NAB Announces Waiver Agreements with Sony and Warner Affecting Non-Royalty Aspects of Webcasting

On October 26, 2016, the National Association of Broadcasters (NAB) announced agreements it had reached with two major record labels that relieve radio broadcasters from certain compliance conditions associated with the sound recording streaming statutory license that are inconsistent with traditional broadcasting practices. They do not, however, alter radio broadcasters' royalty payment obligations under the license.

In a press release circulated to radio stations around the country with the subject line "Urgent - Opt into Streaming Music Waiver," NAB announced that:

The National Association of Broadcasters has successfully reached agreements with Sony Music Entertainment and the Warner Music Group on streaming waivers. These agreements will allow radio broadcasters to continue bringing Sony and Warner artists to millions of listeners online without risking copyright liability.

These waivers are NOT what some radio stations think (or hope) they are. They do NOT affect the obligation of a station that is engaged in webcasting to pay royalties and make certain filings to SoundExchange under the statutory license granting the right to perform sound recordings digitally. They ARE, however, a good thing because they will make it easier for radio broadcasters to comply with some of the lesser known, but also important, eligibility conditions found in that statutory license.

Most webcasters are naturally focused on their interactions with SoundExchange, which administers the royalties paid under the statutory licenses found in Section 112 and 114 of the Copyright Act. SoundExchange collects those royalties from webcasters (and other digital service providers like Sirius XM, music services provided through cable and satellite systems and certain business establishments) and distributes payments to the owners of digitally performed sound recordings (primarily recording artists and record labels).

What many do not realize, however, is that eligibility for the statutory license requires more than just paying those royalties and filing the corresponding paperwork; if you don't comply with certain other conditions, you run the risk of being prevented from enjoying the statutory license. And, yes, though I know many of you dislike the royalty rates and filing obligations, I intentionally chose the word "enjoy"; after all, consider the alternative: having to get the permission from each and every recording artist or record label before streaming their songs.

The Warner and Sony waivers deal with some of these other aspects of the statutory license. NAB has done a fantastic job of listing the majority of the "Important Statutory Requirements" on its website in case you need a refresher (or are just learning about them for the first time). Please review them.

For several years, radio stations engaged in webcasting enjoyed an NAB negotiated waiver of four of these requirements. These included limited waivers of:

The "sound recording performance complement," i.e., a limitation on what a webcaster may play during any 3-hour period; absent a waiver, the maximum limits are:

3 different selections of sound recordings from a particular album or CD;

2 different selections of sound recordings consecutively from the same album or CD;

4 different selections of sound recordings by same artist;

4 different selections of sound recordings from the same boxed set of albums; and

3 different selections of sound recordings consecutively from the same boxed set of albums.

The prohibition against prior announcement that a particular artist will be played in a specified time period;

The requirement that stations have in text, on their website, at the time the song is performed, the:

song name;

album title:

artist name: and

The 6-month limitation on maintaining ephemeral copies of recordings (such as songs from a CD copied onto a station's hard drive music system to facilitate streaming).

These waivers expired at the end of 2015. A temporary extension of the Warner waiver was obtained through September 30, 2016; there were also a series of short term extensions of the Sony waiver.

Now, both waivers have been extended for the next few years, with some modifications to both eligibility for the waivers and the scope of the waivers themselves.

Under the Warner Waiver (good through September 30, 2019):

There is no obligation for radio stations engaged in webcasting to opt-in;

There is no requirement that the station be an NAB member to take advantage of this waiver; and

This is limited to commercial broadcasters only (its terms do not specifically cover noncommercial broadcasters).

Under the Sony Waiver (good through December 31, 2020):

A radio station must opt-in to take advantage of this waiver;

A station does not have to be an NAB member to take advantage of this waiver but NAB members can simply fill out an online form to participate while non-members have to take the additional step of contacting NAB at 202-429-5400 or membership@nab.org to participate;

The waiver is applicable to both commercial and noncommercial webcasters;

There are important additional conditions that will require additional action on the webcaster's part:

Stations that (1) play music and (2) have more than 80,000 music "aggregate tuning hours: (ATH) per month must place a prominent and proximate "buy now" button on their website, player or mobile app, in order to allow listeners to purchase a song through a Sony-authorized download store (e.g., iTunes, Amazon).

Stations that (1) regularly transmit music programming, (2) stream more than 80,000 music ATH per month AND (3) make their simulcast streaming available as transmissions syndicated or aggregated through third-party websites or mobile apps must limit their streaming to the United States.

It is important to note that waiver agreements have not yet been reached with other labels, such as smaller and independent labels or, more importantly, Universal Music Group. Thus, stations should be very careful when, e.g., seeking to play multiple songs by the same artist or from the same album, CD, compilation or boxed set, or when seeking to pre-announce songs to ensure that those songs are from the Warner or Sony catalogs.

Note also that in some instances, the waivers do not waive compliance with the listed eligibility conditions entirely but only provide limited relief. Please call us if you would like to know more or have specific questions regarding the scope of the waivers.

NAB (and Warner and Sony) should be congratulated for reaching these waiver agreements as they do have a big impact on a radio broadcaster's ability to maintain compliance with the statutory webcasting license. For stations whose webcasting consists of simulcasting the over-the-air broadcast via the Internet (which is the vast majority of radio stations engaged in streaming), the waivers ensure that, at least for Sony and Warner music, the tail will not wag the dog, so to speak, in terms of modifying that over-the-air programming to meet the confines of the sound performance complement and pre-announcing prohibition.

Please do not hesitate to contact us if you have any questions about these waivers or the eligibility requirements generally, including the required filings and payment to SoundExchange that are mentioned but not explained in depth in this post.