Is Too Cool for the Webcasting Tribe?

In our last two posts in this series, we saw how Pandora had to jump through about twelve hoops to come under the statutory webcaster license (just for the right to pay statutory royalties!), and even then, its business model was found to be legal only a couple of years ago.  Yet, compared to, Pandora’s business is straightforward.’s innovations have earned it raves from the technocrati–and make for a fascinating copyright case study.

Whereas Pandora uses a computer algorithm to generate personalized playlists for its users, encourages users to act as tastemakers, then further encourages the tastemakers by creating a kind of social competition, with the audience as judges.  It’s a kind of warp-speed American Idol but for cool kids and recorded music. is still in beta, so its final form isn’t necessarily set.  The description that follows is based on reports by users and’s own FAQ.

I Am the DJ, I Am What I Play enables users to set up “rooms,” which are typically themed by music genre.  Visitors may opt to be a “DJ” or simply an audience member.  If you choose to be a DJ, your “avatar” moves from the audience to the front of the room, where it sits behind a laptop computer (instead of two turntables and a microphone), puts on DJ-style headphones and starts bobbing its head rhythmically to the music.  There can be no more than five DJs active at a time.

To be a DJ, you must first put together your own playlist of songs, ideally one suited to the room’s theme.  When you take your place as a DJ, plays the first song in your queue, then moves to the song at the top of the next DJ’s queue, and so on, then back to you and the next song in you queue, and so on.  Thus, if there is the full complement of five DJs, every fifth song played in the “room” will be your selection.  You’ll be able to see when your selection is about to be played, but you won’t know what the other DJs’ selections will be.  None of the audience members will be able to predict any of the upcoming songs at all.

While a song plays, audience members may chat about the song*, and they may rate the song.  Highly rated songs earn their DJs rewards in the form of points, which brings status and may be spent on things like cooler-looking avatars.  If a song is rated poorly enough, it is terminated prematurely and skipped.

*  You know, like “Love it,” “Sux,” “I wouldn’t have modulated down to E-flat just then,” “Just because you need something to rhyme with ‘love’ doesn’t mean you *ever* say ‘the sky above’.”

The songs comprising the DJs’ playlists may be drawn from three different sources (and this is important):  (1) from’s own library, (2) uploaded from the DJ’s own music library (i.e., the one resident on the DJ’s own computer or perhaps music locker), and (3) from any song that the DJ has “heard” (i.e., been in a “room” when it was playing) that is not otherwise in one of the aforementioned libraries.  I’m not very clear on how this third library works technologically.  I guess that keeps copies of all songs uploaded by DJs, then associates the usernames of all users present in a room when that song was played.  I’m not sure at what point deletes the song, or if it stays in those users’ potential playlist indefinitely.

Is a Webcaster?, like Pandora, seeks to operate under the webcasting statutory license.  But it has two tricky legal issues to overcome (that I can see).

First, are the songs uploaded by the DJs properly obtained?  Recall that this is one of the hoops that webcasters have to jump through (specifically, it’s hoop no. 10).  More specifically (but still simplified), this hoop requires (1) that the phonorecord (i.e., the material object on which the sound recordings are fixed) was distributed to the public under the rights holder’s authority and (2) the phonorecord from which the song is transmitted was “lawfully made.”  Even assuming that the DJs’ music was lawfully obtained, uploading the song might not satisfy the second requirement.  The “phonorecord” in question would actually be the hard-drive on’s server, onto which the DJ uploads the music file.  Is that “lawfully made”?  It’d be a violation of the reproduction right, and the DJ doesn’t have permission to make the copy. does have something of a fair-use argument here (on the DJ’s behalf, not its own).  On the one hand, the entire music file is copied, the use is commercial in nature, and the song isn’t “transformed” somehow.  These factors weight against fair use.  On the other hand, the copy is a necessary step in doing something the law otherwise allows–webcasting.  I suppose the response to that would be that Congress wanted to make sure webcasters bought their own music (thus creating a little additional revenue stream for the writers and artists whose songs are being used).  There’s some support in the House Conference Report (at pages 83-84) for’s position.  Congress appeared most concerned about stopping the webcasting of un-released songs and bootlegged recordings, not with technical violations.

Second, if the DJs can select songs in’s own library, aren’t the DJs essentially “requesting” those songs?  Recall that one definition of interactive service is the playing of songs requested by listeners, and that interactive services are not eligible for the webcaster statutory license.  The reason for this restriction is to discourage the listeners from requesting a specific song, then capturing the stream.  If the listener doesn’t know when a song will be played, this technique doesn’t work very well.  In this case, the DJs know when their selections are going to be played–but no one else in the “room” does.

There is an exception to this rule that, at first, appears to apply to  The definition of interactive service excludes publicly-available streams where “individuals” can “request particular sound recordings.”  Alas, there’s an exception to this exception.  It does not apply if the stream “substantially consists of” requested music.  If what the DJs are doing is a “request,” then all of the music played in a given room is “requested.”

Am I prepared to say that is an interactive service?  That just doesn’t feel right to me.  Even if we assume that the DJs are requesting music, the overwhelming majority of the service provided by is non-interactive.  The audience members are completely clueless as to what songs are coming up.  That’s part of its appeal, really.  Yet, if has to obtain licenses the hard way for the 5% or 1% of its service that’s interactive, the whole enterprise fails.

For its part, Congress would seem to have agreed.  In the House Conference Report (at pages 87-88), Congress explained, “[A] service would not be interactive if it merely transmitted to a large number of recipients of the service’s transmissions a program consisting of sound recordings requested by a small number of those listeners.”  That sounds a lot like, doesn’t it?  Yet, in the same Report, Congress said it didn’t want a program to consist substantially of requested music.  Can we logically reconcile these two views?*

*  Here, we enter into the world of “statutory construction.”  If you haven’t been to law school, you might wonder why we’re even looking at something like a conference report, which isn’t “law” but is something a congressional committee produces to explain what it thinks it’s trying to do with a particular piece of legislation.  The reason is that, in trying to figure out what statutes mean, we’re really trying to figure out what Congress meant.  Committee reports and conference reports are useful for that.

The first rule of statutory construction is: you only “look behind” the words of the statute if the words of the statute are unclear.  Is there an unclear term in the definition of interactive service?  If there is one, it’s “request.”  What the statute seems to have in mind is traditional kind of radio request, where the station takes a few requests every hour.  Congress wanted to let webcasters take such requests, too, but no more.  (See page 88 of the Conference Report.)  Webcasters can’t turn their programs into nothing but requests (and they sure can’t tell the requester when the request will be played!).  This makes sense, since the webcasting license is clearly meant to apply to the internet analogs of terrestrial radio.

Thus, one definition of request, then, might be a selection that may be made by any member of the public, as opposed to an identifiable subset of the listeners (the “small number of those listeners” of the Conference Report).  The DJs, then, comprise such an identifiable group, and so their selections aren’t “requests.”  At first, this sounds oddly specific.  But think of the DJs as a collective “guest DJ” at a radio station.  There’s actually a pretty long history of guest or celebrity DJs, which continues to this day.  If Congress was trying to make webcasters approximate traditional radio, guest DJ-ing actually fits with the overall statutory scheme.  This would also reconcile Congress’ apparently contradictory impulses.

This leads me to the best argument I can come up with for why is a webcaster.  While they act as DJs, the DJs are not members of the listening public; they are’s agents.  They are a mechanism for creating unpredictable playlists for the general public, thus keeping in the spirit of the webcasting regime.  It’s no different than if’s CEO asked his mom to make the playlist.  She’s not an employee, but even so, a program consisting entirely of her selections would be OK.  True, the DJs in a particular room change, and members of the audience can elevate to become one, but that’s no different than if hired each DJ as an agent, then accepted the DJ’s resignation at the end.  And nothing prevents a principal from having multiple agents.

If this argument is accepted, it would solve the DJ-as-requester problem because the DJs would be acting on’s behalf.  It might also solve the “lawfully made” problem.  If bought a CD and loaded it onto its server so it could webcast the songs, that would be OK.  Same thing, then, if one of’s agents did the same thing.  What bothers me is that the copies of the DJs’ uploaded songs persist after they cease acting as DJs.

A downside of this theory is that would be responsible for its DJs’ actions.  I’d be curious to see if, in’s terms of use, the DJs don’t agree to indemnify for any copyright infringement they might commit.

That’s it for the internet radio services.  Next time in this series, we’ll wrap things up by looking at the services offered by Spotify.

Thanks for reading!

Rick Sanders

Rick is an intellectual-property litigator. He handles lawsuits, arbitrations, emergency injunctions and temporary restraining orders, opposition and cancellation proceedings, uniform dispute resolution proceedings (UDRPs), pre-litigation counseling, litigation avoidance, and other disputes, relating to copyrights, trademarks, trade secrets, domain names, technology and intellectual-property licenses, and various privacy rights. He has taught Copyright Law at Vanderbilt University Law School. He co-founded Aaron | Sanders with Tara Aaron-Stelluto in 2011.