CommLawBlog : Broadcast & Communications Lawyers & Attorneys : Fletcher Heald & Hildreth Law Firm : Telecommunications, FCC Regulation, Communications Act

And when I refer to “webcasters”, I’m referring not only to my primary target audience, i.e., FCC- licensed radio stations who are webcasting. (See below for more details on the three different categories of broadcaster/webcaster). Beyond that radio-based universe is a larger universe of operators engaging in “non-interactive webcasting”, perhaps more commonly referred to as “streaming”. (These are folks who, in overly simplified terms, don’t allow the user to request and directly hear a song.) The information in this post is generally applicable to all webcasters, radio-based and non-radio-based alike. 

Radio stations who are streaming online (most often consisting of a simulcast of the station’s over-the-air signal, though perhaps offering one or more “side channels” as well) normally fall into one of three categories: commercial broadcaster, noncommercial webcaster, and noncommercial educational webcaster. Remember that the distinction between “commercial” and “noncommercial” is based not on the station’s FCC license, but rather on whether the entity offering the webcasting service is exempt from federal income taxation under Section 501(c) of the Internal Revenue Code. There is a further distinction between “noncommercial webcaster” and “noncommercial educational webcaster”, the latter being affiliated with an accredited educational institution whose students substantially staff the webcasting operations.

There are also sub-categories within each category. For instance, a noncommercial webcaster can self-classify under the “CRB” or “WSA” designations. “CRB” stations are subject to the rules put in place by the Copyright Royalty Board in its Webcasting III decision applicable to the years 2011-2015; “WSA” stations are subject to the relevant Webcaster Settlement Agreement. 

The designations of “commercial broadcaster”, “noncommercial webcaster (WSA)” and “noncommercial educational webcasters” include special categories for smaller entities which come with some benefits. By paying an extra $100 “proxy fee” with its annual minimum payment, a commercial broadcaster who had fewer than 27,777 “aggregate tuning hours” in the previous year and expects to do so again can receive an exemption from the rather onerous monthly “Playlist Report of Use” requirement. Ditto both for a noncommercial webcaster (WSA) who had fewer than 44,000 aggregate tuning hours in the previous year and expects to do so again, and for the noncommercial educational webcaster who had fewer than 55,000 aggregate tuning hours in every month (though you can go over in one month) and expects to do so again. 

You choose your category – or, if applicable, your status as a small broadcaster or microcaster – when you file your Annual Minimum Fee Statement of Account form with SoundExchange. That form is due by January 31, 2013. Note: in prior years, small broadcasters or microcasters had to file a separate “Notice of Election” form; this year that election is incorporated into the Annual Minimum Fee Statement of Account form, which includes a line where the webcaster will indicate its election to pay the $100 “proxy fee”. 

But that’s not all: your obligations continue throughout the year. With the exception of the noncommercial educational microcaster, everyone – whether payment is required or not – must file a Monthly Statement of Account form with SoundExchange within 45 days of the end of the month in question. Full-sized commercial broadcasters, noncommercial webcasters and noncommercial educational webcasters have to file Playlist Reports of Use on a regular basis – generally monthly – as well.

So consider yourself reminded: if you are engaged in “non-interactive webcasting”, you will need to find the proper Annual Minimum Fee Statement of Account Form and send it to SoundExchange along with your payment of $500.00 per channel by January 31, 2013. If you qualify either as a “small broadcaster” or under one of the “microcaster” categories, you may also pay an extra $100 per channel in exchange for an exemption from the requirement that you file Playlist Reports of Use on a monthly or quarterly basis (but you don’t need to use a separate Notice of Election form this year).  However – with one very minor exception for noncommercial microcasters – regardless of your classification or size, your obligations do NOT end on January 31, 2013. You will need to file Statement of Account forms and, possibly, Playlist Reports of Use throughout the year.   

You can get more detailed information about every category via the “How do I Pay” page on the SoundExchange website. We’re here to help as well.

[UPDATE:  This morning, after we had posted this piece, our friends at SoundExchange sent around a note advising webcasters of a new SoundExchange-produced video in which they “break down what your service needs to submit to be compliant with the statutory license for 2013”.  You can find that video at this link.  And, of course, webcasters can also get help from the SoundExchange Licensee Relations group at 202-559-0555.]

Intercollegiate raised a number of arguments, but the one that obviously got the court’s attention was the Appointments Clause claim. The Appointments Clause? Maybe not as familiar to the Great Unwashed as, say, the Commerce Clause or the First Amendment, it’s still a f’real part of the Constitution – check for yourself at Article II, Section 2, Clause 2. For those of you who never bothered to memorize the Appointments Clause for your Civics Class, here ‘tis:

[The President] . . . shall nominate, and by and with the Advice and Consent of the Senate, shall appoint . . . Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.

Intercollegiate argued that the CRB’s members are “principal” rather than “inferior” officers and, as such, must be appointed by the President and confirmed by the Senate.  Since CRB members aren’t appointed by the Prez (or confirmed by the Senate), they’re constitutionally invalid, as are their decisions.

This argument is not new. It surfaced three years ago in a CRB appeal. In that case the argument wasn’t raised in a timely manner, so it was ignored in the Court’s opinion. But Judge Kavanaugh, in a separate concurrence, specifically mentioned it with seeming approval. A couple of months later, a commercial company (Live365) raised the same argument in a U.S. District Court and lost; Live365 appealed that loss, but ultimately settled out before its appeal got too far along.

The third time’s the charm. Intercollegiate properly raised the argument in its own 2011 appeal and the D.C. Circuit has now spoken. Because the Librarian of Congress (who appoints CRB members) was very limited in his/her ability to remove CRB members, and because the CRB was not subject to the direction and supervision of any “principal officer”, well, then, CRB members are themselves “principal officers”. Not having been appointed by the President, they cannot function consistently with the Appointments Clause.

Not to worry, though. Relying on an approach used by the Supreme Court in a similar situation in 2010, the D.C. Circuit has opted to “invalidat[e] and sever[] the restrictions on the Librarian of Congress’s ability to remove” CRB members. By reading those pesky provisions out of the CRB law as Congress wrote it, the court figures that the CRB will henceforth be constitutional.

Constitutional, that is, as long as the Librarian of Congress is a “Head of Department” (as required by the last line of the Appointments Clause). No problem there, either, according to the D.C. Circuit: the Library of Congress is a “component of the Executive Branch” (meaning that it’s a “department”, constitutionally speaking), so the Librarian of Congress is a “Head of Department”. QED. (To get to this point, the Circuit had to tiptoe around at least one earlier case that suggested that the Library of Congress was a “congressional agency”.)

Bottom line: The CRB wasn’t constitutional, but now (with the helpful intervention of the D.C. Circuit) it is. 

Where does that leave orders issued by the CRB back in its benighted, unconstitutional days? The particular order that was the subject of Intercollegiate’s appeal has been vacated and shipped back to the CRB – that would be the New and Improved CRB, Now With Real Constitutional Authority! – for further consideration.  While Intercollegiate did, of course, raise some substantive gripes about the old CRB's royalty ruling, it'll be back to square one for those gripes. Intercollegiate will have to present them again to the CRB.  If, as one might expect, the new CRB does exactly what the old CRB had done, royalty-wise, Intercollegiate will have to bring its gripes back up to the D.C. Circuit all over again.  But next time, it won't have the Appointments Clause argument in its holster.

It’s possible that others subject to previous CRB rulings could now claim that those rulings have no force and effect, thanks to the D.C. Circuit’s decision. Whether or not anybody will view that as a worthwhile exercise remains to be seen.

This is the point where we would ordinarily observe that the losing party before the D.C. Circuit can still seek rehearing, or maybe even Supreme Court review. Chances of further appeals in this case, however, are effectively zero. Intercollegiate won its appeal, so it’s not likely to ask for further consideration by the Circuit or the Supremes. And the CRB isn’t likely to, either. After all, the Circuit’s decision saved the CRB from unconstitutional oblivion – why would the CRB want to appeal that? So we’re guessing that, with the judicially-imposed revisions to the Congressionally-enacted CRB statute in place, life at the CRB will go on largely as it has in the past.

This year my post will be more streamlined than in previous years. That’s because, for the first time in about five years, there is some semblance of stability in the webcasting world. In previous years we’ve had intervening court decisions, actions by the Copyright Royalty Board (CRB), proposed legislation, settlement agreements and other factors that contributed a sense that the system was constantly in flux. Not this year. The only substantive changes from last year are: (1) an increase in the royalty rate that is applied to each service category and (2) slight changes to the particular forms to reflect that increase. (And even the increase in royalty rate is no surprise – it’s just what was provided in the five-year plan adopted by the CRB in 2010.)

In addition, the SoundExchange website has really improved since I started these reminders, as has SoundExchange’s outreach to the industry. Most registered webcasters (those who have filed the Notice of Use of Sound Recording Under Statutory License form and made payments/filed Playlist Reports of Use in the past) have probably received a reminder from SoundExchange already. So it’s easier to get clear information about an already simplified process with which many radio stations are already pretty familiar. I've heard from a number of folks that SoundExchange’s responsiveness to individual inquiries has improved as well.

Another reason for this year’s more streamlined approach: we aren’t in the business of just giving it away. If you’re still not clear on the obligations, you’re reaching out to us – or another law firm – seeking to utilize our specialized expertise. We’re happy to help, but bear in mind that there may not be a one-size-fits-all solution available for your particular circumstances.  I, for one, would prefer to provide clients with individualized guidance to ensure that they are fully compliant and can remain that way with the minimum cost and effort.

With that behind us, the 2012 SoundExchange basics come down to a simple “who”, “what”, and “when” – as in, “who am I”, “what must I file” and “when do I have to file it by”.

Who: Any radio station almost certainly falls into one of three basic service categories: commercial, noncommercial (determined by the webcasters’ 501(c)(3) status, not its FCC-licensure) or noncommercial educational (a noncommercial webcaster affiliated with an educational institution whose operations are also substantially staffed by students). Within each service category, there are sub-categories for small broadcasters or microcasters that offer relief if the webcaster stays under a certain aggregate tuning hour threshold (27,777 ATH/yr for commercial broadcasters, 44,000 ATH/yr for noncommercial and 55,000 ATH/month for noncommercial educational). Note that some service categories and, especially, small broadcaster or microcaster sub-classifications may require you to also file a Notice of Election by January 31. (Failure to opt into service categories subject to this deadline could bar you from the category for the rest of the year.)

What: Regardless of the category, each webcaster is required to make payments to SoundExchange. The amount due is tied to the royalty rate for the webcaster’s particular service category:

• commercial broadcasters pay $0.0020 per performance;
• noncommercial webcasters of all stripes get the first 159,140 ATH per month free and pay on a per performance basis after that (noncommercial webcasters following the CRB decision for 2011-2015 pay $0.0021 per performance; noncommercial webcasters opting into the general noncommercial webcasting settlement agreement pay $0.00067 per performance)
• noncommercial educational pay $0.0020 per performance

Of course, all webcasters must also pay a $500.00 per station annual minimum fee.

Most stations must also file Playlist Reports of Use with SoundExchange, listing key information about every song played during the relevant reporting period. The self-classification process becomes especially important here, as noncommercial webcasters operating under the settlement agreements have relaxed reporting requirements, while small broadcasters and noncommercial and noncommercial educational microcasters may be able to pay a $100 “proxy fee” to be exempted from the Playlist Report of Use requirement entirely.

When: Notices of Election, if applicable, and Annual Minimum Payment Statements of Account are due on January 31.Monthly Statements of Account are due every month thereafter, within 45 days of the end of the month to which they pertain (i.e., by March 16 for January, April 14 for February, etc.). These filings must occur, for most service categories, even if you do not have a payment to make for that month (whether because you didn’t reach the required noncommercial threshold or because your accumulated royalties haven’t exceeded $500.00 for the year to date). You must also file your Playlist Reports of Use on this same schedule (subject to certain relaxations for qualifying noncommercial webcasters who might only file quarterly or the small broadcasters or noncommercial/noncommercial educational microcasters who might not file at all). 

That’s the basic structure – same as last year. Clients of the firm should already have received a specialized e-mail as well that outlines the choices you must make and the factors that will influence your decision; our e-mail also provides links to the specific forms you will need. Otherwise, SoundExchange has accumulated all the information and link to the relevant form on one convenient page (Internet-only, non-FCC licensed webcasters will find their information here as well). You should feel free to contact us if you have further questions.

S.978 would expand the current definition of “criminal infringement” to include streaming (which the bill refers to as “public performance”). Anyone who engages in the unauthorized public performance of a copyrighted work could be criminally charged, as long as (a) the “public performance” involves making the work available on a publicly-accessible computer network and (b) the work was intended for commercial distribution. 

Previously, the statutory definition of “criminal infringement” included only reproduction (i.e., copying) or distribution (i.e., actually transfer or sale of a copy for permanent retention) of a copyrighted work.  The expansion to include streaming is seen by the bill’s sponsors as necessary because prosecutors, concerned that the current law arguably doesn’t criminalize unauthorized streaming, have hesitated to try to prosecute streamers.

The penalty for streaming (set out in 18 U.S.C. §2319) would start with three years in prison and fines. Jail time could go as high as ten years if the infringer is a repeat offender. 

S. 978 would also insert a new penalty provision into Section 2319 aimed at criminal streaming intended to result in commercial advantage or private financial gain for the infringer. Such infringement would warrant a minimum five-year sentence (plus fine), but only if (a) the offense consists of ten or more “public performances by electronic means” in any 180-day period and (b) either the total retail value of the performances exceeds $2,500 or the fair market value of the license required to offer the performance exceeds $5,000. 

Copyrighted works protected here include audio-only works (musical works and sound recordings), audiovisual works (motion pictures, television programs, etc.), and computer programs. So if the bill is enacted, anyone engaged in webcasting without a license would appear to be subject to criminal penalties. While we still believe the focus is firmly on the illegal streaming of audiovisual content (like movies, live sporting events, other television programs), it is clear that the law could be used against anyone who is webcasting without the required licenses.  One more reason to come into compliance with the statutory license applicable to webcasting.

This bill has some serious muscle behind it. All three original co-sponsors are members of the Senate Judiciary Committee, which has jurisdiction over I/P-related legislation. The Chairman of that Committee, Patrick Leahy (D-VT), has expressed support for vigorous enforcement of copyright infringement (including re-introducing a bill to allow websites engaged in repeated and egregious offenses to be shut down entirely). It’s also supported by some serious lobbying interests in the U.S. Chamber of Commerce, RIAA, MPAA, Independent Film and Television Association, Directors Guild of America, International Alliance of Theatrical Stage Employees, Screen Actors Guild, American Federation of Television and Radio Artists, National Association of Theater Owners, and, if that’s not scary enough: the Ultimate Fighting Championship (so, oppose at your own risk). 

So all in all, we’d say this will get some attention and movement.

Bottom line: it is clearly “game on” with regard to any unauthorized uses of copyrighted content. All broadcasters should be certain they are in compliance with ASCAP, BMI, SESAC and SoundExchange (the last relating to the online streaming or “webcasting” of music) and that they fully understand the extremely complex nature of copyright law as it applies to the performance, reproduction or other uses of others’ content. Of course, we are here to help you learn all about it.

First, the White Paper urges Congress to “clarify that infringement by streaming . . . is a felony in appropriate circumstances.” (We can hear it now – “Book ‘em, Dan-O. Streaming in the first degree”.) The brief discussion accompanying this recommendation isn’t entirely clear, but the appearance of the word “streaming” got our attention. 

At first glance, one could take “streaming” here to mean “webcasting” in the broadest sense. In that case it would be a good idea to heed our frequent admonitions about jumping through all of SoundExchange’s various hoops. But our gut instinct is that this isn’t the “streaming” that the Administration is worried about. Rather, the White Paper refers to “the illegal streaming of content” – so we’re guessing that its real target is something along the lines of the illegal file sharing we’ve discussed in the past, or maybe the live streaming of broadcast content – often sporting events – by some users of services like UStream.com or Justin.Tv.  That more limited interpretation makes more sense in terms of the actual economic damage involved. But given the plain language meaning of “streaming”, we can’t rule out the possibility that the Administration may indeed want to criminalize any unauthorized streaming of music. Such a get-tough approach would arguably be consistent with the Administration’s recommendation (described below) concerning performance rights.

The second item of interest appears in the very last section of the White Paper, which recommends that “Congress create a right of public performance for sound recordings transmitted by over-the-air broadcast stations." That's right – the White House is now on record as officially endorsing the Performance Rights Act (PRA). According to the White Paper, the fact that the U.S. has no performance right for recordings “disadvantages” U.S. copyright owners overseas, since “[t]hey are not permitted to collect overseas royalties because they are not granted rights in the U.S.” The White Paper contains no extensive discussion (much less specific support) for this assertion. Indeed, the entire section on this point is a total of five sentences long.

We don't know how much effect this endorsement will have. The PRA has yet to be reintroduced in either the Senate or the House in the 112th Congress, and the last time it was introduced (in the 111th) it clearly didn’t have the votes to pass.  But, as endorsements go, this is a pretty big one. If nothing else, it might lead to the introduction of a bill, thus starting the legislative process yet again. Or it could resurrect the currently dormant discussions between the NAB and the RIAA regarding an accord on this issue. (The success of any legislation will likely depend on those two parties reaching an agreement that both can live with.) But the White House could play a role here, especially if it follows up on the White Paper by using its “bully pulpit” to bring the parties to the negotiating table.  Let’s just say the gauntlet has been thrown down and we think the PRA can fairly be described as “in play” at this point. 

Of course, despite the fact that these recommendations come from the White House, they are nothing more than recommendations. It is up to Congress to act on them or not, as it sees fit. And it remains to be seen whether Congress will do so.  We’ll just say that, if it does, we hope that Congress will consider all points of view and move cautiously, with clarity and precision, to ensure that legitimate rights, including First Amendment rights, are not infringed.

A.        Noncommercial webcasters who have NOT elected to participate in any major webcaster settlement agreement

There is absolutely no distinction on the noncommercial side between a webcaster that operates a broadcast station and one that does not. But there is a distinction between an entity that elects to participate in the general noncommercial webcasters settlement agreement (the “General Agreement”) and one that does not.  (Note: Participation in that agreement offers significantly better terms, in my view.) Fortunately, you can elect that status even if you have not done so before. (Helpful reminder: even if you have previously elected that status, you must “re-up” every year.) For reasons discussed in Section C below, I strongly recommend that the General Agreement option be chosen, if at all possible.

However, if you cannot or decide not to participate in the General Agreement or any other webcaster settlement agreement, your obligations are:

Annual Minimum Statement of Account Form and Fee – File an annual minimum fee of $500 per channel by January 31, 2011 using the 2011 Noncommercial Webcaster Minimum Fee Statement of Account form found here. A separate form must be filed for each channel or station. 

Monthly Statement of Account Form and Fee – File any fees incurred for exceeding the 159,140 aggregate tuning hour maximum, along with the 2011 Noncommercial Webcaster Monthly Usage Statement of Account form found here.  You must file this form even if no fees have been incurred, marking “zero” in the "excess performances" column.  Again, a separate form must be filed for each channel or station.

Playlist Reports of Use – Playlist Reports of Use must be filed on a quarterly basis using the template report for filing (in Excel format) found here, unless you exceed 159,140 aggregate tuning hours in a given month during 2010 or 2011, in which case you file on monthly basis. Also note that you may be able to opt out of this requirement if you qualify as a Noncommercial Microcaster (see Section D below for details).

Notice of Election – No notice of election is required. 

B.        Noncommercial webcasters who HAVE elected to participate in the webcaster settlement agreement between CPB (on behalf of PUBLIC RADIO STATIONS) and SoundExchange

As in previous years, some noncommercial stations do not have to file forms with SoundExchange. Entities subject to this exemption include station that are: CPB-supported; NPR members; National Federation of Community Broadcasters members; or part of American Public Media, the Public Radio Exchange or Public Radio International. Under the terms of the separate CPB/SoundExchange settlement agreement, NPR’s Public Radio Interactive is making those payments. Stations participating in the CPB/SoundExchange agreement will be contacted by Public Radio Interactive with regard to their obligations.

C.       Noncommercial webcasters who HAVE elected to participate in the General Agreement and are NOT considered Microcasters because they have an average of at least 44,000 aggregate tuning hours per year 

While a decision (“Webcasting III”) by the Copyright Royalty Board last December sets the default royalty rates and related terms for non-interactive webcasters, those rates and terms vary somewhat from rates and terms specified in the General Agreement. If you are a party to the General Agreement (and I recommend that all eligible entities take this option), you are still subject to certain obligations. (As mentioned in Section A, above, you must renew this classification each year.) Those obligations include:

Notice of Election – File a Notice of Election by January 31, 2011 on the 2011 Notice of Election for Rates and Terms for Noncommercial Webcasters Form found here. 

Annual Minimum Statement of Account Form and Fee – File an annual minimum fee of $500 per channel by January 31, 2011 using the 2011 Noncommercial Webcaster Minimum Fee Statement of Account form found here. A separate form must be filed for each channel or station.

Monthly Statement of Account Form and Fee – File any fees incurred for exceeding the 159,140 aggregate tuning hour (ATH) maximum, along with the 2011 Noncommercial Webcaster Monthly Usage Statement of Account form found here. You must file this form even if no fees have been incurred, and you must calculate and insert your total ATH in the appropriate columns even if you do not exceed the maximum. Again, a separate form must be filed for each channel or station.

Playlist Reports of Use – Playlist Reports of Use must be filed on a quarterly basis using the template report for filing (in Excel format) found here, unless you:

exceed 159,140 aggregate tuning hours in a given month during 2010 or 2011, in which case you file on monthly basis; and

do not exceed 44,000 aggregate tuning hours in the entire year 2010, in which case you can pay $ 100 for the right to be exempted from this requirement altogether, as per section D, below. 

D.        Noncommercial Webcasters who HAVE elected to participate in the GENERAL AGREEMENT and ARE considered Microcasters because they had fewer 44,000 aggregate tuning hours last year.

This section applies to extremely small noncommercial webcasters who have signed onto the General Agreement. As we have explained in years past, these webcasters can be exempted from the playlist reporting requirement and, by definition, will not be paying royalties because they will never exceed 159,140 aggregate tuning hours in any given month.  Again, to be eligible, you must have elected to participate in the General Agreement in previous years and renew that election this year.

If you choose this category, your obligations are:

Notice of Election – File a Notice of Election by January 31, 2011 on the 2011 Notice of Election for Rates and Terms for Noncommercial Microcaster Form found here. If you wish to avoid filing Playlist Reports of Use, you must file a $100 proxy fee with this form.

Annual Minimum Statement of Account Form and Fee – File an annual minimum fee of $500 per channel by January 31, 2011 using the 2011 Noncommercial Microcaster Minimum Fee Statement of Account form found here. A separate statement of account must be filed for each channel or station.

Monthly Statement of Account Form and Fee – By definition, a station in this classification will not exceed 159,140 aggregate tuning hours, so no monthly statement of account is required.  

Playlist Reports of Use – Of course, the benefit of this classification is that you can opt out of filing Playlist Reports of Use. If you do not choose this option, the reports must be filed on a monthly basis; SoundExchange prefers that you adhere to the template report for filing (in Excel format) found here. Each Playlist Report of Use is also due within 45 days of the end of the month to which it pertains. 

Again, the requirements described in all of the above sections do not apply to "noncommercial educational" webcasters, i.e., noncomm stations whose operations are not substantially staffed by students. If you are a noncommercial educational webcaster, you should review our post relating to your particular situation.

Remember, your annual minimum statement of account forms and payments (and Notice of Election, if applicable) are due by January 31, 2011.  You cannot file these forms electronically, and there is a penalty for late payment (or worse consequences, for late-filing a Notice of Election), so if you haven’t gotten started yet, now would be a good time.

Annual Minimum Statement of Account Form and Fee - You must file an annual minimum fee of $500 per channel by January 31, 2011 (or within 45 days of commencing webcasting). The fee must be filed along with the 2011 Noncommercial Educational Webcaster Minimum Fee Statement of Account form found here. A separate form must be filed for each channel or station. 

Monthly Statement of Account Form and Fee – You must also file the 2011 Noncommercial Educational Webcaster Excess Monthly Liability Statement of Account form found here. If you exceeded the 159,140 aggregate tuning hour maximum, you must submit any resulting fees along with the form.  You must file this form even if no fees have been incurred, and you must calculate and insert your total ATH in the appropriate columns even if you do not exceed the maximum. Again, a separate form must be filed for each channel or station.

Playlist Reports of Use – Playlist Reports of Use must be filed on a quarterly basis using the template report for filing (in Excel format) found here, unless you:

exceeded 159,140 aggregate tuning hours in a given month during 2010 or 2011, in which case you file on a monthly basis; or

did not exceed 55,000 aggregate tuning hours in any given month in 2010 and do not expect to exceed that level in the year 2011 – in which case you can file the proper Notice of Election form (see below) and pay $100 for the right to be exempted from this requirement altogether.

Notice of Election – There is no need to file a Notice of Election unless you qualify for exemption from filing of Playlist Reports of Use. If you never exceeded 55,000 aggregate tuning hours in any month in 2010 and choose to pay a $100 “proxy fee” in lieu of filing reports, you may elect to do so by filing a Notice of Election. You do that by filing the 2011 Noncommercial Educational Webcaster Notice of Election form found here. If you do not meet the eligibility standards, or if you choose not to seek an exemption, you need not file the form.

Again, these forms apply to stations that are noncommercial educational webcasters. If you are not a noncommercial educational webcaster, please check our posts describing the requirements for commercial webcasters or noncommercial (but not educational) webcasters.

Remember, your annual minimum statement of account forms and payments (and Notice of Election, if applicable) are due by January 31, 2011.  You cannot file these forms electronically, and there is a penalty for late payment (or worse consequences, for late-filing a Notice of Election), so if you haven’t gotten started yet, now would be a good time.

A.        Commercial broadcasters, whether or not participating in the Webcaster Settlement Agreement between the NAB and SoundExchange:

There used to be a distinction between those broadcasters who had chosen to participate in the settlement agreement (NAB/SoundExchange Agreement) between the National Association of Broadcasters and SoundExchange and those who had not signed onto that agreement. However, the recent Webcasting III decision of the Copyright Royalty Board (CRB) has eliminated any such distinction on the commercial side. As a result, all Commercial Webcasters who are (a) FCC licensees of an AM or FM radio station and (b) simulcasting at least one channel on the Internet, have these obligations in 2011:

Notice of Election – There is no requirement to file a notice of election unless you are not currently participating in the NAB/SoundExchange Agreement and wish to do so (although as far as I can see there is absolutely no benefit to joining that agreement now). 

Annual Minimum Statement of Account Form and Fee – File an annual minimum fee of $500 per channel by January 31, 2011 using the 2011 Broadcaster Minimum Fee Statement of Account form found here. (Note: The form refers to the NAB/SoundExchange Agreement but that is of no consequence because the Webcasting III decision eliminated all distinctions between the rates and terms specified by the CRB and those laid out in the NAB/SoundExchange Agreement. As a result, all commercial webcasters who are also broadcasters are now created equal for copyright royalty purposes.) 

Monthly Statement of Account Form and Fee – File any fees incurred beyond the $500 annual minimum already paid by using the 2011 Broadcaster Monthly Liability Statement of Account form found here. You must file this form even if you’re not actually paying because your cumulative fees for the year have not yet exceeded $500.  Each Statement of Account is due within 45 days of the end of the month to which it pertains. 

Playlist Reports of Use – Playlist Reports of Use must be filed on a monthly basis. SoundExchange prefers that you adhere to the template report for filing (in Excel format) found here. Each Playlist Report of Use is also due within 45 days of the end of the month to which it pertains. 

B.        SMALL commercial broadcasters who HAVE elected to participate in the Webcaster Settlement Agreement between the NAB and SoundExchange:  

A select few broadcasters who are simulcasting on the web also qualify as “Small Commercial Broadcasters” and are treated differently, mainly because they can be exempted from filing Playlist Reports of Use. 

This distinct classification applies only to those broadcasters who: (1) elected to participate in the NAB/SoundExchange Agreement; and (2) had fewer than 27,777 aggregate tuning hours in the previous year.  These Small Commercial Broadcasters have one additional step to complete before January 31, but they will save a lot of time in the future because they do not have to file playlist reports of use on a monthly basis.  Operators qualifying as “Small Broadcasters” have these obligations in 2011: 

Notice of Election – File a Notice of Election by January 31, 2011 on the 2011 Notice of Election for Rates and Terms for Small Broadcasters Form found here. This Notice of Election must be accompanied by your $100 “proxy fee”. 

Annual Minimum Statement of Account Form and Fee – File an annual minimum fee of $500 per channel by January 31, 2011 using the 2011 Small Broadcaster Minimum Fee Statement of Account form found here. 

Monthly Statement of Account Form and Fee – File any fees incurred beyond the $500 annual minimum already paid by using the 2011 Small Broadcaster Monthly Liability Statement of Account form found here. While it is extremely unlikely that a small broadcaster’s cumulative fees for the year would exceed $500, you must file this form every month whether or not any payment is due. Each Statement of Account is due within 45 days of the end of the month to which it pertains. 

Playlist Reports of Use – Of course, the benefit of this classification is that you can opt out of filing Playlist Reports of Use. If you do not choose this option, the reports must be filed on a monthly basis.  SoundExchange prefers that you adhere to the template report for filing (in Excel format) found here. Each Playlist Report of Use is also due within 45 days of the end of the month to which it pertains. 

Remember, your annual minimum statement of account forms and payments (and Notice of Election, if applicable) are due by January 31, 2011.  You cannot file these forms electronically, and there is a penalty for late payment (or worse consequences, for late-filing a Notice of Election), so if you haven’t gotten started yet, now would be a good time.

That’s why we weren’t surprised to see the CRB use those settlement agreements as its starting point in Webcasting III. And we’re certainly not surprised that the CRB was able to quickly dispose of the attempts from each side to move the needle by a couple points. It doesn’t appear that either the webcasters or SoundExchange (representing the recording artists) is utterly dissatisfied with the final result – we’re certainly not hearing the outcry that greeted Webcasting II. 

For now that’s all we’re going to say about the proceedings themselves. If you really want to know more, you can take the time to pore over the 137 page decision. But we suspect you won’t because, like most people, you don’t really want to know how the sausage is made; you just want it on the plate in front of you. So we’ve compiled this handy chart comparing the royalty rates for the various webcaster classifications for 2011-2015. Two important notes: (1) as in previous years, there is a $500 annual minimum fee per channel which functions similar to a non-refundable deposit against payment obligations incurred under these rate structures; and (2) noncommercial rates only apply if station exceeds 159,140 ATH/month. 

 If you’re paying attention, two things jump out here. First, the CRB has taken the royalty rates found in the major WSAs and more or less applied them across the board to webcasters meeting the definition for the relevant class, whether or not the webcaster originally opted into an available WSA. (For webcasters who opted into a WSA, the WSA still takes precedence.). And second, there are fewer and fewer differences between the various classes of broadcasters.  

When you think about it, this makes sense, since the ultimate goal here is to figure out the going market rate for a performance – which suggests that there should be little to no difference across each class, although it still seems appropriate to offer a benefit (in the form of the first 159,140 ATH free) for noncommercial webcasters.

Of course, that’s not the end of the meal. A heaping helping of mandatory playlist reports still sits on your plate and, frankly, many webcasters find them pretty hard to swallow.  But you don’t have to worry about them right now. We figure you’re just about full after everything you’ve already digested, so we’ll put those away and reheat them in the very near future when we offer a refresher course on the required filings you’ll need to make throughout 2011. 

Check back here in January, in advance of the first deadline of 2011, which would be January 31, the deadline for the filing of notices of elections and annual minimum payments.

First, the decision may be a reliable indicator of the future. It’s clear that the CRB is likely to rely on the current state of affairs in setting rates and terms for webcasters during the years 2011-2015. So when the CRB gets around to establishing  2011-2015 rates, we won’t be surprised if noncommercial (and commercial) webcasters will get tagged again with this same $500 per channel annual minimum.

Second, the CRB’s decision provides a glimpse at some interesting data. According to the decision, SoundExchange claimed that it cost about $803 per channel per year to administer the webcasting statutory license.  If that’s really the case, then SoundExchange is losing money – to the tune of $303 a pop – on the majority of noncommercial stations.  

Interestingly, the CRB’s decision indicates that approximately 730 webcasters paid royalties to SoundExchange in 2009.  Of those, about half (i.e.., 363) were noncommercial.  Yet payments by noncommercial webcasters constituted only about one percent of all royalty payments.  Why?  Because 305 of the 363 reporting noncommercial webcasters – almost 85 percent – paid only the annual minimum of $500 per channel because they never exceed the monthly aggregate tuning hour maximum of 159,140 ATH.  

This fact demonstrates the important practical reality of this particular proceeding. For the vast majority of noncommercial webcasters currently reporting to SoundExchange, the minimum $500 annual per channel fee is the only royalty which they will have to pay to SoundExchange. 

From that perspective, the $500 fee is not merely an interesting but minor component of the royalty obligation. Rather, it appears that for most noncommercial webcasters, it is their royalty obligation. 

Of course, it’s not entirely clear how reliably representative the CRB’s figures are. After all, those figures reflect a total of only 363 noncommercial webcasters, which is not a lot, given the number of licensed noncommercial radio stations in the country – almost ten times that number (3,223) as of June, 2010, according to the FCC. We don’t know why the other stations aren’t accounted for. They may have chosen not to webcast because even the $500 fee was too much; or maybe they ar webcasting, but just not complying with reporting requirements; or maybe they just don’t feel like webcasting, whatever the royalties might be. Still, it’s interesting to contemplate the possibility that noncommercial webcasters’ obligations to SoundExchange may turn out, in practical effect, to be limited to $500 per year per channel.

The most recent royalty term expired on December 31, 2009 without any agreement or court order setting the rates for 2010 and beyond. Past practice teaches that it takes a while to set the permanent rates. So preliminary agreements were reached to cover the period until new rates can be established by the U.S. District Court for the Southern District of New York. (That’s the court that must approve all ASCAP/BMI rates, thanks to a consent decree imposed a few years back to end anticompetitive practices of ASCAP and BMI. SESAC isn’t subject to that consent decree).  As we reported last January, those preliminary agreements set the “old” interim rates, which amounted to a 7% reduction from 2009 rates. 

Those initial preliminary agreements were really just short-term “bridge” measures designed to assure the continued flow of at least some royalty payments in the absence of any other payment arrangement. Those measures weren’t meant to last, and they didn’t.

Meanwhile, the RMLC continued working with the Court, ASCAP and BMI on two separate fronts. 

First, looking toward the long haul, the parties negotiated – and continue to negotiate – final royalty rates for the next full five-year period running until December 31, 2014. 

Second, they were also working on determining an appropriate rate for the interim period lasting from December 31, 2009 (i.e., when the last five-year term ended) until the rates covering the next period are set (i.e., when the negotiation mentioned in the preceding paragraph are concluded). As noted above, the initial 7% reduction announced last January was understood to be a bridge rate to keep money flowing into the ASCAP and BMI coffers until the parties had had a chance to come up with interim rates. (Got it? If not, check our blog from last January where we introduced this topic.)

As we reported back in May, the District Court established the interim rate to be paid by broadcasters to ASCAP. While broadcasters had initially agreed to pay $217 million industry-wide for short-term “bridge” purposes, the District Court decreed that the interim number should actually be $192 million. 

Lo and behold, BMI reached an agreement in late June that will reduce the interim royalties paid by the broadcast industry to BMI from $217 million (the initial “bridge” rate as of January) to . . . $192 million (the now-operative interim rate which will remain in effect at least through 2010).  Where they got this number isn’t too hard to figure out; we're not entirely sure why it took six weeks to get there.  

Here’s a joint statement issued by RMLC and BMI:

The Radio Music License Committee and BMI have reached an interim fee agreement in the radio industry’s rate making proceeding which began earlier this year. The interim fee agreement takes effect August 1, 2010, and calls for an industry fee reduction from $217 million to $192 million. (This follows BMI’s voluntarily agreeing to provisionally lower fees paid by the industry from $233 million to $217 million as of January 1, 2010).

The parties agreed to these terms in order to expedite court determination of an appropriate final fee retroactive to January 1, 2010. The agreement was reached by the parties without prejudice as to final fee consideration.

We’re also happy to provide you with a potential timetable for implementation. Broadcasters should have begun seeing a 10.8% average decrease in monthly billings in June, 2010 (over and above the prior 7% decrease instituted at the beginning of the year). The agreement with BMI is effective August 1; the exact decrease has not been set, but it is expected to begin with the August 2010 billing and be about 10% (again, over and above the prior 7% decrease).

ASCAP and BMI appear to be digging into their positions that they should be getting more money in the long haul – a position which is likely to prolong the negotiations relative to establishment of final rates for the 2010-2014 term. As a result, broadcasters may want to get acquainted with these current interim rates because, “interim” or not, those rates could be with us for some time to come.

The actual details – including when the reduction will be implemented and how it will be allocated on a per-station basis – should be announced in the near future. Check back regularly for our update. But here’s what we know now (thanks mainly to an update on the Radio Music License Committee website):

• Individual stations will pay less to ASCAP during this interim period than they paid in 2009;
• Though the now-discarded interim rate was imposed as of January 1, 2010, stations won’t get any money back for any “overpayment” so far in 2010 – that is, even though Judge Cote’s bottomline number is less than the previously-announced/now-superseded interim rate, and RMLC members will thus have technically overpaid some since January, anyone who overpaid should NOT expect a rebate check in the mail; instead the interim fee adjustments will be worked into your bill starting in June or July bill – so keep an eye out for that;
• This is temporary, applicable only until the permanent rate-making decision is issued by the District Court – and it’s subject to retroactive adjustment once that permanent rate is set.

Here’s what we don’t know:

• Just how much of a reduction any individual broadcaster will see in its individual bill from ASCAP and when it’ll first see that reduction;
• Whether broadcasters will see a similar reduction – or any reduction at all – from BMI (similar court proceedings are pending relative to BMI, so we may expect some decision on that point shortly);
• How long the interim rate will be in effect (it could be years before the permanent rate is set).

As we said, we’ll tell you more when we know more.

The CRB is now effectively proposing to adopt the terms of two of the 2009 agreements as the official rules governing the 2011-2015 term after parties to those agreements suggested that their agreed-to terms might usefully be applied them to all similarly-situated webcasters.  The main difference: where the 2009 settlement agreements were elective (i.e., parties could choose to be subject to the agreements or not), the agreed-to terms will now govern all webcasters in the relevant category.  

The particular agreements relate to (a) participating commercial broadcasters and (b) noncommercial educational broadcasters streaming on the web. (Commercial broadcasters and noncommercial webcasters remain free to enter into their own individual, private, and voluntary agreements in lieu of the regulations but, of course, the entire purpose of a statutory licensing scheme is to relieve copyright users of that burdensome task.) 

The full terms proposed by the CRB may be found in the notice of proposed rulemaking published in the Federal Register. You can also find summaries of the agreements on which those terms appear to be based here (i.e., the settlement between SoundExchange and the NAB regard commercial broadcasters) and here (i.e., the settlement between SoundExchange and noncommercial educational webcasters). 

Note that these are still just proposed rules. The CRB will take comments on the proposals until April 22, 2010. It will then review any comments it receives and will decide whether to make these proposed rules final and official.

While we do not expect many individual broadcasters to file comments on these rates and terms – after all, the rates and terms have already been negotiated out and agreed to by many, if not most, of the affected parties – we are available to discuss this in more detail and assist you in filing comments if you desire.

We will also notify you with regard to any further developments with regard to the 2011-2015 terms and conditions for these commercial broadcasters, noncommercial educational webcasters, as well as any developments in the other proceedings of interest to the webcasting community (primarily the noncommercial, but not educational, webcasters).

A.        Noncommercial Webcasters Who HAVE NOT Elected to Participate in any major Webcaster Settlement Agreement

If you are a noncommercial webcaster – and are not eligible for or have chosen not to participate in any of the settlement agreements applicable to noncommercial webcasters – then you are still governed by the March, 2007 decision of the Copyright Royalty Board. You must:

File your annual minimum fee of $500 per channel by January 31, 2010 using the 2010 Noncommercial Webcaster Annual Minimum Statement of Account form found here.

File any fees incurred for exceeding the 159,140 aggregate tuning hour maximum with the 2010 Noncommercial Webcaster Monthly Usage Statement of Account form found here. You must file this form even if no fees have been incurred, marking “zero” for the amount to be paid.

File playlist reports of use on a monthly basis.

B.        Noncommercial Webcasters Who HAVE Elected to Participate in the Webcaster Settlement Agreement between PUBLIC RADIO STATIONS and SoundExchange

Stations that are CPB-supported, NPR members, National Federation of Community Broadcasters members; or part of American Public Media, the Public Radio Exchange or Public Radio International do not have to file forms with SoundExchange. Under the terms of their settlement agreement, NPR’s Public Radio Interactive is making those payments. These stations will be contacted by Public Radio Interactive with regard to their obligations.

C.        Noncommercial Webcasters Who HAVE Elected to Participate in the GENERAL NONCOMMERCIAL WEBCASTER SETTLEMENT AGREEMENT and are not considered Microcasters because they have an average of at least 44,000 aggregate tuning hours per year

There are two settlement agreements that apply to noncommercial webcasters simulcasting an over-the-air broadcast station. The first applies to any noncommercial webcaster, whether affiliated with an educational institution or not. These noncommercial webcasters must re-elect this status every year, or be covered by the CRB decision of March, 2007 as described in Section A, above.   They must:

File an annual minimum fee of $500 per channel by January 31, 2010 using the 2010 Noncommercial Webcaster Annual Minimum Statement of Account form found here.

File a Notice of Election by January 31, 2010 on the 2010 Noncommercial Webcasters Statement of Election Form found here.

File any fees incurred for exceeding the 159,140 aggregate tuning hour maximum with the 2010 Noncommercial Webcaster Monthly Usage Statement of Account form found here. You must file this form even if no fees have been incurred, marking “zero” for the amount to be paid.

File playlist reports of use on a quarterly basis (monthly if the webcaster exceeded 159,140 aggregate tuning hours in any month in 2009 or in any month in 2010).

D.        Noncommercial Webcasters Who HAVE Elected to Participate in the GENERAL NONCOMMERCIAL WEBCASTER SETTLEMENT AGREEMENT and ARE considered Microcasters because they had fewer 44,000 aggregate tuning hours last year

These are extremely small noncommercial webcasters who can be exempted from the playlist reporting requirement and, by definition, will not be paying royalties because they will never exceed 159,140 aggregate tuning hours in any given month.  They must:

File an annual minimum fee of $500 per channel by January 31, 2010 using the 2010 Noncommercial Microcaster Annual Minimum Statement of Account form found here.

File an additional $100 “proxy fee” in exchange for the exemption from playlist reporting obligations, which occurs with the filing of the “Notice of Election” form found here. 

These webcasters do not have to file any Statement of Account forms for 2010 since, by definition, they will not be paying royalties. If, for some reason, they have miscalculated and exceed 159,140 aggregate tuning hours in a month, they will “true up” their payments for 2010 in January 2011.   

There is no requirement to file playlist reports of use.

E.        Noncommercial Educational Webcasters Who Have Elected to Participate in the NONCOMMERCIAL EDUCATIONAL WEBCASTER SETTLEMENT AGREEMENT [Blogmeister Note: This portion of this post was revised on January 19, 2010 in response to the reader comment found below. See our explanation and further clarification in our responsive comment, below.]

Noncommercial webcasters affiliated with an educational institution whose operations are substantially staffed by students are eligible for the Noncommercial Educational Webcaster Settlement Agreement. They must:

File a Notice of Election by January 31, 2010 on the 2010 Noncommercial Educational Webcaster Statement of Election Form found here. They must certify as to whether they have remained below an average of 55,000 aggregate tuning hours per month (and thus can pay a $100 proxy fee in exchange for the right to be exempted from playlist reporting or go ahead and engage in playlist reporting covering two seven day periods per quarter) or whether they have exceeded 159,140 aggregate tuning hours in any given month (and thus must engage in monthly reporting of all songs played). Stations that exceed 55,000 aggregate tuning hours in a given month but do not exceed 159,140 aggregate tuning hours in a given month will engage in playlist reporting covering two seven day periods per quarter. In any event, there does not have to be any reporting of aggregate tuning hour or actual total performance data, whereas stations that do not participate in this Noncommercial Educational Webcaster Statement must engage in full out, monthly “census” reporting of all songs played during the month that includes actual total performance data.

File a Notice of Election by January 31, 2010 on the 2010 Noncommercial Educational Webcaster Statement of Election Form found here. They must certify as to whether they have remained below an average of 55,000 aggregate tuning hours per month (and thus will pay a $100 proxy fee to be exempted from playlist reporting) or whether they have exceeded 159,140 aggregate tuning hours in any given month (and thus must engage in monthly reporting of all songs played).

File any fees incurred for exceeding the 159,140 aggregate tuning hour maximum with the 2010 Noncommercial Webcaster Monthly Usage Statement of Account form found here.   They must file this form even if no fees have been incurred, marking “zero” for the amount to be paid.

File playlist reports of use on a quarterly basis (monthly if the webcaster exceeded 159,140 aggregate tuning hours in any month in 2009 or in any month in 2010 or not at all if the webcaster stayed below an average of 55,000 aggregate tuning hours per month and chooses to pay a $100 proxy fee instead of filing these reports). 

Again, these forms and payments are due by January 31, 2010. Because that is a Sunday, SoundExchange will accept the forms on Monday, February 1, 2010. However, you cannot electronically file these forms and there is a penalty for late payment (or worse in terms of late-filing a Notice of Election), so we suggest you get started now. Please do not hesitate to contact a Fletcher, Heald & Hildreth, P.L.C. attorney if you have any questions.

A.        Commercial Webcasters Who Have NOT Elected to Participate in the Webcaster Settlement Agreement Between the NAB and SoundExchange (or any other potentially applicable settlement agreement):

If you (a) are a commercial webcaster and (b) either are not eligible for or have chosen not to participate in the settlement agreement between the National Association of Broadcasters and SoundExchange, then you are still governed by the March, 2007 decision of the Copyright Royalty Board. You must:

File your annual minimum fee of $500 per channel by January 31, 2010 using the 2010 Commercial Webcaster Annual Minimum Statement of Account form found here; AND

File annual fees calculated using the per performance rate of $0.0019 for 2010 and using the 2010 Commercial Webcaster Monthly Usage Statement of Account form found here; AND

File playlist reports of use on a monthly basis. 

B.        Commercial Broadcasters Who HAVE Elected to Participate in the Webcaster Settlement Agreement Between the NAB and SoundExchange: 

Commercial webcasters who are simulcasting an over-the-air signal are eligible to participate in the Webcaster Settlement Agreement between the National Association of Broadcasters and SoundExchange. However, eligibility rests on whether you elected to participate by April 2, 2009. If you did not file this election form, you canNOT now choose to participate in this settlement agreement; instead, you must follow the procedures set forth in Section A, above.  

If you did make the proper election before September 15, 2009, you must:

File your annual minimum fee of $500 per channel by January 31, 2010 using the 2010 Broadcaster Annual Minimum Statement of Account form found here; AND

File annual fees calculated using the per performance rate of $0.0016 for 2010 and using the 2010 Broadcaster Monthly Usage Statement of Account form found here; AND

File playlist reports of use on a monthly basis.

C.        SMALL Commercial Broadcasters Who HAVE Elected to Participate in the Webcaster Settlement Agreement Between the NAB and SoundExchange:  

A select few broadcasters who are simulcasting on the web also qualify as “Small Commercial Broadcasters” and are exempt from filing playlist reports of use. These broadcasters elected to participate in the agreement between the NAB and SoundExchange and had fewer than 27,777 aggregate tuning hours in the previous year.   These Small Commercial Broadcasters have one additional step to complete before January 31 but, as we have already noted, will save a lot of time in the future because they do not have to file playlist reports of use on a monthly or even quarterly basis. They must: 

File your annual minimum fee of $ 500 per channel by January 31, 2010 using the 2010 Small Broadcaster Annual Minimum Statement of Account form found here; AND

File an additional $ 100 "proxy fee" in exchange for the exemption from playlist reporting obligations, which occurs with the filing of the "Notice of Election" form found here; AND

File a 2010 Small Broadcaster Monthly Usage Statement of Account form found here. By definition, a station with fewer than 27,777 aggregate tuning hours will never have its cumulative royalties for the year exceed $ 500, but you must file this form certifying your listenership and marking a “zero” in the line indicating how much to be paid that month.

Again, these forms and payments are due by January 31, 2010. Because that is a Sunday, SoundExchange will accept the forms on Monday, February 1, 2010. However, you canNOT electronically file these forms and there is a penalty for late payment (or worse consequences, for  late-filing a Notice of Election), so we suggest you get started now. Please do not hesitate to contact a Fletcher, Heald & Hildreth, P.L.C. attorney if you have any questions.

We’ve written plenty about the challenge to the March 2, 2007 decision of the Copyright Royalty Board which instituted rates and terms to be paid to owners of sound recordings for the years 2006-2010, including the appeal of that decision by several sectors of the webcasting community to the United States Court of Appeals for the District of Columbia Circuit. 

Our most recent post on the topic summarized the opinion of the Court of Appeals that upheld most aspects of the CRB decision. The only aspect of that decision that the Court tossed back to the CRB: the annual minimum fee to be paid by both commercial and noncommercial webcasters. The Court of Appeals determined that the CRB had provided absolutely no justification supporting this amount. Why $500? Why not $100? Why not $250? The CRB’s inability to justify the $500 requirement violated the Administrative Procedure Act’s requirement that, at a minimum, a new rule have some factual or legal underpinning – i.e., it was not reached in an arbitrary or capricious manner. 

The Court sent the CRB back to the drawing board. On December 23, 2009, the CRB began sketching. It published a Notice of Proposed Rulemaking in which it proposes to require every commercial and noncommercial webcaster to pay an annual minimum fee of – you guessed it –$500 per channel. These webcasters will only pay more at such time as their cumulative webcasting royalties for the year exceed $500.  

Our conversations with clients lead us to believe that the $500 per channel annual minimum payment was one of the least controversial aspects of the March 2007 CRB decision. Most commercial webcasters are going to exceed $500 pretty quickly anyway, so this is merely a down payment applied to later royalty payments. The noncommercial webcasters view the $500 payment as minimally burdensome even if they never exceed the monthly allowed maximum of 159,140 aggregate tuning hours which triggers additional payments. 

As a result, we envision minimal objection or contrary suggestions and expect the $500 annual minimum payments to be reinstated as a matter of law in the near future. But if you do have strong feelings one way or the other, you can submit comments to the CRB by January 22, 2010.

As we’ve discussed in the past, primarily in relation to webcasting, there exist two copyrights in any publicly-performed song.  One is the copyright in the underlying “musical work”, i.e., the song itself (consisting of the music and lyrics). That copyright is generally owned by the songwriter (although it may be transferred to, e.g., a publishing company).  The other – which is not at issue here – is the copyright in the “sound recording”, i.e., the particular version, or performance, being transmitted at any particular time. That copyright, which is sometimes referred to as the “performance right”, is generally owned by the recording artist performing that particular version (although, again, ownership of the copyright may be transferred to, e.g., the record company). 

Songwriters – the folks who own the rights in the underlying “musical work” – are for the most part represented by agencies which collect and distribute royalties for the broadcast (or webcast) of their works. These agencies include ASCAP, BMI and SESAC (the Society of European Stage Authors & Composers).

Because of prior antitrust actions taken against them, ASCAP and BMI are covered by a “consent decree” administered by a United States District Court. Every few years, RMLC – a voluntary organization of individuals representing a broad range of the radio industry – renegotiates a new rate structure for payment of royalties by radio broadcasters to ASCAP and BMI.  (SESAC was not a part of the earlier antitrust action and, therefore, has separate negotiations with RMLC). The current rate structure applicable to the ASCAP- and BMI-administered copyrights expires on December 31, 2009. It is not certain that a new rate agreement will be reached and approved by the federal court prior to that expiration date.

Stations that have already given authorization to RMLC to negotiate on their behalf are automatically covered by any rate agreement that is reached for January 1, 2010 and beyond, as well as the rate agreed upon to “bridge” the period between December 31, 2009 and the commencement of that new term. 

Any radio broadcaster that has not yet given such authorization to the RMLC can still do so, in which case any agreements will automatically apply to that broadcaster as well. Broadcasters who, for whatever reason, would prefer not to authorize RMLC to negotiate on their behalf may also sign a direct agreement with ASCAP and/or BMI in which the broadcasters agree to be bound by any new, post-January 1, 2010 terms and the terms of the “bridge period”. 

The letters which many broadcasters have been receiving in recent weeks are intended to make it easy for anyone still interested in signing up (whether with RMLC or ASCAP or BMI) to do so.  

We cannot provide general advice via this blog, but radio broadcasters who receive such a letter from RMLC, ASCAP or BMI should feel free to contact us if you have any questions.

The reporting rules are part of the system established by the CRB for assuring collection and payment of appropriate royalties to copyright holders. Using webcaster-supplied playlists reflecting the frequency with which songs are played on the web, SoundExchange can fairly distribute the royalties it collects. When the CRB first finalized the playlist reporting requirements in 2006, all webcasters were required to file quarterly reports with SoundExchange listing every song played by the webcaster during two seven day periods in that quarter. In December 2008, the CRB proposed to change those quarterly filings to “census” filings – i.e., monthly filings containing information about every song played during the month. The recently-published rules formally adopt that census filing approach.

Under the “new” rules,  census reporting – that is, reporting within 45 days of the end of each month the required information about all songs played during that month – is required for all webcasters except

• broadcasters simulcasting an over-the-air broadcast on the Internet which have such a small listenership that they do not exceed the $500 annual minimum payment per year (in other words, any very small commercial webcasters and noncommercial webcasters that do not exceed 159,140 aggregate tuning hours in any month); and
• preexisting satellite digital audio radio services, new subscription services or business establishment services who cannot accurately measure listenership for technological reasons. (These folks must still report their playlists, but can do so on a modified “aggregate tuning hour” basis.)

Of course webcasters who elected to participate in one of the several settlement agreements reached in the past couple of years are bound by the playlist reporting requirements in the applicable agreement. These webcasters should review their particular settlement agreement, and let us know if you have any questions about your reporting requirements.

The song-related information which must be filed has not markedly changed, though there is one key exception applicable to broadcasters. The reportable information still consists of:

• The name of the webcasting service
• The category transmission code, although this has changed slightly, with broadcasters now using one of the following category codes:
  • Eligible nonsubscription transmissions of broadcast simulcast programming not reasonably classified as news, talk, sports or business programming (essentially, simulcast of a broadcast station’s music programming);
  • Eligible nonsubscription transmissions of non-music programming reasonably classified as news, talk, sports or business programming (essentially, a broadcast station’s news, talk, sports or business programming); and
  • Transmissions of broadcast simulcast programming not reasonably classified as news, talk, sports or business programming made by an eligible new subscription service (this category involves subscription-only simulcast of music programming by a broadcast station)
• The featured artists
• The sound recording title
• The International Standard Recording Code, or a combination of (a) album title and (b) marketing label
• Actual total performances of the song, or a combination of (a) aggregate tuning hours and (b) channel or program name and (c) number of times the song was played during the relevant period

For the last category (actual total performances of the song or the listed combination), the “combination” alternative is applicable only to a preexisting satellite digital audio radio service, a new subscription service, a business establishment service and broadcasters who do not exceed the annual minimum payment required for a given channel (currently $500). 

The new rules have been purged of unnecessary references to prior license terms, obsolete categories (e.g., “small webcaster”) and the like. And illustrating the March of Technology, the CRB has deleted the option of filing the reports on floppy diskettes.

Notably, the Copyright Royalty Board did not adopt the following proposed changes: 

• Any form of “proxy fee” or other exemption from filing altogether, even for the smallest webcasters;
• Imposition of a late fee for tardy or non-filed playlist reports; or
• An exemption from playlist reporting of songs played during syndicated radio programming

While we have focused here on the applicability of these rules to broadcasters who are also webcasting, a section of the newly final rules applies slightly different standards to “preexisting subscription services”. Please contact us if you believe you qualify as a “preexisting subscription service” and require guidance as to how the new rules apply to you. 

Again, the CRB’s changes go into effect on November 12, 2009.

The decision was issued in a case pitting a number of record companies (think BMG, Arista, Bad Boy, Zomba) against the popular LAUNCHcast service. The record companies claimed LAUNCHcast was interactive. The court disagreed. 

The Copyright Act defines an interactive service as one which “enables a member of the public to receive a transmission of a program specifically created for the recipient, or on request, a transmission of a particular sound recording . . . , which is selected by or on behalf of the recipient.”  The parties agreed that LAUNCHcast, in some form, generated a list of songs to be performed based on the initial song or artist choice by the listener.  But was that enough to make it “interactive”? Nope.

The Court engaged in a searching review of the factors leading to the creation of the interactivity/non-interactivity distinction in the Digital Performance Right in Sound Recordings Act of 1995 and its refinement in the 1998 Digital Millennium Copyright Act – two seminal laws intended to protect sound recording copyright holders. The competing goals of the law are: (1) to increase the number of distribution channels for music and (2) to discourage rampant copying of music without compensation to the copyright holder.

The Court concluded that a major consideration – perhaps the major consideration – is the ability of a digital listener to capture and save a high quality copy of a sound recording with little to no effort if he or she knows it is about to be played. That is, if a listener can manipulate the webcast service in a way which permits him/her to snag his/her own digital copy of a song of his/her choosing, then it’s likely an “interactive” service. Stated another way, the Court focused on whether the webcasting service offers listeners an opportunity to steal music they would otherwise purchase.

Analytically, the Court reviewed factors which the Copyright Office had deemed relevant over the years. Although asked to clarify the “interactive/non-interactive” distinction, the Copyright Office has declined to take the bait, explaining that technology changes too rapidly to allow for a hard and fast rule. But it did indicate that some level of listener influence is permitted within the definition of non-interactive. In particular, the Copyright Office had even indicated that LAUNCHcast itself would qualify as “non-interactive”.

How exactly does LAUNCHcast work? The short strokes are that users:  

• Must log in with a unique username/password;
• Must enter basic information about preferences unrelated to music;
• Must enter information regarding the user's favorite artists;
• Must identify the user's favorite musical genres and rating them in order of preference; and
• Are able to rate songs or artists they hear (or even instantly purchase a song they like).

That final step (i.e., the rating process) continually refines and changes the individual stream offered to the individual listener.  Based on all these preferences and refinements, the LAUNCHcast software creates a playlist of 50 songs every time the listener logs on. The listener has no idea what those songs will be or which artists will be featured.

There is actually much more to the software, involving ratios, quotients and other mathematical formulas that aid in the refinement and ordering of the playlists. The Court of Appeals spent a good ten pages describing the process in impressive detail. Though we’re glossing over the particulars, we’ll note that it is this very level of detail which led the Court to conclude that LAUNCHcast is not an interactive service.  As the Court saw it, the LAUNCHcast system does not allow a user either to pick a song and then immediately hear that song, or to predict whether (much less when) any particular song may be played, and or (most definitely) to engage in music piracy. (Indeed, the instant-purchase function probably promotes the legal purchase of copyrighted music).

While LAUNCHcast may be more complex than some other few music services, the Court’s discussion does highlight some key characteristics which webcasters can take note of in determining whether their services may be deemed interactive: 

• In defining “interactive”, Congress “intended to include bodies of pre-packaged material, such as groups of songs or playlists specifically created for the user”;
• About 60 percent of the various factors used in the LAUNCHcast programming to create and modify a user’s playlist are out of the listener’s control (the only absolutely certain control available to a user is the “zero” rating: by giving a song a “zero” rating, the user guarantees that he or she will not hear it again);
• A new playlist of 50 songs is created every time the listener logs in, which prevents any ability to predict what will be heard during any particular session.

Emphasizing the limited involvement of the listener in the LAUNCHcast song selection process, the Court contrasted listening to LAUNCHcast to listening to radio back in the halcyon days. According to the Court, LAUNCHcast listeners do not enjoy even the “limited predictability that once graced the AM airwaves on weekends in America when ‘special requests’ graced lovestruck adolescents’ attempts to communicate their feelings to ‘that special friend’”. Ah yes, the good old days. But the Court’s comparison prompts this reminder to broadcasters who stream their over-the-air programming: be careful about inviting “special requests” from listeners, since granting such requests could lead the webcasting element of your operation to be deemed “interactive”, with all that that entails.

Recall that, for webcasting royalty purposes, the term “noncommercial” is defined by tax code (Section 501) considerations, not by the conventional FCC definition of the term. That is, a noncommercial webcaster is an entity which either (a) is already tax-exempt under Section 501 or (b) has applied for tax-exempt status or (c) is a government entity acting within its public purpose. As a general default matter, noncommercial webcasters must comply with the royalty rates set out in the March 2, 2007 decision of the Copyright Royalty Board (CRB) and other applicable regulations, which require:

a $500 annual minimum fee per channel (though a recent Court of Appeals decision has raised questions about the continued validity of this fee);

commercial per performance rates, for listenership above 159,140 aggregate tuning hours in any given month (about 220 simultaneous listeners at every moment in the month);

reporting of information about all songs played for two seven-day periods per quarter

compliance with the "performance complement" elements of the statutory license limiting, among other things, the number of songs played from the same album or artists in a given time period.

Noncommercial entities can avoid these default requirements in a variety of ways. For example, some entities are covered by the agreement (which was recently extended) between SoundExchange and the Corporation for Public Broadcasting. 

The two new agreements now provide still more ways of opting out of the default CRB regs. Here is how those new agreements work.

The General Agreement

The General Agreement is available to any noncommercial webcaster, not covered by the CPB/SoundExchange agreement, which simulcasts an over-the-air signal (though it can also have other streams). The terms of the General Agreement apply to the years 2006-2015.

To take advantage of the General Agreement, the eligible noncommercial webcaster must file a notice of election by September 15, 2009 or within 30 days of commencing webcasting, whichever is later. (The notice forms are available on the SoundExchange website.)This will cover the webcaster for every subsequent year unless the webcaster revokes its participation by January 31 in any future year. The noncommercial webcaster must also make good on all unpaid royalties owed for the period 2006-2009 before September 15, 2009. 

The General Agreement calls for participating noncommercial webcasters to pay only a $500 annual minimum fee per channel by January 31 of each year as long as the webcaster does not exceed 159,140 aggregate tuning hours (ATH) in a given month. This is essentially the same requirement imposed by the CRB default regs, except that under the new General Agreement the webcaster must file a Statement of Account each month, whether or not it exceeds the ATH max.

However, if the webcaster exceeds 159,140 ATH, it must pay royalties at the following rates and time periods:

2006-10:    $0.0002176 per performance or $0.00251 per ATH for a music channel or $0.0002 per ATH for news/talk/business/sports channels)

2011:         $0.00057 per performance

2012:         $0.00067 per performance

2013:         $0.00073 per performance

2014:         $0.00077 per performance

2015:         $0.00083 per performance

(For comparison purposes, the CRB-imposed per performance rates range from $0.0008 to $0.00019 over the period 2006-2010. No CRB rates have been set for 2011-2015.)

Royalties for the excess transmissions can be calculated on the ATH basis by multiplying twelve songs per hour (a permitted approximation) by the number of listeners in each hour. 

The General Agreement imposes reporting requirements on participating webcasters. Specifically, they must file quarterly reports (due within 45 days of the end of each quarter) listing all songs played during two seven-day periods during the quarter. While a similar reporting obligation was previously in place, the new deal permits webcasters to report simply the number of times each song was played and the number of listeners per hour, rather than the specific number of listeners for each song.

During the period 2011-2015, if the webcaster exceeds a monthly average 159, 140 aggregate tuning hours in any given year, it must engage in “census reporting” for the entire following year. That means that it will have to report every song played during the year – although the ATH reporting method (i.e., number of times each song is played, along with the total number of listeners per hour) can be used instead of the more specific (and onerous) reporting of the number of listeners to each particular song.

Additionally, if a webcaster certifies that it had fewer than 44,000 ATH in the previous year (about five-six simultaneous listeners at every moment in the year) and that it reasonably expects to stay below that number in the coming year, it can avoid the reporting requirement altogether by filing a $100 “proxy fee”.  This certification must be made by September 15, 2009 or within 30 days of commencing webcasting, whichever is later, and again by January 31 of every year in which the webcaster is eligible for, and chooses, this “microcaster” status. The noncommercial webcaster can exceed the 44,000 ATH level one year in this time period and still retain this "microcaster" status as long as it implements technological measures to ensure it does not exceed the limit again. 

Noncommercial Educational Webcasters

Any noncommercial educational webcaster not covered by the CPB/SoundExchange agreement can choose to be covered by the terms of this second new agreement for the years 2011-2015 (or, for reporting purposes only, 2009-2010 as well). To be eligible, the noncommercial webcaster must: (a) be directly operated by, or affiliated with and officially sanctioned by, a domestically-accredited primary or secondary school, college, university or other post-secondary degree granting institution; (b) staff its webcasting operations substantially by students; and (c) not have exceeded 159,140 ATH in any month during the preceding year.

To take advantage of the educational webcaster agreement, a noncommercial educational webcaster must elect this status by January 31 of EACH YEAR or 45 days after the end of the month in which it begins webcasting operations, whichever is later. In other words, this does not automatically renew, unlike the General Agreement). 

Any noncommercial educational webcaster choosing to participate in this agreement must pay a $500 annual minimum fee per channel by January 31 of each year.  

If an educational webcaster exceeds 159,140 aggregate tuning hours in a given month, then the overage will be subject to the following royalty rates, depending on the year in which the overage occurs:

2006-10:    The current CRB-mandated commercial rates

2011:         $ 0.0017 per performance

2012:         $0.0020 per performance

2013:         $0.0022 per performance

2014:         $0.0023 per performance

2015:         $0.0025 per performance

In the event that the 159,140 ATH level is exceeded, royalties can be calculated on the ATH basis by multiplying twelve songs per hour (a permitted approximation) by the number of listeners in each hour.

The educational webcasting agreement imposes reporting requirements on participating webcasters. Specifically, they must file quarterly reports (due within 45 days of the end of each quarter) listing all songs played during two seven-day periods during the quarter. While a similar reporting obligation was previously in place, the new deal permits webcasters to report simply the number of times each song was played and the number of listeners per hour, rather than the specific number of listeners for each song.

If a webcaster certifies that it had fewer than 55,000 ATH for all but one month in the previous year (that would amount to about 75 simultaneous listeners at every moment in the month) and that it reasonably expects to stay below that number in the coming year, it can avoid the reporting requirement by filing a $100 “proxy fee”.  (The educational webcaster may exceed the limit for one month, once, without losing its eligibility as an “educational webcaster” as long as it implements certain technical measures to ensure compliance going forward.) This alternative to the reporting requirement is available not only for 2011-2015, but also for 2009-2010. A webcaster choosing the option for 2009-2010 should file the required certification along with the $500 annual minimum fee due January 31, 2010.

If an educational webcaster exceeds 159,140 average monthly ATH in a given year, then for the entire following year it must engage in “census reporting”, i.e., every song played during the year (but it can simply report the number of times the song was performed, rather than the full listenership for each performance).

Finally, every noncommercial educational webcaster must keep, for a period of at least three calendar years, "server logs sufficient to substantiate all information relevant to eligibility, rate calculation and reporting". So hastily deleting files to save server space may cost you more in the end.

That’s right.  SoundExchange, representing the holders of performance copyrights (held by artists, record labels and others), has announced that it has agreed to terms governing the payment of royalties by four more groups of webcasters.   Despite the plethora of earlier settlement agreements, there remained one category of folks not covered by any royalty agreement: noncommercial entities with FCC licenses that are not part of the public radio system. 

The good news is that, with the completion of the settlement agreements recently announced by SoundExchange, most of these should now be covered in one of the agreements summarized below. 

We won’t have the final details until the full terms of each settlement are published in the Federal Register.   (Note: The agreements won’t become effective until 30 days following Federal Register publication.)  Still, from the information that SoundExchange has released, we know the following.

Religious and Non-Commercial Webcasters

A large subset of “noncommercial entities with FCC licenses that are not part of the public radio system” consists of religious broadcasters. To those of you in that group we say: your prayers have been answered. 

According to the press release issued by SoundExchange, an agreement was reached with the National Religious Broadcasters Music Committee governing royalty rates for the years 2006-2015. 

Webcasters choosing to participate will pay a per performance rate that begins slightly lower than those set by the CRB but will increase through the term.  Fees will be calculated by multiplying the applicable annual royalty rate times the number of songs played times the number of listeners.  “Small stations” – not defined in the press release – may be able to pay a “proxy fee” (as do small commercial broadcasters) to avoid filing records containing information of all songs played. 

This agreement establishes rates through 2015.  In other words, it supplants not only the rates which the CRB set in March, 2007, but also those that the CRB still has under consideration for upcoming years.

College Radio

Many, though not all, college broadcasters also fall into the population of “noncommercial entities with FCC licenses that are not part of the public radio system”.  To those of you in that group we say: it’s time to graduate to a new royalty scheme.

These folks will pay an annual set fee of $500.00 as long as they do not exceed 159,140 “aggregate tuning hours” in a given month.  (If they exceed that ATH level, they will be subject to the royalty scheme set up for commercial per-performance rates in the agreement between SoundExchange and the National Association of Broadcasters earlier this year.)  

Sound Exchange’s press release on this agreement indicates that “college stations and other noncommercial educational webcasters” will pay only a minimum annual fee and will have relaxed recordkeeping requirements. 

XM-Sirius

Thought this one was already resolved, did you? Well, we discussed the rates paid by XM-Sirius a few weeks ago, but that was for the performance of the sound recordings via their satellite feed. This one is for performance via their website.

Again, all we have to work from is a barebones press release, but the terms appear to involve payment on a per performance basis through 2015, though the specific rate has not yet been publicly disclosed.

The Mysterious Fourth Agreement???

While SoundExchange reported that a total of four new agreements had been reached, it didn’t release any details about the final agreement.   Why the mystery?  Who knows?  It could be that this last agreement is the coolest of them all.  We’ll just have to wait and see.

You can be sure that we’ll pass on the full details of each agreement – including who is eligible for which agreements and what steps those eligible parties must take to participate – when publication in the Federal Register occurs.  Once that happens, we’ll also be in a position to update the step-by-step guide to webcasting royalties (which we posted several months ago) to include a breakdown of the latest agreements. Check back here at www.CommLawBlog.com for more information as it comes available.

March 2, 2007:  Copyright Royalty Judges (CRJs) reach a decision regarding the rates and terms applicable to digital performances of sound recordings and making ephemeral recordings for the years 2006-2010. (Rehearing was denied on April 16, 2007.)

April 26, 2007: The Internet Radio Equality, the first of several attempts to overturn the ruling by legislation, is introduced in the House of Representatives (neither this nor any ensuing bill is enacted into law). 

May 30, 2007:  Several webcasters appeal the CRJs' decision to the United States Court of Appeals for the District of Columbia Circuit; these are eventually consolidated into one case.

July 12, 2007: The Court of Appeals denies the webcasters' request to stay the implementation of the new rates and terms, as a result of which the new rates and terms go into effect on July 15, 2007. 

. . . LOTS of time passes . . .

January 15, 2009: The Corporation for Public Broadcasting and SoundExchange, Inc., reach a deal for payment of royalties by eligible public radio stations for the years 2006-2010. This moots any concern about the CRJs’ decision as far as parties to this deal are concerned.

February 16, 2009:  The National Association of Broadcasters and SoundExchange reach a similar deal covering over-the-air broadcasters for the years 2006-2015. This moots any concern about the CRJs’ decision as far as parties to this deal are concerned.

July 7, 2009:  So-called "pureplay" webcasters and Sound Exchange reach a deal for payment of royalties for the years 2006-2010 by these web-only radio stations. This moots any concern about the CRJs’ decision as far as parties to this deal are concerned.

. . . VERY LITTLE time passes . . .

July 10, 2009: The United States Court of Appeals issues its ruling in the appeal of the March 2, 2007 CRJs’ decision.

In other words, more than two years after the CRJs’ decision was issued, the Court finally got around to resolving the appeals – and only after virtually every one of the major parties affected by that decision had already taken matters into their own hands and reached private deals obviating the royalty payment structure established by the CRJs.

The Court of Appeals by and large ruled against the webcasting community, finding the majority of the CRJs’ decision to be valid under the Administrative Procedure Act.  The Court remanded one portion of the case to the Copyright Royalty Judges: the $500 annual minimum fee paid by both commercial and noncommercial webcasters. 

In a move that will be analyzed by close readers of this blog and constitutional scholars alike – and that's not to imply that these groups are mutually exclusive – the Court declined, for the second time in as many weeks, to rule on the constitutionality of the Copyright Royalty Judges themselves.

Let's start with what is easily the most interesting part of the case:  the claim by Royalty Logic, Inc. that the Copyright Royalty Judges themselves have been unconstitutionally appointed to their positions.  (FYI – Royalty Logic is a SoundExchange wannabe seeking to be designated as a "receiving agent" allowed to collect webcaster royalties and distribute them to the copyright owners.) 

Does that claim of unconstitutionality ring a bell?  Yeah, we discussed a similar claim last week, when Judge Kavanaugh raised the issue in his concurring opinion in an appeal of a separate CRJ royalty decision (involving satellite radio).  Judge Kavanaugh concluded that the CRJs “appear to be” "principal officers" of the government, whose appointment constitutionally requires Senate confirmation. Since CRJ appointments don’t include any Senate OK, then the current appointment mechanism is unconstitutional, he suggested.

Royalty Logic used a different tack, something along the following lines. The Constitution authorizes Congress to delegate the power to appoint “inferior officers”, but that power can be given only to the President, the courts, or “Heads of Departments”. Everyone agrees that: (a) CRJs – who are appointed by the Librarian of Congress – are “inferior officers”; and (b) the Librarian of Congress is neither the President nor a court. Royalty Logic argued that the Librarian was also not a “head of department” and, therefore, the CRJ appointments were unconstitutional. 

While that latter point was disputed by SoundExchange and the Department of Justice, the Court chose not to resolve the issue. Instead, the Court observed that Royalty Logic hadn’t bothered to raise the issue of constitutionality in its initial brief, and had thrown in the argument only as a supplement several months later. The Courts don’t look kindly on such piecemeal presentation, especially when the issue raised supplementally has potentially “far-reaching consequences” which should not be resolved on the basis of “hasty, inadequate, and untimely briefing”. So the Court politely declined to consider that question further.

Under either Judge Kavanaugh's or Royalty Logic's formulation of the constitutionality argument, the result is the same: the entire underpinning of the CRJs’ operation (including every rate they have set) is called into question.  But despite the seemingly crucial importance of this point, the Court chose not to resolve it in either the satellite case or the webcaster case.  

Having sidestepped the constitutionality conundrum, the Court methodically plowed through the substantive challenges to the CRJs' decision. The Court found in each instance that the CRJs had not exceeded their authority.  A reviewing court, in determining whether an agency has acted in an "arbitrary and capricious manner", generally accords a rather large degree of deference to the forum whose decision is being reviewed.  The Court applied that generous standard of review to the "willing buyer/willing seller" standard applicable to this statutory license in one magnificent summary: 

The statute does not require that the market assumed by the [CRJs] achieve metaphyiscal perfection in competitiveness.  

Given this wide and forgiving scope of statutory authority, the CRJs got it right, for the most part.  The lone exception was the annual minimum payment of $500 required to be paid per channel (or station) by commercial and noncommercial webcasters alike.  This figure – which actually serves as more of a "deposit" with regard to most commercial webcasters, who can count this against amounts paid throughout the year – was supposedly chosen as a reasonable reflection of the administrative costs incurred by SoundExchange in receiving and distributing the royalties incurred by each webcaster. 

However, after combing through the 13, 288 pages of testimony and 192 exhibits introduced through 39 witnesses over 48 days of trial, the Court found absolutely no evidence supporting this $500 annual minimum payment.  With regard to commercial stations, the imposition of this annual minimum payment without a cap on the overall stations to which it applies constituted an unexplained departure from two voluntary agreements that had been in place.  That, my friends, is the epitome of arbitrary and capricious. 

The Court remanded this issue to the CRB for further consideration.  We wonder whether proceedings will actually continue.  Not only are most of these matters already settled, but this is one area where most webcasters really haven't raised much of a complaint. It's been our experience that commercial webcasters invariably exceed that $500 figure anyway and – though this isn't to say they're happy with the amount or wouldn't mind paying less – most noncommercial webcasters pay their $ 500 per year and don't complain if it ends there.

If that's the case – and it's indeed the end to this case – was this decision ultimately nothing more than "too little, too late"?  Perhaps with respect to the narrow issue of webcast royalties, but obviously not with respect to the much more fundamental issue of the constitutionality of the CRJs. Having shone a bright light on that issue twice in two weeks, but having left it undecided, the Court has effectively invited future parties to litigate it properly. That’s when the fireworks may begin.

• Every pureplay webcaster must make a $25,000 annual minimum payment. This will serve as a deposit against the overall royalty payments for the year if the overall number exceeds $25,000.
   
• Webcasters are divided into three groups for purposes of calculating overall royalty payments: 

• Large Webcasters
  • These are defined as entities with at least $1.25 million in annual revenues
     
  • “Large” webcasters must pay the greater of: 

• 25% of total revenues; or
   
• a “per performance” rate that is about half of that established by the March, 2007 CRB decision.  (For instance, under the settlement the 2009 rate is $0.0093 per song per listener, while the rate set in the March, 2007 CRB decision is $0.0018 per song per listener.)
   
• “Large” webcasters must submit “census” filings of playlist reports. These monthly filings consist of information about every song played as opposed to quarterly reports of songs played during two seven-day periods during the quarter.  These reports must be retained for at least four years
   
• Small Webcasters
  • These are defined as entities with: 

• Less than $1.25 million in annual revenues; and
   
• Less than the maximum allowable "aggregate tuning hours" in the year (which ranges from 8 million to 10 million ATH, depending on the year)
   
• “Small” webcasters must pay the greater of: 

• A percentage of revenues, calculated as follows:
   
  • 2006-2008: 10% of the first $250,000 in revenues and  12 percent for $ 250,000-$ 1, 249,999
     
  • 2009-2015: 12% of the first $250,000 in revenues and 14 percent for $250,000-$1,249,999;

OR

• 7% of expenses
   
• “Small” webcasters must submit “census” filings of playlist reports. These monthly filings consist of information about every song played as opposed to quarterly reports of songs played during two seven-day periods during the quarter.  These must be retained for at least four years.  But small webcasters can pay a proxy fee in exchange for relaxed reporting requirements.

• Pureplay Webcasters who also Offer Subscription Services
  • These are webcasters that offer some form of syndicated or subscription service in addition to a straight music stream.
     
  • They must pay the same rate as paid by broadcasters participating in the SoundExchange/NAB deal.

SoundExchange is pitching this “discounted” rate structure as an experiment. According to SoundExchange, “Time will tell if revenue sharing is the right move for both the recording community and webcasters, but we’re willing to take the risk in the hope that artists, rights holders and webcasters can all benefit.” But then again, SoundExchange maintains that the original rates were fair.

Reviews from the webcaster side are mixed. Pandora founder Tim Westergren calls the new rates “quite high”, but envisions that heavy users of his site will bear the brunt of the cost.  He surmises that free users of Pandora might find themselves limited to 40 free hours per month, with an “opt-in” fee of 99 cents if the user exceeds that limit.  (He notes that that would give the listener unlimited music for an entire month for the same amount he/she would pay for a single song download.)

The settlement will become effective 30 days after it is published in the Federal Register.

In order to be covered by the settlement, a webcaster must: 

• Be Licensed by the Federal Communications Commission;
• Originate programming (not be solely a repeater station);
• Be a member or affiliate of:
  
  • NPR
  • American Public Media
  • Public Radio International,
  • Public Radio Exchange, 
  • the  National Federation of Community Broadcasters, or
  • or be a public radio station that is qualified to receive funding from CPB.
    
• Qualify as a "noncommercial broadcaster" under the statutory licensing rules; and
• Webcast as part of the mission that entitles the owner to be exempt from taxation under Section 501 of the Internal Revenue Code, or, if it is owned by a government entity, operate for a public purpose. 

The 450 or so qualifying stations agreed to make a $1.85 million lump sum payment to SoundExchange covering the years 2006-2010.  We now understand that individual stations covered by this settlement will be making their payments to NPR Public Interactive.

So, public radio licensees, keep an eye out for correspondence from NPR Public Interactive.  If you believe yourself to be covered by this settlement and don't hear something from NPR Public Interactive in the very near future, please let us know, as first reports to SoundExchange will be made in mid-July.

At issue is a patent (No. 6,577,716, if you’re into that kind of thing) which covers methods for (a) “replacing a portion of the content of a radio broadcast that is to be distributed over the Internet” and (b) distributing a portion of the content of a radio station broadcast over the Internet.” To folks not steeped in the technical intricacies of patent descriptions (i.e., us), the overall description of the “methods” is not a model of specificity and detail. It refers, without much elaboration, to the use of content-related “markers” to trigger the identification of “local” programming (e.g., ads, news, weather, sports, traffic) and the replacement of such programming with programming “applicable to individuals located outside the geographical range of the radio broadcast”. 

Exactly what (if any) specific hardware and/or software might be necessary to implement these “methods” does not appear to be identified in the patent itself.

If successful, Aldav could potentially receive millions in both “actual” and “enhanced” damages, and could obtain a permanent injunction preventing these stations from using the patented process without Aldav's permission.

Of course, broadcasters might want to yank local programming from their Internet stream and replace it with wider- interest material for a number of reasons. Replacement of local spots often makes sense, since the advertiser presumably is not expecting business from a global audience, and, conversely, a global audience presumably isn’t interested in hearing about some local business. Also, a station’s right to transmit some content, including locally-produced spots and even some music, may not include Internet transmission – in which case the station could subject itself to claims by the content’s producer, talent and/or copyright holder for additional compensation if that content were to be included in the stream. (While the station may be indemnified by the commercial producer or broker in the event that the talent sues to recoup the extra compensation he or she believes is owed for this extra performance of the commercial, the station and the station alone will be on the hook for the sound recordings performed but not reported to SoundExchange.)

So it's no surprise that content substitution may be standard operating procedure among many, if not most, streamers.

The big question raised by the Aldav suit is whether Aldav’s patent really does give it a monopolistic (or near-monopolistic) lock on any such program-replacement activity. Presumably Aldav thinks so, and is looking to establish that principle by dipping into some of the deepest pockets in the business. In view of the potentially astronomical stakes on the table, though, it is not likely that anybody’s going to be conceding liability in the early rounds.

Meanwhile, streaming stations not targeted by Aldav’s suit should take a close look at their own program-substitution practices, with an eye to trying to dodge any litigation bullets that might get shot in their direction as this situation develops.

The CRB received 43 comments in response to its initial proposal to increase the two-seven-day-per-quarter filing requirement to full "census" reporting.  These comments could be divided into four basic categories: 

• Copyright Owners  (including SoundExchange) who support the move to census reporting as a means of accurately distributing copyright royalty payments. 
   
• Educational and Commercial Radio broadcasters who oppose the proposed change as unduly burdensome, if not impossible.  
  
  
  • Some comments stated outright that increased reporting requirements would result in the commenter ceasing its webcasting altogether, due to a lack of "finances, staff' and technology" to engage in monthly reporting. 
     
  • Other comments noted the particular hurdle facing educational broadcasters, many of whom still allow disc jockeys to freely choose their songs rather than relying on an automated playlist.  These commenters urged the CRB to exempt from any increased reporting requirement those educational broadcasters who pay only the $ 500 annual minimum royalty fee per channel and never exceed the 159,140 aggregate tuning hour maxiumum in a given month.
     
• A Service that Simulcasts the Over-the-Air Broadcasts of Mainly Noncommercial Stations on the Internet
  
• Commercial Providers of Software that Allows Radio Stations and Webcasters to Automate Their Playlist Reporting, two of whom opposthe increased census reporting because of concerns over cost and technology burdens.

The Notice of Inquiry hones in on this particular issue of cost and administrative burden.  Noting that the Copyright Act requires the CRB to establish a method of notifying copyright owners that their sound recordings are being publicly performed under the statutory license, the Notice of Inquiry provides only two alternatives:  the current quarterly reporting requirement and the proposed monthly requirement.  In addition to seeking suggestions as to a possible third alternative that can be both informative and cost-effective, it also asks the following questions (among others): 

• How many small webcasting entities will be adversely impacted by the proposed monthly census reporting? 
   
• What percentage of broadcasters use automated playlists?  What is the cost of preparing a report using the automated playlist and how would that cost increase if census reporting is instituted? For those not using automated playlists, how are reports generated and filed?
   
• Specific to SoundExchange: 
  
  
  • What is the current methodology used to allocate and distribute royalties to copyright owners? 
  • How would that methodology change with census reporting and, in particular,  how would it increase accurate and efficient royalty distribution?
  • What cost savings or additional burdens can copyright owners expect through census reporting?
     
• Who, if anyone, should be exempted from the proposed census reporting?   Possibilities include:
   
  • A revenue-based cut-off (with comment sought on the proper amount for the cut-off)
  • Strictly along the lines of the royalties paid (such as those who do not exceed the $ 500 annual minimum payment)
  • Commercial  vs. Noncommercial
  • Based on the webcaster's physical size or number of employees

We're assuming that the NAB will again file comments on behalf of broadcasters, but you should feel free to provide your tales of horror and woe (or any other information) to the CRB in written comments due May 26, 2009, with reply comments due on June 8, 2009.  

We have prepared a series of interlinked informational slides to guide you along the path. By clicking on the links that apply to your own situation, you can wend your way through the Webcast Royalty Maze. (Don’t worry about making a mistake: you can go back at any time if you think you've answered a question wrong or if you think that you'd like to take advantage of some other available option.)

NOTE: This was created prior to the execution of settlement agreements in August 2009 that cover noncommercial webcasters and noncommercial educational webcasters.  If you are a noncommercial webcaster who might be eligible for one of these agreements, please look for an updated version of this step-by-step guide or contact us for more information.

So, let's begin with an easy one: If you are engaged in the non-interactive public performance of sound recordings by means of a digital audio transmission, click here. 

If you are not engaged in the non-interactive public performance of sound recordings by means of a digital audio transmission, then the statutory license for webcasting does not even apply to you.

The full terms of this settlement have not been released, but here's what we already know:
 

• The terms of this settlement apply to broadcast stations, whether they are simulcasting an over-the-air signal on the Internet, streaming original program on the Internet, or doing both; there is an emphasis on "this" because SoundExchange has one other settlement in place, with CPB-Member stations, NPR, NPR Members, National Federation of Community Broadcasters members, American Public Media, Public Radio Exchange, and Public Radio International.   
   
• While we have heard rumors that other segments of the webcasting community may be close to similar settlements, these are the only two settlements to date. So any webcaster outside of the categories listed above (college radio stations not covered by the NAB or CPB deals, and nonbroadcast -- web-only -- webcasters, especially smaller webcasters, and religious broadcasters stand out at this point) are still subject to the 2006-2010 rates set by the CRB 2007 and the result of the upcoming ratemaking proceeding.  
   
• Broadcasters do not have to accept the terms of this settlement, but if they do, they will lock in their royalty rates for 2009-2010 (regardless of the outcome of the pending appeal of the highly contentious 2007 Copyright Royalty Board decision) and for 2011-2015 (regardless of the outcome of the upcoming ratemaking proceeding).  The "per performance" method of calculation will remain in place, meaning stations will pay royalties calculated according to the number of songs played multiplied by the number of listeners who hear each song multiplied by the applicable royalty rate for the year:  $ 0.0015 in 2009 (down from $ 0.0018), with a gradual increase to $ 0.0025 in 2015.
   
• In addtion to the change in royalty rates, the NAB settled another aspect of the statutory license with four major record labels in a way that will clearly benefit broadcasters simulcasting on the Internet.  The "sound performance complement" section of the statutory license restricted webcasters' playlists in certain ways and, thus, in the case of a broadcaster simulcasting on the Internet, often required adaptation of the over-the-air broadcast to the webcasting rules.  Broadcasters simulcasting on the Internet will no longer be bound by certain rules (it has not been stated exactly which) that restrict among other things: 
  
  
  • The number of songs by a single artist or from a single album that could be played in a certain time period
     
  • The archiving of certain programs for more than a defined period of time or if the program is not of sufficient duration
     
  • The "preannouncing" of a specific upcoming song (while at the same time requiring the contemporaneous display of information about a song as it is being played)

More information about this and any other settlements should be available soon. In fact, the February 15, 2009 deadline set forth in the Webcaster Settlement Act has now passed and outstanding negotiations should have ended. 

But we know enough to say this: the settlement is not "landmark" by any means.  In fact, the biggest surprise may be that the status quo continues despite the efforts of the NAB and others to overturn the 2007 Copyright Royalty Board decision that sharply increased rates. This may bring a measure of certainty to broadcasters who are, or are considering, webcasting;  however,  the continued increase in rates after an initial decline.combined with other administrative requirements that may also increase in the near future, may mean the result is "we're certainly not going to stream". 

We've talked to plenty of broadcasters who are still shying away from what is clearly a mainstream method of delivering their signal because the costs and regulatory compliance efforts are too excessive to justify the additional revenues.   A short term dip in royalty fees combined with relief from playlist restrictions that, frankly, many broadcasters weren't even aware of, are unlikely to change that mindset.

The annual minimum royalty fee can be paid using forms available on the SoundExchange Inc. website.  To access the correct minimum payment form (if the direct links to the forms provided below do not work): 

1. Access the website at http://www.soundexchange.com
   
2. Select the “Download Forms” Option from the column on the right of the page
   
3. Select “For Digital Music Services” from the four options which appear after selecting “Download Forms
   
4. Choose the Relevant Form from the “2009” list:

a.     Commercial Webcasters should click the preferred format under “2009 COMMERCIAL WEBCASTER/SIMULCASTER MINIMUM FEE STATEMENT OF ACCOUNT FORMS”:

Commercial Webcaster/Simulcaster - Statement of Account - Minimum Fee (Excel)

Commercial Webcaster/Simulcaster - Statement of Account - Minimum Fee (PDF)

b.    Noncommercial Webcasters should click the preferred format under “2009 NONCOMMERCIAL WEBCASTER/SIMULCASTER MINIMUM FEE STATEMENT OF ACCOUNT FORMS”:

Noncommercial Webcaster/Simulcaster - Statement of Account - Minimum Fee (Excel)

Noncommercial Webcaster/Simulcaster - Statement of Account - Minimum Fee (PDF)

This $ 500 annual minimum payment acts as a deposit against the royalty fees incurred through all of 2009. In fact, the relevant Statement of Account form that must be filed within 45 days after each month for which it applies (for example: the January form is due by March 16, 2009) takes into account this $ 500 annual minimum payment by including a line on which the filer subtracts $ 500 from the overall amount calculated (each form after the first month provides for subtraction of all amounts previously paid).  For noncommercial stations, of course, there will be no further payments (and no need to file any forms at all) for the rest of the year as long as the noncommercial webcaster does not exceed the maximum allowable limit of 159,140 aggregate tuning hours is exceeded in a given month.  Should a noncommercial webcaster exceed that the monthly allowable minimum, it will use the form available below to pay the excess at the commercial webcaster rate, which is $ .0018 per listener per song for 2009.

These Statement of Account forms are available on SoundExchange’s website. To access the correct Statement of Account form (if the direct links to the forms provided below do not work):

1. Access the website at http://www.soundexchange.com
    
2. Select the “Download Forms” Option from the column on the right of the page
   
3. Select “For Digital Music Services” from the four options which appear after selecting “Download Forms
   
4. Choose the Relevant Form from the “2009” list:

a.     Commercial Webcasters should click the preferred format under “2009 COMMERCIAL WEBCASTER/SIMULCASTER MONTHLY USAGE STATEMENT OF ACCOUNT FORMS”:

Commercial Webcaster/Simulcaster - Statement of Account - Monthly Usage (Excel)

Commercial Webcaster/Simulcaster - Statement of Account - Monthly Usage (PDF)

b.    Noncommercial Webcasters should click the preferred format under “2009 NONCOMMERCIAL WEBCASTER/SIMULCASTER EXCESS USAGE STATEMENT OF ACCOUNT FORMS”:

Noncommercial Webcaster/Simulcaster - Statement of Account - Excess Usage (Excel)

Noncommercial Webcaster/Simulcaster - Statement of Account - Excess Usage (PDF)

Please remember that there is a 1.25 percent late fee for any missed deadlines.  You should not hesitate to contact a Fletcher, Heald & Hildreth, P.L.C. attorney if you have any questions.

The ratemaking proceeding is a trial-type process whereby interested parties present detailed statistical and economic evidence designed to assist the CRB in determining the value of a non-interactive performance of a sound recording (that particular version of a musical work that you hear over the Internet) under a "willing buyer/willing seller" standard. 

Anyone can participate, though the extended and intensive proceeding often deters individual webcasters from joining in the fun, especially if they believe that one or more trade associations will represent their interests.  Still, it only costs $ 150.00 and the time required to file an original and five copies of a  Petition to Participate with the Copyright Royalty Board by February 4, 2009 to reserve your right to participate.  More information regarding the details of how and where to file the Petition are available in the January 5, 2009 Federal Register  notice of this proceeding.   The substantive aspects of the Petition are remarkably simple, requiring just: 

• The petitioner's full name, address, telephone number, facsimile number (if any), and e-mail address (if any); and
   
• A description of the petitioner's significant interest in the subject matter of the proceeding.

You can also join up with some friends and jointly file a Petition with the following information: 

• The full name, address, telephone number, facsimile number (if any), and e-mail address (if any) of the person filing the petition;
   
• A list identifying all participants to the joint petition;
   
• A description of the participants' significant interest in the subject matter of the proceeding; and
   
• If the joint petition is filed by counsel or a representative of one or more of the participants that are named in the joint petition, a statement from such counsel or representative certifying that, as of the date of submission of the joint petition, such counsel or representative has the authority and consent of the participants to represent them in the royalty rate proceeding.

If you are webcasting and interested in participating, but have further questions about the Petition or the entire proceeding, please contact a Fletcher, Heald & Hildreth, P.L.C attorney.

SoundExchange and the Corporation for Public Broadcasting have announced that a settlement has been reached that will alter the way in which these stations pay royalties and report webcasting performances through 2010. 

The current royalty rates have been the subject of significant discussion in the broadcasting community, including  several  informative  articles  in  this  very blog.  The sharp increase in rates for the period 2006-2010 was especially feared by noncommercial stations with a large web audience, as those noncommercial stations would pay at commercial rates anytime their internet listenership exceeded 159,140 "aggregate tuning hours" in a given month, as opposed to the flat fee these stations (and small webcasters) had paid prior to the institution of new rates.

Pursuant to the Webcaster Settlement Act of 2008, this settlement agreement can go into effect immediately, with the following applicable terms: 

• Any eligible radio station which chooses to participate will not have to make any further royalty payments until December 31, 2010, as CPB will make a single, up front payment of $ 1.85 million to SoundExchange on behalf of public radio staitons. 
   
• SoundExchange will also create a consolidated playlist reporting system for use by all stations which choose to become a part of this program; those stations will be responsible for providing playlist information to CPB.
   
• Stations wishing to participate must register their intent with CPB on a designted website; CPB will provide details regarding that registration website in the near future.
   
• This agreement does not affect the "sound performance complement" portion of the statutory license (the restrictions on the number of songs that can be played from a certain CD or by a certain artist within a given time frame, the length of time for which a program can be archived, etc), meaning even participating stations must follow those rules.
   
• As a condition of the settlement, NPR will withdraw its appeal of the Copyright Royalty Board decision (we see this as an indication that more settlement discussions continue between SoundExchange and those segments of the webcasting community that are part of the pending court appeal).

No station is required to participate in this settlement. Thus, a station that is certain it will never exceed the aggregate tuning hour limitation in any given month may simply decide to ride out the next two years until the new rates are determined for 2011 and beyond in a proceeding that will commence in the near future (more on that soon).  Still, if you believe you may be eligible and wish to participate, keep an eye out for further communications from CPB or contact a Fletcher, Heald & Hildreth attorney.

While the webcasting community's anger toward the CRB predictably stems from the royalty decision, we often find that the attendant administrative requirement of filing information  with SoundExchange concerning all the songs played on your Internet stream for two seven day periods of each quarter is an effective barrier to entry for those radio stations who are not already on the Internet.  This is especially true for smaller stations or those that allow their DJs to engage in a more free flowing format which increases the breadth of songs played. 

Our instruction to clients that the regulations formally known as "Notice and Use of Sound Recordings Under Statutory License" require that they compile information about each song played  (including song name, artist name, IRSC code or album title and lable and the frequency of play) in ASCII format and either: (a) in Microsoft Excel or (b) Corel Quattro Pro format AND send it to SoundExchange, Inc via: (a) File Transfer Protocol, (b) E-mail, (c) CD-Rom or (d) on a floppy disc each quarter has been met with a pretty standard response of "that will require me to hire at new staff person -- or at least a part timer".   

The December 30, 2008 NPRM proposes one significant rule change and several smaller ones.  The really bad news, especially for smaller broadcasters, is that the CRB is proposing to make this quarterly report an actual "census filing", which means it would cover the entirety of every quarter, instead of just being a "representative filing" consisting of two weeks of the quarter (it likely will also require all webcasters to engage in precise performance counts, which could bring the added expense of updating your streaming software).  The CRB explains that this change is needed to ensure that royalties are paid out to copyright holders based on the actual use of their works, not just the estimated use.  The CRB does, however, exempt three services from this year-round reporting requirement: 

• Pre-existing satellite digital audio radio services (Sirius XM);
• New subscription services; and
• Business establishment services.

The CRB also seeks answers to the following questions as a means to improving the technological delivery of these records to SoundExchange: 

• Has any commercially available software become available since 2006 that would allow for this information to be delivered in a spreadsheet format other than Microsoft Excel or Corel Quattro Pro? Woudl they be compatible with SoundExchange's software format? What would be the associated cost? 
   
• Have there been technological developments, including improvements to security, that would allow web-based delivery to be added as a fifth accepted method of sending quarterly reports to SoundExchange? Would web-based delivery be more efficient and cost
  effective? 
   
• Are there any other improvements to the reporting system that can be made in light of the technological developments of the past two years? 

The last question seems to be an open invitation to let the CRB know just how onerous the recordkeeping requirement can be and enlighten them as to the deterrent effect it is having on small radio stations that wish to have an online presence.  Whether you want to make a bold, far-reaching statement or simply let the powers that be know that two weeks of playlists per quarter is plenty, your comments must be filed by January 29, 2009.