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The Copyright Office this past week released its Report following its study of music licensing in the US; a comprehensive report addressing a number of very controversial issues concerning music rights and royalties.  Whether its release during the week of the Grammy Awards was a coincidence or not, the report itself, which takes positions on many issues, is sure to initiate lots of discussion and controversy of its own.  The report was issued after two rounds of comments (the questions that were asked in each request for comments are detailed in our stories here and here) and three roundtables held in three different cities where representatives of music companies provided ideas on the questions asked (I participated in the Nashville session).  As detailed below, the report addresses some of the hot button issues in the music royalty space including the broadcast performance royalty, publisher withdrawals from ASCAP and BMI (see our article here), and pre-1972 sound recordings.

Before getting into the details of the proposals, it is important to note that the Copyright Office, unlike many other government agencies, does not itself make substantive rules.  Instead, it merely makes recommendations.  For any of the substantive proposals that it suggests in the Report to become law, Congress must act – which is never easy.  In the Copyright world, it is particularly difficult, as the rules and industry practices are so complex and often obscure, and where any change can have a very dramatic effect on some industry player or another.  Often, a simple change in the rules can take money from someone’s pocket and deposit into someone else’s.  Moreover, copyright is not an area where there are clear partisan divides.  Oftentimes, it matters more where a Congressman’s home district is than his or her party affiliation in their leanings on copyright matters.
Continue Reading Copyright Office Issues its Report on Music Licensing – Issues Include Broadcast Performance Royalties, Publisher Withdrawals from ASCAP and BMI, and Pre-1972 Sound Recordings

Last week, I listened in to presentation by RAIN News providing an excellent overview of the digital music industry (their Whitepaper setting out the findings reported during the presentation is available here).  One statement in that presentation suggested to me today’s topic – the use of music in podcasts.  In the RAIN presentation, a statement was made that most major podcasts are spoken word, but no explanation of that fact was provided. One of the biggest reasons for the lack of music in podcasts has to do with rights issues, as the royalties paid to SoundExchange and even to ASCAP, BMI and SESAC don’t apply to traditional podcasts meant to be downloaded onto a digital audio recording device like an iPhone or any other smartphone.  We wrote a warning about this issue a couple of years ago, but as the popularity of podcasts seems to once again on the rise, the warning is worth repeating.

The rights that a broadcaster or digital music company gets from ASCAP, BMI and SESAC (commonly called the “PROs” or performing rights organizations) deal with the public performance of music.  The PROs license the “musical work” or “musical composition” – the lyrics and the notes that make up the song.  They do not license particular recordings of the song.  As we have discussed before in other contexts, a public performance is a transmission of a copyrighted work to multiple people outside your limited friends and family (see our discussions here and here).  SoundExchange’s royalties also deal with public performance – but it is licensing the public performance of the sound recording – the words and music as recorded by a particular artist.  And SoundExchange only licenses such performances where they are made by a non-interactive service – where the user cannot determine what songs it will hear next (and where the service meets certain other requirements – see our article here for some of those additional requirements).  Podcasts don’t fit within the SoundExchange limitations, and while there has been some debate about whether the PROs have any licensing role in the podcast world (see this article), additional rights from music publishers (who usually control the musical composition copyright) are also needed.
Continue Reading Beware of Music in Your Podcasts – SoundExchange, ASCAP, BMI and SESAC Don’t Give You the Rights You Need

Last month, we wrote about the FCC issues facing broadcasters in 2015.  Today, we’ll look at decisions that may come in other venues that could affect broadcasters and media companies in the remaining 11 months of 2015.  There are many actions in courts, at government agencies and in Congress that could change law or policy and affect operations of media companies in some way.  These include not just changes in communications policies directly, but also changes in copyright and other laws that could have a significant impact on the operations of all sorts of companies operating in the media world.

Starting with FCC issues in the courts, there are two significant proceedings that could affect FCC issues. First, there is the appeal of the FCC’s order setting the rules for the incentive auction.  Both Sinclair and the NAB have filed appeals that have been consolidated into a single proceeding, and briefing on the appeals has been completed, with oral arguments to follow in March.  The appeals challenge both the computation of allowable interference after the auction and more fundamental issues as to whether an auction is even permissible when there is only one station in a market looking to give up their channel.     The Court has agreed to expedite the appeal so as to not unduly delay the auction, so we should see a decision by mid-year that could tell us whether or not the incentive auction will take place on time in early 2016.
Continue Reading What Washington Has in Store for Broadcasters and Digital Media Companies in 2015 – Part 2 – Court Cases, Congressional Communications and Copyright Reform, and Other Issues

As in any month, February has many impending deadlines for broadcasters and media companies – many routine regulatory obligations as well as some that are specific to certain proceedings.  First, let’s look at some of the routine filing deadlines.  On February 2, license renewal applications in the second-to-last filing window of this renewal cycle are due to be submitted to the FCC by TV stations in New York and New Jersey.  The last TV stations to have to file in a regular renewal cycle will be due on April 1, for those TV stations in Pennsylvania and Delaware.  After these stations complete their renewal filings, it will be another 5 years before another set of routine license renewals are to be filed.  Stations in Pennsylvania and Delaware should be broadcasting their pre-filing announcements on February 1 and February 16 (and there are also post-filing announcements that need to be run by the New York and New Jersey stations, as well as those in New England that filed their applications by December 1). 

Radio and TV stations in New York and New Jersey, as well as in Arkansas, Kansas, Louisiana, Mississippi, Nebraska and Oklahoma, should be placing EEO Annual Public File Reports in their public files (online for TV and paper for radio, with links to the reports on their websites) by February 1 if they are part of an employment unit with 5 or more full-time employees.  By February 2, noncommercial TV stations in Arkansas, Louisiana, Mississippi, New Jersey, and New York should file with the FCC their Biennial Ownership Reports, and noncommercial radio stations in Kansas, Nebraska, and Oklahoma should be filing those same reports on February 2.  Commercial radio and TV stations in the entire country will be filing their Biennial Reports in December of this year.  A guide to many of the regular FCC filing deadlines can be found in our Broadcasters Calendar available here.
Continue Reading February Regulatory Dates for Broadcasters – TV Renewals, EEO Reports, Lots of TV Incentive Auction Activity, OTT MVPD and Contest Comments, and Last-Minute January Deadlines for Webcasting

This week, several notices of the intent to audit the records of several webcasters and other digital music services were published in the Federal Register, indicating that SoundExchange was planning on having the royalty payment records of these services reviewed.  Notices were sent to services including Live365, iHeartMedia and CBS).  Those notices have prompted several calls asking what this is all about.  We have written before about these audits (see our article here).  It is a somewhat routine process, where each year SoundExchange picks several webcasters whose records it will have reviewed.  Under the rules adopted by the Copyright Royalty Board, SoundExchange can elect to audit a webcaster (or other digital music service – and some of the notices this week were for services that were not webcasters – one to a background music provider or what is referred to as a “business establishment service”, here).  SoundExchange can, and usually does, elect to review three years of records.  They can only review any service once for the same time period, so effectively a service can be audited only once every three years.

Under the rules, an independent CPA is to do the audit.  Once the audit is complete, it must be provided to the music service for comment.  Then, it is up to SoundExchange and the service to work out what to do if there are discrepancies identified by the audit with which the service does not agree.  The rules do not provide for any independent adjudicator to referee what happens if there is a disagreement.  SoundExchange pays for the audit, unless the audit determines that the service underpaid by 10% or more, in which case the costs can be transferred to the service.
Continue Reading SoundExchange to Audit iHeart, CBS and Other Webcasters and Digital Music Services

Last week, the Copyright Royalty Board asked for comments on a proposed settlement agreement between Sirius XM and SoundExchange, and some articles about that announcement have not been entirely clear about what the deal covers.  It has nothing to do with webcasting royalties for 2016-2020, which are still being litigated (see our article here about the proposals of the parties in that case).  Nor does it have to do with the royalties payable for Sirius’ primary satellite radio service, which were just upheld by the Court of Appeals (see our article here).  Instead, these royalties have to do with a very narrow part of Sirius’ business – providing music channels packaged and sold to consumers along with video services like cable and satellite TV.

Some who closely follow these issues (and the coverage of CRB issues on this blog) may think that the rates for these services were set at the same time as the Sirius rates for their satellite music service, as the CRB at that time set the rates that were applicable to Music Choice, which also offers a music service bundled with cable or satellite video programming (see our articles on the recent decision on the appeal of the rates, and the article on the CRB decision itself here).  Even though Music Choice offers pretty much the same service, their rates are different – as Music Choice was classified as a “preexisting subscription service” in the Digital Millennium Copyright Act, while the service that Sirius provides is classified as a “new subscription service” paying at a different royalty rate set by the CRB using a different royalty standard.  How did this happen?
Continue Reading Copyright Royalty Board Announces Settlement between Sirius and SoundExchange for New Subscription Services Packaged with Cable and Satellite Video – How Different Royalty Standards Result in Different Royalty Rates

Who says that the Internet is not regulated?  Whether to treat Internet video providers by the same rules that apply to cable and direct broadcast satellite systems is the subject of a Notice of Proposed Rulemaking released by the FCC just before Christmas, notice of which was published in the Federal Register today, setting the comment dates on the proposal.  Comments are due by February 17, and replies by March 2.  This proceeding could have a substantial impact on Internet video providers – potentially extending FCC jurisdiction to a whole host of services not currently subject to its rules, and potentially subjecting Internet video services to all sorts of rules that apply to traditional MVPDs (multichannel video programming distributors), including the FCC’s EEO rules, captioning rules and CALM Act compliance.  Even the political broadcasting rules, which the FCC notes in the NPRM only specifically apply to cable and direct broadcast satellite rather than to MVPDs generally, could potentially be looked at in the future for these services should they come under FCC jurisdiction.  At the same time, the rules could also have an impact on program suppliers and broadcast networks, as various rules dealing with access to cable and broadcast programming could extend to Internet video providers, potentially conflicting with existing contractual obligations and even the Copyright Act.  What are some of the specific issues being considered?

The issues raised in the Notice are many – including the very fundamental one as to whether the FCC even has the authority to include Internet delivered video (what the FCC refers to as Over the Top or OTT providers) under the rules for MVPDs.  While the general definition of MVPD would seem to cover Internet video (as it covers anyone who makes multiple channels of video programming available for purchase by subscribers), it is not that simple.  As with any Federal law, one can’t just stop the analysis with a quick read of the statute.  The statute, in at least one place, defines a “channel” as a portion of the electromagnetic spectrum capable of delivering a TV channel.  And the FCC has defined a TV channel as one comparable to what is delivered by broadcast TV.  It’s that reference to “electromagnetic spectrum” that has tripped up previous services seeking an expansion of the MVPD definition.  In the case of Internet-delivered service called Sky Angel, the FCC staff 5 years ago determined that, as it was not a facilities based system – it did not control that electromagnetic spectrum on which its programming was delivered – it could not be an MVPD.  The full Commission sought comments on the staff decision then (see our article on that request for comments on Sky Angel here and here,) and, with the recent Aereo decision (see our articles here and here) and its aftermath, and the seemingly daily announcement of new online video service offerings from everyone from CBS to HBO to Dish and Disney, the FCC seems now ready to move with this expansion of its authority to cover video on the Internet.  Because of the potential for very similar video services to have very different regulatory burdens (cable and satellite could be subject to all the FCC MVPD rules, while the same programming, delivered by an Internet service, might have none of those obligations under the current regulatory interpretations), the majority of the FCC want to move forward with this proposal.  But it asks for comments on whether it really has the authority to do so. 
Continue Reading FCC Regulation of Internet Video? – Dates Set for Comments on Treating Over-the-Top Video Providers like Cable and Satellite TV

While we are in the Holiday season, the regulatory obligations faced by broadcasters don’t stop.  December brings a continuation of the TV renewal cycle, though we are nearing the end of that cycle.  Renewal applications for all TV, Class A and LPTV stations in the following states are due on December 1: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.  These stations need to file their first two post-filing license renewal announcements on the first and 16th of the month.  Stations that filed their license renewal applications in October also will be broadcasting their post-filing announcements on those same days (their last two announcements).  Those would be stations in the following states and territories: Alaska, Hawaii, Oregon, Washington, American Samoa, Guam, the Mariana Islands, and Saipan.  TV stations in the states that file license renewals on February 1 (those in New York and New Jersey) have to start running their pre-filing announcements on the December 1 (and run a second on December 16).

There are other routine filings due in December.  On December 1, Commercial and Noncommercial Full-Power and Class A Television Stations and AM and FM Radio Stations with employment units with 5 or more full-time employees in Alabama, Colorado, Connecticut, Georgia, Maine, Massachusetts, Minnesota, Montana, New Hampshire, North Dakota, Rhode Island, South Dakota, and Vermont all need to complete their EEO Public File Report and place that report in their public file (and on their websites, if they have one).  Noncommercial stations still have obligations to file Biennial Ownership Reports on every other anniversary of the filing of their license renewal applications.  That means that these reports are due on December 1 for Noncommercial Television Stations in Alabama, Connecticut, Georgia, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont; and on the same day for Noncommercial AM and FM Radio Stations in Colorado, Minnesota, Montana, North Dakota, and South Dakota.
Continue Reading December Regulatory Dates for Broadcasters – Renewals, EEO Reports and Noncommercial Biennial Ownership Reports in Some States; TV Ancillary and Supplementary Revenue Reports; As Well as LPTV Rulemaking Comments and Many Other Expected Actions

On Friday, the US District Court in the Southern District of NY found that there is a public performance right in pre-1972 sound recordings in that state, following two decisions from California finding a similar right under California law (though on different grounds).  Like the first decision in California (about which we wrote here), this decision was the result of a law suit by Flo and Eddie of the Turtles against Sirius XM, arguing that Sirius XM was infringing on their rights by playing old Turtles songs without paying the duo (who now own the Turtles’ copyrights) any compensation.  Unlike the California decision which looked to specific language in the California statute about ownership of pre-1972 sound recordings, the NY Court reaches a decision in some ways broader than the California decision, but potentially also in some ways narrower.  What does it mean for the many businesses that play such recordings?

There is no public performance right in sound recordings generally in the United States, with the limited exception of the public performance of such recordings in a digital medium.  Sound recordings had not been covered by Federal copyright law at all until 1972, when they were covered for purposes of protecting reproductions and distributions and other general rights, but Federal law specifically did not include this public performance right in sound recordings until the 1990s.  When sound recordings were added to Federal law in 1972, the regulation of pre-1972 sound recordings was specifically left to state regulation (where it had been prior to Federalization).  The limited digital performance right was adopted in a series of laws enacted in the late 1990s, as fears of digital piracy based on Internet and other digital transmissions grew.  So webcasters, satellite radio, digital cable radio and other digital users of sound recordings have paid a royalty for the performance of such recordings.  That royalty is set by the Copyright Royalty Board (see our article here about the most recent CRB proceeding to set rates), paid by noninteractive services to SoundExchange, and distributed by SoundExchange to copyright holders and artists. For interactive services (like Spotify or iTunes or Rhapsody), the performance rights have to be directly negotiated with the copyright holder, leading to disputes like the recent decision of Taylor Swift to pull her new album from Spotify (see our article here about the difference between interactive and noninteractive services).  As the 1990s adoption of the limited public performance right in sound recordings was a Federal act, most observers believed that there was no public performance right in sound recordings for pre-1972 recordings, as there never had been one prior to Federalization (despite many attempts by artists and labels to have one included in the law)(see our article here when the Flo and Eddie suit was first filed). 
Continue Reading New York Court Finds Public Performance Right in Pre-1972 Sound Recordings – How Will This Affect Businesses that Use Music?

The FCC announced two significant policy initiatives by Blog post in the last week – perhaps recognizing that the Internet provides a better way of packaging a message about policy directions than an unpredictable news conference.  The two decisions announced this week by Blog post were (1) the Chairman announcing that he has directed that a Notice of Proposed Rulemaking be circulated among the other Commissioners to treat Over-the-Top TV providers (“OTT” providers, usually those that provide service over the Internet) of linear programming as MVPDs – meaning that they would be treated, for regulatory purposes, in much the same way as cable and satellite TV services, and (2) an announcement by the head of the incentive auction task force that the auction by which some of the broadcast TV spectrum will be purchased from TV users and resold to wireless carriers for broadband wireless uses will be postponed from its expected date in the summer of 2015 until early 2016.  We will write about the postponement of the auction later.  But what does the MVPD proposal mean?

The MVPD issue is one that we last wrote about here.  At the urging of some OTT providers, apparently including Aereo, the FCC has been urged to treat these providers, when they provide “linear” programming (programming that is provided at set times on a set schedule, in the manner of broadcast TV or cable programming, as opposed to the on-demand programming of a Netflix or Hulu), in the same fashion as cable and satellite.  The Chairman, in his blog post, announces his support for an FCC proceeding to review that proposal, apparently looking to use linear Internet programmers as a new competitive force against cable and satellite TV.  By treating these services as MVPDs, they could get access to over-the-air TV programming (if they can negotiate retransmission consent agreements with the TV stations) and equal access to programming provided by vertically integrated cable programmers (those programmers that have attributable ownership from cable system operators).  But, obviously, there are some big “ifs” here.
Continue Reading FCC Policy by Blog Post – Over-the-Top Internet-Delivered Television Programming Providers May be Treated as MVPDs, a Reaction to Aereo?