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Continue Reading Fred Thompson Announcement Spurs TV Coverage of Equal Opportunities Rules – And Asks If Rules Should Extend to New Media

Two weeks ago, we wrote about the FCC’s proposal for the auction of the 700 MHz band – the portions of the spectrum that will be reclaimed from television operators after the digital transition.  These channels will be used to provide some form of wireless broadband service. The Commission made its decision on the use of this spectrum last week, reserving at least some of the spectrum for “open access” uses – where the provider will not be able to restrict the devices that can access the network, nor limit or block services that run on the network, as long as the devices and services do not cause damage to the network.  In theory, this will encourage the creation of numerous new devices and services to capitalize on the open wireless network being provided.  While the Commission has not released the full test of this decision yet, a memo from our firm, describing some of the decisions announced at the FCC open meeting and in the subsequent public notice, can be found here.

Whether the provisions that the Commission adopted will be sufficient to entice some of the Internet “content” companies, like Google, to bid, remains to be seen. But this “beachfront spectrum” will no doubt introduce some exciting new uses as it begins to come into operation in the next few years – providing more people more wireless access to mobile content – and more competition to those traditional wireless industries that many consumers have forgotten are both wireless and mobile – those provided by traditional broadcasters.  Continue Reading 700 MHz Reclaimed TV Spectrum Auction Rules Adopted – A Preview

As the digital television transition continues, broadcasters have been concerned about the proposals made by a number of the major computer companies seeking the right to operate low power wireless devices in the spectrum used by television stations – in the so-called "white spaces" between channels. Because of the potential for interference, television obviously don’t operate on every channel in every city. The proposal by the tech companies, about which we wrote here, would allow unlicensed wireless devices to operate at low power within this spectrum, provided that such devices were “smart” enough to detect television signals and to avoid the use of channels that would interfere with these signals. Last week, the FCC’s Office of Engineering and Technology issued a report finding that the prototypes of these devices that had been made available for testing appeared to interfere with television signals. The report did note, however, that this testing should not be viewed as the end of the story on this issue, as further refinements to the devices might be able to eliminate the interference. The FCC has asked for comment on this report. Public comments are due on August 15, with replies on August 30.

The white spaces debate has been a very contentious one. The tech companies who favor it have argued that the efficient use of the television spectrum, and the congestion in other portions of the spectrum used by unlicensed devices, mandate attempts to allow these devices to operate in the television band on the condition that they do not interfere with TV uses. These companies contend that they should be able to create devices that can sense television stations and avoid interference to these stations.Continue Reading FCC Study Deals Blow to Television White Space Advocates

If you are a broadcaster, you know that it’s not going to be a good day when you walk into a hearing on the possible extension of the performance royalty in sound recordings to over-the-air broadcasters and see buttons saying "I Support a Performance Right NOW" on the lapels of every other witness on the panel – including the Register of Copyrights, Marybeth Peters.  But that was the scene in Washington, as the House Judiciary Committee’s subcommittee on Courts, the Internet and Intellectual Property held a hearing as to whether the right to collect a royalty for the public performance of a sound recording (the actual song as sung by a particular artist, as opposed to the underlying musical composition) should be paid by broadcasters.  Broadcasters in the United States have paid only a royalty on the public performance of the composition (to ASCAP, BMI and SESAC), and have never paid a royalty for the public performance of the sound recording.  The lack of a sound recording royalty has always been justified in the past on the theory that the artists and copyright holders in the sound recording benefit more than composers through the airplay of the sound recording, as they receive the bulk of the proceeds from CD sales, and the performers benefit from the promotion of live performances.  As they benefit from the promotion provided by the airplay of the song, there is no need for any sort of performance royalty.  As the music and radio businesses have both thrived in the United States – more so than anywhere else in the world – it seemed that this arrangement was mutually beneficial.

But, in recent years, the consensus over this mutually beneficial arrangement seems to have broken down.  Starting in 1995, a performance right in sound recordings has been imposed on digital services, including the royalty on Internet radio which has recently been so controversial (and about which we have written so much, here).  And, with the recent downturn in the record companies’ business, additional sources of revenue are being sought – thus the RIAA and SoundExchange, the collective that receives sound recording performance royalties, have started a Congressional push to require the collection of royalties from over-the-air radio.  And that push was reflected in the hearing held on Tuesday before a House Committee that seemed clearly to favor the imposition of this royalty on broadcasters.Continue Reading House Judiciary Committee Hearing on Broadcast Performance Right – No Breaks for the Broadcasters

There are no items on the agenda for next week’s FCC meeting from the Media Bureau, so one might think that the "broadcast" community could ignore this meeting.  However, there is one matter that will be considered that may well have an effect on the media landscape for the foreseeable future.  That is the adoption of service rules for the 700 MHz spectrum – the remaining portion of the spectrum to be reclaimed from television broadcasters after the digital transition.  Part of that spectrum has already been reclaimed and is beginning to be used by companies such as Qualcomm offering digital multimedia services such as the MediaFLO system, about which we have written before.  The remaining portion of the spectrum that will be auctioned by the Commission by January 2008 and has the potential to provide significant high-speed digital wireless services to the public.   However, anyone reading the communications press would realize that there is a major controversy over how that service will be provided.

The argument is over whether service will be provided on the new spectrum in an open manner – in essence a wireless high speed connection to the Internet where any service can get direct access to the consumer – or whether it will function more like the current systems run by the existing wireless carriers, where the carriers will be able to control the content that will be delivered to the consumer.  This is, by no means an easy decision, and it is currently being debated in Congress and at the FCC.

Continue Reading The 700 Mhz Controversy – Fighting Over the Reclaimed TV Spectrum

As reported in Digital Music News and other publications on Friday, Clear Channel Communications dropped its waiver of music royalties from its on-line agreement signed by musicians submitting songs to the Company in hopes that their music would be played on the Company’s radio stations.  In writing about this decision, most publications attribute the decision to the petition filed with the FCC by the Future of Music Coalition and other public interest groups arguing that the waiver requests constituted a form of payola – the giving of something of value (the waiver of the right to receive a royalty) in exchange for the playing of music.  However, on close inspection, that would appear to be a misunderstanding of the royalty, as there would seem to be no royalty that would be affected by the waiver in connection with the playing of this music by radio stations, and therefore there would be no payola over which the FCC has any jurisdiction.

According to the Future of Music petition, Clear Channel’s promise to play new music was made in connection with the payola settlement that it and other companies entered into with the FCC, and was apparently contained in a side letter filed with the FCC, as it was not spelled out in the settlement agreements themselves. See our analysis of the settlement agreements, here.  The side letter promised that the Company would dedicate a certain amount of radio airplay on the Company’s radio stations to new local music.  However, such play would not implicate any music royalties – so a waiver of royalties would not confer any benefit on the Company.  Broadcast stations pay no royalty for the use of a sound recording – thus the waiver that Clear Channel requested was without any value as there was no royalty to waive.  While broadcast stations do pay a royalty for the composition (the underlying words and music of a song), stations play flat fees to ASCAP and BMI that are a function of the station’s market size and power – not a function of how many songs are played.  Thus, as there is no sound recording royalty and a flat fee for the composition royalty unaffected by any waivers, the waiver did not confer any benefit to the Company in connection with its broadcast operations.  Thus, there where would appear to be no payola issue over which the FCC would have any jurisdiction.Continue Reading Music Waivers Dropped Amid Payola Allegations – What’s the Impact for Future Waivers for Webcasters?

Should artists waive their rights to performance royalties in order to get airplay on broadcast or Internet radio stations? That questions has come to the fore based on a click-through agreement that Clear Channel included on a website set up to allow independent bands to upload their music for consideration for airplay by its stations. While artist groups, including the Future of Music Coalition, condemned that action, there are always two sides to the story, as was made clear in a segment broadcast on NPR’s Morning Edition, in which I offered some comments. As set forth in that segment, artists may be perfectly willing to allow unrestricted use of a song or two in order to secure the promotional value that may result from the airplay that might be received. For the broadcaster or Internet site seeking such permission, getting all rights upfront may well be an important consideration in deciding whether or not to feature a song – especially in the digital media.

Critics of the waiver made much of the fact that the site was set up at least partially to meet Clear Channel’s informal commitment made as part of the FCC payola settlement to feature more independent music, even though that commitment was not a formal part of the settlement agreement.  (See our summary of the payola settlement, here).  Even to the extent that the informal commitments made by the big broadcasters encompassed making time available to more independent musicians, the critics ignore the fact that the companies do not need any waiver of any sound recording performance royalty in connection with the over-the-air broadcast of those songs, as there currently is no public performance right in a sound recording for over the air broadcasting (though artists and record lables are now pushing for such a royalty, see our story here). Thus, the use of the waiver was only for the digital world – which was not covered by the FCC’s jurisdiction over payola promises or the promises to increase the use of independent music. So, effectively, the company is being chastised for trying to minimize their costs on giving the music even greater circulation through their digital platforms than they initially promised.Continue Reading Musicians Trade Waiver of Royalty Rights in Exchange for Exposure – Maybe Not Such a Bad Idea

Just when Internet music companies were starting to understand one set of royalties applicable to the use of music on the Internet through the controversy over the Copyright Royalty board decision on royalties for the public performance of sound recordings in a digital delivery system, the Copyright Office held a hearing on Friday to discuss an entirely different royalty – the "mechanical" royalty for the use of the "musical work" in making a "phonorecord."  In plain English, the copyright holder in the publishing rights in a musical composition (the underlying words and music in a song) is entitled to a royalty when a copy of a song using that composition is made.  While that doesn’t sound too complicated, when copies are made in the digital transmission of music over the Internet (and even in other digital media), all sorts of questions arise.  And in the conversations on Friday, questions were raised as to whether the obligation to pay a royalty for making a digital copy even applied to the streaming of a song on the Internet or possibly even the playing of a song on an HD Radio station.  These stations already pay (to ASCAP, BMI and SESAC) for the public performance of a musical composition, but the mechanical royalty is for a different right, and is collected by a different group, and the question being raised was whether a different royalty is also due when music is used a digital context.  This is also different than the SoundExchange royalty that is paid for the public performance of a sound recording (a particular song as recorded by a particular artist).

The Copyright Office held this Roundtable to update the record in a proceeding begun by a Notice of Inquiry issued in 2001 to try to determine how to apply in a digital world the mechanical royalty and the compulsory license for that royalty under Section 115 of the Copyright Act.  That section applies to the use of a composition in the making of a record or CD.  The artist or record company would have to pay the publishing company a flat fee per copy to obtain the rights to use the underlying song.  That fee is currently about 9 cents per copy, though the Copyright Royalty Board is is in the midst of a proceeding that is to determine whether that royalty should be changed.  When applied to the making of a physical copy, that concept is not hard to understand (though, as set forth below, it is not easy to administer).  But, in a digital world, questions arise as to when the obligation to pay a royalty arises.Continue Reading Copyright Office Holds a Roundtable Discussion of the Mechanical Royalty – Another Confusing Royalty for the Use of Music on the Internet