The Corporation for Public Broadcasting has entered into a settlement with SoundExchange extending their current agreement on Internet Radio royalties for "Public" radio stations through 2015.  The previous deal, about which we wrote here, covered the period from 2006 to 2010.  This new agreement picks up in 2011 and covers included stations through 2015.  As in the previous deal, the new agreement has a payment by CPB to SoundExchange satisfying all royalties for all of the covered stations.  This was the fourth agreement that was announced last week, about which we wrote here, although details of this deal had not previously been released.  We have written about the other deals entered into under the Webcaster Settlement Act of 2009 ("WSA"), including the deals with Sirius XM (here) and with other noncommercial webcasters (here). 

This agreement covers stations affiliated with NPR, American Public Media, Public Radio International, and the Public Radio Exchange. CPB will pay to SoundExchange $2,400,000 in five yearly installments, covering up to 490 public radio stations in the first year, and up to 10 additional stations per year thereafter (up to 530 in 2015).  The fee is also subject to adjustment if all of the covered stations exceed certain listening levels.  Those levels, and the required true-up for performances in excess of the caps, are set out below.  However, the CPB payments for excess performances are limited to a total of $480,000 over the 5 year period of the Agreement:

Year              Music ATH Cap              Per Performance Rate

2011                279,500,000                         $0.00057

2012                280,897,500                         $0.00067

2013                282,301,988                         $0.00073

2014                283,713,497                         $0.00077

2015                285,132,065                         $0.00083

Continue Reading SoundExchange and Corporation for Public Broadcasting Settlement on Internet Radio Royalties for 2011-2015

Noncommercial webcasters were provided with two royalty options under settlements reached with SoundExchange pursuant to the Webcaster Settlement Act of 2009 ("WSA").  One settlement was with Noncommercial Educational Webcasters.  The other, when announced, was characterized by SoundExchange as being a settlement with noncommercial religious broadcasters, though it applies to any noncommercial webcaster who elects to be subject to its terms.  As set forth below, except for certain mid-sized noncommercial webcasters who have more forgiving recordkeeping options under the Educational deal, it would seem that the settlement with the religious broadcasters provides far more advantageous terms, and it also reaches back to cover the period from 2006 through 2010.  The Educational webcasters agreement covers only the rates for the periods from 2011-2015.  These settlements provide another example of the issue raised before the Senate Judiciary Committee of the arbitrary nature of the precedential nature that will be accorded to WSA settlements in future webcasting proceedings.  The noncommercial agreement with significantly higer prices has been accorded precedential weight in future CRB proceedings, while the one with lower rates is, by its terms, not precedential in future proceedings.

It is easiest to start with a review of the ‘Religious" broadcaters settlement (which, as we said above, is open to any noncommecial webcaster).  The agreement provides for a $500 per channel fee for each channel or stream offered by the noncommercial webcaster.  For that flat fee of $500 per channel, the webcaster can stream up to 159,140 monthly aggregate tuning hours of programming on each stream.  An Aggregate Tuning Hour ("ATH") is one hour of programming streamed to one person.  Thus, if you have 2 people who each listen for an hour, you would have two aggegate tuning hours.  A station with 2 listeners who each listen for half an hour would have one ATH of listening.  4 listeners for 15 minutes each would also add up to one ATH.  The 159,140 monthly ATH number represents listening of approximately 221 average simultaneous listeners 24 hours a day, 7 days a week.  If a webcaster exceeds this listening level, it must pay for excess listening on a per performance (per song per listener) basis, at the rates set out below.

Continue Reading Details of Webcasting Royalty Settlements for Noncommercial Webcasters Including Educational and Religious Internet Radio Operators

The recent settlement on Internet radio royalties between Sirius XM Radio and SoundExchange provides yet another option for commercial webcasters trying to determine the royalties to be paid for the public performance of sound recordings.  While the settlement is signed by just these two parties, it will be published in the Federal Register and be available for all commercial webcasters who comply with its terms – which will essentially be any webcaster who is not a "Broadcaster" as defined in the NAB Settlement, about which we wrote here.  As set forth below, the royalty rates available under this settlement are slightly lower for 2009 and 2010 than those set by the Copyright Royalty Board back in 2007, but slightly higher than those available under the NAB settlement.  However, in 2013-2015, the rates available under this deal are actually lower than those agreed to by the NAB, meaning that they present a better deal for webcaster expecting their audiences to grow in the next few years.

First, the most important issue – how much will it cost?  As with the CRB decision, the NAB deal, and the Pureplay deal (about which we wrote here) as it applies to large pureplay webcasters, the rates established by the deal are based on a "per performance" charge.   A performance is one song as listened to by one listener.  So if a song is played on an Internet radio station subject to the deal and 100 people are listening at the time the song is played, there are 100 performances.  The rates established by the deal are as follows:

           Year              Rate per Performance

2009                      $0.0016

2010                      $0.0017

2011                      $0.0018

2012                      $0.0020

2013                      $0.0021

2014                      $0.0022

                        2015                      $0.0024

Continue Reading Details on Sirius XM and SoundExchange Settlement on Internet Radio Royalties – An Option for Some Commericial Webcasters

The Commission today released yet another forfeiture for what has become an increasingly common oversight among broadcasters — the failure to timely file a license renewal application for a satellite earth station.  What made today’s forfeiture unique, however, is the fact that the Commission proposed to double the amount of the forfeiture based on the size of the broadcast licensee and its presumed ability to pay such a fine.  After balancing all the factors, the Commission ultimately ratcheted the fine down a bit, but in the end it assessed a $25,000 fine for the failure to timely file license renewal applications for two earth stations and for the continued operation of those facilities without proper authority.  In light of today’s decision, broadcasters should be sure to review and track the expiration dates for all FCC authorizations. 

The FCC’s decision in this case makes clear that in imposing a large fine in this case it is attempting to send a message that the Licensee will heed.  Per the Commission’s decision:  "This $16,000 forfeiture amount [the baseline forfeiture]  is subject to adjustment, however.  In this regard, we consider the size of the violator and ability to pay a forfeiture, as well as its prior violation of the same rule sections before us today.  To ensure that forfeiture liability is a deterrent, and not simply a cost of doing business, the Commission has determined that large or highly profitable companies such as [Licensee] , could expect the assessment of higher forfeitures for violations, and that prior violations of the same or other regulations would also be a factor contributing to upward adjustment of apparent liability.  Given [Licensee’s] size and its ability to pay a forfeiture, coupled with its previous violation, we conclude that an upward adjustment of the base forfeiture amount to $32,000 is appropriate."  [Emphasis added.]  In reaching its decision, the Commission noted that the Licensee in this case was a large broadcaster with "net yearly sales" of over $110 million.  

This forfeiture should serve as a clear warning to broadcasters both big and small to review and track the expiration dates of any earth stations or other authorizations held by a broadcast station.  Rarely (if ever) will the license term of an earth station authorization coincide with the renewal of the parent broadcast station, which means it is easy for the earth station to slip through the cracks.  

Continue Reading Broadcasters Beware: Failure to Timely Renew Earth Stations Can Draw Large Fines

Following the digital transition, issues with the reception of some television stations have highlighted the need for the use of outdoor antennas to receive the digital signal.  Last week, in three FCC decisions, the Commission made clear that its Over-the-Air Reception Device rules (the "OTARD rules") prohibit most zoning and other land-use restrictions, both governmental and private, on the use of such antennas.  These rules were adopted as a result of Congressional actions, and prohibit many restrictions on the installation and use of antennas used to receive television and other video signals either on private property owned by the user of the antenna or on property leased by the user.  Stations should become familiar with these rules, and let their viewers know of the rules, so that they can use them if they have problems installing antennas to receive the new digital signals over the air.

The rules apply to antennas that are one meter or less in diameter, or any size in Alaska, and are designed to receive or transmit direct broadcast satellite services, or one meter or less in diagonal measurement and are designed to receive or transmit video programming services through multipoint distribution services, including multichannel multipoint distribution services, instructional television fixed services, and local multipoint distribution services; and antennas designed to receive television broadcast signals.  For the Rule to apply, the antenna must be installed on property within the exclusive use or control of the antenna user where the user has a direct or indirect ownership or leasehold interest in the property upon which the antenna is located. 

Continue Reading FCC’s OTARD Rules – Limiting Zoning and Land Use Restrictions on Outdoor TV Antennas

On Tuesday, just before the Senate recesses for its summer vacation, an abridged version of the Senate Judiciary Committee held a hearing on the proposed sound recording performance royalty for over-the-air radio.  Internet radio royalties were also encompassed in this discussion, principally concerning the issue of "platform parity", i.e. whether all music services subject to the sound recording performance royalty should pay a royalty determined by the same standard, or perhaps even the same royalty.  We’ve already written this week about some of the issues surrounding the broadcast performance royalty (why it’s still being considered given that a majority of the House of Representatives has already signed a resolution against the royalty, here, and discussing the likely amount of the royalty were it to be adopted, here).  Neither of these issues was discussed in depth at the hearing.  But a multitude of other issues were raised in the hearing. and we’ll address many of them over the next few days.  But first, today, a summary of the issues raised.

First, it should be made clear that there was not a full committee in attendance.  While a few Senators came and went without saying a word, questions were asked or comments made by only 5 Senators of the 19 on the Committee.  So judging how the full committee feels about the issues raised when only 5 Senators (4 of them Democrats) asked questions may not be a fair assessment of how the committee as a whole feels about the issues raised.  But, broadcasters should take warning that all of the Democratic Senators in attendance seemed to be sympathetic to the idea of adopting a broadcast performance royalty.  However, it must be noted that all also seemed somewhat sympathetic to the concerns about the financial impact of the royalty on broadcasters.  Just as members of the House have cautioned broadcasters to negotiate on a royalty before one is imposed on them, Senator Leahy of Vermont, the Chairman of the Committee, echoed those sentiments, promising that "legislation will move" on this issue – meaning that the issue will not simply fade away, despite the signatures on the NAB petition opposing the performance royalty.

Continue Reading Senate Judiciary Committee Hearing on Radio Performance Royalty and Platform Parity for Webcaster Royalties

One of the fundamental questions that surrounds the proposed broadcast performance royalty for the use of sound recordings by over-the-air (or the "performance tax" as it has been labeled by the NAB) is how much it could it cost a broadcaster?  Right now, that question is difficult to determine, as the pending bills do not themselves provide any details as to what the fees would be, except for noncommercial entities and for small broadcasters for whom fixed yearly fees are proposed.  For a broadcaster with a station having over $1.25 million in yearly revenues, the current Congressional bills leave the amount of the royalty to be determined by the Copyright Royalty Board.  In the current Senate draft of the bill, the amount to be paid would be based on the "willing buyer willing seller" standard that has been so controversial for Internet Radio companies. But the hearing to be held by the Senate Judiciary Committee tomorrow will address, among other issues, the question of "platform parity," i.e whether all companies subject to the sound recording performance royalty should pay a comparable rate, so we may see that proposal change as it did in the House version, to some form of the 801(b) standard (about which we wrote here and here).

We will write about the differing rates paid by differing music services in the next few days, especially as it becomes clear as to what rates for Internet radio royalties were agreed to under the most recent settlements with webcasters pursuant to the Webcaster Settlement Act.   But even without a detailed analysis of all of the rates that have been agreed to, certain trends can be seen as to what SoundExchange, on behalf of the artists and copyright holders, believes to be a fair royalty for the use of their music.  And that number is likely to be a "Substantial" one, as suggested by a recent Congressional Budget Office review of the cost to broadcasters of the proposed performance royalty.

Continue Reading Broadcast Performance Royalty – What Would It Cost? The Congressional Budget Office Says A “Substantial” Amount

Even though the National Association of Broadcasters has been successful in getting about 240 Congressional Representatives (far more than a majority of the House of Representatives) to sign onto a resolution opposing the adoption of a performance royalty for the use of sound recordings by broadcasters in their over-the-air programming, the efforts to enact that legislation have not died.  In fact, if anything, these efforts by the recording industry and related associations have intensified – and will be reflected in a hearing to be held by the Senate Judiciary Committee on Tuesday afternoon.   While I’ve seen some commentary suggesting that this is a futile effort because of the signatures on the NAB resolution, there are many reasons that broadcasters must continue to  be wary of the imposition of the royalty, and why they must keep up efforts to stop it from being enacted if they fear its potential impact.

How can this legislation be enacted if a majority of the House of Representatives have signed the resolution stating their opposition?  First, it is important to recognize that the NAB resolution, The Local Radio Freedom Act, is nonbinding.  Congressional representatives who have signed on to the resolution can take credit with their local broadcasters for having done so.  When the time comes for a vote on proposed legislation, it’s possible that these same Representatives could change their mind, or be pressured by artists and labels in their districts to vote differently from their previously expressed sentiments.  With a long way to go in this session of Congress, facing a vote on the royalty and seeing how committed these Representatives are to the positions that they have taken on the resolution is still a real possibility.  The legislation imposing the royalty (or the "performance tax" in the words of the NAB) has passed the House Judiciary Committee, and the Speaker of the House has not yet specifically stated that the bill will not come to a full House vote, even though she has been pressed to do so by broadcast interests.

Continue Reading The Broadcast Performance Royalty – Not Dead Yet, as Senate Judiciary Committee to Hold Hearing on Tuesday

On September 10, 2009, David Oxenford addressed the Christian Music Broadcasters’ Momentum ’09 Conference in Orlando, Florida.  Dave’ s presentation was titled 18 Issues in 18 Minutes: What a Broadcaster Should Worry About From Washington DC.  In 18 minutes, Dave discussed topics including the FCC’s proposed localism rules, sponsorship identification and noncommercial underwriting issues, contest fines, FCC technical operating and public file rules , FCC EEO obligations, and copyright issues including streaming fees and the proposed broadcast performance royalty.  The 18 minute presentation to a general session of the conference was followed by a one-hour "Digging Deeper" session where conference participants asked for more details on many of these issues.

A copy of Dave’s PowerPoint presentation used for the 18 minute session can be found here. 

Davis Wright Tremaine attorneys Amber Husbands and David Oxenford conducted a webinar on August 26, 2009 for the Kansas Association of Broadcasters, discussing legal issues of importance to on-air talent.  Issues discussed included broadcast indecency, station contests, sponsorship identification and payola issues, potential liability that can arise from the use of social media and newsroom issues.  The newsroom issues included libel, slander and defamation; invasion of privacy; issues about taping and hidden cameras; and possible newsgathering torts including trespassing.

A copy of the PowerPoint presentation used with this presentation can be found here.