noninteractive service

We are waiting on the Copyright Royalty Board to release its decision setting the royalties that webcasters (including broadcasters who simulcast their over-the-air programming on the Internet) will pay to SoundExhange for the public performance of sound recordings in the period 2021 through the end of 2025.  As we wrote here, that decision would normally have been released in December but, as the trial to establish those rates was delayed by the pandemic and held virtually over the summer, the decision on rates could come as late as this April, though once effective it will be retroactive to all streaming that has occurred since January 1 of this year.  While we await the announcement of the new rates, as I’ve recently received several questions about the rules that apply to streaming under the statutory license, I thought that I would take a quick look at the “performance complement” and other rules that apply to companies that rely on this license.

Note that the rules set out below are slightly different for certain broadcasters, as the NAB in 2016 entered into agreements with Sony and Warner Music Groups to waive certain of the statutory requirements for broadcasters who stream their over-the-air signals on the Internet.  These agreements allow broadcasters to stream their normal over-the-air programming featuring music from these labels without having to observe all of the obligations set out below.  We summarized those waivers here, and hope that they will be further extended to cover the new royalty term.  Also, some big webcasters have negotiated relief from these requirements (see our article here).  But for those not subject to a waiver, let’s look at some of the rules that webcasters relying on the statutory license are to observe.
Continue Reading Looking at the Performance Complement and Other Rules that Apply to Webcasting Companies Relying on the Sound Recording Statutory License

Recently, the Radio Music License Committee sent out a memo to broadcasters about a July 8, 2019 SoundExchange payment deadline for pre-1972 sound recordings.  As with everything in copyright law, the issues surrounding pre-1972 sound recordings are complicated, and the RMLC notice, while seemingly straightforward, still resulted in our receiving lots of questions.  These questions may have been compounded because of notices sent to broadcasters back in April about another filing deadline concerning these recordings which caused much consternation for what was, for most broadcasters, a matter of little concern.  For most broadcasters, neither of these dates are of particular concern unless the broadcaster has been identifying pre-1972 sound recordings and not paying SoundExchange royalties when those songs are streamed, and we understand that most broadcasters have in fact been paying SoundExchange for these recordings.  But let’s try to explain what is going on in a little more detail.

First, let’s look at the basics.  Sound recordings (the recording of a particular band or singer performing a song) were originally not covered by federal copyright law.  The law provided protections for “musical works” (i.e. the musical composition, the words and musical notes of the song), but the mere recording of that work was initially not seen as a creative work.  It was thought of more as a mechanical rendering of the real creative work – the underlying song.  So when recordings came to have real value in the first half of the last century, recording artists had to rely on state laws to prevent other people from making and distributing copies of their recordings. Laws against what we would refer to as bootlegging or pirating of recordings were passed in most states, and lawsuits against bootleggers would be brought under these state laws.  It was not until 1972 that Congress, through an amendment to the Copyright Act, recognized that the recordings were themselves creative works entitled to copyright protection.  But that amendment did not fully make all pre-existing recordings subject to the Copyright Act, instead leaving most sound recordings first recorded in the United States prior to the adoption of the amendment to the Act in February 1972 subject to state laws until 2067.
Continue Reading Pre-1972 Sound Recordings and the July 8 SoundExchange Filing Deadline

Update – January 24, 2019 – the notice seeking petitions to participate has been published in the Federal Register, setting a filing deadline of February 4, 2019.  See our article here for more details.

In our summary of January regulatory issues for broadcasters, we suggested that the Copyright Royalty Board this month might start

Many are sitting around enjoying their holiday treats while listening to the Beatles on their favorite on-demand streaming service, and the press is treating this as a breakthrough – usually omitting the fact that the Beatles have been available on many streaming services for as long as there have been streaming services, namely on Internet radio.  We’ve twice written about this fact, first when the Beatles became available on iTunes, here, and then on the 50th anniversary of their invasion of America, here.  And we also recently wrote about the same legal issues which explained why Adele could withhold her new recording “25” from many streaming services, but not from Internet radio.  With the Beatles back in the headlines, for some post-Christmas holiday reading, we thought that we would reprise our 2014 article about the Beatles long absence from on-demand streaming services.  Here it is:

50 years ago the Beatles invaded America, stacking up Number 1 hit records by the dozens, and creating music that, even today, remains incredibly popular with many Americans.  But go to many of the interactive or on-demand music services, like Spotify, and search for Beatles music, and what will you find?   Mostly cover tunes by sound-alike bands rather than the original hits.  But yet, on services where you can’t designate your next song, like Pandora, you can hear the original songs.  Why the difference?
Continue Reading Big News That the Beatles Are Now Available on Streaming Services? – Actually They Have Been on Internet Radio All Along

Adele’s decision to not stream her new CD “25 on services like Apple Music and Spotify has been the talk of the entertainment press pages – like this article from the New York Times.  These articles make it sound like, if you listen to any Internet music service, you’ll not hear a song from the new record.  But, in fact, if you listen to an Internet radio service, like a Pandora, iHeart Radio, Accuradio, the streams of over-the-air radio stations, or any of the myriad of other “noninteractive services” that are available online, you will hear music from 25.  The legal distinctions that allow these services to play Adele’s new music is often not recognized or even acknowledged by the popular press.  Why the difference?

As we’ve written before in connection with music from the Beatles (see our articles here and here), the difference deals with how music is licensed for use by different types of digital music services.  On-demand or “interactive” audio services, like Spotify and Apple Music or the recently in-the-news Rdio, obtain music licenses through negotiations with the copyright holders of the sound recordings – usually the record labels.  These are services where a listener can specify the next track that he or she will hear, or where the listener can store playlists of music they have selected, or even hear on-demand pre-arranged playlists with the tracks in the playlist identified in advance by the service.  If the record labels and the service can’t come to terms for the use of music by one of these interactive services, then the music controlled by the label does not get streamed.  Often, these negotiations can be lengthy, witness the delay of over a year from when Spotify’s announced its launch in the US and when that launch actually took place, because of the complexity and adversarial nature of these negotiations.   In some cases, major artists, like Adele, and before her Taylor Swift and, for a long time, bands like the Beatles and Metallica, had agreements with their labels that gave them the rights to opt out of any deal that their labels did with these audio services.  So, if an artist like Adele can opt out of being played by a service like Spotify, why is she being streamed by online radio? 
Continue Reading Adele’s New Record is Not on Online Streaming Services – Except Where It Is – The Difference Between Interactive and Noninteractive Streaming

The big news in the music world this week is that Apple finally is able to sell digital downloads of the Beatles catalog in its iTunes music store.  For years, the copyright holders who control the Beatles master recordings have withheld permission to use the Beatles recordings on iTunes and other digital download and on-demand streaming services, seemingly afraid of diluting the value of their copyrights.  There are other bands who have had a similar reluctance to make their recordings available on-line.  While this impasse has now been broken by the biggest name among these digital holdouts, at least as to iTunes, some have asked why it is that the Beatles were never missing from Internet radio, while they were absent from these other services.  The answer is the statutory license under which Internet Radio operates.

While there have been many disputes over the royalties that have been imposed under the statutory license created by Congress which allow non-interactive digital music companies to use sound recordings to provide music to their customers, there is no question that the license has fulfilled one of its primary functions – making sure that there is access by Internet radio operators to the entire catalog of sound recordings available in the United States.  One of the principal reasons that the statutory license was created was the inherent difficulty, if not the impossibility, for a radio-like digital service operating under the sound recoding performance royalty first adopted in 1995 to secure permission from all of the copyright holders of all of the music that such services might want to use.  Thus, Congress adopted the statutory license which requires the copyright holder to make available its sound recordings to non-interactive services, in exchange for the service agreeing to pay a statutory royalty – the royalty now set by the Copyright Royalty Board.  But only non-interactive services, where listeners cannot select the songs that they hear, are covered by that statutory royalty (see our summary here of one of the cases dealing with the question of what is and what is not a non-interactive service).


Continue Reading Apple iTunes Gets the Beatles – Why Internet Radio Had Them All Along