Microsoft Word - 112032562_9.docx1 Esser Decl. in Support of NAB’s
Opp’n to Mot. to
Compel & Designation of Materials as “Restricted” Dkt. No.
19-CRB-0005-WR (2021-25)
PUBLIC VERSION
LIBRARY OF CONGRESS Washington, D.C.
In the Matter of:
Determination of Rates and Terms for Digital Performance of Sound
Recordings and Making of Ephemeral Copies to Facilitate those
Performances (Web V)
Docket No. 19-CRB-0005-WR (2021-2025)
DECLARATION OF CAROLINE N. ESSER IN SUPPORT OF THE NATIONAL
ASSOCIATION OF BROADCASTERS’ OPPOSITION TO SOUNDEXCHANGE’S
MOTION TO COMPEL DISCOVERY AND DESIGNATION OF CERTAIN MATERIALS AS
“RESTRICTED”
I, Caroline N. Esser, declare as follows:
1. I am a member in good standing of the State Bar of California. I
am an associate
at Latham & Watkins LLP and counsel for the National
Association of Broadcasters (“NAB”) in
this proceeding. I submit this Declaration in support of NAB’s
Opposition to SoundExchange’s
Motion to Compel Discovery and NAB’s designation of certain
portions of the Opposition and
supporting materials as “Restricted.” I have personal knowledge of
the facts set forth in this
Declaration and, if called to testify as a witness, I could and
would testify competently thereto.
A. Meet And Confer Efforts
2. Beginning on October 22, 2019, and continuing through the
present, NAB has been
in conversation with SoundExchange—through email, letters, and
telephone conferences—about
NAB’s responses and objections to SoundExchange’s discovery
requests. The parties were able
to reach agreement on many but not all of the issues. Below I
summarize portions of this meet
Electronically Filed Docket: 19-CRB-0005-WR (2021-2025)
Filing Date: 12/09/2019 03:44:27 PM EST
2 Esser Decl. in Support of NAB’s Opp’n to Mot. to
Compel & Designation of Materials as “Restricted” Dkt. No.
19-CRB-0005-WR (2021-25)
PUBLIC VERSION
and confer process that are relevant to SoundExchange’s present
Motion and NAB’s Opposition
to the same.
3. On November 1, 2019, I participated in a meet-and-confer call
with counsel for
SoundExchange. During that call, NAB made clear that, consistent
with SoundExchange’s own
position that it would search for documents from entities that are
participants or provided a witness
in this proceeding, NAB would collect documents from NAB and the
station groups that provided
witness testimony in NAB’s written direct case—i.e., iHeartMedia,
Inc. (“iHeart”), Midwest
Communications, Inc. (“Midwest”), and Mel Wheeler, Inc.
(“Wheeler”).
4. In email correspondence on November 4, 2019, SoundExchange took
the position
that NAB should also collect and produce documents from Beasley,
Cumulus, Salem, and
Cromwell in response to RFPs 5, 49, 51, 54, 57, & 58.
SoundExchange claimed that these requests
are directly related to paragraph 40 of Dr. Leonard’s written
direct testimony. Attached hereto as
Exhibit 1 is a true and correct copy of this correspondence from
SoundExchange’s counsel to
counsel for NAB.
5. On November 20, 2019, in the spirit of compromise, NAB
informed
SoundExchange that, though it did not agree that any of these
requests are directly related to
paragraph 40 of Dr. Leonard’s written direct testimony, NAB was
willing to work with Beasley,
Cumulus, Salem, and Cromwell to collect and produce documents
responsive to RFPs 57 and 58.
SoundExchange responded that the “parties are at an impasse” with
respect to RFP 49 (and other
RFPs), but did not provide a more detailed explanation.
SoundExchange also ignored NAB’s
subsequent email seeking clarity on which RFPs SoundExchange was
considering addressing in a
motion to compel. Attached hereto as Exhibits 2 and 3 are true and
correct copies of this
3 Esser Decl. in Support of NAB’s Opp’n to Mot. to
Compel & Designation of Materials as “Restricted” Dkt. No.
19-CRB-0005-WR (2021-25)
PUBLIC VERSION
correspondence between counsel for NAB and counsel for
SoundExchange from November 1,
2019 through December 4, 2019.
6. On November 6, 2019, I participated in another meet-and-confer
call with counsel
for SoundExchange. During that call, NAB explained to SoundExchange
that RFP 64 and the
Unnumbered RFP are incoherent because they seek documents regarding
the major record
companies’ market power in “the market for simulcasting or radio”
and “the market for custom
radio services,” but the majors do not offer simulcasts,
terrestrial radio stations, or custom radio
services and therefore do not compete at all (let alone have market
power) in the alleged markets.
NAB told SoundExchange that the requests were unanswerable as
written and asked
SoundExchange to revise the requests. SoundExchange, however,
claimed it was obvious that it
sought documents regarding the majors’ market power in some
“upstream market,” apparently
referring to a different market or markets in which the owners of
copyrights in sound recordings
license certain rights to downstream players who then perform them
for listeners. SoundExchange
insisted that NAB understood what SoundExchange was actually
seeking and refused to revise
these requests. Because SoundExchange refused to revise them,
counsel for NAB wrote to counsel
for SoundExchange on November 13, 2019 to confirm that NAB would be
standing on its
objections to RFP 64 and the Unnumbered RFP. See Ex. 2.
B. Designation Of Material As “Restricted”
7. I also submit this Declaration in support of NAB’s designation
of certain portions
of its Opposition and Exhibits 1, 2, and 3 in support of this
Declaration as “Restricted.”
8. On June 24, 2019, the Copyright Royalty Board (“CRB”) entered a
protective order
that limits the disclosure of “confidential information” to outside
counsel of record and their staff,
personnel supplied by any independent contractor with whom such
attorneys work, and any outside
4 Esser Decl. in Support of NAB’s Opp’n to Mot. to
Compel & Designation of Materials as “Restricted” Dkt. No.
19-CRB-0005-WR (2021-25)
PUBLIC VERSION
independent consultant or expert who is assisting a participant to
this proceeding (“Protective
Order”). See Dkt. No. 4012. The participants agreed that in this
proceeding, “confidential
information” protectable under the Protective Order (hereinafter
referred to as “Restricted
materials”) “shall consist of commercial or financial information
disclosed by any means
(including, but not limited to, through documents, testimony, or
argument), by a Participant
(Producing Participant) to another Participant or other
Participants, that the Producing Participant
has reasonably determined in good faith would, if disclosed, either
(1) result in a competitive
disadvantage to the Producing Participant, (2) provide a
competitive advantage to another
Participant or entity, or (3) interfere with the ability of the
Producing Participant to obtain like
information from other Participants or entities in the future.” Id.
§ III. Prior to the production of
Restricted materials, participants must (1) mark these materials
“with a conspicuous label of
‘RESTRICTED – Subject to Protective Order in Docket No.
19-CRB-0005-WR (2021-25)’”; (2)
mark these materials “with highlights or brackets”; and (3)
“deliver with all Restricted materials
an affidavit or declaration signed under penalty of perjury listing
a description of all materials
marked with the ‘Restricted’ stamp and the basis for the
designation.” Id. § IV.A.
9. I have reviewed NAB’s Opposition and the exhibits in support of
this Declaration.
I have determined to the best of my knowledge, information, and
belief that portions of NAB’s
Opposition and Exhibits 1, 2, and 3 contain non-public Restricted
material protected under the
Protective Order. Portions of these documents are protected under
the Protective Order because
they contain commercial or financial information that is not
publicly available and that, if
disclosed, would competitively disadvantage participants in this
proceeding, provide a competitive
advantage to another participant or entity, and interfere with the
ability of participants to obtain
like information from other participants or entities in the future.
Restricted material is redacted in
the public copies ofNAB's filing and highlighted in gray and
bracketed in the restricted copies of
NAB's filing.
10. I declare in good faith, and to the best of my knowledge, that
all information
designated as restricted meets the definition of "confidential
information" as set forth in the
Protective Order.
I declare under penalty of perjury that the foregoing is true and
correct, and that I executed
this Declaration ·on December 9, 2019 in San Francisco,
California.
5
~ c;___ Caroline N. Esser
Esser Deel. in Support of NA B's Opp'n to Mot. to Compel &
Designation of Materials as "Restricted"
Dkt. No. 19-CRB-0005-WR (2021-25) PUBLIC VERSION
EXHIBIT 1 PUBLIC VERSION
Dkt. No. 19-CRB-0005-WR (2021-25)
6
From: Warren, Previn To: Lovejoy, Brittany (SF); Damle, Sy (DC);
Esser, Caroline (SF); Hanson, Kris (SF); Jovais, Alicia (SF) Cc:
Cherry, Andrew B.; Trepp, Alex S. Subject: RE: Web V Date: Monday,
November 4, 2019 7:59:50 PM
Counsel:
As we discussed on our call last week, and as anticipated by the correspondence below,
SoundExchange believes that NAB should collect documents in response to specific requests for
production from the following station groups: Commonwealth, Beasley, Cumulus, Salem, and
Cromwell. We have identified the requests we think apply to each of those station groups below.
Please note that this correspondence is separate from our forthcoming discovery letter, which will
lay out SoundExchange’s position on NAB’s responses and objections in advance of our Wednesday
meet and confer. Commonwealth
NAB should collect and produce from Commonwealth to the same extent it is collecting and
producing from Midwest and Wheeler. NAB elected to offer testimony from Mr. Newberry, which
discusses Commonwealth in numerous places. See Newberry WDT ¶¶ 18, 26. It is our
understanding from NAB’s website that Mr. Newberry remains the CEO of Newberry. (See
https://www.nabfoundation.org/documents/board/stevenNewberry.asp.)
Beasley, Cumulus, Salem, and Cromwell
NAB should collect and produce documents from these broadcasters in response to Request Nos. 5,
49, 51, 54, 57, & 58. These requests are directly related to Dr. Leonard’s written direct testimony.
In his testimony, Dr. Leonard argues that “simulcast differs economically from custom radio” in part
because simulcast focuses on non-music content. In paragraph 40, Dr. Leonard states that “[m]y
interviews with broadcasters confirmed the importance of non-music content to their radio
programming.” Dr. Leonard specifically discusses his interviews with Beasley, Cumulus, Salem,
Midwest, and Cromwell, and draws conclusions based on those interviews.
Beasley and Cumulus indicated that [
]. Cumulus also indicated that a music station with little music
content but popular on-air talent will generate more streams than a station with more
music. Salem and Midwest stated that non-music programming including local DJ
personalities can be a radio station’s competitive differentiator. Cromwell stated that
community involvement is a key differentiator for its stations relative to alternatives. They
aim to “be important where we are.” Another example given by Cromwell is that there are
three country music stations in Nashville that play essentially the same music but they still
have nonoverlapping audiences—the reason is because their different non-music content
attracts different listeners to each station.
Id. ¶ 40. NAB should collect and produce from these broadcasters in response to the
7 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
From: Warren, Previn
Sent: Friday, November 01, 2019 5:59 PM
To: '
[email protected]' <
[email protected]>;
[email protected];
[email protected];
[email protected]
Cc: Cherry, Andrew B. <
[email protected]>; Trepp, Alex S. <
[email protected]>
Subject: RE: Web V Caroline, et al:
Thanks for the chat. To memorialize the key part of our conversation:
NAB agreed that it would search for, collect, and produce responsive documents from NAB, iHeart,
Wheeler, and Midwest (subject to NAB’s other objections and reservations, which we have yet to
discuss). SoundExchange agreed that it would search for, collect, and produce responsive
8 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
documents from the record company participants and witnesses as articulated in its responses and
objections – again subject to SoundExchange’s other objections and reservations, which we have not
yet discussed.
SoundExchange explained that it reserves the right to seek documents in response to certain of
SoundExchange’s requests from Commonwealth, Entercom, Beasley, Cumulus, Salem, and
Cromwell. SoundExchange will be articulating its position with respect to these entities (and the
relevant document requests) in a future correspondence.
Thanks, Previn
From:
[email protected] [mailto:
[email protected]]
Sent: Wednesday, October 30, 2019 2:29 PM
To:
[email protected]; Warren, Previn <
[email protected]>;
[email protected];
[email protected]
Cc: Cherry, Andrew B. <
[email protected]>; Trepp, Alex S. <
[email protected]>
Subject: RE: Web V
External Email – Exercise Caution All:
Would a call tomorrow at 1:30 pm PT/4:30 pm ET work for all? If not, let us know and we’ll go back
to the drawing board. Britt Britt N.
Lovejoy LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000
San Francisco, CA 94111-6538 Direct Dial: +1.415.646.8329 Fax:
+1.415.395.8095 Email:
[email protected]
https://www.lw.com
From: Damle, Sy (DC) <
[email protected]>
Sent: Wednesday, October 30, 2019 6:50 AM
To: Warren, Previn <
[email protected]>; Lovejoy, Brittany (SF) <
[email protected]>;
Esser, Caroline (SF) <
[email protected]>; Hanson, Kris (SF) <
[email protected]>
Cc: Cherry, Andrew B. <
[email protected]>; Trepp, Alex S. <
[email protected]>
Subject: RE: Web V Previn -
9 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
Best, Sy
Sy,
We’d like to set up a call to discuss an issue that runs throughout NAB’s responses and objections to
SoundExchange’s requests for production. NAB has objected to our instructions 27, and definitions
9, 15, and 34. Those objections create ambiguity around which entities you will be collecting and
producing documents from in response to a number of our requests. NAB’s objections appear to
exclude a number of witnesses who have submitted testimony, such as Gille and Wheeler, as well as
numerous entities relevant to NAB’s case such as Entercom, Cumulus, and Beasley. NAB’s objections
also appear to indicate that you will not be collecting or producing from iHeart in response to
numerous of our requests.
Given that this is a threshold issue affecting many of SoundExchange’s specific requests, and given
the compressed time for discovery in this proceeding, we would like to resolve this (or take it to the
Judges) this week. After we’ve done so, we will also need to take up NAB’s objections to a number
of our specific requests. (We can save that for a subsequent call.)
Please let me know a good time to catch up; I look forward to it and hope you have been well.
Thanks, Previn
Previn Warren
Jenner & Block LLP 1099 New York Avenue, N.W. Suite 900,
Washington, DC 20001-4412 | jenner.com +1 202 637 6361 | TEL +1 202
661 4961 | FAX Pronouns: He / Him
10 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
[email protected] Download V-Card | View Biography
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11 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
12
From: Esser, Caroline (SF) To: Warren, Previn Cc: Jovais, Alicia
(SF); Lovejoy, Brittany (SF); Damle, Sy (DC); Wetzel, Joe (SF);
Hanson, Kris (SF); Trepp, Alex S.; Rao, Devi M.; Cherry, Andrew B.;
Dukanovic, Ivana (SF) Subject: RE: Web V - Follow-Up Date:
Wednesday, December 4, 2019 5:45:57 PM
Previn: We are writing to follow-up on RFP 82. We have conferred
with iHeart and can confirm that we will be collecting and
producing non-privileged, responsive “Minutes from all meetings of
the iHeart Board of Directors and committees thereof concerning
competition between digital music services,” to the extent they
exist. We hope you all had a nice Thanksgiving. Best,
Caroline
Caroline N. Esser
LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000 San
Francisco, CA 94111-6538 Direct Dial: +1.415.395.8063 Fax:
+1.415.395.8095 Email:
[email protected]
https://www.lw.com
From: Esser, Caroline (SF) Sent: Tuesday, November 26, 2019 8:31 PM
To: 'Warren, Previn' <
[email protected]> Cc: Jovais, Alicia
(SF) <
[email protected]>; Lovejoy, Brittany (SF)
<
[email protected]>; Damle, Sy (DC)
<
[email protected]>; Wetzel, Joe (SF)
<
[email protected]>; Hanson, Kris (SF)
<
[email protected]>; Trepp, Alex S.
<
[email protected]>; Rao, Devi M. <
[email protected]>;
Cherry, Andrew B. <
[email protected]>; Dukanovic, Ivana (SF)
<
[email protected]> Subject: RE: Web V - Follow-Up
Previn: You should have received a document production earlier
today. This production, along with the documents you have already
received, will conclude nearly all of our document productions
related to NAB’s written direct statement. As you are aware,
however, we are still working on collecting and producing documents
from Beasley, Cumulus, Salem and Cromwell in response to RFPs 57
and 58. We are also still discussing RFP 82 (as limited by
SoundExchange during the parties’ meet and confer correspondence)
with iHeart.
While NAB substantially completed its production today, your team
informed us yesterday that you do not expect to complete
SoundExchange’s production until after December 3. Nor have you
informed us whether your production of documents other than those
subject to the parties’ agreement on negotiation documents is now
complete (or will be by tomorrow per Alex’s email indicating there
will be an additional production). Please provide an update similar
to the one you requested of us—i.e., whether and to what extent
SoundExchange’s productions are complete (or will be by tomorrow).
To the extent your productions will not be complete, please provide
a general description of the documents that remain to be produced.
NAB reserves the right to assess the sufficiency of SoundExchange’s
productions once those are completed, and if necessary file a
motion to compel the additional production of documents. Best,
Caroline
Caroline N. Esser
LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000 San
Francisco, CA 94111-6538 Direct Dial: +1.415.395.8063 Fax:
+1.415.395.8095 Email:
[email protected]
https://www.lw.com
From: Warren, Previn <
[email protected]> Sent: Tuesday,
November 26, 2019 7:50 AM To: Esser, Caroline (SF)
<
[email protected]> Cc: Jovais, Alicia (SF)
<
[email protected]>; Lovejoy, Brittany (SF)
<
[email protected]>; Damle, Sy (DC)
<
[email protected]>; Wetzel, Joe (SF)
<
[email protected]>; Hanson, Kris (SF)
<
[email protected]>; Trepp, Alex S.
<
[email protected]>; Rao, Devi M.
13 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
Counsel,
In light of your email below, it appears that NAB will not be
providing its amended response to RFP 82 within the statutory
discovery period. Accordingly, SoundExchange reserves its right to
dispute the sufficiency of NAB’s amended response and, as
appropriate, bring the issue to the Judges’ attention after the
close of the statutory discovery period. See Order Denying, Without
Prejudice, SoundExchange’s Motion to Compel the Services’
Production of Certain Documents, Docket No. 16-CRB-0001 SR/PSSR
(2018-2022), at 2-3 (Sept. 13, 2016).
Also, can you please advise whether and to what extent NAB’s
productions are complete (or will be completed today)? To the
extent your productions will not be complete today, please provide
a general description of the documents that remain to be produced.
SoundExchange reserves the right to assess the sufficiency of NAB’s
productions once those are completed, and if necessary file a
motion to compel the additional production of documents. Again,
SoundExchange is permitted to file such a motion even after the
close of the statutory discovery period. Id.
Best, Previn
From:
[email protected] [mailto:
[email protected]] Sent:
Monday, November 25, 2019 4:49 PM To: Warren, Previn
<
[email protected]> Cc:
[email protected];
[email protected];
[email protected];
[email protected];
[email protected]; Trepp, Alex S. <
[email protected]>; Rao,
Devi M. <
[email protected]>; Cherry, Andrew B.
<
[email protected]>;
[email protected] Subject: RE: Web
V - Follow-Up
External Email – Exercise Caution Hi Previn, Due to the holiday
schedules at iHeart, we need until early next week to get back to
you about RFP 82. Best, Caroline
From: Warren, Previn <
[email protected]> Sent: Monday,
November 25, 2019 1:41 PM To: Esser, Caroline (SF)
<
[email protected]> Cc: Jovais, Alicia (SF)
<
[email protected]>; Lovejoy, Brittany (SF)
<
[email protected]>; Damle, Sy (DC)
<
[email protected]>; Wetzel, Joe (SF)
<
[email protected]>; Hanson, Kris (SF)
<
[email protected]>; Trepp, Alex S.
<
[email protected]>; Rao, Devi M. <
[email protected]>;
Cherry, Andrew B. <
[email protected]>; Dukanovic, Ivana (SF)
<
[email protected]> Subject: RE: Web V - Follow-Up
Caroline,
Thanks, Previn
From:
[email protected] [mailto:
[email protected]] Sent:
Thursday, November 21, 2019 7:19 PM To: Warren, Previn
<
[email protected]> Cc:
[email protected];
[email protected];
[email protected];
[email protected];
[email protected]; Trepp, Alex S. <
[email protected]>; Rao,
Devi M. <
[email protected]>; Cherry, Andrew B.
<
[email protected]>;
[email protected] Subject: RE: Web
V - Follow-Up
External Email – Exercise Caution Previn: We are writing to respond
to your email regarding RFP 28. As we made clear in our October 30
letter, during the meet and confer calls on October 22 and November
8, and in our email correspondence on November 13, unlike
SoundExchange, NAB did not put negotiation tactics at issue in its
written direct case and, as a result, will not be producing
non-valuation negotiation documents. In the few circumstances where
negotiations were explicitly referenced in NAB’s written direct
case, NAB has already produced the relevant documents. See, e.g.,
Williams ¶ 22 ( ); NAB Ex. 77 ( ). The circumstances are similar to
those in Web IV, where the CRB made clear that using an agreement
as a benchmark does not make documents concerning negotiation
tactics
REDACTED REDACTED
15 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
On Nov 20, 2019, at 7:09 PM, "
[email protected]"
<
[email protected]> wrote:
External Email – Exercise Caution Previn: We are writing to
follow-up on certain of NAB’s responses to SoundExchange’s
RFPs.
• RFP 28: We will respond to your separate November 15 email on
this RFP regarding negotiation documents.
• RFP 3 & 4: The parties have reached a separate agreement with
respect to production of experts’ past testimony from prior
proceedings.
• RFP 9: Documents sufficient to show Average Revenue Per User
(“ARPU”) data, on an annual basis, for all Service Types.
o SoundExchange: The requested documents are directly related to
the written direct testimony of Dr. Leonard. In that testimony, Dr.
Leonard makes the claim that it is difficult to “convince
advertisers to pay for” ads on simulcasting, because of the “small
simulcast audience size.” Leonard WDT ¶ 53. However, Dr. Leonard
does not attach to this report data sufficient to evaluate the
relative revenues earned by simulcasting versus other forms of
webcasting. ARPU data is necessary to test Dr. Leonard’s
proposition that simulcasting is less profitable than other forms
of internet webcasting, and from there to test his argument that
simulcasting should receive a different royalty rate than other
forms of webcasting. Leonard WDT ¶ 59. Given Dr. Leonard’s view
that “economic differences among licensees can result in different
negotiated royalty rates,” Leonard WDT ¶ 55, SoundExchange should
be permitted to receive data directly related to those “economic
differences.” Notably, such data would also be directly related to
various propositions in the written direct testimony of Leonard
Wheeler, who states that increased royalties for simulcasting would
“far outweigh the potential revenue that we could generate from
that streaming listenership.” Wheeler WDT ¶ 28.
o NAB Response: Neither Dr. Leonard nor Mr. Wheeler rely on ARPU
data in their written direct testimony. As we explained during our
meet and confer call, the average revenue per user is related to
SoundExchange’s written direct case, not NAB’s. For example, as you
point out, Dr. Leonard notes that it is difficult to convince
advertisers to pay for simulcast ads because of the audience size.
He says nothing about the average revenue per simulcast user. See
Leonard ¶ 53. Further, in support of his claim, Dr. Leonard
provided Appendix D to his WDT, which shows the simulcast listening
hours as a percent of over the air listening hours. This is
sufficient data to test Dr. Leonard’s testimony in paragraph 53.
Mr. Wheeler’s testimony about the potential revenue Wheeler could
generate from increased simulcast listenership is based on his
personal experience and industry expertise, not ARPU data. See
Wheeler ¶ 28. For these reasons, as well as those articulated
during our meet and confer, NAB will not reconsider its
position.
• RFP 12: Documents sufficient to show your market share in the
following markets: (i) noninteractive ad-supported streaming
services, (ii) noninteractive subscription services, (iii)
terrestrial radio services, (iv) interactive ad-supported streaming
services, and (v) interactive subscription services, (vi) overall
music consumption, and (vii) streaming services consumption.
o SoundExchange: On our call, you asked SoundExchange to identify
metrics for calculating market share in accordance with this
request. SoundExchange identifies the following metrics: (a) total
number of listeners, (b) total number of listening hours, (c) total
number of plays or performances, (d) revenue, and/or (e) any other
metric by which a station group measures its own market share.
Documents sufficient to show market share are directly related to
Dr. Leonard’s benchmarking analysis. In that analysis, Dr. Leonard
concludes that iHeart’s direct licenses with indies are
“representative” of the market for simulcast performances, given
the “coverage percentage” for “simulcast, custom radio, and
webcasting performances, respectively.” Leonard WDT ¶ 72.
SoundExchange is entitled to documents bearing on the accuracy of
Dr. Leonard’s conclusion about the “representatives” of these
licenses, including documents that permit alternative calculations
of the market share covered by these licenses. More generally
speaking, Dr. Leonard appears to acknowledge that the relative
weight that should be afforded a benchmark is based in part on the
market share of the entities covered by that benchmark. See Leonard
WDT ¶ 77 n.100 (“Spotify is the largest interactive music streaming
company in terms of number of users and has the largest ad
supported interactive service. Of its overall users, about 54% are
on the ad-supported service.”); ¶ 83 (“These PRO deals are
industry-wide agreements that cover approximately 90% of musical
composition performances and nearly the entire commercial radio
industry.”). That is to say, NAB’s own expert concedes the direct
relevance of market share statistics.
o NAB Response: NAB objects to SoundExchange’s revised version of
this request to the extent it requests “any other metric by which a
station group measures its own market share” as vague, ambiguous,
overbroad, and unduly burdensome. Further, for the reasons
discussed during our meet and confer, NAB does not view documents
related to iHeart, Midwest, or Wheeler’s “market share” as directly
related to NAB’s written direct statement. Nor does NAB concede
that the station groups measure their “market share” in the regular
course of business or that the metrics identified by SoundExchange
are used by the station groups to measure “market share.”
Nonetheless, in the interest of compromise,
16 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
17 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
>
· SoundExchange is awaiting a response from NAB on RFPs 9, 12, and
75, and on RFP 82 as limited by SoundExchange. SoundExchange is
awaiting a response from NAB on whether it will collect and produce
documents from Beasley, Cumulus, Salem, and Cromwell in response to
RFPs 5, 49, 51, 54, 57, & 58. >
Absent a timely response from NAB, SoundExchange reserves the right
to take any or all of the above issues to the Judges.
Best, Previn
Caroline,
The purpose of this email is to discuss NAB’s response to RFP 28.
SoundExchange does not agree with your claim that NAB “has not put
… at issue” the negotiation of direct licenses between independent
labels and broadcasters. Your written direct testimony proves the
opposite.
· Dr. Leonard claims that “iHeart’s direct deals with the renewal
indies are relevant benchmarks to consider in this proceeding.” He
then articulates a theory why that is the case – because the lower
rates in these deals are “the result of competition.” But Dr.
Leonard defends that assertion using highly conditional language,
stating that the indies renewed because “iHeart could and perhaps
was steering towards the labels’ recordings.” The negotiation
documents – in which iHeart may very well have made promises (or
failed to make promises) about steering – are directly relevant to
Dr. Leonard’s theory. We are entitled to see them.
· Dr. Leonard also claims that the direct licenses offer indies
“other (e.g., promotional) benefits.” Again, we are entitled to
probe whether this is true. What representations did iHeart make
(or not make) to the indies about such promotional benefits? Were
indies led to believe that their licensing agreements would lead to
added promotional and marketing support (regardless of whether such
benefits materialized as contractual guarantees)? Was there any
effort by the broadcasters to quantify the value of such benefits
to the labels?
· Dr. Leonard further claims that Again – is this true? What
representations did the labels make (or not
make)
· Dr. Leonard claims that “[o]ther license agreements between
broadcasters and record labels … are not useful comparables.”
SoundExchange is not required to accept this representation at face
value. To the contrary, we are entitled to see how those
negotiations transpired, and to understand what deal terms were
proposed and rejected. If, for example, iHeart approached 300
indies for a renewal license, and they all said no, could Dr.
Leonard still credibly claim that the 15 renewals still function as
a representative benchmark? We are entitled to explore this and
related issues, which Dr. Leonard has put at issue by disregarding
the non-renewed licenses.
For the foregoing reasons, SoundExchange finds NAB’s self-imposed
limitations to RFP 28 to be inadequate. That is particularly the
case in light of the compromises that SoundExchange has proposed
with respect to the negotiation documents requested by the
Services.
In the spirit of compromise, and to ensure parallelism with the
concessions that SoundExchange is willing to make per Alex’s email
earlier today, SoundExchange will accept the following limited
production of documents from NAB in response to RFP 28:
“For the time period January 1, 2012 through the present, all
documents related to the negotiation of a Direct License or the
renewal of a Direct License—including but not limited to (a) all
drafts of licenses, (b) all internal emails, and (c) all emails
exchanged with record companies,
REDACTED
REDACTED
19 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
Caroline,
Thank you for your email. Allow me to summarize what I believe is
the current state of play of our discussions.
· The parties are at an impasse with respect to RFPs 24, 62, 64,
77, and the Unnumbered Request. The parties are at an impasse as to
whether NAB should collect and produce documents from Commonwealth
to the same extent it is collecting and producing documents from
Midwest. The parties are at an impasse as to whether NAB should
collect and produce documents from Entercom and Beasley in response
to RFPs 13, 17, 18, 19, 20, 21, 23, 25, 26, 27, 28, 29, 30 (Beasley
only), 32, 33, & 66. SoundExchange reserves its rights to take
any or all of these issues to the Judges.
· SoundExchange is awaiting a response from NAB on RFPs 9, 12, and
75, and on RFP 82 as limited by SoundExchange. SoundExchange is
awaiting a response from NAB on whether it will collect and produce
documents from Beasley, Cumulus, Salem, and Cromwell in response to
RFPs 5, 49, 51, 54, 57, & 58.
Please advise this morning whether you have any corrections to the
above list.
Best, Previn
External Email – Exercise Caution
Thank you for your email.
With respect to RFP 82, NAB is discussing the proposed limitation
with iHeart and will circle back shortly.
We stand on our objections to RFP 64 and the Unnumbered Request. As
we explained during our call, the requests are legally and
economically incoherent, rendering them unanswerable as well as not
directly related to NAB’s written direct statement. SoundExchange
indicated during the meet and confer call that it would not revise
these requests. NAB reserves all rights and objections with respect
to any potential revisions to these requests, including with
respect to their relatedness, burdensomeness, and/or
proportionality to the needs of this proceeding.
With respect to SoundExchange’s November 4 email regarding
collecting documents from additional station groups, none of the
station groups identified by SoundExchange are participants in this
proceeding, nor did they submit testimony as part of NAB’s written
direct case. By requesting that NAB collect documents from these
station groups, SoundExchange is asking for much more of the NAB
than SoundExchange itself is willing to offer in this proceeding.
See SX Resps. & Objs. to Licensees’ First Set of RFPs at 5
(objecting to discovery requests “that seek to impose obligations
on entities that are not participants in this proceeding and have
not provided a witness in this proceeding”). Because the additional
station groups are not participants and have not submitted
testimony, it is taking time to discuss SoundExchange’s proposal
with them. We can, however, provide you with the following
updates:
* Commonwealth: NAB will not be collecting and producing documents
from Commonwealth as this request is unduly burdensome and not
proportional to the needs of the case. While NAB designated Mr.
Newberry’s Web IV testimony, in which he offered testimony on
behalf of Commonwealth, SoundExchange already had full and fair
discovery regarding that testimony in Web IV. There is no valid
justification for
20 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
reopening discovery on the same set of issues that SoundExchange
already probed in the prior proceeding. In addition, Mr. Newberry
offered testimony in this proceeding based on his role as the Vice
President for Strategic Planning/Industry Affairs at NAB, not his
position at Commonwealth. He provides background on the NAB and
explains what differentiates local radio from other music services.
That is the focus of his testimony, not the particulars of
Commonwealth’s radio business. Indeed, he makes only two passing
references to his time at Commonwealth. See Newberry ¶¶ 18, 26.
Full discovery on Commonwealth based on two sentences in Mr.
Newberry’s Web V testimony is clearly not proportional to the needs
of the case.
· Beasley, Cumulus, Salem & Cromwell: NAB is in the process of
contacting these station groups about SoundExchange’s request that
they produce documents related to paragraph 40 of Dr. Leonard’s
testimony. As discussed above, because they are not participants in
this case nor have they submitted witness testimony, this process
is taking some time.
· Entercom & Beasley: NAB strongly disagrees that Dr. Leonard
put at issue documents related to Entercom and Beasley. Dr. Leonard
mentions the direct licenses with Entercom and Beasley only to
explain that “these agreements are not useful comparables for the
rates that would result from a hypothetical WBWS simulcast-label
license agreement under effective competition” and, as a result, he
did not consider them in his benchmark analysis. Leonard ¶ 92.
SoundExchange’s requests for document productions from Entercom and
Beasley are therefore not directly related to NAB’s written direct
statement, overbroad, and not proportional to the needs of the
case.
Thank you for providing additional information with respect to RFPs
24, 62, 75, and 77. We respond as follows:
* RFP 24: NAB position: “NAB has already produced all of the direct
licenses, which are sufficient to show the list of counterparties
”
SoundExchange response: “RFP 24 also seeks documents sufficient to
show counterparties Are the direct licenses are also sufficient to
show these counterparties? If not, will NAB be producing any
documents in response to this request?” NAB Response: NAB maintains
that the agreements speak for themselves.
* RFP 62: NAB position: “Any responsive, non-privileged
SoundExchange audit documents that would be the subject of a
reasonably tailored discovery request are equally accessible to
SoundExchange. To the extent this Request seeks internal
communications regarding SoundExchange audits, it is overbroad and
not proportional to the needs of the case.” SoundExchange response:
“NAB is obligated to produce internal communications regarding
SoundExchange audits, which are directly related to NAB’s efforts
to revise the regulations concerning how audits are conducted. See
Williams WDT ¶¶ 40-43. For example, NAB requests a reduction in the
interest rate applicable to underpayments, arguing that such
underpayments “may simply reflect good faith errors.” Id. ¶ 43.
SoundExchange is entitled to test that proposition by reviewing
internal documents concerning (among other issues) any
underpayments uncovered by SoundExchange’s auditors. Please let us
know whether you will reconsider your position and produce
documents responsive to this RFP, or whether we need to take this
issue to the Judges.” NAB Response: NAB will not reconsider its
position.
* RFP 75: NAB position: “NAB has already produced all of the direct
licenses, which are sufficient to show both the direct licenses
that were renewed and not renewed.” SoundExchange response: Can you
please clarify whether NAB has produced “all iHeart direct
licenses, entered into since January 2012”? That appears to be the
case but we find NAB’s response somewhat confusing on this point.”
NAB Response: We are confirming with iHeart and will circle
back.
* RFP 77: NAB position: “NAB will work with iHeart to collect and
produce responsive documents, subject to NAB’s position with
respect to non-valuation related negotiation documents and
documents concerning unexecuted licenses, as articulated in our
October 30 letter.” SoundExchange response: “For the avoidance of
doubt, this request seeks documents that the parties have been
calling ‘negotiation documents’ in addition to other categories of
documents. For example, if iHeart conducted an analysis of whether
to offer a label a direct license (and then concluded that it
should not) such documents would be encompassed by this request,
even though they are not ‘negotiation documents.’ To the extent
this request covers ‘negotiation documents,’ SoundExchange
maintains the positions articulated in its November 6 letter and
maintains that NAB should produce consistent with those positions.
We are happy to discuss further once the global discussion over
negotiation documents has concluded.” NAB Response: Pursuant to the
discovery orders in Web IV, NAB will produce valuation documents
related to direct licenses that its expert relies on in his
benchmark analysis. NAB will not produce non-valuation related
documents or documents related to unexecuted licenses, as NAB
(unlike SoundExchange) has not put those matters at issue in its
written direct testimony. We explained our position on this issue
in detail in our October 30 letter and during the parties’ November
8 meet and confer.
Lastly, NAB will respond separately to SoundExchange’s positions
with respect to RFPs 9 and 12.
Best,
Caroline
REDACTED
REDACTED
Caroline N. Esser
LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000 San
Francisco, CA 94111-6538 Direct Dial: +1.415.395.8063 Fax:
+1.415.395.8095 Email:
[email protected]<mailto://
[email protected]>
https://www.lw.com<https://www.lw.com>
From: Warren, Previn
<
[email protected]<mailto:
[email protected]>> Sent:
Tuesday, November 12, 2019 2:15 PM To: Warren, Previn
<
[email protected]<mailto:
[email protected]>>; Esser,
Caroline (SF)
<
[email protected]<mailto:
[email protected]>>
Cc: Jovais, Alicia (SF)
<
[email protected]<mailto:
[email protected]>>;
Lovejoy, Brittany (SF)
<
[email protected]<mailto:
[email protected]>>;
Damle, Sy (DC)
<
[email protected]<mailto:
[email protected]>>; Wetzel, Joe
(SF) <
[email protected]<mailto:
[email protected]>>;
Hanson, Kris (SF)
<
[email protected]<mailto:
[email protected]>>; Trepp,
Alex S. <
[email protected]<mailto:
[email protected]>>;
Rao, Devi M. <
[email protected]<mailto:
[email protected]>>;
Cherry, Andrew B.
<
[email protected]<mailto:
[email protected]>>;
Dukanovic, Ivana (SF)
<
[email protected]<mailto:
[email protected]>>
Subject: RE: Web V - Follow-Up
Alicia and Caroline,
The purpose of this email is to follow up on the meet and confer
between SoundExchange and NAB concerning NAB’s responses and
objections to SoundExchange’s request for production.
First, we have not yet received a response from NAB on the
following outstanding issues. Please advise when we can expect to
hear from you.
· NAB has not responded to SoundExchange’s request from over a week
ago (attached hereto) that NAB collect and produce documents from
Commonwealth, Beasley, Cumulus, Salem, Entercom, and
Cromwell.
· NAB indicated that it would consider and respond to RFP 64 and
the “Unnumbered RFP” but has not yet done so.
· SoundExchange has limited RFP 82 in the following manner:
“Minutes from all meetings of the iHeart Board of Directors and
committees thereof concerning webcasting, on demand services,
terrestrial radio, as well as documents concerning competition
between digital music services, as well as the profitability or
relative profitability of music services. NAB indicated that it
would provide a response regarding this limited request but has not
yet done so.
Second, SoundExchange responds as follows to the objections and
responses articulated by NAB in your email of November 6,
2019.
· RFP 24: NAB position: “NAB has already produced all of the direct
licenses, which are sufficient to show the list of counterparties
”
SoundExchange response: RFP 24 also seeks documents sufficient to
show counterparties who . Are the direct licenses are also
sufficient to show these counterparties? If not, will NAB be
producing any
documents in response to this request?
· RFP 62: NAB position: “Any responsive, non-privileged
SoundExchange audit documents that would be the subject of a
reasonably tailored discovery request are equally accessible to
SoundExchange. To the extent this Request seeks internal
communications regarding SoundExchange audits, it is overbroad and
not proportional to the needs of the case.” SoundExchange response:
NAB is obligated to produce internal communications regarding
SoundExchange audits, which are directly related to NAB’s efforts
to revise the regulations concerning how audits are conducted. See
Williams WDT ¶¶ 40-43. For example, NAB requests a reduction in the
interest rate applicable to underpayments, arguing that such
underpayments “may simply reflect good faith errors.” Id. ¶ 43.
SoundExchange is entitled to test that proposition by reviewing
internal documents concerning (among other issues) any
underpayments uncovered by SoundExchange’s auditors. Please let us
know
REDACTED
REDACTED
23 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
From: Warren, Previn [mailto:
[email protected]] Sent: Wednesday,
November 06, 2019 10:43 PM To:
[email protected]<mailto:
[email protected]> Cc:
[email protected]<mailto:
[email protected]>;
[email protected]<mailto:
[email protected]>;
[email protected]<mailto:
[email protected]>;
[email protected]<mailto:
[email protected]>;
[email protected]<mailto:
[email protected]>; Trepp, Alex S.
<
[email protected]<mailto:
[email protected]>>; Rao,
Devi M. <
[email protected]<mailto:
[email protected]>>;
Cherry, Andrew B.
<
[email protected]<mailto:
[email protected]>>;
[email protected]<mailto:
[email protected]>
Subject: Re: Web V - Follow-Up Caroline, Thanks. Fine about the
typo and no objection to your first bullet. The other responses in
your email, though, were not surfaced on the call and therefore we
will need to consider them and get back to you. I am out of the
office until next week so we will endeavor to get back to you then.
Thanks, Previn Sent from my iPhone On Nov 6, 2019, at 7:08 PM,
"
[email protected]<mailto:
[email protected]>"
<
[email protected]<mailto:
[email protected]>>
wrote: External Email – Exercise Caution Hi Previn, Thanks for
taking the time to connect on the phone and for your summary of the
call. We agree that your summary of our discussion is accurate
except with respect to bullet 2. First, there is a small typo in
bullet 2, which I corrected in red font below. Second, we are
withholding documents on the basis of objections raised for some of
the requests listed in bullet 2 (though not on the grounds that
they are vague). As it was difficult to attempt to address more
than 20 RFPs all in one sweeping statement during our call, below
is a detailed explanation of the requests on which we’re standing
on our objections. For all the other requests listed in bullet 2,
we are working with iHeart, Midwest, and Wheeler to collect
responsive documents (to the extent they exist) and/or have already
produced responsive documents. · RFPs 3 & 82: Both requests are
addressed in your separate bullet points below, and were the
subject of separate conversation. · RFP 24: NAB has already
produced all of the direct licenses, which are sufficient to show
the list of counterparties
· RFP 62: Any responsive, non-privileged SoundExchange audit
documents that would be the subject of a reasonably tailored
discovery request are equally accessible to SoundExchange. To the
extent this Request seeks internal communications regarding
SoundExchange audits, it is overbroad and not proportional to the
needs of the case. · RFP 75: NAB has already produced all of the
direct licenses, which are sufficient to show both the direct
licenses that were renewed and not renewed. · RFP 77: NAB will work
with iHeart to collect and produce responsive documents, subject to
NAB’s position with respect to non-valuation related negotiation
documents and documents concerning unexecuted licenses, as
articulated in our October 30 letter. · RFP 85: Documents related
to iHeart’s bankruptcy or emergence from bankruptcy are not
directly related to NAB’s written direct statement. Best, Caroline
Caroline N. Esser LATHAM & WATKINS LLP 505 Montgomery Street
Suite 2000 San Francisco, CA 94111-6538 Direct Dial:
+1.415.395.8063 Fax: +1.415.395.8095 Email:
[email protected]<mailto://
[email protected]>
REDACTED
Counsel,
Thank you for the productive meet and confer today. Below are the
major points discussed on our call.
· NAB does not yet have a response to SoundExchange’s request that
NAB collect and produce documents from Commonwealth, Beasley,
Cumulus, Salem, Entercom, and Cromwell.
· NAB is not withholding any documents from production on the basis
of the objections that it has raised to the following RFPs: 3, 10,
11, 14, 21, 23-27, 32-34, 43-46, 548-52, 57, 58, 60, 62, 69-75,
77-79, 81, 82, and 85. NAB has not found any documents in NAB’s
possession, custody, or control that are responsive to those RFPs.
NAB is in the process of working with iHeart, Wheeler, and Midwest
on collecting and producing any documents responsive to those RFPs
that these station groups might have.
· RFPs 3, 4: The parties will take these requests up in the context
of attempting to reach “global” resolutions with the other
licensees.
· RFP 64, “Unnumbered RFP”: NAB will discuss and provide a response
regarding this request.
· RFP 82: SoundExchange has limited this request in the following
manner: “Minutes from all meetings of the iHeart Board of Directors
and committees thereof concerning webcasting, on demand services,
terrestrial radio, as well as documents concerning competition
between digital music services, as well as the profitability or
relative profitability of music services. NAB will discuss and
provide a response regarding this limited request.
· RFP 9: SoundExchange will discuss and respond to NAB’s “directly
related” objection.
· RFP 12: SoundExchange will discuss and respond to NAB’s “directly
related” objection and will identify metrics for calculating market
share.
· RFP 56: NAB has agreed to produce in response to this
request.
· RFP 63: NAB has already produced all documents responsive to this
request, both on its behalf and on behalf of iHeart, Midwest, and
Wheeler.
25 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
26 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
27 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
28 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
Alicia, Thanks for the email. I think we misunderstood each other
on the phone. The Tuesday/Wednesday schedule we had proposed is
supposed to cover RFPs specific to NAB and the NAB entities. We had
not intended for that schedule to apply to all other licensees.
With that in mind, we will send Latham a NAB-specific list on
Tuesday, and plan to meet and confer with Latham about that list on
Wednesday. Thanks, Previn Sent from my iPhone On Nov 1, 2019, at
11:40 PM, "
[email protected]<mailto:
[email protected]>"
<
[email protected]<mailto:
[email protected]>>
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, , , , , , , , , , , , Subject: Web V - Follow-Up Thread-Topic:
Web V - Follow-Up Thread-Index: AdWQ/mftxSO8NKU9TiWvBiofcRREzg==
Date: Sat, 2 Nov 2019 03:40:16 +0000 Message-ID: Accept-Language:
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29 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
30 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
31 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
LATHAM & WATKINS LLP505 Montgomery Street Suite 2000= San
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32 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
Latham & Watkins LLP or any of its affiliates may monitor
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33 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
Esser, Caroline (SF)
From: Esser, Caroline (SF) Sent: Friday, November 22, 2019 2:30 PM
To: 'Warren, Previn' Cc: Jovais, Alicia (SF); Lovejoy, Brittany
(SF); Damle, Sy (DC); Wetzel, Joe (SF); Hanson, Kris
(SF); Trepp, Alex S.; Rao, Devi M.; Cherry, Andrew B.; Dukanovic,
Ivana (SF) Subject: RE: Web V - Follow-Up
Previn: We are writing to provide SoundExchange with additional
background on RFP 9. Without waiving any of NAB’s objections to the
production of ARPU data, NAB has confirmed with iHeart that ARPU is
not a metric that iHeart uses. As a result, there are no responsive
documents in iHeart’s possession, custody, or control. Separately,
could you please let us know which RFPs, if any, SoundExchange is
considering addressing in a motion to compel? Thanks, Caroline
Caroline N. Esser LATHAM & WATKINS LLP 505 Montgomery Street
Suite 2000 San Francisco, CA 94111-6538 Direct Dial:
+1.415.395.8063 Fax: +1.415.395.8095 Email:
[email protected]
https://www.lw.com From: Warren, Previn <
[email protected]>
Sent: Friday, November 22, 2019 5:41 AM To: Esser, Caroline (SF)
<
[email protected]> Cc: Jovais, Alicia (SF)
<
[email protected]>; Lovejoy, Brittany (SF)
<
[email protected]>; Damle, Sy (DC)
<
[email protected]>; Wetzel, Joe (SF)
<
[email protected]>; Hanson, Kris (SF)
<
[email protected]>; Trepp, Alex S.
<
[email protected]>; Rao, Devi M. <
[email protected]>;
Cherry, Andrew B. <
[email protected]>; Dukanovic, Ivana (SF)
<
[email protected]> Subject: RE: Web V - Follow-Up
Caroline, Thanks. We are at an impasse on RFP 28 and reserve the
right to take this issue to the Judges. Best, Previn From:
[email protected] [mailto:
[email protected]] Sent:
Thursday, November 21, 2019 7:19 PM To: Warren, Previn
<
[email protected]>
35 PUBLIC VERSION Dkt. No. 19-CRB-0005-WR (2021-25)
2
Cc:
[email protected];
[email protected];
[email protected];
[email protected];
[email protected]; Trepp, Alex S.
<
[email protected]>; Rao, Devi M. <
[email protected]>;
Cherry, Andrew B. <
[email protected]>;
[email protected] Subject: RE: Web V - Follow-Up External
Email – Exercise Caution Previn: We are writing to respond to your
email regarding RFP 28. As we made clear in our October 30 letter,
during the meet and confer calls on October 22 and November 8, and
in our email correspondence on November 13, unlike SoundExchange,
NAB did not put negotiation tactics at issue in its written direct
case and, as a result, will not be producing non-valuation
negotiation documents. In the few circumstances where negotiations
were explicitly referenced in NAB’s written direct case, NAB has
already produced the relevant documents. See, e.g., Williams ¶
22
; NAB Ex. 77 . The circumstances are similar to those in Web IV,
where the CRB made clear that using an agreement as a benchmark
does not make documents concerning negotiation tactics or
unexecuted licenses discoverable. See Jan. 1, 2015 Web IV Discovery
Order 9 at 4. We disagree with SoundExchange’s assertion that Dr.
Leonard’s testimony contains “theories about what motivated iHeart
and various independent record companies to execute direct
licenses” and that this testimony requires NAB to produce its
entire negotiation files. See Nov. 6, 2019 SoundExchange Resp. to
Negotiation Letter at 4 (citing Leonard ¶ 65). Dr. Leonard uses the
indie renewals as benchmarks in part because the fact that both
parties voluntarily renewed an agreement indicates as a matter of
basic economics that the agreement was one between a willing buyer
and willing seller. Dr. Leonard does not opine about the actual
negotiation dynamics between iHeart and the indies. Rather he
remarks that the indies “could have refused to agree to renew the
agreements and received higher per play royalties under the
statutory rates,” and the fact that they didn’t “suggest[s] an
understanding that iHeart could and perhaps was steering towards
the labels’ recordings or that licensing iHeart offers other (e.g.
promotional) benefits for the labels.” Leonard ¶ 65 (emphasis
added). In other words, Dr. Leonard is doing nothing more than
acknowledging a basic principle of contract negotiation—a party
generally will not enter into an agreement with higher prices than
it could get elsewhere if it is not receiving some other benefit.
iHeart has already agreed to produce non-privileged valuation
documents from January 1, 2012 to the present related to the
negotiation of the executed renewed indie direct licenses that Dr.
Leonard relies on in his benchmark analysis, and the deals with
those indie labels when first signed, to the extent they exist. In
addition, NAB has produced documents, and intends to produce
additional documents and communications, regarding iHeart’s
steering towards lower-royalty direct deal music. NAB is also
producing all of the iHeart direct licenses. Together, these
materials are more than sufficient to test Dr. Leonard’s testimony.
Any additional production of non-valuation negotiation documents
would not be directly related NAB’s written direct case or
proportional to the needs of this proceeding, and would impose an
undue burden on the NAB. We are still working with iHeart on RFP 82
and will circle back as soon as possible. Best, Caroline Caroline
N. Esser LATHAM & WATKINS LLP 505 Montgomery Street Suite 2000
San Francisco, CA 94111-6538 Direct Dial: +1.415.395.8063 Fax:
+1.415.395.8095 Email:
[email protected]
https://www.lw.com
REDACTED REDACTED
3
-----Original Message----- From: Warren, Previn
<
[email protected]> Sent: Thursday, November 21, 2019 2:57
PM To: Esser, Caroline (SF) <
[email protected]> Cc:
Jovais, Alicia (SF) <
[email protected]>; Lovejoy, Brittany
(SF) <
[email protected]>; Damle, Sy (DC)
<
[email protected]>; Wetzel, Joe (SF)
<
[email protected]>; Hanson, Kris (SF)
<
[email protected]>; Trepp, Alex S.
<
[email protected]>; Rao, Devi M. <
[email protected]>;
Cherry, Andrew B. <
[email protected]>; Dukanovic, Ivana (SF)
<
[email protected]> Subject: Re: Web V - Follow-Up
Caroline, Thank you for your email. • The parties are at an impasse
with respect to RFP 9. The parties are at an impasse as to whether
NAB should collect and produce documents from Beasley, Cumulus,
Salem and Cromwell with respect to RFPs 5, 49, 51, and 54.
SoundExchange reserves its rights to take any or all of these
issues to the Judges. • SoundExchange is awaiting a response from
NAB on RFP 28, and RFP 82 as limited by SoundExchange. We need your
response on these issues by noon eastern tomorrow given the
impending discovery deadline. Absent a response from NAB within
that timeframe, SoundExchange reserves the right to take these
issues to the Judges. Best, Previn Sent from my iPhone On Nov 20,
2019, at 7:09 PM, "
[email protected]"
<
[email protected]> wrote: External Email – Exercise
Caution Previn: We are writing to follow-up on certain of NAB’s
responses to SoundExchange’s RFPs. • RFP 28: We will respond to
your separate November 15 email on this RFP regarding negotiation
documents. • RFP 3 & 4: The parties have reached a separate
agreement with respect to production of experts’ past testimony
from prior proceedings. • RFP 9: Documents sufficient to show
Average Revenue Per User (“ARPU”) data, on an annual basis, for all
Service Types.
37 PUBLIC VERSION
4
o SoundExchange: The requested documents are directly related to
the written direct testimony of Dr. Leonard. In that testimony, Dr.
Leonard makes the claim that it is difficult to “convince
advertisers to pay for” ads on simulcasting, because of the “small
simulcast audience size.” Leonard WDT ¶ 53. However, Dr. Leonard
does not attach to this report data sufficient to evaluate the
relative revenues earned by simulcasting versus other forms of
webcasting. ARPU data is necessary to test Dr. Leonard’s
proposition that simulcasting is less profitable than other forms
of internet webcasting, and from there to test his argument that
simulcasting should receive a different royalty rate than other
forms of webcasting. Leonard WDT ¶ 59. Given Dr. Leonard’s view
that “economic differences among licensees can result in different
negotiated royalty rates,” Leonard WDT ¶ 55, SoundExchange should
be permitted to receive data directly related to those “economic
differences.” Notably, such data would also be directly related to
various propositions in the written direct testimony of Leonard
Wheeler, who states that increased royalties for simulcasting would
“far outweigh the potential revenue that we could generate from
that streaming listenership.” Wheeler WDT ¶ 28. o NAB Response:
Neither Dr. Leonard nor Mr. Wheeler rely on ARPU data in their
written direct testimony. As we explained during our meet and
confer call, the average revenue per user is related to
SoundExchange’s written direct case, not NAB’s. For example, as you
point out, Dr. Leonard notes that it is difficult to convince
advertisers to pay for simulcast ads because of the audience size.
He says nothing about the average revenue per simulcast user. See
Leonard ¶ 53. Further, in support of his claim, Dr. Leonard
provided Appendix D to his WDT, which shows the simulcast listening
hours as a percent of over the air listening hours. This is
sufficient data to test Dr. Leonard’s testimony in paragraph 53.
Mr. Wheeler’s testimony about the potential revenue Wheeler could
generate from increased simulcast listenership is based on his
personal experience and industry expertise, not ARPU data. See
Wheeler ¶ 28. For these reasons, as well as those articulated
during our meet and confer, NAB will not reconsider its position. •
RFP 12: Documents sufficient to show your market share in the
following markets: (i) noninteractive ad- supported streaming
services, (ii) noninteractive subscription services, (iii)
terrestrial radio services, (iv) interactive ad- supported
streaming services, and (v) interactive subscription services, (vi)
overall music consumption, and (vii) streaming services
consumption. o SoundExchange: On our call, you asked SoundExchange
to identify metrics for calculating market share in accordance with
this request. SoundExchange identifies the following metrics: (a)
total number of listeners, (b) total number of listening hours, (c)
total number of plays or performances, (d) revenue, and/or (e) any
other metric by which a station group measures its own market
share. Documents sufficient to show market share are directly
related to Dr. Leonard’s benchmarking analysis. In that analysis,
Dr. Leonard concludes that iHeart’s direct licenses with indies are
“representative” of the market for simulcast performances, given
the “coverage percentage” for “simulcast, custom radio, and
webcasting performances, respectively.” Leonard WDT ¶ 72.
SoundExchange is entitled to documents bearing on the accuracy of
Dr. Leonard’s conclusion about the “representatives” of these
licenses, including documents that permit alternative calculations
of the market share covered by these licenses. More generally
speaking, Dr. Leonard appears to acknowledge that the relative
weight that should be afforded a benchmark is based in part on the
market share of the entities covered by that benchmark. See Leonard
WDT ¶ 77 n.100 (“Spotify is the largest interactive music streaming
company in terms of number of users and has the largest ad
supported interactive service. Of its overall users, about 54% are
on the ad-supported service.”); ¶ 83 (“These PRO deals are
industry-wide agreements that cover approximately 90% of musical
composition performances and nearly the entire commercial radio
industry.”). That is to say, NAB’s own expert concedes the direct
relevance of market share statistics. o NAB Response: NAB objects
to SoundExchange’s revised version of this request to the extent it
requests “any other metric by which a station group measures its
own market share” as vague, ambiguous, overbroad, and unduly
burdensome. Further, for the reasons discussed during our meet and
confer, NAB does not view documents related to iHeart, Midwest, or
Wheeler’s “market share” as directly related to NAB’s written
direct statement. Nor does NAB concede that the station groups
measure their “market share” in the regular course of business or
that the metrics identified by SoundExchange are used by the
station groups to measure “market share.” Nonetheless, in the
interest of
38 PUBLIC VERSION
5
compromise, NAB will confirm with iHeart that there are no
additional responsive documents beyond those already produced
regarding: (a) total number of listeners to simulcast and
terrestrial radio, (b) total number of listening hours to simulcast
and terrestrial radio, (c) total number of plays or performances on
simulcast and terrestrial radio, and (d) revenue from simulcast and
terrestrial radio. NAB will also confirm with Midwest and Wheeler
that there are no additional responsive documents beyond those
already produced regarding: (a) total number of listeners to
simulcast and terrestrial radio, (b) total number of listening
hours to simulcast and terrestrial radio, and (d) revenue from
simulcast and terrestrial radio. Information regarding Midwest and
Wheeler’s (c) total plays/performances is equally available to
SoundExchange given that this data is included in reports to
SoundExchange. Thus, SoundExchange has already obtained (or is
about to obtain) a significant amount of information regarding
metrics (a)-(d) from NAB related to iHeart, Midwest, and Wheeler in
initial disclosures, the back-up data provided for Dr. Leonard’s
report during the expert exchange of materials on October 1, and in
response to RFPs 7, 10, 58, and 78. • RFP 75: NAB has conferred
with iHeart and is working on producing a small number of recently
executed direct license agreements that have not yet been produced
to SoundExchange. • RFP 82: NAB is still discussing SoundExchange’s
proposed limitation to its request for iHeart board meeting minutes
with iHeart and will circle back. • Beasley, Cumulus, Salem &
Cromwell – RFPs 5, 49, 51, 54, 57, & 58: NAB believes that
SoundExchange’s request for production of documents from Beasley,
Cumulus, Salem & Cromwell in response to RFPs 5, 49, 51, 54,
57, and 58 is objectionable and reserves its right to oppose the
production in its entirety should SoundExchange move to compel.
However, without waiving any of its objections to the production of
these documents, and without conceding that any of these requests
are directly related to paragraph 40 of Dr. Leonard’s written
direct testimony, NAB is willing to work with these station groups
to collect and produce documents responsive to RFPs 57 and 58. RFPs
57 and 58 request information related to the value of music versus
non-music content, the revenues attributable to music- formatted
stations, and expenditures on non-music content. These are the only
requests that are even arguably related to Dr. Leonard’s testimony
about the importance of on-air talent, talk-content, and local DJ
personalities. See Leonard ¶ 40. Beasley, Cumulus, Salem, and
Cromwell have indicated that they will conduct a reasonable search
for documents responsive to RFPs 57 & 58. Due to their vacation
schedules, however, we may need additional time after November 26
to produce documents from these broadcasters, who are not
participants and did not provide witness testimony in the
proceeding. Best, Caroline Caroline N. Esser LATHAM & WATKINS
LLP 505 Montgomery Street Suite 2000 San Francisco, CA 94111-6538
Direct Dial: +1.415.395.8063 Fax: +1.415.395.8095 Email:
[email protected]<mailto://
[email protected]>
https://www.lw.com<https://www.lw.com>
39 PUBLIC VERSION
From: Warren, Previn <
[email protected]> Sent: Wednesday,
November 20, 2019 11:51 AM To: Esser, Caroline (SF)
<
[email protected]> Cc: Jovais, Alicia (SF)
<
[email protected]>; Lovejoy, Brittany (SF)
<
[email protected]>; Damle, Sy (DC)
<
[email protected]>; Wetzel, Joe (SF)
<
[email protected]>; Hanson, Kris (SF)
<
[email protected]>; Trepp, Alex S.
<
[email protected]>; Rao, Devi M. <
[email protected]>;
Cherry, Andrew B. <
[email protected]>; Dukanovic, Ivana (SF)
<
[email protected]> Subject: RE: Web V - Follow-Up
Caroline, I have not heard back from you in response my below email
concerning RFP 28. Please advise as to NAB’s position. Separately,
SoundExchange is still awaiting an answer from you on the below
items, some of which have been pending now for weeks. We would
appreciate a prompt update given the impending discovery deadline.
> · SoundExchange is awaiting a response from NAB on RFPs 9, 12,
and 75, and on RFP 82 as limited by SoundExchange. SoundExchange is
awaiting a response from NAB on whether it will collect and produce
documents from Beasley, Cumulus, Salem, and Cromwell in response to
RFPs 5, 49, 51, 54, 57, & 58. > Absent a timely response
from NAB, SoundExchange reserves the right to take any or all of
the above issues to the Judges. Best, Previn From: Warren, Previn
Sent: Friday, November 15, 2019 12:59 PM To:
'
[email protected]'
<
[email protected]<mailto:
[email protected]>>
Cc:
[email protected]<mailto:
[email protected]>;
[email protected]<mailto:
[email protected]>;
[email protected]<mailto:
[email protected]>;
[email protected]<mailto:
[email protected]>;
[email protected]<mailto:
[email protected]>; Trepp, Alex S.
<
[email protected]<mailto:
[email protected]>>; Rao,
Devi M. <
[email protected]<mailto:
[email protected]>>;
Cherry, Andrew B.
<
[email protected]<mailto:
[email protected]>>;
[email protected]<mailto:
[email protected]>
Subject: RE: Web V - Follow-Up Caroline, The purpose of this email
is to discuss NAB’s response to RFP 28. SoundExchange does not
agree with your claim that NAB “has not put … at issue” the
negotiation of direct licenses between independent labels and
broadcasters. Your written direct testimony proves the
opposite.
40 PUBLIC VERSION
7
· Dr. Leonard claims that “iHeart’s direct deals with the renewal
indies are relevant benchmarks to consider in this proceeding.” He
then articulates a theory why that is the case – because the lower
rates in these deals are “the result of competition.” But Dr.
Leonard defends that assertion using highly conditional language,
stating that the indies renewed because “iHeart could and perhaps
was steering towards the labels’ recordings.” The negotiation
documents – in which iHeart may very well have made promises (or
failed to make promises) about steering – are directly relevant to
Dr. Leonard’s theory. We are entitled to see them. · Dr. Leonard
also claims that the direct licenses offer indies “other (e.g.,
promotional) benefits.” Again, we are entitled to probe whether
this is true. What representations did iHeart make (or not make) to
the indies about such promotional benefits? Were indies led to
believe that their licensing agreements would lead to added
promotional and marketing support (regardless of whether such
benefits materialized as contractual guarantees)? Was there any
effort by the broadcasters to quantify the value of such benefits
to the labels? · Dr. Leonard further claims that
Again – is this true? What representations did the labels make (or
not make)
· Dr. Leonard claims that “[o]ther license agreements between
broadcasters and record labels … are not useful comparables.”
SoundExchange is not required to accept this representation at face
value. To the contrary, we are entitled to see how those
negotiations transpired, and to understand what deal terms were
proposed and rejected. If, for example, iHeart approached 300
indies for a renewal license, and they all said no, could Dr.
Leonard still credibly claim that the 15 renewals still function as
a representative benchmark? We are entitled to explore this and
related issues, which Dr. Leonard has put at issue by disregarding
the non-renewed licenses. For the foregoing reasons, SoundExchange
finds NAB’s self-imposed limitations to RFP 28 to be inadequate.
That is particularly the case in light of the compromises that
SoundExchange has proposed with respect to the negotiation
documents requested by the Services. In the spirit of compromise,
and to ensure parallelism with the concessions that SoundExchange
is willing to make per Alex’s email earlier today, SoundExchange
will accept the following limited production of documents from NAB
in response to RFP 28: “For the time period January 1, 2012 through
the present, all documents related to the negotiation of a Direct
License or the renewal of a Direct License—including but not
limited to (a) all drafts of licenses, (b) all internal emails, and
(c) all emails exchanged with record companies, distributors,
representatives, or other content owners—regardless of whether or
not the Direct License or renewal was executed for the licenses
relied on as a benchmark by Dr. Leonard in Section V.A of his
written direct testimony, in addition to “valuation-related”
documents related to the negotiation or renewal of any unexecuted
or nonrenewed license rejected as a comparable by Dr. Leonard in
Section V.C of his written direct testimony.” These limitations are
consistent with and proportional to SoundExchange’s willingness to
produce all documents (valuation and non-valuation) related to the
2017 agreements with Spotify and Apple Music, to produce valuation-
related documents for certain historic agreements, and to produce
certain documents for presently unexecuted agreements (WMG-Spotify)
– notwithstanding our view that such documents are not
discoverable. Please let us know if you are willing to accept this
compromise, or if the parties are at an impasse on RFP 28. In the
event you reject this compromise, please be advised that
SoundExchange reserves the right to move to compel the production
of all documents requested by RFP 28 as initially served.
REDACTED
REDACTED
42 PUBLIC VERSION
43 PUBLIC VERSION
10
With respect to RFP 82, NAB is discussing the proposed limitation
with iHeart and will circle back shortly. We stand on our
objections to RFP 64 and the Unnumbered Request. As we explained
during our call, the requests are legally and economically
incoherent, rendering them unanswerable as well as not directly
related to NAB’s written direct statement. SoundExchange indicated
during the meet and confer call that it would not revise these
requests. NAB reserves all rights and obj