Update – February 25, 2009 – The change in fees did not become effective as planned – see our post here

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Months ago, the FCC announced that the fees paid by broadcasters (and other services) for the processing of applications and other filings would be going up.  It was only recently that the notice was published

2009 – a new year, and a whole new cycle of regulatory requirements.  We wrote last week about the potential for changes in regulations that may be forthcoming but, like death and taxes, there are certain regulatory dates each year that broadcasters need to note and certain deadlines that must be met.  Those dates

The FCC has released a Public Notice, warning regulated entities that there are websites that pretend to be the site on which FCC regulatory fees are to be electronically filed.  These so-called "phishing" sites are apparently out to obtain from broadcasters and other entities regulated by the FCC information about their financial

The FCC today released its schedule for Regulatory Fees that will be paid in September of this year.  The Order set the fees to be paid by entities regulated by the FCC, increasing those fees as required by Congress by approximately 7.5% over the fees paid last year. The fees to be paid by broadcasters are set forth below.  Fees for all other services can be found in the appendix to the FCC’s Order setting the fees.  The exact window for paying the fees has not yet been set, but should be announced later this month, in a public notice that will also provide more details on the filing process.  The Order also contains a Further Notice of Proposed Rulemaking, asking if the FCC should change the allocation of fees between the services regulated by the FCC.  As to broadcasters specifically, the FCC asks if it should adopt fees for Digital Television, as the current FCC fees apply only to analog television.  Comments on these issues will be due 30 days after this Order is published in the Federal Register.

In reaching its decision as to the fees for 2008, the FCC decided not to impose a fee on AM expanded band stations for the current fee cycle – but it will decide whether to do so after the FCC decides the issue raised in the pending Diversity proceeding as to whether to allow licensees to retain those AM stations if they are held by a small business entity.

Fees are paid based on the status of the station as of October 1, 2007 (so, for instance, if a station had received an upgrade in the interim, it pays based on its old facilities).  However, the licensee who owns the station as of the date that fees are due is responsible for paying those fees, even if it did not own the station as of October 1, 2007.  Fees for radio are set by a combination of the predicted population served by the station and the class of the station, while TV station’s fees are paid based on TV market size.  Parties holding construction permits for new stations pay flat fees regardless of the area served by the proposed station, and there are also flat fees for broadcast auxiliaries, television stations that are authorized as satellites of other stations, and secondary broadcast stations (e.g. translators).  Noncommercial operators are exempt from the fees.  The fees for broadcasters can be seen by clicking on the "Continue Reading" link below.  Continue Reading FCC Sets 2008 Regulatory Fees and Starts Proceeding to Reallocate Future Fees

The new iPhone, connecting as it does to ATT’s high speed wireless network, has allowed Internet radio to go wireless.  While this has been possible on many platforms in the past, it has never been as easy, seamless, ubiquitous and as promoted as with the new iPhone.  The CBS radio  stations on AOL Radio, Pandora and Soma FM are all available, as are add-on applications that open the door to streaming many other Internet radio stations.  Tim Westergrin of Pandora  was quoted as stating that the iPhone would change people’s expectations of Internet radio, making it "a 360-degree solution – in the car, in the home, on the go."  But, as with any application that increases the audience of Internet radio, it comes with a cost, as the delivery of Internet radio by a mobile device, like a wireless phone, is subject to the same royalties established by the Copyright Royalty Board last year and currently in effect while on appeal – rates that are computed by the "performance," i.e. one song streamed to one listener (see our reminder on the per performance payment, here).

In the requests for reconsideration of last year’s CRB decision, SoundExchange had asked that the Board make clear that its decision applied to noninteractive streams (i.e. Internet radio) delivered to wireless devices like mobile phones.  In one of the few actions taken on reconsideration, the Board granted that request (see our summary of the reconsideration, here, and the CRB decision here).  Thus, services making their streams available to the iPhone (except for those covered under the special percentage of revenue offer that SoundExchange made to a limited class of small webcasters, and noncommercial webcasters under 159,140 aggregate tuning hours a month), must count performances and pay the per-performance royalties due to SoundExchange.Continue Reading Internet Radio on the iPhone – Remember the CRB Royalties Apply

We recently wrote about the challenge to appointment of the Copyright Royalty Board’s judges filed by Royalty Logic as part of the appeal of the Board’s decision on Internet Radio royalties.  Royalty Logic argued that the appointment of the Copyright Royalty Judges was improper, as the Librarian of Congress was not the "head of a department" who can appoint lesser government officials under the Appointments Clause of the Constitution.  Thus, Royalty Logic contends that the decision reached by the Board as to Internet radio royalties was a nullity, as the Board effectively does not legally exist.  Earlier this week, the Board and SoundExchange filed their replies to the Royalty Logic motion, arguing that, in fact, the Librarian is the head of a department, as he is appointed by the President and approved by Congress and runs a government "department," i.e. the Library of Congress, of which the Copyright Office is a part.  In demonstrating that the Library is a department, the briefs reach back to the creation of the Library by Thomas Jefferson, and look at the legislative history of legislation modifying the powers of the Library and the process for the appointment of the Librarian – legislation passed in 1870 and 1897.  Essentially, the very technical argument about why the Board was not properly constituted was met with an equally technical one that says it was properly formed.  Clearly, arguments only lawyers could love.

While Royalty Logic will have the opportunity to respond, the litigation process continues on the main portion of the appeal, as SoundExchange filed its intervenor’s brief the week before last, defending the decision of the Copyright Royalty Board.  In one notable departure, SoundExchange, while contending that the Board was correct in determining the minimum fees that would be required of webcasters, it said that, because of the agreement that it reached with certain webcasters that would cap minimum fees at $50,000  no matter how many channels a service might have (see our discussion of the agreement here), it asked that the Court remand that one limited matter back to the Board for adoption of the limitation on minimum fees so that it would apply to all webcasters and not just those who signed the agreement.  In all other respects, SoundExchange opposed the briefs of the webcasters.Continue Reading Yes We Do Exist – Claims Copyright Royalty Board

The FCC today released a Notice of Proposed Rulemaking asking for public comment on its proposed Regulatory Fees for 2008.  These fees are paid annually by most commercial entities that are regulated by the FCC for the privilege of being regulated.  Noncommercial broadcasters are exempt from the fees.  The fees are normally paid in August or September, during a period of several days that will be established by the Commission after receiving comments on this proposed fee schedule.  The fees for broadcasters are, as they seemingly always do, increasing.  The Commission is also asking for comment on one specific change in how broadcast fees are collected, asking if it should collect fees from AM station licensees who have expanded band stations for both the expanded band station and the in-core channel, if the licensee is still operating both.  Currently, fees are only paid once by expanded band licensees. 

Broadcast fees are based on Class of Service and the population covered by a station.  For AM stations, the proposed fees are to increase from $400 per station for the least powerful stations in the smallest market to $450, and from $7275 for high-powered stations in the largest markets  to $7925.  For FM stations, the least powerful stations in the smallest markets are proposed to increase from $575 to $600.  For high power stations in big markets, the increase is from $9125 to $10,200.  For TV stations, the fees range from $1875 for a UHF station in the smallest markets, up to $69,400 for a VHF station in the largest markets, up from $1750 and $64,300 last year.  Continue Reading FCC Proposes 2008 Regulatory Fee Schedule

Under the compulsory license for the use of sound recordings – the license which allows Internet radio services to use all legally recorded sound recordings by paying a royalty set by the Copyright Royalty Board – the designated collection agency can, once each year, audit a licensee to assess its compliance with the royalty requirements.  Under the law, when the collective decides to audit a company, it must notify the Copyright Royalty Board, who then gives public notice of the fact that an audit is to take place.  The Copyright Royalty Board has just announced that SoundExchange has decided to audit Last.FM.  Based on a number of public statements, SoundExchange has been citing Last.FM as an example of problems with royalties – contending that Last.FM had paid royalties of only a couple of thousand dollars a year, under the Small Webcasters Settlement Act, just before selling out to CBS for over $200 million.  Given SoundExchange’s tough talk about Last.FM, this notice of an audit is not surprising.  SoundExchange’s focus on this company illustrates the difficulty of valuing music use, and the different perceptions of music users and copyright holders as to what that value should be.

 In past years, SoundExchange has audited a number of webcasters – usually large webcasters.  As SoundExchange must bear the cost of the audit unless a significant underpayment is discovered, it is unlikely that more than a few companies will be audited each year.  However, as SoundExchange has made such a big deal of Last.FM, with witnesses on performance royalty issues mentioning it at Congressional hearings, and representatives mentioning it on various industry conferences (including SoundExchange President John Simson’s reference to the company on a panel on which we jointly appeared at Canadian Music Week earlier this month), many expected that an audit would be forthcoming.Continue Reading SoundExchange to Audit Internet Radio Royalty Payments of Last.FM – What is the Value of Music?

Here we are, almost a full month into the new year, and a number of important dates for broadcasters are already upon us.  As we wrote here, for instance, the payment of a minimum fee to SoundExchange by radio stations streaming their signals on the Internet is due today.  Lowest unit rates are in