The NAB recently announced that a majority of Congress has signed on to the Local Radio Freedom Act, the nonbinding resolution where Congressional representatives declare their opposition to the adoption of a broadcast performance royalty.  With that announcement, it is worth taking another look at what a broadcast performance royalty is and what might happen next.  We have been covering the arguments about a broadcast performance royalty for over 13 years, but it still bears consideration as I find that there are still broadcasters who do not fully understand the issues.

As we’ve written before, the royalties that broadcasters pay to ASCAP, BMI, SESAC and even GMR are paid for the public performance of musical compositions (or “musical works,” the words and music in a song).  These royalties are paid to the composers of music (and the copyright holders in the musical compositions, usually a publishing company). The broadcast performance royalty proposes that broadcasters also pay royalties for the public performance of sound recordings.  A sound recording is the actual recording of a musical composition by a singer or band.  Sound recording royalties are paid to the performers (and the copyright holders in the performances, usually the record labels). Broadcasters do pay these royalties now to SoundExchange when they stream their programming on the Internet. But in the US, other than digital audio services (like webcasters and music services like Pandora, Sirius XM, Spotify or Apple Music), over-the-air broadcasters and other businesses (like bars, restaurants, and retail establishments) who play sound recordings are not subject to a performance royalty for the performance of those sound recordings, though such royalties are paid in many other countries in the world.
Continue Reading NAB Announces that a Majority in Congress Have Signed on to the Local Radio Freedom Act – A Look at the Broadcast Performance Royalty Debate

Our friends at Edison Research recently released a study on music discovery highlighting the ways in which people discover new music.  Among their findings was that broadcast radio, YouTube and streaming services were among the largest sources for that discovery.  That report caused one radio trade publication to suggest that podcasts, which ranked relatively low among the places where new music is discovered, might have opportunities to grow there.  What that suggestion overlooks is one of the biggest reasons that music podcasts have not taken off – rights issues.  There still is no easy way to clear the rights to major label music – so most podcasts are limited to spoken word featuring limited, directly licensed music.

That comment made us think that we should re-run an article from earlier this year, that explained music rights in podcasts.  That article was prompted by the settlement between the Radio Music License Committee and BMI over music royalties for broadcasting.  While a press release about the settlement said that the BMI license includes the use of music in podcasts, we pointed out that radio stations should not assume that means that they can start to play popular music in their podcasts without obtaining the rights to that music directly from rightsholders.  They cannot, as BMI controls only a portion of the rights necessary to use music in podcasts and, without obtaining all of the remaining rights to that music, a podcaster using the music with only a BMI license is looking for a copyright infringement claim.
Continue Reading Using Music in Podcasts – Talk to the Copyright Holders – Why You Can’t Rely on Your ASCAP, BMI, SESAC and SoundExchange Licenses

The Department of Justice’s Antitrust Division yesterday announced that it was starting a review of the ASCAP and BMI antitrust consent decrees that govern the United States’ two largest performing rights organizations for musical compositions (referred to as the “musical work”). The DOJ’s announcement of the initiation of the examination of the consent decrees poses a series of questions to which it invites interested parties – including users, songwriters, publishers and other interested parties – to file comments on the decrees, detailing which provisions are good and bad and, more broadly, whether there is a continuing need for the decrees at all. Comments are due on July 10.

This re-examination of the decrees has been rumored for many months. Back in March, we wrote about those rumors and the role that Congress may play in adopting replacement rules should the DOJ decide to fundamentally change the current provisions of the consent decrees. The DOJ itself just recently looked at the consent decrees, starting a review only 5 years ago with questions very similar to those it posed yesterday (see our post here on the initiation of the last review 5 years ago). That review ended with the DOJ deciding that only one issue needed attention, whether the decrees permitted “fractional licensing” of a song. We wrote about that complex issue here. That issue deals with whether, when a PRO gives a user a license to play a song, that user can perform the song without permission from other PROs when the song was co-written by songwriters who are members of different PROs. The DOJ suggested that permission from one PRO gave the user rights to the entire song, an interpretation of the decrees that was ultimately rejected by the rate courts reviewing the decrees (see our article here).   So, effectively, the multi-year review of the consent decrees that was just concluded led nowhere. But apparently the DOJ feels that it is time to do it all again. To fully understand the questions being asked, let’s look at what the consent decrees are, and why they are in place.
Continue Reading DOJ Starts Review of BMI and ASCAP Consent Decrees – Exploring the Background of the Issues

The alphabet soup of organizations that collect royalties for playing music has never been easy to keep straight, and today royalty issues sometimes seem even more daunting with new players like GMR (see our articles here, here and here) and arguments over issues like fractional licensing that only a music lawyer could love (see our articles here and here). But there are certain basics that broadcasters and other companies that are streaming need to know. Based on several questions that I received in the last few weeks, I’ve been surprised that one of the issues that still seems to be a source of confusion is the need to pay SoundExchange when streaming music online or through mobile apps. For the last 20 years, since the adoption of the Digital Millennium Copyright Act, anyone digitally transmitting noninteractive music programming must pay SoundExchange in addition to ASCAP, BMI and SESAC (and more recently GMR) for the rights to play recorded music – unless the service doing the digital transmission has directly secured the rights to play those songs from the copyright holders of the recordings – usually the record labels.  Why is there this additional payment on top of ASCAP, BMI and SESAC?

SoundExchange represents the recording artists and record labels for the royalties for the performance of the recording of a song (a “sound recording” or a “master recording”).  ASCAP, BMI, SESAC and GMR by contrast represent the songwriters who wrote the song (not the performers) and their publishing companies.  When you play music on your over-the-air radio signal, you only pay for the public performance rights to the underlying musical composition or “musical work” as it is often referred to in the music licensing world – the words and music of the song.  This money goes to the songwriters and their publishing companies (the publishing companies usually holding the copyright to the musical composition). But, in the digital world, for the last 20 years, anyone who streams music, in addition to paying the songwriters, must pay the performers who recorded the songs and the copyright holders in the sound recordings (usually the labels).  That is the royalty that SoundExchange collects.
Continue Reading Are You Streaming Your Radio Station? Reminder that Broadcasters Need to Pay Royalties to SoundExchange as well as ASCAP, BMI and SESAC

Last week, I listened in to presentation by RAIN News providing an excellent overview of the digital music industry (their Whitepaper setting out the findings reported during the presentation is available here).  One statement in that presentation suggested to me today’s topic – the use of music in podcasts.  In the RAIN presentation, a statement was made that most major podcasts are spoken word, but no explanation of that fact was provided. One of the biggest reasons for the lack of music in podcasts has to do with rights issues, as the royalties paid to SoundExchange and even to ASCAP, BMI and SESAC don’t apply to traditional podcasts meant to be downloaded onto a digital audio recording device like an iPhone or any other smartphone.  We wrote a warning about this issue a couple of years ago, but as the popularity of podcasts seems to once again on the rise, the warning is worth repeating.

The rights that a broadcaster or digital music company gets from ASCAP, BMI and SESAC (commonly called the “PROs” or performing rights organizations) deal with the public performance of music.  The PROs license the “musical work” or “musical composition” – the lyrics and the notes that make up the song.  They do not license particular recordings of the song.  As we have discussed before in other contexts, a public performance is a transmission of a copyrighted work to multiple people outside your limited friends and family (see our discussions here and here).  SoundExchange’s royalties also deal with public performance – but it is licensing the public performance of the sound recording – the words and music as recorded by a particular artist.  And SoundExchange only licenses such performances where they are made by a non-interactive service – where the user cannot determine what songs it will hear next (and where the service meets certain other requirements – see our article here for some of those additional requirements).  Podcasts don’t fit within the SoundExchange limitations, and while there has been some debate about whether the PROs have any licensing role in the podcast world (see this article), additional rights from music publishers (who usually control the musical composition copyright) are also needed.
Continue Reading Beware of Music in Your Podcasts – SoundExchange, ASCAP, BMI and SESAC Don’t Give You the Rights You Need