public performance rights

The Supreme Court on Friday announced that is has decided to review the decision of a US Appeals Court in New York finding that the Aereo service of retransmitting over the Internet the signals of local television stations, without permission from or payment to those stations, was legal.  We wrote about the Second Circuit Court of Appeals decision in the Aereo case here.  The Supreme Court’s decision to hear the case, which may signal that the case will be decided before the Court adjourns its term in June, was supported not only by the television stations who had sought to block the Aereo service and the program suppliers to those television stations (including many of the sports leagues), but also by Aereo itself.  As Aereo and its copycat service FilmOn X were being sued in every jurisdiction where they started to do business, the desire to get a quick and final resolution of the legality of their services is a natural one.  This is especially true as the Courts have been reaching different decisions, as demonstrated by the two cases decided only a month apart, one in Boston finding Aereo to be legal, and one in DC finding FilmOn X to be infringing on the copyrights of the TV stations who brought the lawsuit.  So what issues will the Supreme Court be deciding?

One newspaper editorial, from the Los Angeles Times, has suggested that this is a Betamax case for the 21st century.  The Betamax case, officially known as Sony Corp. v Universal City Studios, was the case that declared the VCR to be legal, and found that its original manufacturer, Sony, was not contributorily infringing on the copyrights held by Universal and other studios that brought the case.  But that comparison really does not hold up, as the Betamax decision was premised on several findings that simply cannot be made here.  First, the Court in the Betamax case found that the VCR was not in and of itself an infringing service, as it had substantial legal uses.  In fact, there was testimony in the record that many copyright holders actually were not opposed to the use of a Betamax to copy their programs for time shifting and other purposes.  In the Aereo cases, copyright holders are for the most part universally opposed to the service and, other than retransmitting copyrighted programs without consent, there does not appear to be another use for the service.
Continue Reading Supreme Court Decides to Review Aereo – Why This is Not the New Betamax Case

Congressman Mel Watt from North Carolina this week introduced his long-awaited bill proposing that over-the-air radio broadcasters pay a royalty to sound recording copyright holders (usually the record label) and to artists. As we have written many times, currently, royalties on sound recordings are paid only by companies that make digital performances, including webcasters (see our summary of the current webcasting rates here) and satellite radio (see our summary of the recent decision on satellite radio rates here). While the bill’s proposals for a broadcast royalty has been covered in many other news reports, few note that the Watt bill, called the Free Market Royalty Act, goes far beyond past proposals for a royalty on over-the-air broadcasters. In addition to the over-the-air royalty, the bill proposes that the Copyright Royalty Board be taken out of the equation in setting royalties.  And the removal of the CRB from the process applies not just to the proposed new performance royalty on broadcasters, but also to the setting of royalties for all other noninteractive commercial digital music services. Instead of a CRB proceeding to set rates, commercial music users, including webcasters and satellite radio, would need to negotiate a royalty with copyright holders – principally with SoundExchange – a royalty not subject to review as to the reasonableness of the rates by the CRB or by the Courts.

And the proposal goes further than simply designating SoundExchange as the party with whom all noninteractive digital audio services would go to negotiate royalties. In addition, the bill provides that any copyright holder could opt out of the rates negotiated by SoundExchange, after they are set, and negotiate direct licenses for its music with music services, including radio broadcasters. Seemingly, a popular band, or a label with a number of hit acts, that thought that it could get more from its music than any rate to which SoundExchange agreed, could withdraw from any "deal" with SoundExchange, and negotiate on their own for what would presumably be higher royalties.  If the copyright holder withdraws its music from the SoundExchange royalty, broadcasters and other music services could not play that music unless and until a license deal was reached.Continue Reading Congressman Watt’s Music Royalty Bill – Performance Royalty For Over-the-Air Broadcasters And Other Fundamental Copyright Act Changes Impacting All Digital Music Services

No one ever claimed that music royalties are easy to understand, especially in the digital age when nice, neat definitions that had grown up over many years in the physical world no longer necessarily make sense. The complexity of the world of digital music licensing is clear from many sources, but the Commerce Department’s “Green Paper” on Copyright Policy, Creativity, and Innovation in the Digital Economy does a good job discussing many of the music royalty issues that have arisen in the last 20 years that make copyright so confusing for professionals, and pretty much incomprehensible for those not immersed in the intricacies of copyright law on a regular basis. The Green Paper discusses some of the issues in music policy that make this area so confusing, and highlights where interested parties and lawmakers should focus their efforts to reform current rules to make them workable in the digital age. The Paper also discusses other areas of copyright policy that we will try to address in other articles.  You can find the Green Paper here (though note that it is about 120 pages and will take some time to download).

One of the most controversial issues that it addresses is the concept of a general performance right for sound recordings. As did Register of Copyrights Maria Pallante in the speech we summarized here, the Commerce Department puts the current administration on record as supporting the creation of such a right – a right that has not existed in the United States, except for a limited sound recording performance royalty for performances by digital audio companies like webcasters (see our summary of the royalty rates paid by different types of Internet Radio services here) and satellite radio (see our summary of the royalties to be paid by Sirius XM under the most recent Copyright Royalty Board decision). While the most controversial aspect of the creation of a broad sound recording performance royalty has been in connection with the extension of that royalty to broadcasters, the adoption of a general royalty, as advocated by the Green Paper would extend payment obligations to others who publicly perform sound recordings – including bars, restaurants, stadiums and other retail establishments.Continue Reading Making Music Rights Manageable in a Digital World – Issues Identified In Commerce Department “Green Paper” on Copyright Policy

In one week this month, Apple announced that it will get into Internet Radio, and Pandora, the biggest player in that space, announced that it will be buying a traditional, over-the-air radio station. What do these two big announcements say about the state of music royalties for digital music services? Apple’s struggles to get its service launched were well chronicled, as it was working to get an agreement for its new service from the record labels. What was less reported was its simultaneous negotiations with the music publishing community. Pandora’s radio station purchase, on the other hand, was admittedly a simple deal to take advantage of a blanket license available to all similarly situated companies owning radio stations. We’ll explain why these two deals were so different, and what impact the deals may have on other digital music services below.

The Apple deal is one negotiated with the copyright holders for the simple reason that the service that it is offering appears to be an interactive one, unlikely to be completely covered by any statutory (compulsory) or other blanket license. As we’ve written before, a statutory or compulsory license is one where the copyright holder, by law, cannot refuse to make available his or her copyrighted work. But, in return, the copyright holder receives a royalty set by the government – in the US, usually the Copyright Royalty Board. In the music world, the two most common compulsory licenses are the ones that allow webcasters and other digital music services to publicly perform sound recordings (the royalties paid by webcasters, satellite radio and digital cable radio companies to the record companies and artists), and the royalty that allows users (including record companies) to make reproductions of musical compositions in connection with the making of a sound recording, downloads, ringtones, and probably on-demand streaming services. This royalty is commonly referred to as the mechanical royalty, and is paid to songwriters and composers or their publishing companies. To qualify for these compulsory licenses, a company must follow certain rules. If they don’t, then they have to negotiate directly for the licenses from the copyright holder – which appears to be what Apple did.Continue Reading Apple Announces an Internet Radio Offering and Pandora Buys a “Real” Radio Station – What Does It Mean for Music Royalties?

The Copyright Office has just released a Notice of Inquiry asking whether Federal protection should be extended to sound recordings recorded prior to 1972.  A sound recording is a song as recorded by a particular artist.  Sound recordings were first protected under Federal law in 1972.  Prior to that, unauthorized recordings or reproductions of an artist’s recoding were policed under various state criminal and civil law.  While the Copyright Act has provided for the protection of pre-1972 sound recordings first registered in other countries, US sound recordings recorded prior to 1972, have not received Federal copyright protections.  Many have assumed that this also exempts pre-1972 sound recordings from royalty requirements under Section 114 of the Copyright Act – i.e. the royalties paid by Internet and satellite radio and other digital music providers under the statutory license.  How would a change in the law affect Internet radio operators?

That is one of the questions that is asked by the Notice of Inquiry.  Many Internet radio operators have not excluded pre-1972 recordings from royalty payments based on any exception that may exist for pre-1972 sound recordings, as the possibility has not been widely publicized.  Moreover, some copyright holders have suggested that the digitization of older songs may somehow bring pre-1972 recordings under the coverage of the Copyright Act, or that there may be state remedies that are somehow the equivalent of the Federal public performance right.  Others may just not want to go to the trouble of determining which copyrighted songs are subject to the Uruguay Round Agreements Act (making the non-US pre-1972 sound recordings subject to US Federal law).  The Copyright Office’s Notice of Inquiry asks what impact the inclusion of pre-1972 sound recordings would have on many undertakings – including the archiving and restoration of sound recordings, and on the current benefits that copyright holders and others enjoy under state laws.  In addition, it asks about the benefits and issues that would arise under Section 114 of the Copyright Act – the section that sets out the statutory license under which most Internet radio companies operate.Continue Reading Copyright Office Asks if Federal Protection Should be Extended to Pre-1972 Sound Recordings – What’s the Impact on Internet Radio?

In the last two weeks, David Oxenford has, at two different conferences, moderated panels on digital music rights and licenses.  At the Digital Music Forum East, in New York City on February 25, 2010, his panel focused on rights and licenses generally, featuring panelists from SoundExchange, BMI, the Harry Fox Agency, Rightsflow and MediaNet

In a ruling released last week, a US District Court Judge issued a ruling finding that a download of a recorded musical work does not give rise to a "public performance" requiring a payment to ASCAP, BMI or SESAC.  If this decision is upheld on appeal, it could mean that one less fee would have to be paid in connection with on-demand downloads – which would also affect podcasts and video downloads made available by broadcasters on their websites.  However, there are many issues that must be understood about this ruling, so broadcasters should not impetuously rush to provide downloads and podcasts without first securing the bundle of rights necessary for such performances.

First, it is important to understand the issue that was presented in this case.  The case did not involve streaming of programming – so it has no effect on Internet radio royalties.  It involves only downloads – where a copy of a specific work is downloaded to a single consumer’s computer at the request of that consumer.  This is what happens when a consumer buys a song from iTunes, or downloads a podcast made available by a broadcaster.  There is no question that, to provide such a download or podcast containing music, a service needs to get permission from the copyright holder in the "sound recording," the song as recorded by a particular artist.  This is typically received from the record company which holds the copyright.  In addition, there is a requirement that the rights to the composition must be obtained for purposes of the making of the making of a "reproduction" and a "distribution" of the underlying composition.  This is typically obtained from the publishing company or a clearinghouse such as the Harry Fox agency.  A service that provides downlaods of music can alternatively pay a statutory royalty for the composition, though that requires following a somewhat cumbersome process of filings set out by the Copyright Office and requiring specific notice to the copyright holder in the publication.Continue Reading District Court Finds No Public Performance In Download – Could Affect Fees on Podcasts and Video Downloads