Regular readers interested in webcasting will already know that the Copyright Royalty Board (CRB) recently accepted comments on a proposal to require webcasters to file information on a monthly basis regarding each song played  in the month (the current requirement mandates filing this information for two seven-day periods each quarter).  The filing of these playlist reports is intended to assist SoundExchange, Inc. in fairly distributing to copyright owners the royalties it collects for performance of sound recordings over the Internet.  However, the CRB’s rulemaking has hit a snag:  the judges are now going back to the well and have issued a Notice of Inquiry intended to tackle the most crucial issue raised by both sides of this issue:  how much of a burden would increased recordkeeping and filing requirements impose? 

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.