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Royalties paid for the use of music by broadcasters and digital media companies, and other issues about music rights, can be an incredibly dense subject, with nuances that can be overlooked.  I participated in a CLE webinar earlier this week, sponsored by the Federal Communications Bar Association, where we tried to demystify some of the issues in music licensing (see description here).  I moderated a panel on the Hot Topics in Music Licensing, talking about the broadcast performance royalty, the appeal of the webcasting royalty decision, issues about the proliferation of performing rights organizations seeking royalties for the public performance of musical compositions, and more theoretical issues about the entire process of clearing music for use by broadcasters and other businesses.  To highlight some of the issues, and some of the tensions in the world of music royalties, I put together the attached article.  Hopefully, it provides some context on the relationship between some of these hot topics, and gives some food for thought as to how these issues can be addressed. 

As 2023 begins, our “Hot Topics” panel will look at some of the current legal and policy issues in music licensing that may be relevant to the communications industry.  Most of the issues we will discuss are ones that have been debated, in one form or another, in copyright circles for decades.  But, as copyright can be so complicated with many stakeholders with differing interests, the chances of any final resolution to any of these issues may well be small.  This article is meant to put some of those debates in context, as many of the specific issues, in one way or another, are intertwined. 

The issue that likely will be the most contentious this year (and has been for decades) is the continuing effort of the recording industry to establish a public performance right in sound recordings that would apply to non-digital performances.  For over 25 years, recording artists and the record labels (which usually hold the copyrights to popular recordings) have had a right to a performance royalty for digital performances.  Broadcasters who stream an online simulcast of their programming, along with webcasters and others who make non-interactive digital transmissions, must pay a performance royalty, generally to SoundExchange.  The rates to be paid are set by the Copyright Royalty Board.  But in the US, over-the-air broadcasters, restaurants, bars, clubs, retail establishments, and others who publicly perform music pay only for the performance of the musical compositions (the “musical work”), not for the performance of the song as recorded by a particular artist (the “sound recording”).  That has been a point of contention for a century, almost from the moment when recorded music first appeared, but the issue has become particularly heated in the last two decades, once the sound recording public performance right was established after being mandated by copyright legislation in the late 1990s.Continue Reading  An Overview of the Hot Policy Topics in Music Licensing

Here are some of the regulatory developments of significance to broadcasters from the past  week, with links to where you can go to find more information as to how these actions may affect your operations.

  • The US Court of Appeals this week determined that the FCC’s requirement that broadcasters confirm by searching DOJ and FCC

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In recent months, lawsuits have been filed against streaming audio service Pandora by comedian Lewis Black, the estate of Robin Williams, and representatives of other comedians seeking public performance royalties for the underlying comedic work – not the recording of the comedy bit for which a royalty is already paid, but instead for the script of that comedic performance.  Reportedly, Spotify has pulled comedy recordings from its service to avoid such threats.  What is the issue here?  The claim in the lawsuits is that the authors of the script of any comedy bit have the right to control the performance of their works in the same way that composers of a song control the rights to use that song.  The argument is that, if these services are playing these comedy bits through a digital audio performance, not only do the comedians who are recorded performing such bits deserve a royalty, but a separate royalty should also be paid to those who wrote it.

In these lawsuits, the analogy is made to the copyrights for the performance of a song.  For music streamed by any digital audio company, there are two royalties that must be paid.  The composers of the music are paid for the performance of their work (both in the digital and analog worlds).  These payments are usually made through a performing rights organization (a “PRO”) which represents thousands (or sometimes millions) of composers and their publishing companies.  ASCAP, BMI and SESAC are the traditional PROs who, for radio and television, all have their rates reviewed for fairness under antitrust laws.  As we have written (see for instance our articles here and here), a new PRO for musical works, GMR, has recently settled litigation with the Radio Music License Committee and is assessing most commercial radio stations a royalty for the performance of music by the composers that it represents.  For digital performances, a royalty is also owned for the performance of the sound recording – the composition as recorded by a singer or band.  Through an act of Congress, all noninteractive digital performances (see our article here on the difference between interactive and noninteractive services) can be played by a digital music service by paying a “collective” that acts like a PRO by collecting royalties from those services that transmit the music to their listeners and distributing those royalties  to the performers and their record labels (as the labels usually own the copyright in the recording).  Since the sound recording digital performance royalty was first collected about two decades ago, SoundExchange has served as the “collective.”  The lawsuits by the comedians seek to collect these dual royalties from digital services that transmit comedy recordings to their listeners.  Why is this not covered by the royalties that services already pay?
Continue Reading Public Performance Royalties for Comedy Recordings? – New PROs Claim that Additional Royalties Are Due