radio performance royalty

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Last week, as we noted in our monthly look ahead at the regulatory dates of importance to broadcasters in August, the reinstatement of the rule prohibiting the duplication of programming on FM stations went into effect.  The FCC Order reinstating the rule is interesting both for its substance, and for the parties pushing for that reinstatement – principally representatives of the music industry.  As we note below, even though the rule is now back in effect, the NAB has asked for reconsideration of that action.

First, let’s look at what the rule provides.  The reinstated rule prohibits any commonly owned or operated (e.g., through a time brokerage agreement) commercial FM station from duplicating more than 25% of its weekly programming on another FM station if there is overlap of the 3.16 mv/m (70 dbu) contours of the two stations, and that area of overlap constitutes 50% of the 3.16 mv/m predicted coverage area of either of the overlapping stations.  Program duplication is not limited to simultaneous transmission of the same programming – the rule by its terms defines “duplication” to include the broadcast of the same programming any time within a 24-hour period.  Continue Reading FM Programming Nonduplication Rule Goes Back into Effect – A Win for the Music Industry While the NAB Objects

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

In the last year, the popularity of Alexa, Google Home and similar “smart speaker” devices has led to discussions at almost every broadcast conference of how radio broadcasters should embrace the technology as the new way for listeners to access radio programming in their homes. Broadcasters are urged to adopt strategies to take advantage of the technology to keep listeners listening to their radio stations through these new devices. Obviously, broadcasters want their content where the listeners are, and they have to take advantage of new platforms like the smart speaker. But in doing so, they also need to be cognizant that the technology imposes new costs on their operations – in particular increased fees payable to SoundExchange.

Never mentioned at these broadcast conferences that urge broadcasters to take advantage of these smart speakers is the fact that these speakers, when asked to play a radio station, end up playing that station’s stream, not its over-the-air signal. For the most part, these devices are not equipped with FM chips or any other technology to receive over-the-air signals. So, when you ask Alexa or Google to play your station, you are calling up a digital stream, and each digital stream gives rise to the same royalties to SoundExchange that a station pays for its webcast stream on its app or through a platform like TuneIn or the iHeartRadio. For 2018, those royalties are $.0018 per song per listener (see our article here). In other words, for each song you play, you pay SoundExchange about one-fifth of a cent for each listener who hears it. These royalties are in addition to the royalties paid to ASCAP, BMI, SESAC and, for most commercial stations, GMR.
Continue Reading Hey, Alexa, How Much Did You Raise My SoundExchange Royalties?

One of the fundamental questions that surrounds the proposed broadcast performance royalty for the use of sound recordings by over-the-air (or the "performance tax" as it has been labeled by the NAB) is how much it could it cost a broadcaster?  Right now, that question is difficult to determine, as the pending bills do not themselves provide any details as to what the fees would be, except for noncommercial entities and for small broadcasters for whom fixed yearly fees are proposed.  For a broadcaster with a station having over $1.25 million in yearly revenues, the current Congressional bills leave the amount of the royalty to be determined by the Copyright Royalty Board.  In the current Senate draft of the bill, the amount to be paid would be based on the "willing buyer willing seller" standard that has been so controversial for Internet Radio companies. But the hearing to be held by the Senate Judiciary Committee tomorrow will address, among other issues, the question of "platform parity," i.e whether all companies subject to the sound recording performance royalty should pay a comparable rate, so we may see that proposal change as it did in the House version, to some form of the 801(b) standard (about which we wrote here and here).

We will write about the differing rates paid by differing music services in the next few days, especially as it becomes clear as to what rates for Internet radio royalties were agreed to under the most recent settlements with webcasters pursuant to the Webcaster Settlement Act.   But even without a detailed analysis of all of the rates that have been agreed to, certain trends can be seen as to what SoundExchange, on behalf of the artists and copyright holders, believes to be a fair royalty for the use of their music.  And that number is likely to be a "Substantial" one, as suggested by a recent Congressional Budget Office review of the cost to broadcasters of the proposed performance royalty.Continue Reading Broadcast Performance Royalty – What Would It Cost? The Congressional Budget Office Says A “Substantial” Amount

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