Before the COPYRIGHT ROYALTY JUDGES LIBRARY of CONGRESS Washington, D.C
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Before the COPYRIGHT ROYALTY JUDGES LIBRARY OF CONGRESS Washington, D.C. ____________________________________ : In The Matter Of: : : : Docket No. 14-CRB-0005 (RM) Notice and Recordkeeping for : Use of Sound Recordings : Under Statutory License : ____________________________________: JOINT COMMENTS OF THE NATIONAL ASSOCIATION OF BROADCASTERS AND THE RADIO MUSIC LICENSE COMMITTEE REGARDING THE COPYRIGHT ROYALTY JUDGES’ NOTICE AND RECORDKEEPING RULEMAKING Gary R. Greenstein Karyn K. Ablin Rachel Landy Bruce G. Joseph Alan Ezekiel Christopher M. Mills Wilson Sonsini Goodrich & Rosati Jennifer L. Elgin 1700 K Street NW, Fifth Floor WILEY REIN LLP Washington, D.C., 20006-3817 1776 K Street NW (202) 973-8800 (tel.) Washington, DC 20006 (202) 973-8899 (fax) (202) 719-7000 (tel.) [email protected] (202) 719-7049 (fax) [email protected] [email protected] [email protected] [email protected] [email protected] Counsel for the Radio Music License [email protected] Committee Counsel for the National Association of Broadcasters June 30, 2014 TABLE OF CONTENTS Page INTRODUCTION ............................................................................................................................. 1 I. RADIO BROADCASTERS AND THEIR USE AND HANDLING OF SOUND RECORDINGS AND INFORMATION RELATING TO THOSE SOUND RECORDINGS. ...................................................................................................... 6 A. The Broadcasters Providing These Comments .......................................................... 6 B. Streaming and Its Relationship to Broadcasters’ Business. ....................................... 9 C. Broadcasters Have Diverse Systems for Handling Sound Recording Information that Are Ill-Equipped To Handle the Current Reporting Requirements. .......................................................................................................... 10 D. Broadcasters Obtain Many of Their Sound Recordings from Record Companies and Music Services that Often Do Not Provide the Relevant Information. ............................................................................................................. 11 E. Broadcasters Frequently Receive Limited Information from Third-Party Program Providers (Syndicators). ............................................................................ 12 II. PRINCIPLES FOR ESTABLISHING REASONABLE REPORTING REQUIREMENTS ............................................................................................................... 12 A. Congress Has Mandated “Reasonable” Reporting Requirements That Do Not Place an Undue Burden on Broadcasters and Other Webcasters. ............... 13 1. The Statute Mandates a Balancing of Interests. ........................................... 13 2. The Judges and the Copyright Office Have Recognized the Importance of Balancing Interests. .............................................................. 13 3. Congress’ Intent Was To Strike a Balance Between Competing Interests, and it Was Particularly Concerned with Accounting for the Interests of Entities Operating FCC-Licensed Radio Stations. ........................................................................................................ 15 B. SoundExchange Should Be Required To Demonstrate that the Changes It Seeks Are Reasonable Before Those Changes Are Adopted. .............................. 16 C. The Regulatory Flexibility Act Requires Consideration of Small Entities. .................................................................................................................... 18 III. THE SOUND RECORDING IDENTIFICATION REQUIREMENTS SHOULD BE SCALED BACK, NOT MADE MORE DEMANDING. ............................ 19 A. The Current Reporting Requirements Are Unreasonably Burdensome for Broadcasters and Should Be Modified To Accommodate Business Realities More Effectively, Not Made More Punitive. ............................................ 20 B. Experience and Industry Practice Show that Broadcasters Have Significant Difficulties Reporting Album and Label Information and that this Information Is Rarely Needed To Identify a Recording; Broadcasters Should Be Exempted from Reporting this Information. .................... 23 1. It Is Often Difficult – and Sometimes Impossible – for Broadcasters To Report Album and Label Information Reliably. ............... 25 a. Broadcasters Often Do Not Receive Album and Label Information from the Record Companies and Music Services that Provide Them with Music. ..........................................25 b. Digital Automation Systems Designed for Radio Broadcasting Often Do Not Support Entry of Album and Label Information. ............................................................................29 2. Updating Old Databases and Keeping Them Updated with the Required Datapoints Would Require a Massive and Costly Effort. ........................................................................................................... 30 3. Industry Practice Confirms that Title and Artist Information Generally Suffices To Identify Sound Recordings. ..................................... 33 4. SoundExchange Should Be Required To Quantify the Scope of Its Alleged Matching Problems Using Title and Artist Information Alone on Broadcaster ROUs Before the Judges Decide Whether It Is Reasonable To Continue To Require this Information from Broadcasters. ................................................................... 34 C. Requiring ISRC Reporting for Each Sound Recording Played Would Exacerbate Current Reporting Burdens and Is Unreasonable, Unnecessary, and Error-Prone. ................................................................................ 35 1. Mandatory ISRC Reporting Would Be Extraordinarily Burdensome Because Broadcasters Often Do Not Have the ISRCs. .......................................................................................................... 36 2. Broadcasters Cannot Obtain ISRC Identifiers in Any Economically Reasonable Manner; the Burden of Locating Missing ISRCs Therefore Should Not Be Placed on Them. ........................ 39 3. SoundExchange and RIAA Oppose Requiring Their Own Members to Report ISRCs – an Irony That Exposes the Unreasonableness of SoundExchange’s ISRC Proposal Here. .................... 41 - ii - 4. ISRC Reporting Is Not Necessary to Apportion Royalties, and May Actually Increase Reporting Errors. .................................................... 42 D. SoundExchange’s Numerous Proposed Additional Reporting Requirements for Classical Recordings Are Unnecessary and Unreasonable............................................................................................................ 44 E. The Regulations Should Be Amended To Include Reasonable Reporting Requirements Regarding Programming Provided to Broadcasters by Third Parties. ................................................................................. 46 F. Broadcasters Should Not Have To Identify or Report Recordings as to Which SoundExchange Is Not Authorized To Collect or Distribute Royalties. ................................................................................................................. 48 G. The Smallest Broadcasters Paying No More Than the Annual Minimum Fee Should Be Exempt From any Reporting Requirements, Which Would Increase the Royalties That SoundExchange Is Able To Distribute.................................................................................................................. 50 H. The Copyright Royalty Judges Should Allow Broadcasters for Whom Census Reporting Is Not Commercially Feasible To Submit ROUs for a Reasonable Sample of Their Programming. ............................................................ 52 I. The Regulations Should Be Clarified To Confirm That Incidental Performances of Sound Recordings Need Not Be Reported. .................................. 54 IV. THE JUDGES SHOULD REJECT SOUNDEXCHANGE’S ATTEMPTS TO IMPOSE HARSH PENALTIES FOR REPORT SUBMISSION ERRORS AND DELAYS AND TO SHORTEN THE SUBMISSION PERIOD ITSELF. ................ 55 A. The Judges Should Reaffirm Their Rejection of SoundExchange’s Request for Onerous Late Fees for Delayed or Imperfect ROUs, Particularly Given that SoundExchange Already Is Overcompensated for the Time Value of Money Through the Late Payment Fee. ............................... 56 B. SoundExchange’s Attempt To Force Licensees To Forfeit the Right To Reclaim Overpayments After only Ninety Days Is Discriminatory and Unwarranted Given Its Own Unlimited Right To Recapture Overpayments to Copyright Owners and Three-Year Right To Audit Licensees. ................................................................................................................. 59 C. The Report Submission Due Date Should Not Be Accelerated by 15 Days; SoundExchange Itself Only Distributes Royalties Every Three Months, and Services Need the Full 45 Days To Prepare and Verify the Reports. .................................................................................................................... 61 - iii - D. Many of SoundExchange’s ROU Complaints Can Be Resolved If the Judges Give SoundExchange Standing Authority To Use Proxy Data To Distribute Royalties Where Warranted, A Proposal that Broadcasters Support. .............................................................................................. 63 V. SOUNDEXCHANGE’S REPEATEDLY REJECTED REQUEST THAT SERVICES MAINTAIN SERVER LOGS IS NOT APPROPRIATELY ADDRESSED IN THIS RULEMAKING AND, IN ANY EVENT, SHOULD BE REJECTED