The nuts and bolts of legal issues for broadcasters were highlighted in two sessions in which I participated at last week’s joint convention of the Oregon and Washington State Broadcasters Associations, held in Stephenson, Washington, on the Columbia River that divides the two states. Initially, I conducted a seminar for broadcasters providing a refresher on their
Dave Oxenford this week conducted a seminar on legal issues facing broadcasters in their digital media efforts. The seminar was organized by the Michigan Association of Broadcasters, and originated before a group of broadcasters in Lansing, but was webcast live to broadcasters in ten other states. Dave addressed a variety of legal issues for broadcasters in connection with their website operations and other digital media platforms. These issues included a discussion of service marks and copyrights, employment matters, music on websites, the use of social media, privacy, and sponsorship disclosure. The slides used in the Lansing presentation are available here. During the seminar, Dave also mentioned that stations with websites featuring user-generated content, to help insulate themselves from copyright infringement that might occur in the content posted to their website by their audience, should take advantage of the registration with the Copyright Office that may provide safe harbor protection if a station follows the rules and takes down offending content when identified by a copyright holder. The Copyright Office instructions for registration can be found here.
One of the most common issues that arise with radio station websites is the streaming of their programming. In August, Dave gave a presentation to the Texas Association of Broadcasters providing a step-by-step guide to streaming issues, with a summary of the royalty rates paid by different types of streaming companies. That summary to Internet Radio issues is available here. Additional information about use of music on the Internet can be found in Davis Wright Tremaine’s Guide to The Basics of Music Licensing in a Digital Age. Dave also presented this seminar at the Connecticut Broadcasters Association’s Annual Convention in Hartford on October 14.
The Supreme Court Decision in Citizens United v. Federal Election Commission, freeing corporations to use their corporate funds to take explicit positions on political campaigns, has been mostly analyzed by broadcast trade publications as a good thing – creating one more class of potential buyers for broadcaster’s advertising time during the political season – which seems to almost be nonstop in these days of intense partisan battles in Washington and in the statehouses throughout the country. What has not been addressed are the potential legal issues that this "third party" money may pose for broadcasters during the course of political campaigns. Not only will an influx of money from non-candidate groups require that broadcasters review the contents of more commercials to determine if the claims that they make are true, but it may also give rise to the return of the Zapple doctrine, one of the few remnants of the Fairness Doctrine never specifically repudiated by the FCC, but one which has not been actually applied in over a quarter of a century. Public file obligations triggered by these ads also can not be overlooked.
First, the need for broadcasters to vet the truth of allegations made in political ads sponsored by non-candidate advertisers. As we have written before(see our post here), the political broadcasting rules enforced by the FCC allow broadcasters to run ads sponsored by the candidates themselves without fear of any liability for the claims made in those ads. In fact, the Communications Act forbids a station from censoring a candidate ad. Because the station cannot censor the candidate ad (except in the exceptionally rare situation where the airing of the ad might violate a Federal felony statute), the broadcaster has no liability for the contents of the ad. So candidates can say whatever they want about each other – they can even lie through their teeth – and the broadcaster need not fear any liability for defamation based on the contents of those ads. This is not so for ads run by third parties – like PACs, Right to Life groups, labor unions, unincorporated associations like MoveOn.org and, after the Citizens United case, corporations.
A story in today’s Wall Street Journal discusses the significant amount of money being spent on television advertising for and against pending proposals for health care reform. As we have written before, broadcasters are required to keep in their public file information about advertising dealing with Federal issues – records as detailed as those kept for political candidates. Information in the file should include not only the sponsor of the ad, but also when the spots are scheduled to run (and, after the fact, when they did in fact run), the class of time purchased, and the price paid for the advertising. Clearly, the health care issue is a Federal issue, as it is being considered by the US Congress in Washington. So remember to keep your public file up to date with this required information.
Section 315 of the Communications Act deals with these issues, stating that these records must be kept for any request to purchase time on a "political matter of national importance", which is defined as any matter relating to a candidate or Federal election or "a national legislative issue of public importance." Clearly, health care would fit in that definition. The specific information to be kept in the file includes:
- If the request to purchase time is accepted or rejected
- Dates on which the ad is run
- The rates charged by the station
- Class of time purchased
- The issue to which the ad refers
- The name of the purchaser of the advertising time including:
- The name, address and phone number of a contact person
- A list of the chief executive officers or members of the executive committee or board of directors of the sponsoring organization.
The US Court of Appeals for the District of Columbia today released its decision for the most part rejecting the appeals of webcasters of the 2007 decision of the Copyright Royalty Board setting Internet Radio royalty rates for the use of sound recordings. The Court generally upheld the Board’s decision, finding that the issues raised by the appealing parties did not show that the decision was "arbitrary and capricious" – a high standard of judicial review that the Courts accord when reviewing supposedly "expert" administrative agency decisions. On only one issue did the Court have concerns with the CRB’s decision – that being the question of the $500 per channel minimum fees that it had required that webcasters pay. The Court found that per channel fee, which could result in astronomical fees for some webcasters regardless of their listenership, was not supported by the record evidence, and remanded that aspect of the case to the CRB for further consideration.
The Court surprised some observers by not reaching the constitutional issue of whether the Copyright Royalty Judges were properly appointed. As we wrote before (see our posts here and here), issues were raised by appellant Royalty Logic, contending that these Judges should be appointed by the President, and not by the Librarian of Congress. In the recent Court decision on the CRB rates for satellite radio, where the issue had not even been raised, one Judge nevertheless wrote that he questioned the constitutionality of the CRB. The Court here decided not to decide the issue – finding that it had been raised too late by Royalty Logic, and raised too many fundamental issues (including whether the Register of Copyrights should herself be appointed by the President, potentially invalidating many copyrights) to be decided on the minimal briefing accorded it by the parties.
The FCC today adopted an Order revising its rules to permit the rebroadcast of AM radio stations on FM translator stations. A copy of the Order is available here. By this Order, the FCC formally adopted the interim policy that it has experimented with in the past year and a half since the release of the Notice of Proposed Rule Making in this proceeding. The Commission acknowledged that the interim rule has worked well and that allowing AM stations the same flexibility to use FM translators to enhance their service is in the public interest.
Per today’s Order: "Specifically, AM broadcast stations will be allowed to use currently authorized FM translator stations (i.e., those now licensed or authorized in construction permits that have not expired) to rebroadcast their AM signals, provided that no portion of the 60 dBu contour of any such FM translator station extends beyond the smaller of: (a) a 25-mile radius from the AM transmitter site; or (b) the 2 mV/m daytime contour of the AM station. In addition, AM broadcast licensees with Class D facilities will be allowed to originate programming on such FM translators during periods when their AM station is not operating."
Several things to note:
First, "currently authorized FM translators" means translator stations with licenses or permits in effect as of May 1st, 2009. As expected, there is no opportunity to seek authorization for new FM translators, and by extension, there was no need for the FCC to address the issue of priorities between LPFM stations and FM translators (which the FCC says it will address in the pending LPFM rule making). So this rule change simply allows existing FM translator stations to rebroadcast AM stations.
Last week, the FCC fined yet another broadcaster for violations of its contest rules, issuing a fine of $4,000 to a station that had not disclosed to its listeners all of the material terms of a contest that it conducted on the air. In this case, the station promised a give-away of three cars, but…
In January, the Copyright Royalty Board asked for comments as to whether it should require "census reporting" of all sound recordings that are used by a digital service subject to the statutory royalty. This would replace the current requirement that services need only report on the sound recordings used for two weeks every calender quarter. Most of the comments that were filed dealt with the difficulties of certain classes of webcasters – particularly small webcasters and certain broadcasters – in keeping full census reports of every song that is played by a service, and how many people heard each song. In a Notice of Inquiry published in the Federal Register today, the CRB asked for further information about the cost and difficulties of such reporting. Comments on the Notice are due on May 26, 2009, and replies on June 8.
The real issues, as identified by the CRB, were raised by smaller entities that argued that they do not have the ability to track performances. Especially problematic are stations that have on-air announcers who pick the music that they want to play in real time, and don’t run their programming through any sort of automation system or music scheduling software. Live DJs playing music that they want is a hallmark of college radio, but one that creates problems for tracking performances. How can a DJ’s on-the-fly selection of music be converted to the nice, neat computer spreadsheets required by SoundExchange for the Reports of Use of music played?
The week, Congressman Rick Boucher, a member of both the House of Representatives Commerce and Judiciary Committees, told an audience of broadcasters at the NAB Leadership Conference that they should accept that there will be a performance royalty for sound recordings used in their over-the-air programming and negotiate with the record companies about the amount of a such a royalty. He suggested that broadcasters negotiate a deal on over-the-air royalties, and get a discount on Internet radio royalties. Sound recordings are the recordings by a particular recording artist of a particular song. These royalties would be in addition to the payments to the composers of the music that are already made by broadcasters through the royalties collected by ASCAP, BMI and SESAC. Congressman Boucher heads the Commerce Committee subcommittee in charge of broadcast regulation, and he has been sympathetic to the concerns of Internet radio operators who have complained about the high royalty rates for the use of sound recordings. Having the Congressman acknowledge that broadcasters needed to cut a deal demonstrated how seriously this issue is really being considered on Capitol Hill.
The NAB was quick to respond, issuing a press release, highlighting Congressional opposition to the Performance royalty (or performance tax as the NAB calls it) that has been shown by support for the Local Radio Freedom Act – an anti-performance royalty resolution that currently has over 150 Congressional supporters. The press release also highlights the promotional benefits of radio airplay for musicians, citing many musicians who have thanked radio for launching and promoting their careers. The controversy was also discussed in an article on Bloomberg.com. In the article, the central issue of the whole controversy was highlighted. If adopted, how much would the royalty be? I was quoted on how the royalty could be very high for the industry (as we’ve written here, using past precedent, the royalty could exceed 20% of revenue for large music-intensive stations). An RIAA spokesman responded by saying that broadcasters were being alarmists, and the royalty would be "reasonable." But would it?
As we have written, by April 2, broadcasters who are streaming need to file with SoundExchange a written election in order to take advantage of the SoundExchange-NAB settlement. For broadcasters who make the election, the settlement agreement will set Internet radio royalty rates through 2015. One aspect of this agreement that has not received much attention is the waiver from the major record labels of certain aspects of the performance complement that dictates how webcasters can use music and remain within the limits of the statutory license. When Section 114 of the Copyright Act, the section that created the performance royalty in sound recordings, was first written in the 1990s, there were limits placed on the number of songs from the same CD that could be played in a row, or within a three hour period, as well as limits on the pre-announcing of when songs were played. These limits were placed seemingly to make it more difficult for listeners to copy songs, or for Internet radio stations to become a substitute for music sales. In conjunction with the NAB-SoundExchange settlement, certain aspects of these rules were waived by the 4 major record labels and by A2IM, the association representing most of the major independent labels. These waivers which, for antitrust reasons, were entered into with each label independently, have not been published in the Federal Register or elsewhere. But I have had the opportunity to review these agreements and, as broadcasters will get the benefit of the agreements, I can provide some information about the provisions of those agreements.
First, it is important to note that each of the 5 agreements is slightly different. In particular, one has slightly more restrictive terms on a few issues. To prevent having to review each song that a station is playing to determine which label it is on, and which restrictions apply, it seems to me that a station has to live up to the most restrictive of the terms. In particular, the agreements generally provide for a waiver of the requirement that stations have in text, on their website, the name of the song, album and artist of a song that is being streamed, so that the listener can easily identify the song. While most of the labels have agreed to waive that requirement for broadcasters – one label has agreed to waive only the requirement that the album name be identified in text – thus still requiring that the song and artist name be provided. To me, no station is going to go to the trouble of providing that information for only the songs of one label – so effectively this sets the floor for identifying all songs played by the station and streamed on the Internet.