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On Friday, the Copyright Office extended by one week the deadline for comments on its wide-ranging proceeding on the current music licensing regime and whether reforms are necessary or appropriate.  We wrote about the proceeding and the many questions that it raises here.  Comments are now due on May 23.  Comments can be filed on the Copyright Office website, here. 

In addition, the Copyright Office announced a series of three roundtable discussions to be held at different sites across the country – in Nashville, Los Angeles and New York.  At these roundtables, stakeholders in the music industry and interested members of the public can address the issues raised in the Inquiry.  Interested parties who want to be considered for guaranteed participation in the round table discussions need to sign up by May 20, using the form available here.  At that same link, the discussion topics for these roundtables are set out – covering the broad range of music royalty and licensing issues raised in the Inquiry.  Clearly, this is an important proceeding in which many in the music and media industries will want to participate – but it is just one of many proceedings that may affect the way that broadcasters and digital media services use music in the future.
Continue Reading Copyright Office Announces One Week Extension for Comments on Music Licensing Inquiry and 3 Roundtable Discussions of the Issues – Just One of Many Proceedings Affecting Music Rights and Royalties

The Copyright Office recently issued a Notice and Request for Public Comment on a study that they have commenced on music licensing in all of its forms.  We’ve written about the complexity of the music licensing process many times, and about proposals for reform.  Many of these proposals have been issued in connection with the speeches of Copyright Register Maria Pallante’s discussion of copyright reform (see our article here), and the subsequent Green Paper on Copyright issued by the Patent and Trademark Office (see our article here).  This Notice appears to be one more step in this overall review of copyright underway throughout the administration and in Congress.  The Notice released by the Copyright Office is wide-ranging, and touches on almost every area of controversy in music licensing.  Comments are due on May 16, and the Copyright Office promises to hold roundtable discussions to further explore the issues in music licensing.

The issues on which the Copyright Office asks for comments deal both with the licensing of the musical composition or musical work (the words and music of a song) and the sound recording (the song as actually recorded by a particular artist).  The request deals with both the public performance right for musical compositions, usually licensed through ASCAP, BMI and SESAC, and the rights to make reproductions of the works, which are usually licensed by the music publishers, sometimes through organizations like the Harry Fox Agency.  On the sound recording side of the music world, the rights are usually licensed by the record company except for the public performance royalties paid by non-interactive music services, which are collected in the United States by SoundExchange. 
Continue Reading Copyright Office Begins Wide-Ranging Inquiry Into Music Licensing

In one week this month, Apple announced that it will get into Internet Radio, and Pandora, the biggest player in that space, announced that it will be buying a traditional, over-the-air radio station. What do these two big announcements say about the state of music royalties for digital music services? Apple’s struggles to get its service launched were well chronicled, as it was working to get an agreement for its new service from the record labels. What was less reported was its simultaneous negotiations with the music publishing community. Pandora’s radio station purchase, on the other hand, was admittedly a simple deal to take advantage of a blanket license available to all similarly situated companies owning radio stations. We’ll explain why these two deals were so different, and what impact the deals may have on other digital music services below.

The Apple deal is one negotiated with the copyright holders for the simple reason that the service that it is offering appears to be an interactive one, unlikely to be completely covered by any statutory (compulsory) or other blanket license. As we’ve written before, a statutory or compulsory license is one where the copyright holder, by law, cannot refuse to make available his or her copyrighted work. But, in return, the copyright holder receives a royalty set by the government – in the US, usually the Copyright Royalty Board. In the music world, the two most common compulsory licenses are the ones that allow webcasters and other digital music services to publicly perform sound recordings (the royalties paid by webcasters, satellite radio and digital cable radio companies to the record companies and artists), and the royalty that allows users (including record companies) to make reproductions of musical compositions in connection with the making of a sound recording, downloads, ringtones, and probably on-demand streaming services. This royalty is commonly referred to as the mechanical royalty, and is paid to songwriters and composers or their publishing companies. To qualify for these compulsory licenses, a company must follow certain rules. If they don’t, then they have to negotiate directly for the licenses from the copyright holder – which appears to be what Apple did.Continue Reading Apple Announces an Internet Radio Offering and Pandora Buys a “Real” Radio Station – What Does It Mean for Music Royalties?

With the National Association of Broadcasters big convention coming up next week in Las Vegas, this week we’ll look at a couple of the issues that will likely be discussed when the industry gathers for its annual reunion. On Sunday, before most of the NAB Show begins, the Radio and Internet Newsletter (RAIN) will be holding its RAIN Summit West, where I will be moderating a panel called The Song Plays On – which will focus on the music royalties paid by Internet Radio and other digital music services. We’ll not focus on what the current royalties are, but instead to try to explore what they could be in the future. This is really one of the most difficult issues in the industry, as the two sides (and really there are many more than two sides to this issue) come at the issue from far different perspectives. We will try to bridge those differences and explore where there might be common ground for music users and copyright holders to come together to arrive at mutually beneficial solutions to this thorny issue.

The Internet Radio Fairness Act introduced in Congress last year brought this issue into sharp focus. That Act sought to bring about a number of reforms in the way that the Copyright Royalty Board sets various music royalties – particularly the rates that apply to Internet radio stations. We wrote about the provisions of the bill dealing with Internet radio royalties soon after the bill was introduced. After that article, there was a Congressional hearing on the issue, and lots of debate before the bill died at the end of the year as the session of Congress expired. This year, the Chair of the House Judiciary Committee has promised a number of hearings on all aspects of music and audio copyright issues, though none have yet been scheduled. But the debate about IRFA last year illustrated the divide between the various sides in the music royalty debate. Continue Reading Why the Differing Perceptions of the Value of Music by Digital Music Services and Copyright Holders Make Royalty Decisions So Hard

Every year, about this time, I dust off the crystal ball to offer a look at the year ahead to see what Washington has in store for broadcasters.  This year, like many in the recent past, Washington will consider issues that could fundamentally affect the broadcast industry – for both radio and TV, and affecting the growing on-line presence of broadcasters.  The FCC, Congress, and other government agencies are never afraid to provide their views on what the industry should be doing but, unlike other members of the audience, they can force broadcasters to pay attention to their views by way of new laws and regulations. And there is never a shortage of ideas from Washington as to how broadcasters should act.  Some of the issues discussed below are perennials, coming back over and over again on my yearly list (often without resolution), while others are unique to this coming year.  Issues unique to radio and TV, and those that could affect the broadcast industry generally, are addressed below.

Television Issues

Spectrum issues have been the dominant TV concerns in past years, first with the digital transition, and more recently with the "white spaces" rulemaking and the proposals advanced as part of the FCC’s Broadband Plan to reclaim part of the TV spectrum for wireless broadband uses.  These issues remain on the FCC’s agenda, as do new issues dealing with the carriage of television stations by cable and satellite television providers.  Specific issues for TV include:

Spectrum reclamation:  The initial proposals for the reclamation of part of the TV spectrum for wireless broadband were laid by the FCC’s Notice of Proposed Rulemaking released in November, looking at how the TV spectrum could be used more efficiently, and how incentive auctions encouraging some TV stations to vacate their channels could be conducted.  Congress still has to pass legislation to allow such auctions, and it will probably also mandate a spectrum inventory to determine if the reclamation of the TV spectrum is really necessary to provide for wireless broadband needs.  At the same time, some TV operators have begun to talk about television stations themselves providing broadband service with their excess spectrum.  While Congress will probably act on the auction bills this year, and there will be much debate about the details of the reallocation issue, so don’t expect final resolution of this matter in 2011.

White Spaces:  The FCC has authorized the operation of wireless devices in the television spectrum, resolving many of the concerns about interference to television operators by requiring all wireless users to protect operating TV channels in specific areas based on databases of existing users, not on spectrum sensing techniques.  But implementation issues still need to be worked out – including finding parties to compile and administer the databases to make sure that all existing spectrum users who are to be protected are registered.  Expect action on these matters this year, but no actual white spaces use until after these implementation efforts are completed.

LPTV Digital Transition:  While many members of the general public may consider the digital television transition to be complete, many Low Power TV stations and TV translators are still operating in analog.  The FCC has commenced a proceeding to require the transition of these stations to digital, suggesting that the transition be complete as early as the end of 2012.  Expect controversy on this issue.  Many LPTV stations feel that being forced incur the costs to covert to digital is premature and could imperil broadcast service, especially to rural areas and minority populations who rely on translators and LPTV stations, if spectrum repacking caused by any future repurposing of TV spectrum for broadband forces further technical changes.  These issues will be considered by the Commission this year.

Retransmission Consent Reform:  At the end of 2010, there was much controversy over retransmission consent issues, as there were instances where broadcasters and cable operators and other multichannel video programming distributors had difficult negotiations over the carriage fees to be paid to the TV stations.  FCC sources stated at the end of the year that a proceeding will be initiated to determine if the rules governing the negotiation process should be changed.  The multichannel video programming distributors and some public interest groups argue that the FCC should protect viewers who may have their TV service disappear if a TV station does not reach a deal with a MVPD, while the broadcasters argue that the ability to remove the station is the heart of the negotiation, and removing the risk of the MVPD losing the right to carry the station would negate the negotiation.  Look for this proceeding to commence early in the year but, as it will no doubt be very controversial, it may take some time to resolve.

DMA Boundary Issues:  The FCC has also begun a proceeding to look at DMA boundaries that cross state lines to see if every television viewer should be guaranteed to receive service from cable or satellite providers of a station in his or her state.  Television stations fear that this guarantee could upset traditional television markets, and could have an impact on retransmission consent negotiations in border counties.  Comments in this proceeding are due on January 24th, 2011.Continue Reading Gazing Into the Crystal Ball – What Washington Has In Store For Broadcasters in 2011

In the last two weeks, David Oxenford has, at two different conferences, moderated panels on digital music rights and licenses.  At the Digital Music Forum East, in New York City on February 25, 2010, his panel focused on rights and licenses generally, featuring panelists from SoundExchange, BMI, the Harry Fox Agency, Rightsflow and MediaNet. …

Broadcasters need to be aware that ASCAP, BMI and SESAC (the "performing rights organizations" or PROs) don’t cover them for all uses of music – especially uses that may be made on station websites.  Offering downloads, podcasts, and streaming video featuring music all require specific permission from music rights holders.  And, as we wrote just…

Last week, the FCC released a decision denying objections to the sale of the NY Times-owned radio station in New York City – objections based on the fears of certain listeners that the sale would mean the loss of the station’s classical music service.  In rejecting the petitions, the FCC relied on the long-standing policy of the FCC not to get into format questions, citing a thirty year old policy statement, upheld by a Supreme Court decision, which found that such review "would not benefit the public, would deter innovation, and would impose substantial administrative burdens on the Commission."  In other words, the Commission concluded some thirty years ago that it had no place in making programming decisions for broadcasters.  It is ironic that this decision was released on the same date as comments were due at the FCC on the MusicFirst petition arguing that broadcasters should be compelled to air specific content – commercials that advocate the adoption of a performance royalty and music from performers who supported the royalty. 

It appears from a review of the Commission’s Electronic Comment Filing System that, while the FCC solicited comments on the MusicFirst petition, MusicFirst itself did not choose to file anything in response to that request.  A few musicians’ groups did file comments, echoing the concerns originally raised by MusicFirst, but with very little specificity to support the implication that there was a nationwide conspiracy of broadcasters to boycott music from royalty supporters.  And, while most of the comments stated that they did not want to abridge the First Amendment rights of broadcasters, they nevertheless went on to say that broadcasters who did not air statements in support of the royalty should have sanctions imposed.  Maybe I’m missing something, but that sure seems to be an invitation to government compelled speech.   The NAB filed extensive comments addressing the First Amendment implications of the complaint. Continue Reading FCC Says It Will Stay Out of Programming Decisions – On Same Day MusicFirst Petition Comments Were Due

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