The Copyright Office has just released a Notice of Inquiry asking whether Federal protection should be extended to sound recordings recorded prior to 1972.  A sound recording is a song as recorded by a particular artist.  Sound recordings were first protected under Federal law in 1972.  Prior to that, unauthorized recordings or reproductions of an artist’s recoding were policed under various state criminal and civil law.  While the Copyright Act has provided for the protection of pre-1972 sound recordings first registered in other countries, US sound recordings recorded prior to 1972, have not received Federal copyright protections.  Many have assumed that this also exempts pre-1972 sound recordings from royalty requirements under Section 114 of the Copyright Act – i.e. the royalties paid by Internet and satellite radio and other digital music providers under the statutory license.  How would a change in the law affect Internet radio operators?

That is one of the questions that is asked by the Notice of Inquiry.  Many Internet radio operators have not excluded pre-1972 recordings from royalty payments based on any exception that may exist for pre-1972 sound recordings, as the possibility has not been widely publicized.  Moreover, some copyright holders have suggested that the digitization of older songs may somehow bring pre-1972 recordings under the coverage of the Copyright Act, or that there may be state remedies that are somehow the equivalent of the Federal public performance right.  Others may just not want to go to the trouble of determining which copyrighted songs are subject to the Uruguay Round Agreements Act (making the non-US pre-1972 sound recordings subject to US Federal law).  The Copyright Office’s Notice of Inquiry asks what impact the inclusion of pre-1972 sound recordings would have on many undertakings – including the archiving and restoration of sound recordings, and on the current benefits that copyright holders and others enjoy under state laws.  In addition, it asks about the benefits and issues that would arise under Section 114 of the Copyright Act – the section that sets out the statutory license under which most Internet radio companies operate.

Continue Reading Copyright Office Asks if Federal Protection Should be Extended to Pre-1972 Sound Recordings – What’s the Impact on Internet Radio?

The nuts and bolts of legal issues for broadcasters were highlighted in two sessions in which I participated at last week’s joint convention of the Oregon and Washington State Broadcasters Associations, held in Stephenson, Washington, on the Columbia River that divides the two states.  Initially, I conducted a seminar for broadcasters providing a refresher on their EEO recruiting obligations set out under FCC rules.  With some public interest groups calling for stricter enforcement of a broadcaster’s EEO obligations, and with the license renewals for Oregon and Washington State radio broadcasters coming up in 2013 (with TV the next year), broadcasters cannot slack off on these important obligations to widely disseminate information about job openings and to educate their communities about broadcast employment issues as required by the FCC rules.  Slides from my PowerPoint presentation on a broadcaster’s EEO obligations are available here.  Broadcasters looking for more information on EEO obligations can review the Davis Wright Tremaine Guide to the EEO rules, here, and our most recent reminder about the obligations for the annual EEO public inspection file report, here.

At a second session, we discussed the variety of legal issues facing broadcasters in the current environment.  Many of the same issues discussed in this session were also discussed in my Top Ten List of Legal Issues to Keep Broadcasters Awake at Night, details of which can be found here.  Some specific questions were raised during the Oregon-Washington session include questions about the FCC rules covering contests that stations conduct, and the rules that apply to such contests.  See our blog post on some of those issues here and here.  The obligations for the public file of broadcasters are also set out in our advisory, here.  Another issue that broadcasters should remember is the new obligation for their advertising contracts to include terms that state that advertising is not sold for any discriminatory purpose, to avoid no-urban, no Spanish dictates (see our post here for details).  As we wrote recently in connection with fines issued to a couple of stations for multiple day-to-day violations of the FCC rules, the attention to these details now will avoid major financial headaches for broadcasters later, and potentially long-term issues at license renewal time as well. 

Last week, we wrote that the FCC is going ahead with a rulemaking looking at how broadband needs may require some reallocation of the TV spectrum to wireless uses.  The initiation of a rulemaking on that issue is planned for the next FCC meeting in late November.  With that proceeding about to begin, the FCC today froze all applications for new Low Power Television (LPTV) stations and for TV Translators, and for major changes in existing LPTV and TV translator stations.  Over a year ago, after not having accepted applications for a decade during the DTV transition, the FCC allowed the filing of applications for new LPTV stations and TV translators in rural areas.  Finding that much of the demand for new translators has been met in these rural areas in the intervening period, the FCC has now determined that, until the spectrum needs for television and broadband are more certain, it would not accept any more applications for these stations. It appears that the long-planned window for LPTV stations in major markets will not happen in the foreseeable future.

The freeze does allow for the filing of minor changes to LPTV and TV translator stations, for applications to flash cut to digital, and for displacement applications if a full-power station precludes the continued operation of such a station on its current channel.  LPTV and translator stations still operating on channels 52 through 69, which have already been reallotted for wireless uses, can also file displacement applications during the freeze.

Continue Reading FCC Freezes Applications for New LPTV and TV Translator Stations While Contemplating How the Broadband Plan Will Affect the TV Spectrum

Earlier this week, I posted a Top Ten list of legal issues that should keep a broadcast station operator up at night.  In two orders released today, the FCC found stations where these issues apparently had not been keeping their operators awake, as the FCC issued fines for numerous violations.  At one station, the FCC found that the EAS monitor was not working, the fence around the AM tower site was unlocked, and the station had no public inspection file, resulting in a $5500 fine (see the FCC’s Enforcement Bureau order here).  At another station, the FCC inspectors were told that the station had no public file, and they also found the AM tower site fence unlocked, resulting in a $3500 fine (see the order here).  These cases are one more example that, while broadcasters have plenty of big-picture legal and policy issues that they need to be concerned about, they also need to worry about the nuts and bolts, as the failure to observe basic regulatory requirements like tower fencing, EAS, and public file requirements can bring immediate financial penalties to a station. 

The tower fencing issue is one that we have written about before.  FCC rules require that public access be restricted to areas of high RF radiation, which are likely to occur at ground levels near AM stations.  The FCC has many times issued fines for fences with unlocked gates, holes, or areas where there are gullies where a child could climb under the fence into the tower area.  The FCC has been  unwilling to accept excuses that the fence was locked "yesterday" or "last week" or at some other less defined time in the absence of proof, as they’ve heard that excuse many time.  If the fence is open when they arrive, expect a fine.

Continue Reading Non-Functioning EAS, An Unavailable Public File and Open Tower Site Gates Result in FCC Fines of $5500 and $3500

As summarized by Brian Hurh on our sister site broadbandlawadvisor.com, yesterday the FCC’s Consumer and Government Affairs Bureau released a Public Notice seeking comments to refresh the record on closed captioning that was last addressed in the Commission’s 2005 and 2008 Closed Captioning NPRMs. As recognized by the Commission, much has happened since those proceedings, both technologically and regulatory. As directed by the recently enacted 21st Century Communications and Video Accessibility Act (which we blogged about earlier here, and discussed in DWT’s Advisory here), the FCC’s rules must be revised to extend closed captioning to the Internet within 6 months of the Advisory Committee’s report on closed captioning, which must be released by October 2011. As we noted earlier, the Advisory Committee must be formed by December 8, and hold its first meeting by April 2011.

The revised closed captioning rules will necessarily require a new closed captioning rule making proceeding, and presumably, the Commission is gathering information now to determine what the forthcoming rule making proceeding will look like. Some of the issues that the Commission seeks to refresh include:

  • Whether to establish quality standards for non-technical aspects of closed captioning, including whether different quality standards should apply to live and pre-recorded programming;
  • The need for mechanisms and procedures over and above the "pass through" rule, and whether there should be a per violation forfeiture amount for non-compliance;
  • Whether the FCC should revise its rules to disallow the use of electronic newsroom technique for certain DMAs;
  • How the section 79.1(d)(12) exemption for channels producing revenues of less than $3 million should apply to digital mulitcast, specifically, the ramifications of treating each multicast stream as a separate channel for purposes of the exemption.

Comments are due November 24.  Reply comments are due December 9.  Comments can be submitted to the FCC in paper, or electronically via the FCC’s Electronic Comment Filing System. 

The NAB Radio Board today voted to adopt a Terms Sheet to offer to the musicFirst Coalition which, if agreed to by musicFirst and adopted by Congress, will settle the contentious issue of whether to impose a sound recording performance royalty (the "performance tax") on over-the-air broadcasters.  If adopted, that will mean that broadcasters in the United States, for the first time, will pay a royalty to artists and record labels, in addition to the royalties paid to ASCAP, BMI and SESAC that go to the composers of the music.  What does the Term Sheet provide, and what will this mean for broadcasters, webcasters and others who pay music royalties?

The Term Sheet sets out a number of points, including the following:

  • A 1% of gross revenue sound recording royalty to be paid to SoundExchange
  • A phase-in period for the 1% royalty, that will be tied to the number of mobile phones that contain an FM chip.  A royalty of one-quarter of one percent would take effect immediately upon the effective date of the legislation adopting it.  The royalty would rise in proportion to the number of mobile phones with enabled FM chips.  Once the percentage of phones with FM chips reached 75%, the full royalty would take effect.
  • The 1% royalty could only be changed by Congressional action.
  • The royalty would be lower for noncommercial stations and stations with less than $1.25 million in revenue – from a flat $5000 for stations making between $500,000 and $1.25 million in revenue down to $100 for those making less than $50,000 per year.
  • Broadcasters would also get a reduction in their streaming rates – but only when FM chips in mobile phones exceed 50% penetration.  The reduction would be tied to the rates paid by "pureplay webcasters" (see our summary of the Pureplay webcasters deal here), but would be set at a level significantly higher than pureplay webcasters, rising from $.001775 in 2011 (if FM chips were quickly deployed) to $.0021575.
  • Future streaming royalties would not be set by the Copyright Royalty Board but by a legislatively ordered rate court – presumably a US District Court similar to that which hears royalty disputes for ASCAP and BMI.
  • An acknowledgment by AFTRA that broadcasters can stream their signal on the Internet in their entirety – apparently agreeing to relieve broadcasters from any liability for the additional amounts due to union artists when commercials featuring union talent are streamed
  • An agreement that broadcasters can directly license music from artists and reduce their  liability for the new royalty by the percentage of music that the broadcasters is able to directly license
  • Agreements to "fix" issues in Sections 112 and 114 of the Copyright Act in making the provisions of these laws regarding ephemeral copies and the performance complement consistent with the waivers that major record labels gave to broadcasters when the NAB reached its settlement with SoundExchange on streaming royalties last year.  See our post here on the provisions of those waivers.
  • musicFirst would need to acknowledge the promotional effect of radio in promoting new music, and would need to work with radio in attempting to secure legislation mandating the FM chip in mobile phones.

[Clarification – 10/26/2010 – Upon a close reading of the Terms Sheet, it looks like the phase in of the 1% royalty and the delay in the streaming discount only kick in if Congress does not mandate active FM chips in cell phones.  If the mandate is enacted, then the full 1% royalty and streaming discount is effective immediately. Given the opposition of much of the wireless industry to a mandated FM chip, this may represent a recognition that the legislation requiring the active FM chip will not be enacted in the near future]

What does this all mean?

Continue Reading NAB Radio Board Adopts Proposal for Settlement of Performance Tax Issue – Where Do We Go From Here?

So what Washington issues should be keeping broadcasters up at night? At the Connecticut Broadcasters Association Annual Convention in Hartford on October 14, and the Kansas Association of Broadcasters Annual Convention in Wichita on October 18, I presented my Top 10 list of issues for broadcasters – dealing with issues both practical and policy-based.  The PowerPoint presentation from Connecticut is available here, and that from Kansas is available here.   At these sessions, we discussed a variety of legal issues of importance to the industry, including the need for broadcasters to consider the upcoming license renewal cycle.   As we wrote a few weeks ago, that cycle begins with stations in Virginia, Maryland, DC and West Virginia in June 2011, and will continue across the country for the next few years, with radio stations in Kansas filing renewals in February 2013, and radio stations in Connecticut filing on December 1, 2013.   Television stations in each state will have applications due a year later. To be sure that stations are prepared for the renewal, they should be checking their public inspection files to make sure that they are complete, and should be preparing quarterly programs-issues lists detailing the programming that they broadcast to serve the public interest. A copy of Davis Wright Tremaine’s most recent advisory on the Quarterly issues programs list is available here. The most recent Quarterly Programs Issues List should have, by October 10, have been placed in the public files of all stations around the country, covering issue-responsive programming that was broadcast in the last quarter.  The DWT Advisory covering all of the other materials that should be in the public inspection file, and the retention period for that content, is availablehere.

We also discussed compliance with the FCC’s EEO rules, and how important such compliance is – and how each station’s EEO performance will be evaluated at license renewal time or if the station is randomly audited in the FCC’s EEO random audit process. We wrote about some of the complaints of certain public interest organizations about how they felt that the FCC had not been aggressive enough in EEO enforcement, here. With the scrutiny given to this issue, broadcasters should be observing their obligations carefully. DWT’s advisory on EEO compliance is available here, and our most recent reminder on the annual public inspection file reports for broadcasters is available here.  A PowerPoint presentation from a seminar that I just completed for the Washington and Oregon Broadcasters Associations will be posted on our blog shortly, which will highlight some of these EEO obligations. 

Continue Reading Top Ten Legal Issues to Keep Broadcasters Awake At Night – Presentations to Connecticut and Kansas Broadcasters Associations

My station received a cease and desist letter for a third party political ad.  What should we do?  This is a question we hear more than ever these days from both broadcasters and cable operators.  As we previously advised, this is not unexpected following the Supreme Court’s decision in Citizens United, which allowed third party money to be used freely for political advertising on behalf of candidates for federal office.

Of course, if the ad is a "use," meaning that it contains the recognizable voice or image of the candidate sponsoring the ad, Section 315 of the Communications Act provides absolute immunity to broadcasters and cable operators for anything said in the ad.  But most of the cease and desist letters relate to third party ads attacking candidates that are not "uses" exempt from censorship under Section 315.  (The purely negative use of a candidate’s voice or image is not a protected "use.")

Continue Reading What to Do With Cease and Desist Letters About Political Ads

FCC Chairman Julius Genachowski announced today that the FCC is ready to move forward with preparations for incentive auctions in anticipation of receiving Congressional authority for such auctions at some point in the future.  In a speech at the Spectrum Summit held today at the FCC in Washington, DC, Genachowski invoked President Eisenhower, FDR, and the transcontinental railroad, among other historical figures and events, to emphasize his belief that America is at a critical time in its history and that ensuring a steady flow of spectrum for wireless use in the next five to twenty years will be crucial to the growth and prosperity of the United States of America.  This is potentially welcome news for wireless carriers eager for new spectrum, but also a clear warning to television broadcasters that as far as the FCC is concerned it is not a matter of if, but rather when, the FCC will have the authority to conduct incentive auctions to facilitate the recapture of television spectrum and the repacking of the television channels. 

Since the release of the National Broadband Plan in March, which advocated the reclamation and re-purposing of 120 MHz of spectrum currently allocated for free over-the-air broadcast television, the FCC has quietly proceeded to meet with broadcasters and prepare for the possibility of incentive auctions.  Now, following on the heels of the recent TV White Spaces order, which we wrote about recently here and here, Genachowski has announced that the Commission will consider a Notice of Proposed Rule Making at its November 30th open meeting "that would lay essential groundwork for implementing incentive auctions quickly should Congress act."  According to the Chairman’s speech, the forthcoming item will explore a licensing framework that would allow stations to "voluntarily" share channels and examine new ways to improve the digital television reception of VHF channels in hopes of making that spectrum more attractive as a home for relocated television stations. This last issue is particularly interesting, given that the Engineering Forum held by the Commission in June explicitly explored the issue of improving VHF reception and found that there was little or no way to improve the reception of digital stations operating on VHF channels.  But the Commission will have to find someplace to move broadcast stations, and it will undoubtedly explore all options in the effort to meet the challenge of freeing up spectrum. 

At a recent seminar held by the Federal Communications Bar Association, an economist from the FCC described how the process would work.  Essentially, broadcasters would make a bid for what they would accept to do one or more of the following (i.e. "how much would it take before you’d…"):  1.) share a channel with another broadcast station, 2.) move to a VHF channel, or 3.) cease broadcasting altogether.  Then, new entrants would make offers as to what they would bid for new spectrum.  The Commission would compare and reconcile the two elements, consummate the transactions, and then repack the television spectrum to accommodate the amount and location of the new spectrum sold.  This is a grossly simplified version of what the FCC, auction experts, and economists anticipate the incentive auctions will look like, but it was clear that the FCC has given incentive auctions a lot of thought and is eager for the opportunity to put the theory into practice.  It will be interesting to finally have the FCC put this theory on paper and present it for public comment in the forthcoming NPRM.  It will also be interesting to see how the FCC will conduct a rule making in the abstract, as it is almost guaranteed to not have any statutory authority for the type of auctions it will be seeking to draft regulations to govern. 

The Commission’s recent Notice of Proposed Rule Making proposing a framework and time line for the transition of Low Power Television stations to digital operations — which we wrote about last month here — was published in the Federal Register today setting December 17, 2010 as the deadline for Comments and January 18, 2011 as the deadline for Reply Comments.  Interested parties should start preparing their comments now.  One continuing issue commenters should be aware of is the possibility of a television spectrum incentive auction or some other reclamation of television spectrum.  In seeking comment on the timing of the transition of LPTV stations to digital, the Commission has asked whether it makes sense for LPTVs to transition sooner rather than later and possibly face the need to reshuffle if the spectrum is compressed or otherwise reconfigured in the future, or alternatively, if LPTVs wait until the spectrum is settled before a DTV transition is mandated.  Comments on that issue and any others responsive to the Commission’s NPRM are welcomed from all interested parties.  Comments can be filed in paper with the Commission or electronically through the ECFS filing system.  The proceeding has been designated as MB Docket No. 03-185.