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NJBA Comments on Aereo and Radio

Like “apples and oranges” the broadcast group says to those seeing a link to royalty payments

Paul Rotella, president and CEO of the New Jersey Broadcasters Association, and Frank Montero have put together a piece wherein they counter those who have said the Supreme Court’s Aereo decision opened the door to considering requiring radio stations to pay performance royalties.

Here the article is reproduced in full.

Apples and Oranges

On the same day in Washington, June 25, two significant events occurred in the world of performance rights in broadcasting. The first was the Supreme Court’s decision in the Aereo case. Aereo is an online television streaming service that captures television broadcasts using thousands of tiny individual antennas (ostensibly one for each subscriber). It then stores those programs and makes them available to paid subscribers by streaming over the Internet. Aereo claimed that it was not engaging in a public performance of copyrighted material but instead was merely leasing equipment to subscribers who were engaged in a “private performance.” Broadcasters disagreed and argued that Aereo was no different than a cable system or other MVPD and should have to pay fees to retransmit that content to subscribers for a fee. On June 25th, the U.S. Supreme Court ruled that Aereo violated copyright law by retransmitting over-the-air programming without authorization. In a 6-3 vote, the high court said Aereo’s streaming service represented a “public performance” of the television networks’ copyrighted works — even though it legally captured those shows over the air and obtained individual copies for each viewer. Essentially, Aereo’s business plan was built on copyright infringement.

On that very same day, in the same city, but before a different branch of the federal government, a hearing was held on Capitol Hill about performance royalties before the House Judiciary Subcommittee on Intellectual Property. This was the second of two hearings as part of a comprehensive review of copyright laws. As stated by Rep. Jerrold Nadler (D-NY), Ranking Member of the Subcommittee in his opening statement, a specific focus of the hearings was to correct the perceived injustice that “musicians and other rights holders of sound recordings receive absolutely no compensation when their music is played over-the-air on terrestrial, meaning AM-FM, radio …” During the June 25 hearing, there was a lot of ganging up on radio. Charles Warfield who testified on behalf of the NAB and Ed Christian on behalf of the RMLC were peppered with questions by the representatives who asked why Congress should permit radio to build a business without having to pay artists.

So what is the difference between Aereo and the radio stations? The answer is plenty.

Let’s start with what radio is and what Aereo is not. Radio is a free over-the-air service that is bound by a powerful and mandatory public service obligation. Radio broadcasters are licensed by the federal government and the are tasked to inform, educate, and alert listeners to important events, topics, and emergencies.

They are local, involved in their communities, support or form charities and serve the public interest. They run EAS alerts, PSA announcements, and provide mandatory air time to political candidates. Radio is bound by law to serve their communities and the public responds. Many states are moving to qualify broadcasters as first responders. When the flood waters of Katrina or Sandy rose above homes, leaving flood victims nowhere to turn for refuge but their roof, did they bring laptops or tablets or TV sets or Aereo with them? No, they brought radios! It was their life line. I’ve never heard anyone call Aereo a life line!

Radio has significantly contributed to the U.S. recording industry, which is the largest in the world. In fact, the recording industry enjoys such an enormous value from radio airplay that there’s an entire body of payola law dealing specifically with how to handle attempts by the recording industry to pay radio stations for playing their records. That’s right … paying the radio stations. Why? Because those plays drive sales of recordings and concert tickets. So airplay for the recording industry is a prime driver in promoting sales. As Warfield stated before the Congressional hearing “in all 37 years of my career, I have never had a record executive come to my station and say ‘why are you playing all of my music?’” In contrast, Aereo and other MVPDs use their content to attract subscribers. Unlike Aereo or whatever the MVPD du jour is, radio stations don’t have subscribers because there is no subscription required. They have listeners because they are not charging the public for listening to their station.

The core objective of copyright law is the public good, not the creator’s interest nor the user’s interest. The Supreme Court has acknowledged this. In recent remarks, Congresswoman Anna Eshoo (D-CA), Ranking Member of the Communications and Technology Subcommittee, expressed frustration over the Supreme Court’s Aereo decision. She said her constituents were fed up with rising cable TV bills and, in her words, “Aereo provided the innovative solution needed to disrupt the video marketplace, giving consumers greater choice in how they watch their favorite free over-the-air broadcast programming.”

I respectfully believe the Congresswoman’s frustration is misdirected and seems to stem from the belief that Aereo developed a technological breakthrough to help the consumer against cable companies and broadcasters. But Aereo’s innovation wasn’t technological. Giving every subscriber their own miniature dime-sized antenna, when using just one antenna would work, wasn’t an innovation driven by technology. It was driven by a desire to circumvent the copyright laws.

As Chief Justice Roberts noted in questioning Aereo’s counsel during the oral arguments, “Your technological model is based solely on circumventing legal prohibitions that you don’t want to comply with. There’s no reason for you to have 10,000 dime-sized antennas except to get around copyright laws …” Preventing a thief who has found a new way to pick a bank safe, is not hampering technological innovation. It’s merely stopping a clever thief. If the Congresswoman’s constituents want greater choices for watching their favorite free over-the-air broadcast programming, they should cut the cord and stop paying subscriber fees. And if there are issues receiving the free over-the-air signals, they might want to look at what FCC Chairman Wheeler is doing with spectrum auctions and the protection of TV coverage areas. In the case of radio, the analogy is different. Charging radio stations to play records was once compared to throwing a surprise birthday party for a great friend that everyone likes, and then sticking the birthday boy with the check for all the food and drink.

There’s just no comparison.