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

A recent Court of Appeals decision that could have an impact on the Washington Redskins trademark dispute about their team name, is covered in the following article by my law partner, Mitchell Stabbe, who specializes in trademark law.  He writes about a case where the Court determined that a trademark rule that has led to the denial or rejection of trademarks deemed to be disparaging was an unconstitutional infringement on Free Speech.  This is the first of what we hope will be many articles on this blog from Mitch and his team of trademark specialists: 

In a decision that could have a significant impact on the well-publicized dispute over the REDSKINS trademark, the US Court of Appeals for the Federal Circuit recently ruled that the prohibition against federal registration of disparaging trademarks violates the First Amendment and is unconstitutional.  The case involved an appeal from the denial by the Patent and Trademark Office (“PTO”) of an application by Simon Shaio Tam to register the mark THE SLANTS for an Asian-American band, which selected the name in order to make a statement about racial and cultural issues.  The PTO had found that, regardless of intent, the likely meaning of phrase THE SLANTS may be disparaging to a substantial composite of persons of Asian descent.

Each of the previous appeals affirmed the finding that the mark is disparaging, and held that the issue of constitutionality could not be addressed because of a binding precedent issued by the Federal Circuit in 1981.  That precedent could only be reversed if all of the Federal Circuit judges (as opposed to a panel of three judges, which decides most cases) ruled together.  The court agreed to consider the question whether the prohibition against disparaging marks is constitutional.  In a 9-3 ruling, the Federal Circuit reversed its own precedent and concluded that the statutory prohibition violates the First Amendment and is unconstitutional.  The court reasoned that, by denying registration to disparaging marks, the Government was targeting speech based on the content of the message conveyed by the mark, which is almost always a violation of the First Amendment requirement that the Government make no laws abridging freedom of speech.  Even though the lack of a federal registration does not limit the right to use a mark, the court ruled that denying registration would restrict freedom of speech by creating a disincentive to the adoption of disparaging trademarks because the markholders would be denied the “truly significant and financially valuable benefits” of registration.  (We will address those benefits in an upcoming post.) Continue Reading Court of Appeals Rules that Prohibition Against Federal Registration of Disparaging Trademarks is Unconstitutional Restriction of Free Speech

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

The FCC’s Media Bureau gave a long-awaited Christmas present to many of the country’s AM stations, releasing a Public Notice announcing the filing dates for the translator modification application filing windows for AM stations.  These are the windows authorized by the Commission as part of its AM Revitalization proceeding (see our article here for more about the FCC decision to open these windows).  In these windows, the FCC will allow an AM licensee to buy or arrange to program an FM translator and move it up to 250 miles to a location from which it can be used to rebroadcast an AM station.  In making such a site move, the applicant can also change the translator’s channel to specify operations on any vacant frequency in the area where the AM station wants to operate that translator that will not cause interference to existing broadcasters.  However, applications will only be accepted to move translators or translator construction permits in the commercial part of the FM band, 92.1 MHz (Channel 221) and above.

Initially, there will be two windows.  The first window will open January 29, 2016 and close at 11:59 pm (EDT) on July 28, 2016.  This window can be used by Class C and Class D AM stations to seek to move an FM translator for use by those stations.

The second window will open on July 29, 2016 and close at 5:59 pm (EDT) on October 31, 2016.  Any AM station can file an application during that window.  Continue Reading Window to Open January 29 for Applications to Move FM Translators Up to 250 Miles to Rebroadcast AM Stations

While many broadcasters’ thoughts are on holiday celebrations, the political process leading to the 2016 elections marches on. Last week, Bobby Baker, the head of the FCC’s Office of Political Programming and I conducted a webinar for broadcasters in 16 states on the legal issues that need to be considered in connection with the upcoming political season. The slides from that presentation are available here.

The week before last, I wrote about some of the issues that broadcasters should already be considering in connection with the 2016 election. With Lowest Unit Charge windows either open or to open this month in Iowa and New Hampshire, and windows opening in South Carolina and Nevada in the first week in January, stations need to be paying attention to their political obligations. Even though political windows are not yet open in other states, stations in these other states nevertheless need to pay attention to their political obligations. As I explained in the webinar, those windows apply only to Lowest Unit Rates. All other political obligations, including reasonable access for Federal candidates, equal opportunities, and the no censorship provisions of the rules apply once you have legally qualified candidates – not just during political windows. See our article here and here on that subject. Continue Reading Understanding a Broadcaster’s Political Broadcasting Obligations Under FCC Rules – A Webinar Outlining the Requirements

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 the royalty covers, which services can rely on the royalty for their music rights, some of the requirements of the royalty, and the rates themselves. Further information about the decision is available in our article summarizing the CRB’s decision as to the rates and terms that was released last week, here, and the next steps in the process were outlined in our article here.  In the next few weeks, as the CRB’s decision explaining its reasoning is made public, we’ll provide a summary, and highlight new issues as they arise as interested parties review and digest the new rates.

One important point that we discussed in the webcast this afternoon, and which bears repeating, is that these royalties do apply to broadcaster simulcasts.  For some reason, I have seen trade press reports which indicate that they do not, and I have had questions from broadcasters implying the same thing.  Broadcasters who stream music on the Internet, even a full simulcast of their over-the-air broadcasts, should be paying SoundExchange now for the public performance of the sound recordings that they stream.  They will continue to do so, at a lower rate, when these new rates become effective in January.  As we explained in our article last week, simulcasters have been paying at the rate of $.0025 per performance in 2015, and for advertising-supported simulcasts, that rate will fall to $.0017 in 2016.

Watch for more on the CRB royalties as issues develop over the next few weeks.

In a consent decree released earlier this week, the FCC fined the parties to a LMA for an FM radio station in Colorado $8000 because the FCC believed that the programmer paid too many of the licensee’s expenses directly. According to the decision, the programmer paid certain debts of the licensee directly, including the licensee’s obligations on its tower lease, and the cost of its telephone line to the main studio. These issues came to light as the programmer filed to acquire the station from the licensee, whose station it had programmed for over a decade.

What does this tell parties to an LMA? Don’t have the programmer pay expenses of the licensee directly. The FCC requires that the licensee maintain control over its station. Some of the ways that this control is demonstrated is by having the licensee continue to provide the transmission plant for the station, and to maintain employees at the main studio and continue to have a phone line to those employees. The licensee should continue to write a check for those expenses, even if the money that fills the bank account for that check is paid to the licensee by the programmer. Failing to meet these obligations is viewed by the FCC as an unauthorized transfer of control of the station.  This decision is consistent with past Commission decisions on these kinds of agreements (see, for instance, this case which we discussed 5 years ago). It is the FCC’s view that the licensee must continue that direct legal relationship with those that provide these services by paying them for their services – so it should write the check, not the programmer.

As one of the many legislative changes that made their way into the Congressional Omnibus Spending Bill set to be voted out of Congress this week and signed by the President to keep the government operating for the next year, there is a provision authorizing TV stations to continue through September 30, 2025 operating with Joint Sales Agreements that were in place prior to the FCC action last year to order the termination of such agreement (see our article here). Without this legislation, those JSAs would have had to have been terminated by next December (see our article here about the extension of the divestiture date in the STELAR legislation).  The provision says that no party to such an agreement shall be in violation of the FCC’s ownership rules if they continue to operate with the JSA in place. The new legislation says that, with respect to such grandfathered agreements, the rules that were in effect the day prior to the FCC’s ruling will remain in effect. How this will affect the transfer of stations that are involved in such agreements remains to be seen. But for those TV broadcasters who have these agreements and continue to operate their stations, for the foreseeable future, their JSAs can remain in place.

The Copyright Royalty Board yesterday announced on its website the royalty rates that webcasters will pay to SoundExchange for the use of sound recordings in their digital transmissions over the Internet and to mobile devices in the period from 2016-2020.  For commercial webcasters, the CRB set $.0017 as the per performance (i.e. the rate paid per song, per listener) rate for nonsubscription streaming, and $.0022 per performance for subscription streaming.  For most webcasters, including broadcasters, this represents a drop of approximately 1/3 in the rates paid – perhaps the first time in any CRB proceeding that rates decreased as the result of a CRB decision.  The rates and terms adopted by the CRB for this statutory license can be found here.

For Pureplay webcasters, like Pandora, the nonsubscription rates represent a modest increase from the $.0014 rate that they were paying in 2015 pursuant to the Pureplay Agreement negotiated under the Webcaster Settlement Act almost 8 years ago (see our article here).  For the subscription services offered by these companies, the rate actually decreases from the $.0025 rate that they had been paying. There is also no provision for a percentage of revenue. The Pureplay Agreement had required that services pay the higher of the per performance rate or 25% of the webcaster’s gross revenues from all sources, limiting their growth outside of webcasting, and preventing companies with substantial other business interests from entering the Internet radio market and relying on the Pureplay rates. That percentage of revenue overhang has been eliminated.  For a summary of the rates that had been in effect for all of the different classes of webcasters, see our article here. Continue Reading CRB Announces Webcasting Royalty Rates for 2016-2020 – Lower Rates for Broadcasters Who Stream, Minimal Change for Pureplay Webcasters

It seems like every streaming company, and every financial analyst and reporter covering the media beat has been breathlessly awaiting the release of the Copyright Royalty Board’s decision on Internet Radio Royalties that will apply to noninteractive streaming companies during the years 2016-2020.  Many have been predicting a decision for days.  But, in a public notice released today and available on the CRB website, the CRB announced that the that the decision will be released on Wednesday.  While the CRB will make the rates available on their website on Wednesday, the full decision will only go, initially, to the Librarian of Congress which oversees the administrative aspect of the CRB and reviews its decisions for legal errors, and to counsel involved in the case. Counsel will have an opportunity to review the decision to suggest that portions of the decision containing confidential business information be redacted from the public version of the decision, a version that will be released at some point in the future.  So the streaming world will know by Wednesday what they will be paying in the upcoming 5-year period, barring any post-decision changes through appeals, direct licenses, or other processes.

To clarify, this decision only apples to noninteractive streaming companies – webcasters or Internet radio – where the listener cannot select the next song to be played.  It does not apply to digital music companies where parties can play individual tracks on demand, or where they can save music into playlists where the songs can be replayed in the same order repeatedly.  Those paying these “statutory royalties” must adhere to certain restrictions as to how often a particular song will be played, but get the rights to play any song legally released in the United States.  See our article here as to why Adele could refuse to make her songs available to services like Spotify, while Pandora and other Internet radio companies could play those songs.  And these royalties apply only to streams that are directed to US residents, which is why many webcasters, including Pandora, are not available in much of the world.  See our article here on determining where royalties are paid for digital content.  Even though limited to these particular digital music services, the decision remains very important.  What happens when the decision is released, and what is next? Continue Reading Waiting for the Copyright Royalty Board Decision on Internet Radio Royalty Rates – Decision To Be Announced on Wednesday