David Oxenford

Free Market Royalty Act: Plenty of swirl around an unlikely law

Tuesday, October 1, 2013 - 12:35pm

Rep. Melvin Watt yesterday introduced the Free Market Royalty Act (FMRA) which would address the lack of parity in statutory royalty requirements levied on terrestrial broadcasters and Internet radio services. (Read Rep. Watt’s statement and rationale here.) 

By law, broadcast radio is exempt from paying a performance royalty to artists and labels. Broadcast stations do pay royalties to publishers and songwriters. Also by law, Internet radio is not exempt, and must pay for use of recordings in addition to paying songwriters and publishers.

The Free Market Royalty Act introduced by Rep. Watt aims to remove government from setting royalty rates, and to turn the matter over to free market negotiations. As such, the bill has a compulsory impetus, but no compulsory mechanism. It would repeal the existing blanket license that makes label-owned recordings available to broadcasters free of charge. To gain a license for playing music recordings over the air or in an Internet radio stream, programmers would negotiate with labels directly, or with SoundExchange, a performing rights organization that represents labels and performing artists.

Labels and broadcasters are already striking out on the non-statutory path, ditching government compulsory licenses for negotiated ones. This summer, Warner Music and Clear Channel Media & Entertainment agreed to establish broadcast royalties payable from Clear Channel radio stations to Warner labels, and to lower label performance payouts on Clear Channel digital streams. (Clear Channel operates iHeartMusic, a streaming platform that features broadcast webcasts.)

Is it a good idea to push government out of its long-standing role as copyright arbiter? RAIN spoke to David Oxenford, law partner of Wilkinson Barker Knauer LLP in Washington, who specializes in broadcast regulation, and who has represented radio groups and digital media companies. “No. The government has almost always been involved, either through the Copyright Royalty Board, or through rate courts that ASCAP and BMI go through on the publishing side. The only collective in the performance rights world that is not subject to government oversight is SESAC, and SESAC is being sued by radio and TV broadcasters to bring it under that kind of oversight.”

The National Association of Broadcasters, radio’s chief lobbying voice, unsurprisingly disputes the bill. NAB head of communications Dennis Wharton cited the Warner Muisic/Clear Channel deal in his refutation of the FMRA as an unnecessary correction: “NAB believes market-based negotiations like the recent Warner Music-Clear Channel accord demonstrate that this issue is already being addressed in the free market. This legislation would impose new costs on broadcasters that jeopardize the future of our free over-the-air service.”

From the other side of the opinion fence, burdensome costs are exactly what the bill might correct. Pandora and other Internet radio pureplays arguably serve the same music-discovery mission as terrestrial radio, and provide a corresponding benefit to performers and labels that broadcast does, yet are legally bound to add a cost line item that doesn’t exist on traditional radio balance sheets. Rep. Watt’s statement on that point: “Those deals expose the unfairness and inadequacy of the current system and they strongly point out the need for a legislative solution that will apply market wide.”

Previously introduced bills have sought to even the balance from the opposite direction -- by lowering or eliminating performance royalties on the Internet side. The Internet Radio Fairness Act was put into congressional play last year, suggesting an adjustment to the makeup of the Copyright Royalty Board, and the standards by which it sets compulsory royalties to labels and recording artists. According to David Oxenford, “They deal with things totally differently. Essentially, the structure that Watt is proposing makes the Internet Radio Fairness Act meaningless.”

The MusicFIRST Coalition, which advocates for musicians, clearly had its PR gun locked and loaded, ready for the Watts bill. Executive Director Ted Kalo delivered an instant response supporting the FMRA with plenty of historical context and criticism of the NAB. (Read it here.) “After saying no to each and every approach to date, the broadcasters have run out of excuses. [...] This bill sends all parties back to the bargaining table [...] and critically, for artists, it preserves protections in current law.” 

Casey Rae, Interim Executive Director of the Future of Music Coalition, puts a global spin on his organization’s support of the FMRA: “First, there is no defensible excuse to not pay recording artists for the use of their music, especially considering that the rest of the developed world recognizes the contributions of performers. Second, the lack of a reciprocal right internationally means that millions of dollars are left on the table that would otherwise go to American creators. You’d be hard pressed to think of another export that the United States would freely give away in the global marketplace with no expectation of remuneration.”

Will the FMRA become law? Oxenford doubts it. “I think Congress has a few other things to deal with. Besides that, the NAB has got over 100 Congressional representatives signed on the anti over-the-air bill, I think it’s unlikely to pass. Most copyright legislation -- unless you get all parties to agree on it, Congress is reluctant to act on it.”

RAIN examines restrictions and waivers for web streams that play small number of artists

Tuesday, August 28, 2012 - 9:35am

iHeartRadio's All Beatles & Stones Radio station

Clear Channel's iHeartRadio has launched a new non-customizable stream called "All Beatles & Stones Radio." As its name suggests, the stream plays only music by The Beatles and The Rolling Stones.

Inside Radio reports the station is a part of iHeartRadio's "Back To School" line-up of stations, one for every letter of the alphabet. "All Beatles & Stones" represents the letter A. Other featured artists will apparently include Passion Pit ("P"), Bananarama and the Bangles ("B"), Lupe Fasco ("L") and others. RAIN could not find these other stations on iHeartRadio's website (besides the custom radio stations for each artist). Inside Radio refers to them as iHeartRadio Original stations, but they do not appear at time of publication on iHeartRadio's Originals page (here).

iHeartRadio recently playedThe "All Beatles & Stones" stream -- which does not allow the user to skip songs -- includes nothing but Beatles and Rolling Stones music, sometimes with songs by the same artist back-to-back. The music is only broken-up by an occassional short identifier.

But most webcasters aren't allowed to do this. After all, the Digital Millennium Copyright Act (DMCA) imposes limits on the use of music within Internet radio streams for webcasters that intend to use the statutory license. For example, webcasters are not allowed to play more than 4 songs by the same artist in a 3 hour period -- a rule iHeartRadio's Beatles/Stones stream broke several times just during the composition of this article.

"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," writes industry attorney David Oxenford (pictured below), now a partner with Wilkinson Barker Knauer. He outlines some of the other DMCA restrictions in the Broadcast Law Blog here.

However, it turns out the NAB negotiated with the four major music labels and A2IM in 2009 to waive some of these limits, including that 4-songs-by-the-same-artist rule. Those agreements were a part of the NAB's settlement with SoundExchange which set royalty rates through 2015 at a discount from what was decided by the Copyright Royalty Board (as was permitted by the Webcaster Settlement Acts; read more in RAIN here).

David Oxenford

However, as Oxenford wrote in 2009 (here) after reviewing each agreement between the NAB and labels, these waivers apply to web streams of over-the-air and HD-2 stations. They "do not cover Internet-only channels that a broadcaster may program on its website." It's possible Clear Channel is broadcasting the "All Beatles & Stones Radio" channel as an HD-2 or over-the-air station somewhere, in which case the DMCA restrictions would most likely not apply.

Additionally though, the DMCA's restrictions are only waived "insofar as the broadcaster does not 'depart materially from today's range of typical over-the-air radio programming practices,' citing specifically the practices of having DJs talk between songs and stations running commercials and PSAs between songs." Does the "Beatles & Stones" station's back-to-back music line-up, with only ocassional short identifiers, "depart materially" from today's "typical over-the-air radio programming practices"?

Other restrictions in some of the agreements, such as not streaming more than half the songs from an album or CD at any time within a 3 hour period, would make stations focusing on new artists with relatively small discographies like Passion Pit potentially difficult.

You can listen to iHeartRadio's "All Beatles & Stones Radio" station here. You can subscribe to Inside Radio's daily newsletter here.

Industry attorney David Oxenford joins new law firm

Monday, June 4, 2012 - 8:15am

David OxenfordRespected industry attorney, frequent RAIN source and RAIN Summits veteran David Oxenford has joined Wilkinson Barker Knauer as partner.

Oxenford previously served as partner at Davis Wright Tremaine. He was a frequent contributor to the firm's Broadcast Law Blog (found here).

In addition to counseling broadcasters in matters before the FCC, the courts and other government agencies for more than 30 years, Oxenford has represented a number of Internet radio companies before the Copyright Office, Copyright Royalty Board and other agencies.

Wilkinson Barker Knauer, LLP is "one of the largest law firms in the nation dedicated to the practice of communications and technology law," the firm writes in its press release. It was named "Law Firm of the Year" in communications law for 2011-2012 by U.S. News & World Report.

You can find the firm's press release here.

David Carson explains Copyright Office's roles and stances on copyright issues impacting radio

Wednesday, May 9, 2012 - 12:10pm

David Carson at RAIN Summit West 2012"We're nothing to be afraid of," chuckled David Carson, General Counsel of the U.S. Copyright Office, during RAIN Summit West 2012. Carson was interviewed on-stage by industry attorney and Davis Wright Tremaine partner David Oxenford. "Are you to be feared?" Oxenford had asked, on behalf of the webcasters and broadcasters in the audience.

Carson insisted the answer is "no." In fact, he said the Copyright Office has "hardly anything to do with" what is perhaps the biggest copyright-related sore spot among webcasters: setting royalty rates. That job is mainly handled by the Copyright Royalty Board.

However, Carson (pictured) did explain that the Copyright Office can review the CRB's decisions for "legal error," and any corrections can become legal precedents in the future. The CRB can also consult the Copyright Office about legal questions, and the Copyright Office makes recommendations about who should serve as a judge on the CRB.

In fact, Carson was part of a panel that just recently recommended the new CRB judge, Suzanne Barnett (RAIN coverage here).

The Copyright Office does take stances on copyright issues, though, and makes recommendations to Congress. One such issue -- "the most glaring," in Caron's opinion -- is the broadcast radio performance royalty. Carson said that since before 1978, the Copyright Office has "taken the position that sound recordings should be entitled to a performance royalty just like musical compositions are... We are one of the few countries on earth that doesn't actually provide a performance royalty for sound recordings [played on AM/FM broadcast radio]." (Internet and satellite radio in the U.S. do pay performance royalties.)

To the Copyright Office, explained Carson, broadcast radio's performance royalty exemption "seems sort of bizarre" and "strange."

Oxenford questioned Carson about whether the Copyright Office has, or should, consult broadcasters about that stance. "That's what Congress does," answered Carson. "We advise Congress." And while sometimes Congress requests the Copyright Office to conduct studies and discuss the matter with stakeholders, more commonly "we're actually directed not to talk to stakeholders. 'We want your expert advice,' [instructs Congress]... and as often as not they thank us for our recommendations and then go off and do something else."

All that said, "we can expect no copyright legislation this year," predicted Carson, thanks in part to the election.

Carson also discussed the situation on pre-1972 sound recordings, and offered his thoughts on the recent SOPA debacle (when "suddenly politics wasn't played by the usual rules").

You can watch the entire interview with David Carson thanks to RTTNews here.

Librarian of Congress appoints new CRB Chief Judge

Friday, April 13, 2012 - 11:55am

CRBThe Librarian of Congress today announced that Suzanne Barnett will be the new Chief Judge for the Copyright Royalty Board (CRB). Barnett is currently a superior court judge of King County in Seattle, Washington.

"This is the first new judge on the three-judge CRB since the judges were first appointed in January 2006, soon after Congress first created the CRB," writes Davis Wright Tremaine partner David Oxenford. He also notes that at least one royalty case has been postponed until after the new judge assumes her role at the CRB.

Oxenford has more details -- including info about the law governing who should make-up the CRB -- at the Broadcast Law Blog here.

David Oxenford will interview U.S. Copyright Office general counsel David Carson at RAIN Summit West 2012, which takes place this Sunday, April 15 (more info here).

Lawsuit against SoundExchange could gain much for SiriusXM, broadcasters, webcasters with little risk

Wednesday, April 4, 2012 - 11:10am

Kevin GoldbergIn the upcoming legal battle between SiriusXM and SoundExchange, the satellite radio broadcaster (along with broadcasters and others) has everything to gain, while SoundExchange and the CRB face potentially serious set-backs. So argues Kevin Goldberg, Special Counsel at Fletcher, Heald & Hildreth, in the CommLawBlog.

Last week news broke that SiriusXM had sued SoundExchange and the American Association of Independent Music (A2IM), accusing the record industry organziations of interfering with its efforts to directly license the sound recordings (find RAIN's coverage here).

The eventual outcome of the lawsuit aside, Goldberg (pictured) says SiriusXM "made the right play... litigation is expensive, but not as expensive as the $200 million in royalties that SiriusXM claims to have paid last year," he writes. "Add in the fact that a victory would not only reduce that expense, but also afford SiriusXM more flexibility in future negotiations and the ability to innovate."

Moreover, broadcasters (and, RAIN would add, webcasters) stand to "reap the benefits" of SiriusXM's lawsuit "without any effort." Goldberg echoes Davis Wright Tremaine partner David Oxenford (RAIN coverage here) in reasoning that SiriusXM's direct licensing deals "would provide important concrete data – possibly the only such data – regarding the value of a digitally transmitted sound recording" in future CRB royalty hearings for both SiriusXM and broadcasters.

"This would be especially important if the broadcasters’ own worst case scenario – enactment of the Performance Rights Act – were to occur," writes Goldberg.

The outlook is less rosy for SoundExchange. The royalty collection agency faces, at the very least, a long and expensive legal battle, Goldberg argues. At worst, it could face "possible dismantling... or the imposition of some limiting consent decree... or the forced introduction of a competitor receiving agent."

Quote from Goldberg

The lawsuit may also "be enough to rethink the entire regime" of the Copyright Royalty Board (CRB), writes Goldberg. "From allowing SoundExchange to exist without competition to siding with SoundExchange on virtually every contested fact in the 2007 Webcasting II decision (and many other ratemaking proceedings), the CRB may have created the environment that allowed questionable, if not illegal, activity to flourish."

The constitutionality of the CRB and its appointment process have been repeatedly questioned and challenged in the past (RAIN coverage here, here, here and here).

But who wins or loses this particular lawsuit may be "beside the point," says Goldberg. "The mere initiation of the case may represent an early tremor signaling the onset of a seismic event, an event that would likely, one way or another, fundamentally affect all the players."

You can find Goldberg's extensive analysis and explanation of the SiriusXM lawsuit against SoundExchange and A2IM here.

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