Copyright Royalty Board Announces SoundExchange Audits of Broadcast Companies

[davideduardo]

From attorney David Oxenford:

"The Copyright Royalty Board this week published notice in the Federal Register that SoundExchange is auditing two broadcast companies who are streaming their signals online to assess compliance with the statutory music licenses provided by Sections 112 and 114 of the Copyright Act for the public performance of sound recordings and ephemeral copies made in the digital transmission process by commercial webcasters. A notice was published last month indicating an audit of five other broadcast companies. Notices of audits are annual events. But, as the number of broadcasters selected for audits this year is higher than in past years, we thought that we should republish some of the observations that we have made in the past about these audits. "
Oxenford's free article describes the process for the audits and the way underpayments are determined if found.

This only involves streamed digital content of broadcasters, not broadcast signals.

Oxford adds:

"SoundExchange is not the only royalty collection group that can audit music users – though its audits are different because announcements are published in the Federal Register."

 

[TheBigA]

I already posted this story under the royalty act thread

https://radiodiscussions.com/threads/radio-royalty-act-reintroduced.775045/page-2

If you read the OP in this thread, it says that these radio companies don't pay artists or labels. However, it turns out that they do.

“Artists and music creators deserve to be fairly compensated for their work,” Tillis says. “For too long, FM and AM radio stations have enjoyed the benefits of playing music without compensating the artists. This commonsense legislation makes an important step towards ensuring that our nation’s artists are recognized and paid for the value that they bring to our airwaves.”

They act like these companies don't exist, until they want money from them. The all of a sudden they know who they are.

Even if radio stations paid the additional royalty being demanded, it would never be enough, and this announcement shows.

 

[davideduardo]

I already posted this story under the royalty act thread

https://radiodiscussions.com/threads/radio-royalty-act-reintroduced.775045/page-2

If you read the OP in this thread, it says that these radio companies don't pay artists or labels. However, it turns out that they do.

We all know that radio companies that stream pay. That is why the Oxenford article is well stated as it establishes the guidelines for broadcasters with streams.

 

[TheBigA]

We all know that radio companies that stream pay.

We know it, but obviously the people behind this new royalty don't. The stations are already paying artists and labels.

This should be a warning to all broadcast stations of what to expect if the labels get their new royalty.

 

[ted chittenden]

We all know that radio companies that stream pay. That is why the Oxenford article is well stated as it establishes the guidelines for broadcasters with streams.

I didn't see it in your post so I'm wondering: Have the names of the broadcasting companies being audited been publicly announced yet.

 

[TheBigA]

I didn't see it in your post so I'm wondering: Have the names of the broadcasting companies being audited been publicly announced yet.

Yes in this link

Seven Radio Groups Face SoundExchange Streaming Audits.

Each year SoundExchange selects a group of companies to determine whether its royalty collection procedures are working as designed. This year, the Copyright Royalty Board has disclosed that SoundExchange will

www.insideradio.com

The Copyright Royalty Board has disclosed that SoundExchange will audit the paperwork submitted by commercial radio streamers Alpha Media, Beasley Media Group, Hubbard Radio, iHeartMedia, Midwest Communications, and TelevisaUnivision, plus noncommercial religious broadcaster Family Stations.

 

[ted chittenden]

Yes in this link

Seven Radio Groups Face SoundExchange Streaming Audits.

Each year SoundExchange selects a group of companies to determine whether its royalty collection procedures are working as designed. This year, the Copyright Royalty Board has disclosed that SoundExchange will

www.insideradio.com

Thank you. A couple of quick thoughts.

Per the linked article, this will be the second auditing go-round for Midwest. Until evidence shows otherwise, I have to assume that SoundExchange was running out of large broadcasting companies to audit so it began a fresh round with Midwest.

The fact that IHeart and Audacy were included also interests me. Back in the day, according to Kurt Hanson's blog on Internet radio (I'm not sure if that's still up), both IHeart and Audacy negotiated separate copyright deals with the major labels that were, if somewhat opaque, different from what the Copyright Royalty Board was doing.

 

[TheBigA]

The fact that IHeart and Audacy were included also interests me.

I didn't see Audacy included in the article. Several streaming companies have negotiated separate copyright deals. I think Apple is one.

 

[ted chittenden]

I didn't see Audacy included in the article. Several streaming companies have negotiated separate copyright deals. I think Apple is one.

It was near the bottom of the article; to wit:

"In 2023, Cox Media Group, Bonneville International, and Educational Media Foundation were selected for audits. And in 2022, SoundExchange audited Audacy and Midwest Communications."

 

[TheBigA]

It was near the bottom of the article; to wit:

"In 2023, Cox Media Group, Bonneville International, and Educational Media Foundation were selected for audits. And in 2022, SoundExchange audited Audacy and Midwest Communications."

Yes but that's not part of this current audit. AFAIK, audits aren't about the rates, but about the reporting.

 

[ted chittenden]

Yes but that's not part of this current audit. AFAIK, audits aren't about the rates, but about the reporting.

You had no way of knowing how my mind worked, but when I read that IHeart was in the last go-round and that Audacy had been audited in 2021, I asked myself why. My assumption, per the Kurt Hanson site article I read quite a while back, was that not only the rates but other aspects of the use of copyrighted materials had been written into those private contracts. According to my memory of the Kurt Hanson article, one of the things that the two major broadcasters made clear to other broadcasters was that the private deals included direct access to information about who was actually listening to the streams, something that other broadcasters were not willing to allow.

 

[TheBigA]

According to my memory of the Kurt Hanson article, one of the things that the two major broadcasters made clear to other broadcasters was that the private deals included direct access to information about who was actually listening to the streams, something that other broadcasters were not willing to allow.

All streamers have to report details on listener numbers to SoundExchange.

Noncommercial webcaster (CRB)

This is the “default” category for noncommercial services offering “Internet-only” transmissions and/or simulcasts of AM or FM transmissions.

www.soundexchange.com

With a few exceptions, ALL statutory licensees are required to submit Reports of Use to SoundExchange on a regular basis, including detailed information of what sound recordings were performed and the audience measurement of those performances (for each recording).

 

[RadioGuy1864]

Do the radio companies have to cooperate in the audit?

 

[TheBigA]

Do the radio companies have to cooperate in the audit?

It's worse than that. If the audit finds a discrepancy in SoundExchange's favor, they have to PAY for the audit.

Part of the reason radio companies are so angry about the broadcast royalty is all of this time and money involved in the required documentation.

 

[yeoldeschool]

Gee wiz, guys, I found the cause of the problem:

Copyrights in the US were originally for 14 years if the author died during that term. If he lived beyond it, then he was granted one additional 14 year term, for a total of 28. Full stop. No more. And some states provided for copyright terms of only 14 to 21 years with no renewals.

If the Hollywood and record label combines' unceasing bloating of our copyright terms had never happened, many radio stations' playlists today would cost them absolutely nothing. And the internet would also be alive with countless hobbyist music curators, running free streams for fellow music lovers for the sheer joy of it.

Edit:

"Forever minus a day? Calculating optimal copyright term" (Rufus Pollock, June 15, 2009, University of Cambridge)
https://rufuspollock.org/economics/papers/optimal_copyright_term.pdf
"The optimal term of copyright has been a matter for extensive debate over the last decade. Based on a novel approach we derive an explicit formula which characterises the optimal term as a function of a few key and, most importantly, empirically-estimable parameters. Using existing data on recordings and books we obtain a point estimate of around 15 years for optimal copyright term with a 99% confidence interval extending up to 38 years. This is substantially shorter than any current copyright term and implies that existing terms are too long."

"Optimal Copyright over Time: Technological Change and the Stock of Works" (Rufus Pollock, October 1, 2007, University of Cambridge)
https://rufuspollock.org/economics/papers/optimal_copyright_term.pdf
"The optimal level for copyright has been a matter for extensive debate over the last decade. Using a parsimonious theoretical model this paper contributes several new results of relevance to this debate. In particular we demonstrate that (a) optimal copyright is likely to fall as the production costs of 'originals' decline (for example as a result of digitization) (b) technological change which reduces costs of production may imply a decrease or a decrease in optimal levels of protection (this contrasts with a large number of commentators, particularly in the copyright industries, who have argued that such change necessitates increases in protection) (c) the optimal level of copyright will, in general, fall over time as the stock of work increases."

 

[TheBigA]

If the Hollywood and record label combines' unceasing bloating of our copyright terms had never happened, many radio stations' playlists today would cost them absolutely nothing. And the internet would also be alive with countless hobbyist music curators, running free streams for fellow music lovers for the sheer joy of it.

Unfortunately that has proven to be a losing argument when brought against the music industry. When The Turtles sued Sirius for non-payment of royalties, Sirius claimed the songs were outside the time protected by the law. The Turtles pointed out that the copyright dates had changed when they remastered the recordings for digital. The judge accepted that argument and Sirius lost a huge lawsuit.

 

[Larry]

Using existing data on recordings and books we obtain a point estimate of around 15 years for optimal copyright term with a 99% confidence interval extending up to 38 years. This is substantially shorter than any current copyright term and implies that existing terms are too long."

90 years is probably excessive but 15 years seems incredibly short. Even 38 years would have all of the 1960s Beatles and Motown catalogs already in public domain.

 

[yeoldeschool]

@TheBigA - Well, I wouldn't allow one court precedent to serve as a demotivational poster for the underlying idea of copyright reform. What one judge rules is routinely reversed on appeals. I myself see no rationale behind the notion that entering a vault and making a new copy of a master tape reboots when the recording was made. By that twisted logic, Toyota would be able to claim taking our cars for repairs reverts them to new from the factory, justifying a whole new auto loan and an associated payment schedule/term.

@Larry - 15 years is incredibly long considering the speed with which information spreads, gets consumed, and then goes out of fashion today. We have to remember that the 14-28 years initially allotted creators in the late 1700s factored in the reality that knowledge in those days traveled at a snail's pace. Authors needed enough time for their works to actually reach all ends of the earth and rack up sales in every potential market.

 

[TheBigA]

I wouldn't allow one court precedent to serve as a demotivational poster for the underlying idea of copyright reform. What one judge rules is routinely reversed on appeals.

You're right. In 2021, the Turtles decision was overruled:

Not So Happy Together - The Turtles vs. SiriusXM Copyright Case - Joshua D. Waterston, Esq. - Wilftek

What happens when Congress is unable – for almost 50 years – to figure out how to protect recorded music? Specifically, music recorded before 1972? Messy litigation involving the Turtles is what happens. First, some background. Almost 50 years ago, Congress passed the Sound Recording Amendment...

jwaterston.com

However, the Music Modernization Act covered pre-1972 royalties moving forward.

 

[yeoldeschool]

Interesting. And well, as far as the MMA goes, laws can also be changed.

BTW, continuing my previous stream of thought to @Larry - Whereas authors did once need lots of time for their works to actually reach all ends of the earth, now, all kinds of media can reach all those ends instantaneously, and then fall out of circulation after very short commercial runs. At that point, they become locked up like moths in amber because of being considered too unprofitable to continue airing, or to release on DVD/BD, or to stream. All this while the fans get punished like hell for trying to share them through grey market trading (e.g. bittorrent) -- trading they only resort to out of a lack of alternatives, and of being unable to themselves afford the licensing costs and disc pressing factories required to perpetuate them in aboveboard ways.

So, I'm definitely thinking it's time for a major shortening of copyright terms, with 15 being the maximum for very high budget, high effort productions, and even shorter terms applying to forms of intellectual property that "run their public consumption courses" in shorter periods of time.