Digital TV and New Media Usage
by Jason Walker

(Originally published in Smart Licensing Volume 10, Number 4. December 2006)

Part 1 of this article in the last issue of Smart Licensing™ discussed the need for television stations to license the performance rights to music contained in programs broadcast over their analog signal and through their website.  In this issue, the discussion continues with a look at digital television and new media uses.

Digital TV
The current ASCAP blanket and per program licenses grant stations the right to publicly perform music contained in free, over-the-air digital broadcasts occurring within a station’s market without additional cost or reporting obligations.  This covers pure simulcasting and time-shifting of a station’s analog signal as well as so called market expansion channels (i.e., digital channels that broadcast programming from a source other than that allocated to the station’s analog signal, such as a different network).

The interim BMI blanket and per program licenses grant stations the right to publicly perform music contained in free, over-the-air digital broadcasts occurring within a station’s market without additional cost or reporting obligations, with one caveat.  Each year BMI may ask stations to fill out a simple one-page questionnaire concerning their digital television signal.  See Exhibit D of the BMI blanket and per program licenses for an example of the Digital Signal Questionnaire.  As with the ASCAP licenses, the BMI interim licenses cover pure simulcasting and time-shifting of a station’s analog signal as well as market expansion channels.

Stations should note that the Television Music License Committee is currently negotiating with BMI over the terms of the next license (which will be retroactive to January 2005) and that the scope of coverage and the fee for digital broadcasts could change. This uncertainty aside, there is currently no economic incentive for stations on an ASCAP and BMI blanket or per program license to also license the performance rights to ASCAP or BMI music broadcast on their digital channels directly from their news theme or production music provider.

The interim SESAC blanket license also grants stations the right to publicly perform music contained in free, over-the-air digital broadcasts occurring within a station’s market without additional cost or reporting obligations, provided that the digital broadcasts are predominantly simulcasts of a station’s analog signal.  Digital channels that are dedicated to time-shifting of a station’s analog programming or to market expansion programming are not covered under the interim SESAC blanket license and, consequently, would generally require an additional digital license from SESAC.

The TMLC and SESAC concluded an arbitration proceeding in January 2006 to determine reasonable blanket and per program fees going back to January 2005.  In the arbitration proceeding, the TMLC also requested an expansion of coverage for performances of SESAC music in non-simulcast digital broadcasts similar in scope to the coverage offered by the most recent ASCAP and BMI licenses. In June 2006, the arbitrators essentially denied this request by ruling that the digital coverage offered by the new SESAC blanket and per program licenses will be the same as that offered by the interim SESAC blanket license.

Music Report’s understanding of the separate Digital Television Broadcasting Performance License offered by SESAC is that stations would be charged annually the greater of $157.50 or an amount equal to 10% of a station’s blanket license fee for the first non-simulcast digital channel, and the greater of $105.00 or an amount equal to 2% of a station’s blanket license fee for each additional non-simulcast digital channel.  In the event that any digital channel broadcasts market expansion programming, the fee for that channel would increase by an additional amount equal to 10% of a station’s blanket license fee.

The SESAC Digital Television Broadcasting Performance License also contains several reporting and verification obligations for each digital channel covered by the license.  Within sixty days after the end of each quarter, stations are required to furnish SESAC with: (1) music cue sheets for all locally-produced programs, (2) a listing of all syndicated programs including the episode title and/or number and the name of the producer, and (3) music cue sheets for all non-local programs to the extent they are made available to the station. Further, SESAC would have the right, upon thirty days advance written notice, to examine a station’s books and records in order to verify all payments, statements, computations, reports and accounting required by this license.

Unless a station can ensure that all of the music broadcast over a digital channel – including the music in every commercial, promo and PSA – is either not affiliated with SESAC or has been direct licensed, the safest practice would be to secure an additional digital license from SESAC.  If a station does secure an additional digital license from SESAC, they would not need to also license the performance rights directly from their news theme or production music provider.

New Media Uses
While technology has made it easier and cheaper for stations to reach audiences on the go, music rights issues have become increasingly complex. The blanket and per program licenses currently offered by ASCAP, BMI and SESAC give stations certain limited rights to publicly perform music over their analog and digital broadcast signals and on their websites. But these licenses do not give stations all of the rights that may be necessary to deliver their programming to handheld devices like cell phones and MP3 players, or to certain public locations like airports, grocery stores, elevators and buses.

Arguments over whether performance rights are needed to deliver programming to handheld devices often hinge on subtle distinctions like whether the mode of delivery is a stream or a download.  And even when it’s determined that performance rights are needed, it’s not always clear who is responsible for securing them – the station?  the cell phone carrier?  the grocery store?
In addition to performance rights, stations may also need to license the reproduction rights to songs and recordings contained in locally-produced programs that are delivered to new media platforms.  Many stations believe the Copyright Act entitles them to “synchronize” songs and recordings in a locally-produced program without the need to secure a reproduction license as long as they satisfy certain criteria, but the Copyright Act is restrictive and unclear.

Certainly, the safest practice would be to license in advance both the performance rights and the reproduction rights to all music contained in locally-produced programs that are delivered to new media platforms.  As a practical matter, this would limit the use of music to selections from a station’s news theme or library package.  Fortunately, more and more production music providers are recognizing the rapidly changing needs of television stations and are offering them broad grants of rights.  For instance, one major music provider offers an “All-Media License Addendum” and others routinely add contract language that allows stations to use their music “in all media now known or hereafter devised.”

Stations can contact Music Reports to discuss their specific music licensing needs.  They can also learn more by reading the “Broadcaster’s Guide to Music Licensing” and the “Television and Film Producer’s Guide to Music Licensing” on our Smart Licensing™ at http://accounting.musicreports.com/blog.php/