New year brings filing deadlines for commercial webcasters

The beginning of another year brings renewed obligations for all broadcasters who are operating a non-interactive webcast (as opposed to an on-line service that provides interactive downloads or podcasts). That universe is populated by three separate and distinct types of webcasters, each of which has slightly different obligations from the others. Those three types are: (1) commercial webcasters; (2) noncommercial webcasters; and (3) noncommercial educational webcasters.

Important definitional note: For purposes of webcasting royalties, the distinction between commercial and noncommercial is not based on the nature of the underlying broadcast license. Rather, it’s based on the reporting entity’s status under Section 501 of the Internal Revenue Code. If a webcaster is exempt from taxation under Section 501, it is deemed to be NONcommercial when it comes to webcaster royalty matters. And if a noncommercial webcaster’s operation is substantially staffed by students, it is a noncommercial educational webcaster. This post is addressed to commercial licensees. (Simultaneously with this item we are also posting similar items for the other two types of webcasters – so if you happen to be noncommercial webcaster or a noncommercial educational webcaster, look elsewhere here on CommLawBlog.com for a post addressed to your own particular situation.)

If you are engaged in the COMMERCIAL WEBCASTING of one or more streams, your first filing of the new year – primarily consisting of an annual minimum fee statement of account with payment of $500 per channel – is due on January 31, 2011.  But your obligations continue throughout the year with statements of account and playlist reports of use required on a monthly basis. 

Any commercial webcasting service operating as a broadcaster (that is, operating an FCC-licensed AM or FM station simulcasting at least one channel on the Internet) will fall into one of the two categories outlined below.

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.