NAB Agreement With Sony Brings Flexibility Back to Music Streaming

By David D. Burns, Pillsbury Law

David Burns

The NAB has negotiated a waiver agreement with Sony Music Entertainment that will once again enable radio stations to stream Sony-licensed music unhindered by certain restrictions established by the statutory music streaming license. Stations wishing to take advantage of the Sony waiver need to opt in on the NAB website, and (depending on the amount of streaming they do) may need to place a button on their websites or apps to enable listeners to click through to purchase Sony song downloads.  A previous waiver agreement with Sony, as extended, expired on July 31, 2016, leaving stations without a waiver for the past few months.  NAB’s new agreement with Sony will last until December 31, 2020.

In a related action, NAB negotiated an extension of the existing waiver agreement with Warner Music.  That extension will last until September 30, 2019.

When it comes to music licensing, broadcasters generally are familiar with ASCAP, BMI and SESAC—performing rights organizations to which stations pay royalties to compensate songwriters and music publishers for the right to play music compositions over the air and via digital streaming. With respect to streamed music, however, stations must also pay royalties to the owners of the digital sound recording rights and to the recording artists.  Under the Digital Millennium Copyright Act of 1998, a statutory license was created for the performance of sound recordings over the Internet (i.e., streaming).  In addition to paying royalties through Sound Exchange, the statutory license imposes limitations on streaming that must be observed by stations streaming sound recordings if they have not entered into separate licensing agreements with the music labels.

Under the new Sony waiver agreement, certain of those restrictions are lifted with respect to music for which Sony, one of the “big three” music labels, holds the rights. Specifically:

  • Programming Restrictions:  The statutory license limits the number of times a webcaster may transmit music from a specific artist, album or boxed set during a three-hour period of time (known as the “sound recording performance complement”).  Generally, within a three-hour period, a station may stream (i) no more than three songs from a single album (and no more than two such songs consecutively), and (ii) no more than four songs by a single artist or from a boxed set of albums (and no more than three such songs consecutively).  The new waiver agreement will allow radio stations to stream up to half of an album during a three-hour period.
  • Prior Announcements: Under the statutory license, stations generally are prohibited from making announcements as to the time a particular song will be streamed.  The Sony waiver will permit greater flexibility in making prior announcements as to music to be streamed. Although it does not permit a station to announce the specific time a song will be played or to set out a specific programming schedule, it does allow stations to promote a program featuring a specific artist or artists at a specific time where the program is recurring or is in the nature of a tribute or documentary.
  • Identification of Song, Artist and Album: The statutory license requires that while a song is being played, the station must identify textually, by displaying on its website or the device used to play the music, the song, artist and album. This will still be required under the Sony waiver, but exceptions will be made for occasional or inadvertent failures to comply.
  • Ephemeral Copies: Under the statutory license, ephemeral copies of sound recordings (i.e., temporary copies made to facilitate the streaming process) must be destroyed within six months. The Sony waiver eliminates this requirement.

Stations that wish to take advantage of the Sony waiver and that stream more than 80,000 Aggregate Tuning Hours of music per month must place a prominent “buy now” button on their website, player or app in order to allow music listeners to purchase a song through a Sony-authorized download store (e.g., iTunes or Amazon), and in some cases may need to limit their streaming to the United States.  An “Aggregate Tuning Hour” is basically one hour of music streamed to one listener over one channel.  The waiver applies only to “AM/FM Streaming” by “Broadcasters,” which consists, with a few exceptions, of simultaneous non-subscription transmissions over the Internet of over-the-air radio programming.  In other words, Internet-only webcasters need not apply.

The Sony waiver is the latest in a series of agreements NAB has entered into over the last several years under which music labels have agreed to waive certain of the provisions found in the statutory license. In this particular case, however, the agreement will not help you unless you proactively opt in at the NAB website.