Music Rights

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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…

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

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

While January starts off with some regulatory deadlines that apply to all broadcasters – Quarterly Issues Programs lists must be placed in a station’s public file by the 10th of January – there are many other dates that come due this month, dates to which broadcasters need to pay careful attention. For TV stations, they need to file at the FCC by January 11 (as the 10th is a Sunday) Children’s Television Reports, listing all of the programming that they broadcast in the previous quarter addressing the educational and informational needs of children. Records showing a TV station’s compliance with the commercial limits in children’s television should also be placed in the station’s public file.  As we have written, missing Quarterly Issues Programs lists (see our articles here and here) and Children’s Television Reports (and even late Children’s Television Reports) provided the basis for most of the fines during the last renewal cycle (see, for instance, our article here) – even for missing reports from early in the renewal cycle and, for the Children’s Reports, even where the reports were filed (repeatedly) only a few days late. So it is important to meet the obligations imposed by these regular filing deadlines.

Starting on the first day of this new year, there are a host of other obligations and deadlines that arise. On January 1, TV stations need to be captioning clips of video programming that they make available on their websites or in their mobile apps, if those clips came from programming that was captioned when shown on TV. For more on that obligation, see our article on the new online captioning requirements here.
Continue Reading January Regulatory Dates for Broadcasters – Quarterly Issues Programs Lists and Children’s Television Reports, Incentive Auction, FM Translators for AM Stations, Webcasting Fees, LUR Windows and More

The actions and reactions in response to the Copyright Royalty Board’s decision from two weeks ago continue to roll in as the ramifications of the decision sink in. In the days before Christmas, two announcements were made that warrant note. One was a decision of the CRB itself, correcting the rates and terms that it released just the week before – with some sighs of relief being heard from certain high school and university stations. The other was the realization that there were many issues covered by Webcaster Settlement Act agreements from 2009 that were not reflected in the CRB decision and may have impact on significant portions of the webcasting industry.

First, the correction. On Christmas Eve, the CRB issued a revised version of the rates and terms that will apply in 2016 (you can find the revision here). It appears that there were some formatting errors that were corrected, and a number of definitions that had been included in the initial release were deleted – apparently as they referred to terms that were no longer used in the current royalty rates. For instance, a number of definitions relating to “broadcasters” and “broadcaster webcasting” were excluded. These were no longer necessary as broadcasters are not treated any differently than other commercial webcasters under the new royalties. One place where the deletion of a definition resulted in a substantive change was what appeared to be an unintentional inclusion in the initial release of the definition of an “educational webcaster.”  The definition seemingly applied only to those webcasters that received CPB funding and transmitted solely noncommercial radio programs from a terrestrial radio station. That definition would have excluded many webcasters affiliated with schools but without an FCC license from a settlement agreement entered into by the Collegiate Broadcasting Association and SoundExchange – a settlement meant to cover school webcasters providing for a $500 a year royalty for streaming of less than 159,140 aggregate tuning hours per month (and record-keeping relief for many webcasters covered by that arrangement). That “educational webcaster” definition was excluded in the revision released last week – leaving the CBI settlement in place covering webcasters affiliated with educational institutions, to the relief of many educational webcasters.
Continue Reading Webcasting Royalty Decision Developments – Revised Rates and Terms from the CRB, Issues about Performance Complement and Small Webcasters

Many are sitting around enjoying their holiday treats while listening to the Beatles on their favorite on-demand streaming service, and the press is treating this as a breakthrough – usually omitting the fact that the Beatles have been available on many streaming services for as long as there have been streaming services, namely on Internet radio.  We’ve twice written about this fact, first when the Beatles became available on iTunes, here, and then on the 50th anniversary of their invasion of America, here.  And we also recently wrote about the same legal issues which explained why Adele could withhold her new recording “25” from many streaming services, but not from Internet radio.  With the Beatles back in the headlines, for some post-Christmas holiday reading, we thought that we would reprise our 2014 article about the Beatles long absence from on-demand streaming services.  Here it is:

50 years ago the Beatles invaded America, stacking up Number 1 hit records by the dozens, and creating music that, even today, remains incredibly popular with many Americans.  But go to many of the interactive or on-demand music services, like Spotify, and search for Beatles music, and what will you find?   Mostly cover tunes by sound-alike bands rather than the original hits.  But yet, on services where you can’t designate your next song, like Pandora, you can hear the original songs.  Why the difference?
Continue Reading Big News That the Beatles Are Now Available on Streaming Services? – Actually They Have Been on Internet Radio All Along

Earlier today, Triton Digital’s President for Market Development John Rosso and I discussed the new webcasting royalty rates adopted last week by the Copyright Royalty Board to cover the sound recording performance royalty for 2016-2020.  You can listen to that conversation discussing the basics of that decision here.  John and I discuss what rights…