Arista Records v. Launch Media: Webcasting Service Is Not “Interactive” under U.S.C. 114

The Second Circuit U.S. Court of Appeals held that a webcasting service that provides users with customized internet radio stations is not an “interactive service” under 17 U.S.C. section 114(j)(7), and therefore need not pay individual licensing fees to sound recording copyright holders. In Arista Records, LLC et al v. Launch Media, Inc., 578 F.3d 148 (2nd Cir. 2009), the Court held that the degree of control that a user exercises over the songs to be played dictates whether the service is “interactive” as defined by the statute. Because the Launch Media service permitted users to select preferred genres and artists, but not specific playlists, the Court found that users did not exert the level of specific control required to define the service as “interactive.” The Second Circuit was the first Circuit court to rule on this issue.

BACKGROUND

Launch Media operated an Internet radio website, or webcasting service, called LAUNCHcast (Yahoo has since acquired Launch Media and the service). The LAUNCHcast service “enables a user to create ‘stations’ that play songs that are within a particular genre or similar to a particular artist or song the user selects.” 578 F.3d 148, 150 (2nd Cir. 2009). Users select artists, songs, and genres they like, and LAUNCHcast uses that general information to create a customized playlist for the user from among the tens of thousands of songs in its catalog. The playlist is delivered to the user via webcasting. The user does not have the ability to request particular songs, or to request that songs are played in a specific order – the LAUNCHcast service randomly generates the playlist.

In 2001, Arista Records, along with several other recording companies, sued Launch Media for copyright infringement, claiming that the LAUNCHcast service was an “interactive service” under 17 U.S.C. section 114(j)(7), and therefore had to pay fees to the plaintiffs. A service deemed to be “interactive” under the statutory definition must pay individual licensing fees to the sound recording copyright holders of the songs played by the service. If it is not deemed “interactive,” the webcasting service must only pay a statutory licensing fee set by the Copyright Royalty Board based on the number of listeners.

The District Court for the Southern District of New York sided with Launch Media, and a group of the record companies appealed. Arista Records, LLC et al v. Launch Media, Inc., 578 F.3d 148 (2nd Cir. 2009)

Statutory Background

With the rapid growth and prominence of the Internet, recording companies recognized the Web’s ability to decrease music sales – if a user could request that a certain song play online at a predicted time, he could easily copy it without actually having to purchase the recording. The industry pressed Congress to provide statutory protection against this outcome.

In 1995, Congress enacted the Digital Performance Right in Sound Recordings Act, giving sound recording copyright holders the exclusive right to play or broadcast sound recordings via digital audio transmission through paid or “interactive” services. 17 U.S.C. section 114(d). The statute defines an “interactive service” as “one that enables a member of the public to receive a transmission of a program specifically created for the recipient, or on request, a transmission of a particular sound recording, whether or not as part of a program, which is selected on behalf of the recipient.” 17 U.S.C. section 114(j)(7).

In 2000, the Digital Media Association petitioned the Copyright Office for more clarity on the term “interactive service,” requesting that the Copyright Office amend the definition “to state that a service is not interactive simply because it offers the consumer with some degree of influence over the programming offered by the webcaster.” 578 F.3d at 156. The Copyright Office declined to rule on the issue, however, claiming that the rapidly changing nature of the marketplace did not make a bright line ruling practicable, though it state that Congress did intend to identify an “interactive” service based on the amount of influence a user has on song selection. Id.

LAUNCHcast is Not “Interactive” Because Users Cannot Select Specific Songs

In the first Circuit Court opinion regarding whether a webcasting radio service is “interactive,” requiring the payment of individual licensing fees, the Second Circuit focused on user control over the music played.

The Court determined that a service is “interactive” “if a user can either (1) request – and have played – a particular sound recording, or (2) receive a transmission of a program ‘specially created for the user.’” 578 F.3d at 161. The Court reviewed LAUNCHcast’s methodology and determined that the service did not meet the first definition of ‘interactive service’ because users could not request or expect to hear a particular song on demand. Id.

In considering the second definition of ‘interactive,” the Court wrote: “If the user has sufficient control over the interactive service such that she can predict the songs she will hear, much as she would if she owned the music herself and could play each song at will, she would have no need to purchase the music she wishes to hear.” Id.

The Court determined that LAUNCHcast users simply did not have the kind of control required to define the service as “interactive.” While LAUNCHcast users could select genres and other general preferences, “this degree of control is no different from a traditional radio station listener expressing a preference for a country music station or a class rock station.” Id. at 163. The users were not able to preview the upcoming song list, and therefore could not be ready to record a specific song. A user could prevent a playing song from appearing on its playlist in the future, but “the ability not to listen to a particular song is certainly not a violation of a copyright holder’s right to be compensated when [its] sound recording is played.” Id. at 164.

Accordingly, the Court concluded that the LAUNCHcast service was not an “interactive service” as that term is defined by statute. Indeed, the Court noted that LAUNCHcast users “do not even enjoy the limited predictability that once graced the AM airwaves on weekends in America when ‘special requests’ represented love-struck adolescents’ attempts to communicate their feelings to ‘that special friend.’” Id.

CONCLUSION

Arista Records obviously represents a victory for Internet radio stations, but independent record labels win as well. Webcasting services often draw from a broader playlist than traditional radio stations, giving smaller record labels an increased chance of exposure. If the Internet radio stations had to pay individual licensing fees for every song on the list, many would have to go out of business, limiting the opportunities for the smaller labels. Still, the finding in Arista Records – and the recording industry’s claims of losses due to webcasting—seems far overshadowed now by the recording industry’s losses resulting from file sharing.

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Jan Jensen

Ryan Smith

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