In a very busy week, here are some of the regulatory developments of significance to broadcasters from the past week, with links to where you can go to find more information as to how these actions may affect your operations.

  • The Federal Trade Commission and seven state Attorneys General announced a settlement with Google LLC and iHeart Media, Inc. over allegations that iHeart radio stations aired thousands of deceptive endorsements for Google Pixel 4 phones by radio personalities who had never used the phone.  The FTC’s complaint alleges that in 2019, Google hired iHeart and 11 other radio broadcast companies to have their on-air personalities record and broadcast endorsements of the Pixel 4 phone, but did not provide the on-air personalities with the phone that they were endorsing.  Google provided scripts for the on-air personalities to record, which included lines such as “It’s my favorite phone camera out there” and “I’ve been taking studio-like photos of everything,” despite these DJs never having used the phone.  The deceptive endorsements aired over 28,000 times across ten major markets from October 2019 to March 2020.  As part of the settlement, subject to approval by the courts, Google will pay approximately $9 million and iHeart will pay approximately $400,000 to the states that were part of the agreement.  The settlement also imposes substantial paperwork and administrative burdens by requiring both companies to submit annual compliance reports for a period of years (10 years in the case of iHeart), and create and retain financial and other records (in the case of iHeart, the records must be created for a period of ten years and retained for five years).
    • This case is a reminder that stations must ensure that their on-air talent have at least some familiarity with any product they endorse, particularly where on-air scripts suggest that they have actually used the product.  Stations should not assume that talent know the relevant rules – they more likely will just read whatever is handed to them without understanding the potential legal risk for the station, which, as demonstrated in this case, could be significant.

Continue Reading This Week in Regulation for Broadcasters: November 26 to December 2 , 2022

In a Federal Register notice published today, the Copyright Royalty Board announced cost-of-living increases in the statutory royalties paid by webcasters for the public performance of sound recordings.  These are the royalties paid to SoundExchange by those making noninteractive digital transmissions of sound recordings.  This included broadcasters who simulcast their over-the-air programming on the internet or through mobile apps (or through other digital means including smart speakers like Alexa, see our article here).  The CRB notice sets out the computations that the Board used to determine the amount of the cost-of-living increase.  Those computations led to a royalty rate for 2023 of $.0024 per performance for services that do not charge a subscription fee.  For subscription services, the rate will be $.0030 per performance.  A performance is one song played to one listener – so for one song paid to four listeners one time each, a webcaster pays about a penny.

Given the rate of inflation in the general economy, it is perhaps no surprise that the rates for 2023 represent a substantial increase from the royalties paid last year, and from those that were in place in 2021, the first year of the current 5-year royalty period.  As we wrote here, when the CRB decided on the rates for 2021-2025, the nonsubscription rate was $.0021 per performance.  But the CRB provided for cost of living increases.  That led to rates in 2022 for commercial webcasters, including broadcasters streaming their programming on the internet, of $.0022 per performance for a nonsubscription transmission and $.0028 per performance for a subscription transmission (see our article here mentioning the 2022 increase).
Continue Reading Copyright Royalty Board Announces Cost-of-Living Increase for 2023 Webcasting Royalties – Including Royalties for Broadcasters Who Simulcast Their Programming Online

Any media platform that accepts ads for political races and ballot issues in Washington State is aware of the state’s detailed rules that govern all forms of political advertising.  Digital platforms, in particular, are concerned by state rules that require the platforms to maintain and make available to the public not only the information

In a recent state court decision, a King County judge in Washington State concluded that Facebook violated state political disclosure rules by not publicly providing information about the sale of political ads relating to state elections and ballot issues, as required by state law.  While there does not yet appear to be a written decision in the case, according to trade press the judge’s ruling rejected motions by Facebook parent Meta to have the law declared unconstitutional and to have penalties asserted by the State attorney general thrown out (see attorney general’s statement here).  We have written much on this blog about FCC regulations relating to political advertising and have noted how those rules do not apply to online platforms.  This case is but one example of how state laws are filling in some of the gaps in the regulation of political advertising.

As we wrote several years ago, the Federal Election Commission has only general rules requiring that paid online political advertising for federal offices have some identification of the sponsors of the advertising.  The FEC in 2018 started a rulemaking proceeding to determine if the “stand by your ad” certifications required in most federal broadcast and cable candidate advertising (the requirement which obligates the federal candidate to say “I’m X and I approved this message”) should carry over into the online world.  That proceeding has never been resolved – likely held up both because of the difficulty of resolving sensitive political issues at the FEC, and because of the inherent difficulty of adopting one-size-fits-all disclosure obligations for online media, where ads can range from TV-style videos to short tweets and textual messages to images displayed in virtual reality worlds.  Carrying over broadcast-style regulation to these diverse platforms is a tricky fit.
Continue Reading As More Political Advertising Moves Online, State Laws Provide the Regulatory Framework for Disclosures and Recordkeeping

Here are some of the regulatory developments of significance to broadcasters from the past week, with links to where you can go to find more information as to how these actions may affect your operations.

  • Revisions to the pending Journalism Competition and Preservation Act were released to the public this week (revised draft bill

Here are some of the regulatory developments of significance to broadcasters from the past  week, with links to where you can go to find more information as to how these actions may affect your operations.

A new Chief Copyright Royalty Judge of the Copyright Royalty Board has just been named by the Librarian of Congress.  According to the Press Release announcing his appointment, David Shaw will fill that position after having previously served as an administrative law judge on the International Trade Commission for over 10 years.  There, he heard complex cases dealing with detailed financial matters – experience that sounds relevant to the kinds of cases he will be deciding on the CRB.  The Copyright Royalty Judges decide cases determining the marketplace value of music when  setting royalty rates, and that look at the relative value of programming when deciding the distribution of cable royalties to program copyright holders.  In addition to ITC experience, Shaw was a judge at the Social Security Administration and, according to his biography, worked in the General Counsel’s office at NPR early in his career.  With the appointment of this new Chief Judge, we thought that it would be worth looking at some of the specific areas in which the CRB makes decisions that affect media companies.

The CRB is principally charged with rates and distributions for copyrights governed by a “statutory licenses.”  A statutory license is created by Congress when it is believed that individual negotiations between copyright holders and copyright users would either be unduly complex so as to be almost unworkable or where an efficient market would not otherwise exist.  Essentially, the statutory license means that the copyright owner must license the work that they own – they cannot restrict its use – if the user pays the royalties set by law or established by the CRB and abides by the conditions for use set out in the law.  See our article here about music statutory licenses and our articles here and here on some of the issues with the TV statutory licenses.  The conditions of use are often carefully restricted so as to only cover very specific uses under the statutory license (see our article here on the conditions placed on the use of music under the statutory license for webcasting – the public performance right for sound recordings used by noninteractive services discussed below).Continue Reading New Copyright Royalty Board Chief Judge Named – Looking at the Issues Considered by the CRB of Importance to Media Companies

In recent months, lawsuits have been filed against streaming audio service Pandora by comedian Lewis Black, the estate of Robin Williams, and representatives of other comedians seeking public performance royalties for the underlying comedic work – not the recording of the comedy bit for which a royalty is already paid, but instead for the script of that comedic performance.  Reportedly, Spotify has pulled comedy recordings from its service to avoid such threats.  What is the issue here?  The claim in the lawsuits is that the authors of the script of any comedy bit have the right to control the performance of their works in the same way that composers of a song control the rights to use that song.  The argument is that, if these services are playing these comedy bits through a digital audio performance, not only do the comedians who are recorded performing such bits deserve a royalty, but a separate royalty should also be paid to those who wrote it.

In these lawsuits, the analogy is made to the copyrights for the performance of a song.  For music streamed by any digital audio company, there are two royalties that must be paid.  The composers of the music are paid for the performance of their work (both in the digital and analog worlds).  These payments are usually made through a performing rights organization (a “PRO”) which represents thousands (or sometimes millions) of composers and their publishing companies.  ASCAP, BMI and SESAC are the traditional PROs who, for radio and television, all have their rates reviewed for fairness under antitrust laws.  As we have written (see for instance our articles here and here), a new PRO for musical works, GMR, has recently settled litigation with the Radio Music License Committee and is assessing most commercial radio stations a royalty for the performance of music by the composers that it represents.  For digital performances, a royalty is also owned for the performance of the sound recording – the composition as recorded by a singer or band.  Through an act of Congress, all noninteractive digital performances (see our article here on the difference between interactive and noninteractive services) can be played by a digital music service by paying a “collective” that acts like a PRO by collecting royalties from those services that transmit the music to their listeners and distributing those royalties  to the performers and their record labels (as the labels usually own the copyright in the recording).  Since the sound recording digital performance royalty was first collected about two decades ago, SoundExchange has served as the “collective.”  The lawsuits by the comedians seek to collect these dual royalties from digital services that transmit comedy recordings to their listeners.  Why is this not covered by the royalties that services already pay?
Continue Reading Public Performance Royalties for Comedy Recordings? – New PROs Claim that Additional Royalties Are Due

In our summary of last week’s regulatory actions, I was struck by a common thread in comments made by several FCC Commissioners in different contexts – the thread being the FCC’s role in regulating Internet content companies.  As we noted in our summary, both Republican commissioners issued statements last week in response to a request by a public interest group that the FCC block Elon Musk’s acquisition of Twitter.  The Commissioners stated that the FCC had no role to play in reviewing that acquisition.  Twitter does not appear to own regulated communications assets and thus the FCC would not be called upon to review any application for the acquisition of that company.  The Commissioners also noted concerns with the First Amendment implications of trying to block the acquisition because of Musk’s hands-off position on the regulation of content on the platform, but the Commissioners’ principal concern was with FCC jurisdiction (Carr StatementSimington Comments).  In the same week, FCC Chairwoman Jessica Rosenworcel, in remarks to a disability rights organization, talked about plans for more FCC forums on the accessibility of Internet content to follow up on the sessions that we wrote about here.

The ability of the FCC to regulate internet content and platforms depends on statutory authority.  In holding the forums on captioning of online video content, the FCC could look to the language of the 21st Century Communications and Video Accessibility Act, which included language that asked the FCC to look at the accessibility of video content used on internet platforms.  In other areas, the FCC’s jurisdiction is not as clear, but calls arise regularly for the FCC to act to regulate content that, as we have written in other contexts, looks more and more like broadcast content and competes directly with that content.
Continue Reading Does the FCC Regulate Internet Content and Companies? 

Last week, we discussed the controversy started by Neil Young removing his music from Spotify because of its carriage of Joe Rogan’s podcast.  In that article, we looked at the relationship between music royalties and the decision of Spotify and other music services to emphasize podcasts and other talk programming over music.  Today, we will look at how music rights and royalties impact decisions like those of Neil Young and other musicians who may have wanted to pull their music to support the protest over Rogan’s podcast.

At its most basic level, there is the question of how much the artists themselves stand to lose from the withdrawal of their music from a service like Spotify.  Young himself said that he would lose 60% of his streaming revenue from pulling his music, which one source estimated to be over $700,000.  Given the other streaming services that now exist, his music is still available and generating revenue on his catalog, though apparently less than the amount generated by Spotify.  The 60% number in and of itself is interesting as, while artists and other music representatives complain about the Spotify per song payouts (likely because they offer a free, ad-supported tier with lower payouts than those from subscription services), the wider variety of services offered by Spotify seem to bring in big numbers of listeners – likely including many who would not subscribe to a pay-music service. Thus, because of the sheer numbers of listeners, and assuming that Young is representative of other artists, Spotify is responsible for the majority of the streaming revenue that has allowed the music industry to enjoy in recent years some of their most profitable years ever.  Even with these banner payouts, as we noted in our article on the Spotify side of the equation, the music industry is still not satisfied, recently calling the payouts “appallingly low.”  More on that issue in an upcoming post on the discussions of a US broadcast radio sound recording performance royalty.
Continue Reading Spotify, Joe Rogan and Neil Young – Looking at the Rights and Royalty Issues Behind the Story (Part 2 – The Rights of the Artists to Pull Their Music)