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

decision by a US District Court in New York was just released, setting the rates to be paid to ASCAP for the use of their composers’ music by Yahoo!, AOL and Real Networks.  The decision set the ASCAP rates at 2.5% of the revenues that were received by these services in connection with the music portions of their websites.  These rates were set by the Court, acting as a rate court under the antitrust consent decree that was originally imposed on ASCAP in 1941.  Under the Consent Decree, if a new service and ASCAP cannot voluntarily agree to a rate for the use of the compositions represented by ASCAP, the rates will be set by the rate court.  The Court explained that they used a "willing buyer, willing seller" model to determine the rates that parties would have negotiated in a marketplace transaction  – essentially the same standard used by the Copyright Royalty Board in setting the rates to be paid to SoundExchange for the use of sound recordings by non-interactive webcasters (see our post here for details of the CRB decision).  The ASCAP decision, if nothing else, is interesting for the contrasts between many of the underlying assumptions of the Court in this rate-setting proceeding and the assumptions used by the Copyright Royalty Board in setting sound recording royalty rates.

First, some basics on this decision.  ASCAP represents the composers of music (as do BMI and SESAC) in connection with the public performance of any composition.  This decision covered all performances of music by these services – not just Internet radio type services.  Thus, on-demand streams (where a listener can pick the music that he or she wants to hear), music videos, music in user-generated content, karaoke type uses, and music in the background of news or other video programming, are all covered by the rate set in this decision.  Note that the decision does not cover downloads, presumably based on a prior court decision that concluded that downloads do not involve a public performance (see our post here).  In contrast, the CRB decision covered the use of the "sound recording" – the song as actually recorded by a particular artist – and covers only "non-interactive services," essentially Internet radio services where users cannot pick the music that they will be hearing.


Continue Reading Rate Court Determines ASCAP Fees for Large Webcasters – Some Interesting Contrasts with The Copyright Royalty Board Decision

The Copyright Royalty Board has asked for comments on proposed royalty rates for the use of sound recordings by "Preexisting Subscription Services."  In adopting the Digital Millennium Copyright Act, Congress divided digital music services into various categories, each of which are assessed different royalties for the use of sound recordings. Preexisting subscription services were those digital subscription music services in existence as of the date of the adoption of the DMCA. Basically, these were the digital cable music services that were in operation in 1997.  In the proceeding now being resolved by a settlement between Music Choice (the one remaining service that was in existence in 1997) and SoundExchange, the companies propose a royalty of 7.25% of gross revenues of the service for the period 2008-2011, and 7.5% of gross revenues for 2012. A $100,000 minimum payment is due at the beginning of each year.  Comments on the settlement are due on November 30.  As set forth below, this settlement sets the stage for the upcoming decision on satellite radio royalty rates – as these two services are both governed by a royalty-setting standard that is different than that used for Internet radio.

The Copyright Royalty Board announced the proceeding to set the royalties for Preexisting Subscription Services at the same time as they initiated the proceeding to set new royalties for Satellite Radio Services – which were also considered to be preexisting services at the time of the adoption of the DMCA – not because they were actually operating, but as their services had been announced and construction permits to construct the satellites had been issued by the FCC.  No settlement has been reached with the satellite radio services (except as to limited "new subscription service" that XM and Sirius provide in conjunction with cable and satellite television packages where, according to the CRB website, a settlement has been reached), and a hearing was held earlier this year to take evidence on what the rates for those services should be.  As we’ve written before, SoundExchange has requested royalties that would reach 23% of a satellite radio operator’s gross revenues.  The satellite radio case has been completed, briefs filed, and oral arguments were held in October.  A decision in the case is expected before the end of the year.


Continue Reading Copyright Royalty Board Asks for Comment on Music Choice Royalty – Satellite Radio is Next