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
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