Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, DC 20554

In the Matter of
Request for Declaratory Ruling
Concerning Sponsorship Identification
of Certain Programming Carried by
Radio Stations Licensed to Clear
Channel Communications, Inc. and/or
Its Direct and Indirect Subsidiaries.

To: The Commission

REQUEST FOR DECLARATORY RULING

Pursuant to 47 CFR §1.2, the Future of Music Coalition (“FMC”) , by its counsel, Media Access Project, respectfully asks the Commission to issue a declaratory ruling to resolve any possible uncertainty as to the applicability of the Commission’s sponsorship identification rules to certain broadcast programming carried by Clear Channel Communications, Inc.

Specifically, FMC asks that the Commission rule that;

waiver of digital performance rights in exchange for broadcast carriage of music constitutes consideration within the meaning of Sections 317 and 507 of the Communications Act and 47 CFR §73.1212, and, consequently, an artist waiving such performance rights is a sponsor of the broadcast of such broadcasts and must be identified as such.

The “Voluntary Agreement”

This controversy arises from implementation the Consent Decree entered into between the Federal Communications Commission and Clear Channel Communications, Inc. (“Clear Channel”) terminating investigations initiated by the Enforcement Bureau against Clear Channel as to whether Clear Channel and its direct and indirect subsidiaries that hold FCC authorizations may have violated the sponsorship identification requirements set forth in Sections 317 and 507 of the Communications Act of 1934 and 47 CFR §73.1212. Clear Channel Communications, Inc., 22 FCCRcd 7875 (2007). Incident to the Consent Decree, Clear Channel entered into a “voluntary agreement” to air 1600 hours of programming “which will feature the recordings of local, regional and unsigned artists and artists affiliated with independent labels.” See id., 22 FCCRcd at 7890 (Statement of Commissioner Adelstein). The “voluntary agreement” was set forth in a letter to the Commissioners sent on or about April 6, 2007. See Attachment A. Significantly, the second of eight “rules of engagement” set forth in the “voluntary agreement” is the following: “Radio should not be allowed to sell or barter access to its music programmers.”

Applicable Legal Provisions

47 USC §317(a)(1) provides in relevant part that

All matter broadcast by any radio station for which any money, service or other valuable consideration is directly or indirectly paid, or promised to or charged or accepted by, the station so broadcasting, from any person, shall, at the time the same is so broadcast, be announced as paid for or furnished, as the case may be, by such person....

The Commission has implemented Section 317(a) through the promulgation of 47 CFR §73.1212(a), which provides in relevant part that

When a broadcast station transmits any matter for which money, service, or other valuable consideration is either directly or indirectly paid or promised to, or charged or accepted by such station, the station, at the time of the broadcast, shall announce: (1) That such matter is sponsored, paid for, or furnished, either in whole or in part, and (2) By whom or on whose behalf such consideration was supplied.... * * * * (i) For the purposes of this section, the term “sponsored” shall be deemed to have the same meaning as “paid for.”

17 USC §106 provides in relevant part that

[T]he owner of copyright under this title has the exclusive rights to do and to authorize...the following:

* * * *

(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.

Section 106(6) was an amendment contained in the Digital Performance Right in Sound Recordings Act (‘‘DPRA’’), Public Law 104–39, 109 Stat. 336 (1995). Thus, under the DRPA, copyright owners of sound recordings are granted a limited performance right to make or authorize the performance of their works ‘‘by means of a digital audio transmission.’’ Both analog and digital radio broadcast of music are exempt from digital performance right royalty payments. However, under the DPRA, web streaming of music is ordinarily subject to digital performance right royalty payments.

The Clear Channel Contract

In fulfilling the commitment set forth in the “voluntary agreement,” Clear Channel has imposed conditions on the carriage of the programming in question which raise questions as to the applicability of Sections 317 and 508 of the Communications Act of 1934 and 47 CFR §73.1212. In particular, those artists seeking airplay on Clear Channel’s radio stations must accept a contract (the “Clear Channel Contract”), which is set forth as Attachment B hereto. Paragraph 1 of the contract provides in relevant part that:

You grant to Clear Channel the royalty-free non-exclusive right and license, in perpetuity (unless terminated earlier by You or Clear Channel as set forth below), to use, copy, modify, adapt, translate, publicly perform, digitally perform, publicly display and distribute any sound recordings, compositions, pictures, videos, song lyrics, still images,

Analysis

The quoted language in the Clear Channel Contract clearly compels waiver of digital performance right royalty payments for Clear Channel’s web streaming of music submitted pursuant to the “voluntary agreement.” The music is “sound recordings,” web streaming of such music is a “digital performance,” and the contractual provision compels the grant of a “royalty-free non- exclusive right and license, in perpetuity...to...digitally perform” all submitted music.

There can be no doubt that the digital performance right is an asset of value, and that waiver of that right is a form of consideration. The second “rule of engagement” set forth in the “voluntary agreement” is that “Radio should not be allowed to sell or barter access to its music programmers.” Thus, conditioning of airplay upon the waiver of digital performance right royalties clearly violates the letter and spirit of the “voluntary agreement.” Simply put, Clear Channel is charging a price for airplay by bartering airplay in exchange for waiver of the digital performance right. So, too, does the conditioning of airplay upon the waiver of digital performance right royalties constitute “consideration” within the meaning of 47 USC §317 of the Communications Act, as implemented by the Commission at 47 CFR §73.1212.

As set forth above, 47 USC §317, as implemented by the Commission at 47 CFR §73.1212, provides that any carriage of program matter which is provided in exchange for consideration of any kind must be announced as or “paid for or furnished as the case may be, by such person [as provided the consideration].” Accordingly, it is clear that, since all music provided under the Clear Channel Contract is provided in exchange for consideration and must be identified on air as having been “sponsored,” “paid for” or “furnished.”

Conclusion

WHEREFORE, FMC asks that the Commission promptly issue the requested declaratory ruling and that it grant all such other relief as may be just and proper.

Respectfully submitted,

Andrew Jay Schwartzman
Parul Desai

Media Access Project
Suite 1000
1625 K Street, NW
Washington, DC 20006
202 232-4300

Counsel for FMC
July 13, 2007




PDF of Complaint
Go to FMC's 2006 Radio Study

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