Does the SiriusXM Decision Mean Anything for You?

Paying performers and record companies performance fees for radio station broadcasts — we all know that is a hot topic in Congress. The NAB and broadcasters have for several years stalled attempts in Congress to levy performance fees on terrestrial broadcast stations while every other form of quasi-radio, from satellite radio to internet broadcasting, pays performance fees.  But, is it possible that the California Flo & Eddie decision possibly foretells coming legal challenges to terrestrial radio’s blanket exemption from paying performance fees for pre-1972 recordings?

The Flo & Eddie decision hinged upon the court’s finding that Section 301 of U.S. copyright law limits the applicability of federal copyright law to sound recordings made after February 15, 1972, and that state laws apply to sound recordings made prior to that date.

Specifically, Section 301 of Title 17 of the U.S. Code states that “[w]ith respect to sound recordings fixed before February 15, 1972, any rights or remedies under the common law or statutes of any State shall not be annulled or limited by this title until February 15, 2067”.

The Flo & Eddie decision held that Sirius XM owes performance fees under California law for pre-1972 musical recordings played on satellite radio.  Since California law gives copyright holders exclusive ownership in the public performance of their works, the court determined that Sirius XM is liable to those copyright owners for performance fees – performance fees that to date went unpaid on the theory that, because federal copyright law was inapplicable, no such performance fees were owed by Sirius XM for pre-1972 recordings.

The central issues for radio stations is whether this court ruling potentially impacts the significant terrestrial broadcast station exemption now enjoyed by broadcasters from the payment of performance fees for pre-1972 musical recordings.  The Flo & Eddie decision suggests that state law, at least in California, may control for pre-1972 sound recordings.

State laws on sound recording copyrights are a patchwork of criminal laws, civil statutes and common law.  If state law is applicable, performance fees for sound recordings may, or may not, be owed in any particular state.   If you are really interested in a deep dive into the pre-1972 state law carve-out for sound recordings, the U.S. Copyright Office has an informative publication titled: “Federal Copyright Protection for Pre-1972 Sound Recordings” at https://copyright.gov/docs/sound/pre-72-report.pdf.

Let’s take a brief look at copyright law as it pertains to radio broadcast station performance fees.   The exemption against paying sound recording performance fees afforded to radio broadcast stations is contained in one short sentence at Section 106 (6) of federal copyright law which states: “the owner of copyright under this title has the exclusive rights … in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission”.  This section does not give a copyright owner any rights for the transmission of an analog audio transmission which is the free pass for analog radio from radio broadcast performance fees.

For radio stations that are now transmitting in digital, Section 114(d)(1) under the title of “Exempt transmissions and retransmissions” states that “[t]he performance of a sound recording publicly by means of a digital audio transmission, other than as a part of an interactive service, is not an infringement of section 106 (6) if the performance is part of … a nonsubscription broadcast transmission”.  Thus, HD radio broadcasts, unlike most other digital transmissions, are likewise exempt from the payment of copyright performance fees.

All this is good as it generally relates to radio broadcast performance fees for sound recordings.  The central question raised by the Flo & Eddie decision is whether this federal law will still apply to terrestrial radio stations playing pre-1972 recordings, or whether state law should apply.

If state law applies, then there may be a direct liability of radio stations to individual copyright holders for performance fees if either the state law, or common law applicable in the state, can be construed to cover radio station airplay of sound recordings.  If state law is applicable, any radio station playing pre-1972 recordings in those states where performance fees may be owed could possibly be liable for the payment of fees or damages going back a number of years, depending upon what state law says.

So what should radio stations now do?  Should all pre-1972 recordings be pulled?  Under general copyright law, removing recordings now from playlists is unlikely to have much effect upon any amounts that might already be owed.

The Flo & Eddie decision is less than 24 hours old.  Like most court decisions, this ruling is subject to appeal and interpretation.  Much will be written on this subject.

There may be significant reasons why the rationale for state law applicability of pre-1972 performance fees does not extend to terrestrial radio broadcasters.  It is also unknown how many state laws could be construed to give sound recording copyright holders a performance right in radio station broadcasts.  Right now, it is safe to say that nothing in the Flo & Eddie decision specifically overturns or otherwise changes the current blanket exemption from sound recording performance fees now applicable to radio stations.

But, if courts should extend in subsequent decisions the Flo & Eddie rationale to apply state copyright law to terrestrial radio stations playing pre-1972 recordings, station liners for many oldies stations may need to be changed to state “All the hits of the 70s, 80s & 90s, except for anything prior to February 15, 1972!”.