FCC invites comments on alleged improprieties in Performance Rights Act debate

A new front has been opened in the on-going struggle over the Performance Rights Act (PRA). The new battleground is the FCC, which has invited comment on a “Request for Declaratory Ruling” filed by MusicFIRST Coalition back in June.

As we have previously reported (here and here, for example), the PRA would require radio stations to pay for the on-air performance of copyrighted sound recordings. That would be over and above the royalties broadcasters already pay to the composers of the underlying works (through ASCAP, BMI and SESAC). Historically, of course, radio has provided on-air exposure to recording artists for free, just as the artists have made their recordings available to broadcasters for free. That quid pro quo arrangement has served everybody – artists, broadcasters and the listening public – well for decades. The artists – well, at least some of the artists, and certainly the record companies for which they work – now want to change the deal.

Whether the proposed change makes much sense is a matter of considerable (to put it mildly) debate. (See our colleague Peter Tannenwald’s post here for an interesting take on the situation.) But thus far, the debate has been thrashed out in Congress, in connection with various bills which would either impose a new performance rights royalty obligation or not. (While no final votes have been taken, some observers – including our colleague Kevin Goldberg – have concluded that the PRA is doomed to failure in this Congress.)

Perhaps sensing a need to expand the battlefield, MusicFIRST – a “partnership of artists and organizations in the music community who support compensating performers for their work when it’s played over the air” – has tried to lure the FCC into the fray. 

And the FCC has taken the bait.

In June MusicFIRST filed its Request, alleging that, “[b]y using their licenses over public airwaves to promote their own pecuniary interests and to distort an important matter of public debate”, broadcasters are violating their public interest obligations. The Coalition suggested that the Commission should consider “strengthening the license renewal process and shortening license terms”.

Acting with unusual speed – in our experience, this kind of declaratory ruling request can gather dust for months, if not years, before the FCC even acknowledges that it’s been filed – the Commission has invited comments. In particular, the agency is looking for input on the following points:

  • whether and to what extent certain broadcasters are “targeting and threatening artists who have spoken out in favor of the PRA,” including a refusal to air the music of such artists;
  • the effects of radio broadcasters’ alleged refusal to air advertisements from MusicFIRST in support of the PRA;
  • whether and to what extent broadcasters are engaging in a media campaign, coordinated by NAB, which disseminates falsities about the PRA; and
  • whether certain broadcasters have evaded the public file requirements by characterizing their on-air spots in opposition to the PRA as public service announcements.

MusicFIRST is clearly trying to get broadcasters’ attention by attacking them where they are arguably most vulnerable – in the soft white underbelly of the regulatory/licensing process.

Of course, the Request does not ask the FCC to address the merits (or lack thereof) of the PRA . . . and properly so, since the FCC has neither the expertise nor the statutory authority to weigh in on such issues. Rather, the Request gets the FCC’s attention by claiming that at least some broadcasters may not be playing by the rules and may be acting unfairly in some way. Using that as a hook, MusicFIRST suggests regulatory responses (e.g., shortened renewal terms, possible disciplinary action) that might, um, incentivize broadcasters to be more, er, open to the PRA and its advocates.

The Request is particularly interesting for what it does not provide: any significant, detailed, factual information to support its extravagant claims of some industry-wide cabal resulting in rampant disregard for any particular rule(s). While the Request purports to “reveal a pattern of threats and intimidation by which broadcasters are using their licenses” improperly, the Request describes in the tersest possible manner a total of five instances of such supposed misconduct. And those instances are not identified with respect to the station(s) in question or the artists who were supposedly threatened or intimidated. While such vague, unverified and unverifiable charges may have worked for Joe McCarthy back in the day, we thought that government had gotten past that particular gambit by now. Apparently not.

Moreover, even if the five examples sketched anonymously in the Request could be shown to be every bit as bad as MusicFIRST would have us believe, that would still reflect the conduct of but a very, very small handful of stations in a radio industry numbering more than 14,000 stations. (By the way, one of the five anonymous instances referred to in the Request has been tracked down by a newspaper: it turns out to be a 100-watt noncommercial high school station in Delaware at which the students opted for a one-month boycott of MusicFIRST-related artists two years ago. It would be difficult to claim with a straight face that that incident reflects some industry-wide “pattern of threats and intimidation”.)

The Request also alleges that “broadcasters are refusing to accept ads” from MusicFIRST and its allies relative to the PRA. Again, however, the “evidence” of such refusals is slim at best. The Request mentions six – count ’em, six – stations (by call sign) which purportedly declined the MusicFIRST spots. It also says that a request to run the spots “in 38 different markets on a variety of different types of stations” was sent to Clear Channel – and as of the date of the Request, Clear Channel had not responded, even though “[i]t has now been over a week since we sent the script.” No real smoking gun there.

The Request claims that broadcasters are “spread[ing] malicious and untruthful information about the PRA.” MusicFIRST’s knickers are all in a twist because, for example, some anti-PRA materials distributed by some broadcasters refer to the PRA as a “tax”.   MusicFIRST’s position is that the term “tax” can refer only to situations involving making payments to a government, and since the PRA provides for no such payments, well, then, obviously, use of the word “tax” has got to be a Big Lie. But the word “tax” also means “a heavy burden”, without reference to the precise nature of the burden. If the promo items in question had been hypertechnical legal documents in which the use of the word “tax” called for ultra-precision, MusicFIRST’s criticism might have some basis. But the materials don’t appear to have called for such nice distinctions. And since pretty much everybody agrees that the PRA would, in fact, impose a heavy burden on broadcasters, it’s hardly malicious or untruthful to refer to it as a “tax”.

Finally, MusicFIRST frets that all of this supposed nefarious skullduggery is being orchestrated by the NAB and is “blatantly anti-competitive”.

So, gesticulating wildly at all that blue smoke and all those mirrors, MusicFIRST urges the Commission to come to the rescue. Interestingly, while the gist of the Request sounds an awful lot like a complaint under the long-gone Fairness Doctrine, MusicFIRST defensively claims that that’s not the case. But it asserts that broadcasters “have a statutory duty to use their monopoly . . . responsibly and not simply to further their own economic interests.”

The Commission, for its part, acknowledges that “substantial First Amendment interests are involved in the examination of speech of any kind.” It also recognizes that no remedies may be necessary, or available, to address the activities which MusicFIRST alleges.

But none of that is stopping the Commission from jumping right into this fracas with both feet, notwithstanding the anonymous, non-specified, unverified and unverifiable nature of MusicFIRST’s claims. By doing so, the FCC seems to be signaling its sympathy for the artists’ position – for sure, by inviting any comments at all the Commission appears to be giving the benefit of every conceivable doubt to MusicFIRST.

If you want to chip in your two cents’ worth, you have until September 8, 2009 to file comments. Reply comments are due by September 23.