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In November, the FCC changed its policy regarding the foreign ownership of broadcast stations.  In its decision, about which we wrote here, it agreed to entertain applications seeking “alien ownership” exceeding the 25% limit for foreign ownership of broadcast stations that had previously been in place.  In the modern communications era, with its diversity of media outlets, the Commission determined that the risk of increased foreign ownership was outweighed by the potential for new entrants into the broadcast industry, backed by new sources of capital from outside of the United States.  The FCC did not adopt any blanket rules for permitting higher levels of alien ownership, but instead agreed to consider specific requests for a declaratory ruling on a case-by-case basis to show that foreign ownership of a broadcast station in excess of 25% was not contrary to the public interest.  Despite the invitation to file such requests, as far as we know, none have been filed – until now, and that comes from what is perhaps an unexpected source – Pandora, which is best known as an Internet radio operator.

As we wrote several months ago, Pandora has sought to acquire an FM radio station that operates in the Rapid City, South Dakota radio market.  Its application to acquire the station was opposed by ASCAP, who feared that Pandora would use its status as a broadcaster to ask for broadcaster rates negotiated by the Radio Music Licensing Committee (RMLC) for the public performance of ASCAP music.  ASCAP based its opposition principally on the contention that Pandora had not proved that less than 25% of its stock was beneficially owned or controlled by foreign entities.  Despite Pandora being a company founded in the US by US citizens, headquartered and operating almost exclusively in the US, and traded on the US stock exchanges, ASCAP contended that Pandora had not established that its ownership of a broadcast station would not violate the alien ownership rules.  How could they make such an argument?
Continue Reading Pandora Files First Petition for Declaratory Ruling Under FCC’s Liberalized Foreign Ownership Rules for Broadcast Stations

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

The Copyright Royalty Board has extended the deadline for comments on proposals to change the recordkeeping obligations of webcasters and others who use music under the statutory license granted by Section 114 of the Copyright Act.  Some of the proposed changes include requiring that services provide ISRC codes for all songs when filing their Reports…

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

On Friday, the Copyright Royalty Board published in the Federal Register a proposal for changes in its recordkeeping rules – suggesting more detailed requirements for larger webcasters who are required to report the songs that they play on a “census” basis – that would be most webcasters who are required to report the songs that they play, how often they were played, and how many people listened when they were played each time.  Conversely, for the smallest of webcasters, those who pay a “proxy fee” so that they do not have to report the details of how many listeners were listening to each song that was played, the questions asked by the CRB are geared to potentially expanding the universe of those who do not need to report.  Comments are due on June 2, with replies due on June 16.  Given the potential economic impact that these proposals could have on businesses of all sizes, anyone steaming their music on the Internet and reporting to SoundExchange should carefully consider the details of the Notice of Proposed Rulemaking and whether to submit comments in this proceeding.

The proposals to require more detailed recordkeeping originated from SoundExchange, which filed a Petition for Rulemaking asking that the CRB adopt new rules on a number of issues.  The Board last comprehensively visited this topic in 2009 (see our summary here).  The Board’s Notice of Proposed Recordkeeping poses a number of questions that were raised by SoundExchange, and asks for public comment.  What are these proposals?
Continue Reading Copyright Royalty Board Starts Rulemaking to Change Recordkeeping Requirements for Commercial and Noncommercial Webcasters

Last week, the Copyright Royalty Board published in the Federal Register its decision on Internet radio royalties for 2011-2015.  The question that I received many times since the publication last week is “huh, didn’t we already see that decision a long time ago?”  Indeed we did – the original decision setting the rates was reached in December 2010 (which we wrote about here and here).  But, as many will remember, there was also an intervening decision finding that the CRB had been unconstitutionally established.  The Court remedied the unconstitutionality by changing the law’s provisions dealing with the ability of the Librarian of Congress to remove the Judges, and sent the decision back to the CRB to redo the 2010 decision.  The redo is the result that was released last week.  While the new decision did not change the rates for webcasters, it did contain some new analysis that presents some interesting insights into the Judge’s thought processes that may be relevant to webcasters who will be affected by the recently started proceeding to determine rates for 2016-2020.  As the three Judges on the CRB have all arrived on the CRB since the 2010 decision, this rewritten decision provides some insight as to how they are approaching the new proceeding. 

By the time the decision declaring the unconstitutionality of the “old” CRB was reached, the only party left fighting the decision was Intercollegiate Broadcasting Systems, a group of college broadcasters.  All of the commercial broadcasters had either settled their royalty disputes, or dropped out of the proceeding (see our summary of the rates entered into by parties as part of the Webcasters Settlement Acts).  Thus, no commercial webcasters participated in the remanded proceeding before the CRB.  The CRB noted the lack of any challenge to the commercial rates, and given that they were not challenged, and that they fell in a zone of reasonableness, they were adopted.  But, in determining that the rates were in the zone of reasonableness, the CRB did not just pay lip service to reviewing the prior decision, but it instead did a full review of that decision.  And, some of the discussion that they offered may arise again in the new proceeding.
Continue Reading Copyright Royalty Board Reissues Decision on Internet Radio Royalties for 2011-2015 – Same Rates But New Analysis

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

In discussing music royalties, the controversy that usually makes the news is the dispute between music services and copyright holders – with services arguing that the royalties are too high and rightsholders contending that they are underpaid. The introduction of the Songwriters Equity Act in Congress earlier this year seems to point toward a new area of dispute – one between the various rightsholders themselves.  This issue was one that was much discussed on a panel that I moderated last week at the RAIN Summit West (audio of that panel is available here).  What is this conflict?

The Songwriters Equity Act, while not explicit in identifying the controversy, does point to the dispute. As we have written many times before, in any piece of recorded music, there are two copyrights – the sound recording copyright (also known as the “master recording,” the recording of a particular song by a particular artist, rights usually held by the record label), and the right to the musical work (or “musical composition,” the words and music to a song, usually held by a publishing company).  The proposed legislation suggests that the amount of the royalties for the public performance of sound recordings can be taken into account in setting the royalties that are payable to songwriters for the public performance of the songs that they have written.  This would amend Section 114(i) of the Copyright Act, which currently prohibits the consideration of the sound recording royalty in determining the rates to be paid for the public performance of musical works.  The proposed legislation would also substitute the “willing buyer, willing seller” standard for the 801(b) standard in setting rates under Section 115 of the Copyright Act, the mechanical royalty (see our discussion of the difference between these standards, here).  While this does not sound like a big deal, it may have a significant impact.
Continue Reading Raising the Royalties for Musical Works? A Discussion of the Potential Dispute between Music Rights Holders over the Value of Their Rights

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