Sound Exchange

On January 19, 2012, SoundExchange presented a webinar to update music service providers and webcasters on what they need to do by the close of the month and where to find the information that they need. Members from SoundExchange’s Legal team also answered FAQs for the service provider community during this webinar.

Below are those questions, with responses from our team. They’re presented in the order they were asked (we’ve removed names and contact information for privacy).

1. Please explain what the “Eligible Small Broadcaster Rates and Terms” are, mainly what are aggregate tuning hours and how are they determined in relation to small broadcasters.

Small Broadcasters are webcasters that (1) own or operate an FCC-licensed AM or FM station and (2) stream fewer than 27,777 aggregate tuning hours (“ATH”) annually. Small Broadcasters are able to waive their obligation to submit reports of use by timely submitting a Notice of Election form and a reporting waiver fee of $100 per station/channel. (Broadcasters and Small Broadcasters pay at the same rate, and both must submit monthly statements of account, not to be confused with reports of use.)
The phrase “aggregate tuning hours,” or “ATH,” is a metric for measuring audience listenership using time. One listener listening for ten consecutive hours would equal ten ATH, while ten listeners each simultaneously listening for one single hour would also equal ten ATH. It should be noted that most services are required to report liability using “performances” instead of ATH. ATH is usually used for determining thresholds for eligibility and other payment-related calculations.”

1. Discuss in detail the reporting requirements for a Noncommercial Educational Webcaster that does not exceed 159,140 total ATH for any individual channel or station in any month.

There are three levels of reporting requirements for Noncommercial Educational Webcasters. Noncommercial Educational Webcasters that do not exceed 55,000 ATH per month (per station/channel) may elect the reporting waiver by submitting a Notice of Election and paying the $100 reporting waiver fee in lieu of providing reports of use. Noncommercial Educational Webcasters that do not exceed the monthly threshold of 159,140 ATH (per station/channel) and do not elect the reporting waiver are required to submit reports of use containing two periods of seven-consecutive-days within each calendar quarter, within 45 days after the end of each quarter. Noncommercial Educational Webcasters that exceed the monthly threshold of 159,140 ATH (per station/channel) must submit full census reporting for each month, within 45 days after the end of each month. For both quarterly and monthly reports of use from Noncommercial Educational Webcasters, the reports of use should contain artist name, track name, and either the ISRC number or the combination of album name and marketing label. Additionally, they are required to list the station/channel name and play frequency (or “spins”) with each track. Though reporting ATH or actual total performances are not required, they are encouraged. What are the acceptable formats for submitting reports by email? ie txt, tab, csv, etc.?
The preferred method of receiving reports of use is via FTP. Services may request a login/password by e-mailing ftp@soundexchange.com and within approximately five business days an account will be set up. Services may also submit reports of use via e-mail to reports@soundexchange.com as well sending them burned to a CD-ROM or on a portable USB drive (“jump drive,” or “stick”). Reports of use must be in electronic format as a text file, or as a csv file. There is an Excel template available for use from our website that contains a macro which converts the Excel file into a txt file.

1. Who is the target audience for this webinar? We’re a broadcaster, but that isn’t a choice on your “Industry” list. Thanks.

The target audience is anyone who is a current or prospective statutory licensee, especially current or future webcasters, as well as anyone interested in information regarding how statutory licensees must submit payments, forms and reports to SoundExchange.

1. We are unclear if we need to send in zero returns or not. We’ve been told that we didn’t need to, and then someone else said we did. Is that something you can clear up for us in the webinar?

If the phrase “zero returns” means statements of account containing zero performances (or zero ATH if applicable), the answer is “probably.” All commercial services (except Microcasters) must submit statements of account each month, regardless of their amount of performances, ATH or liability. The only noncommercial services required to submit monthly statements of account, regardless of performances, ATH or liability, are Noncommercial Webcasters (WSA) (not to be confused with Noncommercial Webcasters (CRB)). On a related note, reports of use should only contain tracks for which their performances (or ATH) are represented on the statement of account for the applicable period. (If this amount is also zero, then a report of use is also not needed.)

1. I am wondering what forms we need for 2012 because I could not find the same forms that we were using in 2011. In 2011 they said: (Pursuant to the Webcaster Settlement Act of 2008) but now they do not say that. Same for the annual minimum fee. Are we using the (CRB/WSA) ones?

Some categories that were previously only available through the Webcaster Settlement Act (“WSA”) were incorporated into the default rates and terms by the Copyright Royalty Board (“CRB”) as a part of their Final Determination of the rates and terms for 2011-2015. These categories include: Broadcasters, Small Broadcasters, and Noncommercial Educational Webcasters. As such, services that are eligible for those categories do not have to “elect” for them; they are assumed to be operating in those categories, provided timely payments, statements of account, and reports of use are submitted. (NOTE: If Small Broadcasters and Noncommercial Educational Webcasters wish to elect the “reporting waiver,” those services are still required to submit an applicable Notice of Election.)

1. When you say by January 31, does that mean postmarked by that day or received at SoundExchange?

Payments for minimum fees must be “made” by January 31, 2012. We calculate late fees using January 31, 2012 as a “received by” date. If you have concerns about submitting payments or statements of account timely, please submit a copy of the applicable statement of account or Notice of Election, PRIOR to the due date, via e-mail to royaltyadministration@soundexchange.com or via fax to 202-640-5871, along with a cover letter explaining the circumstances. (Please remember to send a copy of the actual form with the payment as well.)

1. The Broadcaster NoE form for WSA (located here: http://soundexchange.com/service-provider/how-do-i-pay/) is dated 2009. Is it still necessary to submit a new form each year? if so, what is the new due date?

The Notice of Election for Broadcasters is a “historical” form, in that the form is a one-time submission for services electing via the WSA, for any periods from 2006-2015. It should be noted that while services may continue to elect this way, if they wish, Broadcasters beginning operation on or after 1/1/2011 may operate as such without an election, due to the rates and terms being incorporated by the CRB for the 2011-2015 default rates and terms. (See above for more info.)

1. We will start streaming some stations on Feb 1. What is our deadline, in that case, for submitting the initial 2012 forms?

Services beginning their streaming on or after 2/1 owe their minimum fees within 45 days of the end of the month in which they begin streaming. Most commercial services may account for this minimum fee by correctly completing the monthly statement of account form for that initial month (also due 45 days after the end of each month). Most noncommercial services should submit a minimum fee statement of account form with that minimum fee, instead of a monthly form. It should be noted that some categories have deadlines for any applicable Notice of Elections which may differ from the deadline for a minimum fee, so please review all deadlines for all forms as indicated.

1. Do we need to resubmit Notice of Election forms EVERY year, or just the initial year?

Most services that are required to submit a Notice of Election must do so annually. The lone exception is for Noncommercial Webcasters (WSA), who only need to timely submit their NoE once.

1. What is ATH?

See above.

1. Which Notice of Election form do I use as a Commercial Small Webcaster with Live365.com?

Many categories have similar names (“Small Webcasters,” “Small Broadcasters” and “Small Pureplay Webcasters,” for example) and services should pay close attention as to which forms they are completing and submitting to SoundExchange.
Some companies provide webcasters with technical and reporting support for their streaming services, and this support may or may not purport to include “coverage” under statutory licensing in regards to royalty payments to SoundExchange. While we encourage any service to review their own agreements with these companies for more information (with, if needed, their own legal counsel), it should be noted that services submitting Notices of Use to the Copyright Royalty Board, indicating their intention to operate under statutory licensing, are considered “Licensees, ” and are expected to provide payments, statements of account and/or reports of use directly to SoundExchange as described under applicable regulations.

1. Why don’t you send invoices?

Licensees are required to self-calculate all liability and represent to SoundExchange what they owe for any particular period, so we are not in a position to “invoice” services for such liability. If needed, we can provide a signed copy of a W-9 form to assist services with approving payments by their own accounting departments. Beyond this, however, SoundExchange does not complete other documents (e.g., “vendor agreements,” etc.) as federal law designates SoundExchange as the only authorized entity to collect royalties for digital audio transmissions under the statutory license.

1. I notice that some forms I fill out are under small broadcaster and other broadcasters. Where can I go to get understanding of the difference between them?

Broadcasters and Small Broadcasters should complete and submit different forms to SoundExchange, even though their payment rate is identical. Please see our “How Do I Pay?” page for more information about these and other categories.

1. We struggle with or Reports of Use. A lot of our music is very old and we can’t find the label and album information. What should we do about the missing information?

Services choosing to operate under statutory licensing are required to submit complete reports of use (where applicable), containing all needed information, in order to be compliant with federal law. Services not compliant with federal law may be subject to legal action for copyright infringement by copyright owners and/or artists. That being said, SoundExchange’s primary concern in this regard is ensuring that services are able to submit proper reporting going forward. If you are unable to submit compliant reports of use for any past or current activity, please contact us as soon as possible to discuss the matter.

1. What if you missed filing a Notice of Use for new side channel, but combined the performance counts on the main station? Do we file a Notice of Use, pay a fee, and amend previous month’s statement of account?

Commercial services are allowed to aggregate multiple stations/channels onto a single statement of account form, as long they are also able to aggregate those same multiple stations/channels into a single report of use each month. (SoAs and RoUs need to have a “one-to-one” relationship.) If the reports of use are not able to be consolidated for all stations/channels, then the statements of account must also reflect those stations/channels separately. Notices of Use filed with the Copyright Office should be re-filed/amended if any of the previously filed information is incorrect. Please contact us directly for further assistance with these issues.

1. If we have been paying annual usage fees for SoundExchange from the beginning, have not exceeded the allowed ATH, but have not sent in a report, do we need to send in past quarterly reports?

All commercial services (except Small Broadcasters and Microcasters) must submit monthly reports of use, regardless of their liability (unless they accrued zero performances). Noncommercial webcasters have varying reporting responsibilities, depending upon their specific category. Please refer to the information found from our “How Do I Pay?” page, in the specific “Click Here For More Info” links within each category’s row, and/or contact us directly for assistance.

1. Why are we required to pay additional web licensing fees when we already pay web licensing fees with SESAC, ASCAP and BMI? How is SoundExchange different? How often are we required to pay the fees?

There are two copyrights in each track: the copyright in the underlying musical work and the copyright in the sound recording of a performance of that musical work by a particular artist. ASCAP, BMI and SESAC are organizations that represent the copyright owners for underlying musical works (songwriters, composers, publishers). SoundExchange administers statutory licensing of the sound recording copyright (generally owned by a record label). Permission (or licensing) from both owners – the owner of the musical work and the owner of the sound recording – generally must be obtained for the public performance of a sound recording via digital transmission. It is common for services to be paying all four organizations in order to secure the widest amount of coverage in these instances.

1. What is the definition of an “incidental performance”?

The term “incidental performance” is not defined in federal regulations. However, federal regulations do state that services do not have to include incidental performances in the calculation of their royalty liability if the incidental performances both (1) make no more than incidental use of a sound recording including, but not limited to, brief musical transitions in and out of commercials or program segments, brief performances during news, talk and sports programming, brief background performances during disk jockey announcements, brief performances during commercials of sixty seconds or less in duration, or brief performances during sporting or other public events AND (2) other than ambient music that is background at a public event, does not contain an entire sound recording and does not feature a particular sound recording of more than thirty seconds (as, for example, in the case of a sound recording used as a theme song). Services that have questions about whether their performances are incidental performances should seek legal counsel.

1. Is the information that is in all of your slides today available for review on the SoundExchange website? If so, where would I find them?

The links found within our “How Do I Pay” page, within the “I Am A Service Provider” section, contain all needed information for statutory licensees. In addition, the most recent webinar will be made available on-demand via our website.

1. As a broadcaster, we already pay a rights fee for streaming music to ASCAP, BMI & SESAC. Do we still need to pay rights fee for streaming music?

See above.

1. [I am] interested in Microcasting. Where can I find more information?

Please visit the links for our Microcaster category on the “How Do I Pay” page.

1. We have 30 some odd stations, now we fill out 1 form for each individual station. Can these be combined into one form and consider them channels?

See the above answer relating to the aggregation of multiple stations/channels.

1. Which Notice of Election do you need to complete if you wish to abide by the rates that the NAB worked out? If you’ve already filled a Notice of Election and are not changing, do you have to resubmit?

See the above answer relating to Broadcaster and the default rates for 2011-2015. Services that previously filed as Broadcasters via the WSA do not need to resubmit their Notice of Election unless their information has changed and needs correcting.

1. So as a Non-Comm FM that streams and does not exceed the ATH, should I be filing a quarterly report or continue reporting monthly?

All Noncommercial Webcasters (CRB) need to submit monthly reports of use, containing complete census data, including actual total performances, UNLESS they own/operate an FCC-licensed AM or FM station and do not exceed their minimum fee in liability. Such services may submit instead reports of use quarterly, containing two seven-consecutive-day periods of data, using ATH, program/channel name, and play frequency. Noncommercial Webcasters WSA and Noncommercial Educational Webcasters have separate and different reporting requirements, and those services should consult their categories’ information from our How Do I Pay page for more info.

1. Will this webinar be recorded for watching later?

Yes, via our website.

1. Copyrights termination revisions is a priority for some a&r sound recording copyright holders. Will orphan works be discussed?

Services creating public performances of copyrighted sound recordings via digital transmissions must generally obtain either direct licensing with the sound recording copyright owner, or be compliant under the statutory licenses described in Sections 112 and 114 of the Copyright Act. The statutory license that SoundExchange administers is available for any commercially released track. The statutory license differs from direct licenses in that services relying on the statutory license do not need to secure directly the permission of the copyright owners of the tracks they wish to stream. If you need assistance determining if your service should be paying for its transmissions via statutory licensing or via direct licensing, please seek legal counsel.

1. WHAT OTHER SERVICES?

Sorry! Not sure what this question is. Please contact us and explain.

Have more questions? Write us at L&E@SoundExchange.com, or call us as 202-559-0555.

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