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Last week, just before Thanksgiving, the FCC released the tentative agenda for its December meeting. From that agenda, it appears that the meeting will be an important one for broadcasters and other media companies. Already, the press has spent incredible amounts of time focusing on one item, referred to as “Restoring Internet Freedom” by the FCC, and “net neutrality” by many other observers. The FCC’s draft of the Order that they will be considering at their December meeting is available here.

The one pure broadcast item on the agenda is the Notice of Proposed Rulemaking, looking to determine if the FCC should amend the cap limiting one TV station owner to stations reaching no more than 39% of the national audience. The FCC asks a series of questions in its draft notice of proposed rulemaking, available here, including whether it has the power to change the cap, or if the power is exclusively that of Congress. The FCC promised to initiate this proceeding when it reinstated the UHF discount (see our articles here and here). In that proceeding, the FCC determined that the UHF discount should not have been abolished without a thorough examination of the national ownership cap – an examination that will be undertaken in this new proceeding if the NPRM is adopted at the December meeting.
Continue Reading December FCC Meeting to be an Important One for Broadcasters and Other Media Companies

The Copyright Office yesterday issued a reminder, here, that their electronic system for “designated agents” of Internet service providers – those who are to receive notice of any claimed infringing content posted on a service provider’s site – is active and all services must register in that system by December 31 for…

I was recently interviewed by Steve Goldstein of Amplifi Media, a firm that consults for podcast companies, on the difficulties with the use of music in podcasts. That interview has been turned into an article on Steve’s blog, here, discussing these legal issues. That article discusses the same issues that we’ve written about…

This week SoundExchange, the non-profit rights organization that collects the royalties paid by digital music companies for the public performance in the United States of sound recordings, announced that it had acquired CMRRA (the Canadian Musical Reproduction Rights Agency, Ltd). CMRRA licenses the reproduction rights to musical works in Canada. As we have written before, musical works or musical compositions are the lyrics and music for a song, while the sound recording is the actual recording of that song by a singer, band or other performer. We have also written before about the difference between the public performance right and the right to make reproductions of songs (including “mechanical rights”), rights that arise in different contexts and usually require a different type of license before a music service can use a song in its business. Why would a company that licenses the public performances of sound recordings in the US acquire a company that licenses reproduction rights in Canada?

SoundExchange’s public notice talks about its ability to “integrate and streamline the administration and distribution of sound recording and music publishing royalties.” And it also highlights that the deal will allow it to “offer a broad and comprehensive range of services to rights holders in both sound recordings and music publishing and music users alike across North America.” While SoundExchange suggests that it is the first company to offer a comprehensive range of services in licensing both sound recordings and musical works in North America, this deal instead seems to be part of a trend where rights collectives are merging to offer such comprehensive services in licensing both public performance rights and the rights to make reproductions, for both sound recordings and musical works.
Continue Reading SoundExchange Acquires CMRRA – What Does it Mean for Music Licensing?

The Copyright Office last year announced changes to its system for registering designated agents for receiving take-down notices that are sent by copyright owners when they believe that user-generated content posted on a website is infringing on the copyright owner’s content (see our article here). The new system makes these registrations electronic, and requires all services seeking protection under Section 512 of the Copyright Act (the “safe harbor” for user-generated content) to register in the new system by December 31, 2017. Last week, the Copyright Office announced certain minor changes to the information required of the companies registering their designated agents in this new system (see Federal Register notice here).

The new changes make it easier for smaller companies to register in the new system. Initially, the system had required a user to establish an account with the Copyright Office before registering the designated agent. That account registration, while not public, did require the submission of information including the physical address of a contact person, and a secondary contact person for the company. Recognizing that many small website owners who might register for the sale harbor (e.g. a blogger running his or her own blog) might not have a secondary contact person for their website operations, the Copyright Office made the secondary contact optional. The office also eliminated the need to register a title for the contact person and the physical address for that person. Presumably, that address is no longer necessary as most contacts would be done through email or by phone – data fields that are still required. Why register in this system?
Continue Reading Copyright Office Makes Changes to Registration of Designated Agents for Take-Down Notices for User Generated Content – Reminder of December 1 Deadline to Register in New Electronic System

In the Federal Register last week was a notice that SoundExchange intends to audit the royalty payments of Pandora for its Internet radio service. As we wrote at the beginning of the year, SoundExchange routinely decides to audit representative companies in various segments of the digital music industry. In January, for instance, they issued notices of audits for a number of broadcasters, pure webcasters, and other digital music services (see our post here about the audit notices released in January). These audit notices are usually released at the beginning of the year though, from time to time, we’ve seen SoundExchange decide later in the year to audit a particular service (see our article here).

What is involved in an audit? We wrote about the royalty audit process here. SoundExchange issues notice of an audit, and that notice must be published in the Federal Register. SoundExchange selects an auditor who, under the rules of the Copyright Royalty Board, must be a CPA. The auditor reviews the books and records of the service and issues a report, to which the service can respond. Neither the audit report nor the response are filed with the government or otherwise made public. The results of the audit are provided to SoundExchange for any appropriate action they may take. Under the audit rules, if a service has underpaid SoundExchange by more than 10%, in addition to any late fees it owes, it also has to pick up the cost of the audit. This audit notice reminds all digital music services to accurately measure their audiences and properly report to SoundExchange, as it is always possible that their royalty payments can be reviewed. As this notice makes clear, just because they were not targeted in January does not mean that they will not be reviewed at some other point during the year.
Continue Reading Copyright Royalty Board Announces Additional Webcaster Audit by SoundExchange – Reminder to Carefully Maintain Your Royalty Records as They Can be Reviewed at Any Time

Broadcasters and advertisers should take note of the more than 90 warning letters that the FTC sent out this week as a reminder of the need to disclose material sponsorship connections in social media promotions and endorsements.  The FTC has since 2009 announced a policy that any online content for which anything of value has been received must disclose that consideration – even social media posts (see our article here about that policy).  This is in the nature of the FCC’s sponsorship identification rules for broadcast content.   That same policy statement addressed the need for those making personal endorsements to make these sponsorship disclosures.  The recent warning letters are notable not only for their sheer number, but also because the warning letters were addressed to marketers and social media “influencers” – the individuals whose social media followings make their endorsements valuable.  To date, the FTC has only named marketers (Warner Brothers Home Entertainment and Lord & Taylor) in its social media endorsement cases.  Although the FTC did not say who received warning letters, its press release noted that the letters were “informed by petitions filed by Public Citizen and affiliated organizations” in September 2016.

By directing warning letters to marketers and influencers, the FTC is sending a firm reminder that both sides of a sponsorship arrangement need to disclose their connection, “unless the connection is already clear from the context of the communication containing the endorsement.”  Specifically, the FTC advises influencers that they must “clearly and conspicuously” disclose any material connection with a marketer; and marketers, in turn, should ensure that the influencers they sponsor disclose their material connections.
Continue Reading FTC Puts “Influencers” on Notice:  Disclose Marketing Relationships in Social Media Posts

In the last month, there have been two bills introduced in the US House of Representatives seeking to impose a performance royalty for sound recordings on broadcast radio stations in the US. The bill introduced yesterday, The PROMOTE Act (standing for the Performance Royalty Owners of Music Opportunity to Earn Act – whatever that may mean, can be found here), seems to have garnered more attention, perhaps as it was promoted by its principal sponsor, California Congressman Darrell Issa, as giving performing artists the right to decide whether or not their music is played by radio stations. In fact, it does not do that, instead merely setting up a royalty system similar to that in place for Internet radio operators, allowing broadcasters to play music only if they pay royalties on “identical” rates and terms as do webcasters.

The PROMOTE Act proposes to add to the Copyright Act’s Section 106 enumeration of the “exclusive rights” given to copyright holders a provision stating that sound recording copyright holders (for most popular releases, that is usually the record company) have the exclusive right to authorize the performance of recorded songs by broadcast radio stations. That is in addition to the existing right to authorize the playing of these songs by digital audio transmissions (e.g. webcasters, satellite radio and digital cable services). But, like with the right to play music by digital services, that right to prohibit the playing of recorded songs is not absolute. Instead, like for the digital services, through a proposed amendment to Section 114 of the Copyright Act, broadcasters will have the right to play the songs if they pay a royalty set by the proposed legislation at “rates and terms” “identical” to those paid by webcasters. Let’s look at these issues more closely.
Continue Reading New Congressional Attempts to Impose a Performance Royalty for Sound Recordings on Broadcast Radio, Including the PROMOTE Act – What Do They Provide?

The Copyright Office is now a part of the Library of Congress, with the Register of Copyrights (the head of the Copyright Office) appointed by the Librarian of Congress. As part of its plans to review the Copyright Act, the House Judiciary Committee asked for comments earlier this year about structural reform of the Copyright…

In a decision released this week, the 9th Circuit Court of Appeals overturned a District Court decision (about which we wrote here) that had found that a video service provided by Aereokiller was a “cable system” as defined by Section 111 of the Copyright Act. That decision had held that, as a cable system, Aereokiller was entitled to retransmit the programming broadcast by a television station under a statutory license, without specific permission from the copyright holders in that programming. The Court of Appeals, while finding that the wording of Section 111 was ambiguous, determined that the consistent position taken by the Copyright Office, finding that cable systems as defined by Section 111 had to be local services retransmitting TV programming, with some fixed facilities to a defined set of communities was determinative of the issue. The Copyright Office’s interpretation was given particular deference as Congress had been well-aware of this interpretation of the statute in other contexts, had in the past amended the Copyright Act to accommodate other new technologies that the Copyright Office found to be outside its definition of a cable system, and had taken no action to amend the statute to include Internet-based video transmission services.

The issue in the case is whether the broad definition of a cable system included in Section 111 would include an over-the-top system such as that offered by Aereokiller. The definition contained in Section 111 is:

A “cable system” is a facility, located in any State, territory, trust territory, or possession of the United States, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service. For purposes of determining the royalty fee under subsection (d)(1), two or more cable systems in contiguous communities under common ownership or control or operating from one headend shall be considered as one system.

The question of whether this definition includes Internet-based video systems has been raised many times since the Supreme Court’s Aereo decision (about which we wrote here), which found that the retransmission of television signals by such systems were “public performances” that needed a license. After the Supreme Court’s determination in Aereo, which had language comparing these over-the-top systems to cable systems that need a statutory license to cover their public performances, these services argued that they were in fact cable systems entitled to rely on the Section 111 statutory license to cover their public performances of the TV station’s programming. These systems argued that they made “secondary retransmissions” of television signals “by wire, cables, microwave or other communications channels” – the Internet argued to be one of those other communications channels. While most courts have rejected this argument (see our articles here and here), a District Court in California was an exception, finding that the statutory language was broad enough to cover these Internet-based systems.
Continue Reading Court of Appeals Rules that Over-the-Top Video Service is Not a Cable System Entitled to Statutory License to Retransmit TV Station Programming