubscription, noninteractive services should be $.0017 per performance (i.e. per song per listener). This is the rate that they published back in December (about which we wrote here).

While the basis for the decision seems relatively simple, the process to get to that decision was not – and it took 203 pages for the Judges to discuss all of the issues that they weighed in coming to their conclusions. While some of those pages were dedicated to discussions of the rates for noncommercial webcasters and the terms of the payments to be made by webcasters (topics we will try to cover in a later post), the bulk of the decision was a discussion of how the Judges weighed the arguments of the parties in the case in reaching their conclusion. While no summary can cover all of the issues that went into this consideration, some of the issues covered in this decision are discussed below.
Continue Reading Looking at the Decision of the Copyright Royalty Board on Internet Radio Royalties for Commercial Webcasters – What are the Issues that the Judges Considered?

The full decision of the Copyright Royalty Board on Internet Radio royalties, excluding confidential information, has now been made public and is available here.  In December, we wrote about the rates and terms of the royalties that webcasters pay to SoundExchange for the public performance of sound recordings as set by the CRB…

It’s February, and we’re back to the normal cycle of FCC filings. Due to be placed in the public files of radio and TV stations with 5 or more full-time employees are EEO Public Inspection File Reports for radio and TV stations in the following states: Arkansas, Kansas, Louisiana, Mississippi, Nebraska, New Jersey, New York, and Oklahoma. Radio stations with more than 10 full-time employees licensed in the states of Arkansas, Louisiana and Mississippi also have an obligation to file an EEO Mid-Term Report providing the FCC with their last two EEO Public File Reports, plus providing the FCC with a contact person to provide information about their EEO programs.  For more about the Form 397 Mid-Term Report, see our article here.

Noncommercial Television Stations in Kansas, Nebraska, and Oklahoma and Noncommercial AM and FM Radio Stations in Arkansas, Louisiana, Mississippi, New Jersey, and New York have an obligation to file their Biennial Ownership Reports on February 1. While the FCC just last week adopted new rules to move noncommercial stations to a Biennial Ownership Report filing deadline consistent with commercial stations (by December 1 of odd numbered years), that rule is not yet effective so noncommercial stations in the states listed above need to continue to file their reports as scheduled on the anniversary date of the filing of their license renewal applications.
Continue Reading February Regulatory Dates for Broadcasters

In the last week, copyright audits have been in the news.  Several broadcasting publications noted the recent announcements by the Copyright Royalty Board that SoundExchange has decided to audit several companies that pay it royalties, including webcasters (including Pandora and a number of broadcasters in connection with their webcast operations), business establishments services (those who provide music for stores and other businesses – DMX and Muzak) and music services provided by cable and satellite video providers (e.g. DMX and Muzak).  It was also just announced in the Federal Register that the sports leagues plan to audit a number of MVPDs to determine if the MVPDs have been accurately paying the royalties owed the sports league for the sports programming on TV stations carried on certain satellite and cable systems.  What are these audits, and why are they being announced by publication in the Federal Register?

When media companies buy a piece of equipment, or a building in which to house their operations, they usually know in advance how much their purchase is going to cost, and in the vast majority of cases, they get a bill specifying the price.  Even the purchase of some programming is easily quantifiable – either as a fixed fee per month, or some barter arrangement or other set fee.

But, in many other licensing transactions, the fees are not as easily quantifiable.  For certain movie packages or other syndicated video programming, the number of times that a program is played is not necessarily clear in advance.  For music, it is even more complicated, as a digital music service never knows how much music it is going to use when it enters into a licensing agreement.  In the case of programming carried by an MVPD on a distant signal basis pursuant to the compulsory copyright licenses under Sections 111 and 119 of the Copyright Act, the MVPD in advance won’t know how many subscribers it will have or exactly what programming the stations that it carries will program.  So in all of these cases, the user of the copyrighted material does not get a bill.  Instead, the user has to tell the “seller” of the rights (or its representative) how much they owe.  Because the buyer is reporting how much they think that they owe, the rights organizations usually have the right, by contract or by law, to audit the user to decide if the user paid the right amount.
Continue Reading SoundExchange Audits of Digital Music Companies and Sport Leagues Audits of MVPDs Published in the Federal Register – Understanding Audit Rights Under Statutory Licenses

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 2016 is available here.  The dates set out on the calendar include not only FCC filing deadlines and dates…

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