[House Report 111-680]
[From the U.S. Government Publishing Office]
111th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 111-680
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PERFORMANCE RIGHTS ACT
_______
December 14, 2010.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Conyers, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 848]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the bill
(H.R. 848) to provide parity in radio performance rights under
title 17, United States Code, and for other purposes, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
The Amendment.................................................... 1
Purpose and Summary.............................................. 6
Background and Need for the Legislation.......................... 6
Hearings......................................................... 9
Committee Consideration.......................................... 9
Committee Votes.................................................. 9
Committee Oversight Findings..................................... 11
New Budget Authority and Tax Expenditures........................ 11
Congressional Budget Office Cost Estimate........................ 11
Performance Goals and Objectives................................. 14
Constitutional Authority Statement............................... 14
Advisory on Earmarks............................................. 14
Section-by-Section Analysis...................................... 14
Changes in Existing Law Made by the Bill, as Reported............ 16
The Amendment
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Performance Rights Act''.
SEC. 2. ESTABLISHING EQUITABLE TREATMENT FOR TERRESTRIAL, CABLE,
SATELLITE, AND INTERNET SERVICES.
(a) Performance Right Applicable to Radio Transmissions
Generally.--Section 106(6) of title 17, United States Code, is amended
to read as follows:
``(6) in the case of sound recordings, to perform the
copyrighted work publicly by means of an audio transmission.''.
(b) Inclusion of Terrestrial Broadcasts in Existing Performance
Right.--Section 114(d)(1) of title 17, United States Code, is amended--
(1) in the matter preceding subparagraph (A), by striking
``a digital'' and inserting ``an''; and
(2) by striking subparagraph (A).
(c) Inclusion of Terrestrial Broadcasts in Existing Statutory
License System.--Section 114(j)(6) of title 17, United States Code, is
amended by striking ``digital''.
(d) Ensuring Platform Parity.--Section 114(f) of title 17, United
States Code, is amended--
(1) by striking paragraph (1);
(2) by redesignating paragraphs (2), (3), (4), and (5) as
paragraphs (1), (2), (3), and (4), respectively; and
(3) in paragraph (1), as redesignated--
(A) in subparagraph (A), by striking ``under
chapter 8'' and all that follows through the end of the
third sentence and inserting ``under chapter 8 shall
determine reasonable rates and terms of royalty
payments for transmissions subject to statutory
licensing under subsection (d)(2) during 5-year periods
beginning on January 1 of the second year following the
year in which the proceedings are to be commenced,
except in the case of a different transitional period
provided under section 6(b)(3) of the Copyright Royalty
and Distribution Reform Act of 2004, or such other
period as the parties may agree.'';
(B) in subparagraph (B)--
(i) in the second sentence, by striking
``eligible nonsubscription transmission''; and
(ii) in the third sentence, by striking
``eligible nonsubscription services and new
subscription'' and all that follows through
``subparagraph (A)'' and inserting ``services,
in addition to the objectives set forth in
subparagraphs (A), (B), and (C) of section
801(b)(1), the Copyright Royalty Judges may
consider the rates and terms for comparable
types of services and comparable circumstances
under voluntary license agreements.
Notwithstanding section 801(b)(1), the
provisions of section 801(b)(1)(D) shall not be
taken into account by the Copyright Royalty
Judges in any proceeding under this section'';
(C) by striking subparagraph (C) and inserting the
following:
``(C) The procedures under subparagraphs (A) and
(B) shall also be initiated pursuant to a petition
filed by any copyright owner of sound recordings or any
transmitting entity indicating that a new type of
service on which sound recordings are performed is or
is about to become operational, for the purpose of
determining reasonable terms and rates of royalty
payments with respect to such new type of service for
the period beginning with the inception of such new
type of service and ending on the date on which the
royalty rates and terms for preexisting services most
recently determined under subparagraph (A) or (B) and
chapter 8 expire, or such other period as the parties
may agree.''.
(e) Technical and Conforming Amendments.--
(1) Section 114(f).--Section 114(f) of title 17, United
States Code (as amended by subsection (d)), is further
amended--
(A) in paragraph (1)(B), in the first sentence, by
striking ``paragraph (3)'' and inserting ``paragraph
(2)''; and
(B) in paragraph (4)(C), by striking ``under
paragraph (4)'' and inserting ``under paragraph (3)''.
(2) Section 114(j).--Section 114(j)(6) of title 17, United
States Code, is amended by striking ``retransmissions of
broadcast transmissions'' and inserting ``broadcast
transmissions and retransmissions of broadcast transmissions''.
(3) Section 804.--Section 804(b)(3)(C) of title 17, United
States Code, is amended--
(A) in clause (i), by striking ``and
114(f)(2)(C)'';
(B) in clause (iii)(II), by striking
``114(f)(4)(B)(ii)'' and inserting
``114(f)(3)(B)(ii)''; and
(C) in clause (iv), by striking ``or 114(f)(2)(C),
as the case may be''.
SEC. 3. TREATMENT FOR MINORITY, FEMALE, RELIGIOUS, RURAL, SMALL,
NONCOMMERCIAL, PUBLIC, EDUCATIONAL, AND COMMUNITY
STATIONS AND CERTAIN USES.
(a) Minority, Female, Religious, Rural, Small, Noncommercial,
Public, Educational, and Community Radio Stations.--
(1) In general.--Section 114(f)(1) of title 17, United
States Code, as redesignated by section 2(d), is amended by
adding at the end the following:
``(D)(i) Notwithstanding the provisions of
subparagraphs (A) through (C), each individual
terrestrial broadcast station that has gross revenues
within a range specified in clause (ii) may elect to
pay for its over-the-air nonsubscription broadcast
transmissions a royalty fee as provided in clause (ii),
in lieu of the amount such station would otherwise be
required to pay under this paragraph. Such royalty fee
shall not be taken into account in determining royalty
rates in a proceeding under chapter 8, or in any other
administrative, judicial, or other Federal Government
proceeding.
``(ii) As provided in clause (i), each individual
terrestrial broadcast station that has gross revenues
in any calendar year of--
``(I) less than $100,000 may elect to pay
for its over-the-air nonsubscription broadcast
transmissions a royalty fee of $500 per year;
``(II) at least $100,000 but less than
$500,000 may elect to pay for its over-the-air
nonsubscription broadcast transmissions a
royalty fee of $2,500 per year; and
``(III) at least $500,000 but less than
$1,250,000 may elect to pay for its over-the-
air nonsubscription broadcast transmissions a
royalty fee of $5,000 per year.
``(E)(i) Notwithstanding the provisions of
subparagraphs (A) through (C), each individual
terrestrial broadcast station that is a public
broadcasting entity as defined in section 118(f) and
that has gross revenues within a range specified in
clause (ii) may elect to pay for its over-the-air
nonsubscription broadcast transmissions a royalty fee
as provided in clause (ii), in lieu of the amount such
station would otherwise be required to pay under this
paragraph. Such royalty fee shall not be taken into
account in determining royalty rates in a proceeding
under chapter 8, or in any other administrative,
judicial, or other Federal Government proceeding.
``(ii) As provided in clause (i), each individual
terrestrial broadcast station that is a public
broadcasting entity as defined in section 118(f) and
has gross receipts in any calendar year of--
``(I) less than $100,000 may elect to pay
for its over-the-air nonsubscription broadcast
transmissions a royalty fee of $500 per year;
and
``(II) $100,000 or more may elect to pay
for its over-the-air nonsubscription broadcast
transmissions a royalty fee of $1,000 per year.
``(F) Notwithstanding the provisions of
subparagraphs (A) through (E), each individual
terrestrial broadcast station that had total gross
revenues during the 4 full calendar quarters
immediately preceding the date of enactment of the
Performance Rights Act of--
``(i) less than $5,000,000 shall not be
required to pay a royalty under this paragraph
during the 3 years immediately following the
date of enactment of the Performance Rights
Act; and
``(ii) $5,000,000 or more shall not be
required to pay a royalty under this paragraph
during the 1 year immediately following the
date of enactment of the Performance Rights
Act.
The provisions of this subparagraph shall not be taken
into account in determining royalty rates in a
proceeding under chapter 8, or in any other
administrative, judicial, or other Federal Government
proceeding.''.
(2) Payment date.--A payment under subparagraph (D) or (E)
of section 114(f)(1) of title 17, United States Code, as added
by paragraph (1), shall not be due until the due date of the
first royalty payments for nonsubscription broadcast
transmissions that are determined, after the date of the
enactment of this Act, under such section 114(f)(2) by reason
of the amendment made by section 2(b)(2) of this Act.
(b) Transmission of Religious Services; Incidental Uses of Music.--
Section 114(d)(1) of title 17, United States Code, as amended by
section 2(b), is further amended by inserting the following before
subparagraph (B):
``(A) an eligible nonsubscription transmission of--
``(i) services at a place of worship or
other religious assembly; and
``(ii) an incidental use of a musical sound
recording;''.
SEC. 4. AVAILABILITY OF PER PROGRAM LICENSE.
Section 114(f)(1)(B) of title 17, United States Code, as
redesignated by section 2(d), is amended by inserting after the second
sentence the following new sentence: ``Such rates and terms shall
include a per program license option for terrestrial broadcast stations
that make limited feature uses of sound recordings.''
SEC. 5. NO HARMFUL EFFECTS ON SONGWRITERS.
(a) No Adverse Affect on License Fees for Underlying Musical Works;
Necessity for Other Licenses.--
(1) In general.--Section 114(i) of title 17, United States
Code, is amended to read as follows:
``(i) No Adverse Affect on License Fees for Underlying Musical
Works; Necessity for Other Licenses.--
``(1) No adverse affect on license fees for underlying
musical works.--License fees payable for the public performance
of sound recordings under section 106(6) shall not be cited,
taken into account, or otherwise used in any administrative,
judicial, or other governmental forum or proceeding, or
otherwise, to set or adjust the license fees payable to
copyright owners of musical works or their representatives for
the public performance of their works, for the purpose of
reducing or adversely affecting such license fees. License fees
payable to copyright owners for the public performance of their
musical works shall not be reduced or adversely affected in any
respect as a result of the rights granted by section 106(6).
``(2) Necessity for other licenses.--Notwithstanding the
grant by an owner of copyright in a sound recording of an
exclusive or nonexclusive license of the right under section
106(6) to perform the work publicly, a licensee of that sound
recording may not publicly perform such sound recording unless
a license has been granted for the public performance of any
copyrighted musical work contained in the sound recording. Such
license to publicly perform the copyrighted musical work may be
granted either by a performing rights society representing the
copyright owner or by the copyright owner.''.
(2) Conforming amendment.--Section 114(d)(3)(C) of title
17, United States Code, is hereby repealed.
(b) Public Performance Rights and Royalties.--Nothing in this Act
or the amendments made by this Act shall adversely affect in any
respect the public performance rights of or royalties payable to
songwriters or copyright owners of musical works.
(c) Preservation of Royalties on Underlying Works Publicly
Performed by Terrestrial Broadcast Stations.--Section 114(f) of title
17, United States Code, (as amended by section 2(d)) is further amended
by adding at the end the following new paragraph:
``(5) Notwithstanding any other provision of this section,
under no circumstances shall the rates established by the
Copyright Royalty Judges for the public performance of sound
recordings be cited, taken into account, or otherwise used in
any administrative, judicial, or other governmental forum or
proceeding, or otherwise, to reduce or adversely affect the
license fees payable to copyright owners of musical works or
their representatives for the public performance of their works
by terrestrial broadcast stations, and such license fees for
the public performance of musical works shall be independent of
license fees paid for the public performance of sound
recordings.''.
SEC. 6. PAYMENT OF CERTAIN ROYALTIES.
Section 114(g) of title 17, United States Code, is amended--
(1) by amending paragraph (1) to read as follows:
``(1) Except in the case of a transmission to which
paragraph (5) applies or a transmission licensed under a
statutory license in accordance with subsection (f) of this
section, the following shall apply:
``(A) A featured recording artist who performs on a
sound recording that has been licensed for public
performance by means of an audio transmission shall be
entitled to receive payments from the copyright owner
of the sound recording in accordance with the terms of
the artist's contract.
``(B)(i) In a case in which the copyright owner of
a sound recording has licensed the sound recording for
the public performance of the sound recording by means
of an audio transmission, the copyright owner shall
deposit 1 percent of the receipts from the license with
the American Federation of Musicians and American
Federation of Television and Radio Artists Intellectual
Property Rights Distribution Fund (or any successor
entity) (in this subparagraph referred to as the
`Fund') to be distributed to nonfeatured performers who
have performed on sound recordings. The sound recording
copyright owner shall make such deposits for receipts
received during the first half of a calendar year by
August 15 and for receipts received during the second
half of a calendar year by February 15 of the following
calendar year.
``(ii) A sound recording copyright owner shall
include with deposits under clause (i) information
regarding the amount of such deposits attributable to
each licensee and, subject to obtaining consent, if
necessary, from such licensee, for each sound recording
performed by means of an audio transmission by such
licensee during the applicable time period, and to the
extent included in the accounting reports provided by
the licensee to the sound recording copyright owner--
``(I) the identity of the artist;
``(II) the International Standard Recording
Code of the sound recording;
``(III) the title of the sound recording;
``(IV) the number of times the sound
recording was transmitted; and
``(V) the total amount of receipts
collected from that licensee.
``(iii) The Fund shall make the distributions
described in clause (i) as follows: 50 percent shall be
paid to nonfeatured musicians (whether or not members
of the American Federation of Musicians) and 50 percent
shall be paid to nonfeatured vocalists (whether or not
members of the American Federation of Television and
Radio Artists). The Fund may, prior to making such
distributions, deduct the reasonable costs related to
making such distributions.
``(iv) The sound recording copyright owner shall
not be required to provide any additional information
to the Fund other than what is required under this
subparagraph. Sound recording copyright owners shall
use reasonable good faith efforts to include in all
relevant licenses a requirement to report the
information identified in subclauses (I) through (V) of
clause (ii). Amounts required under clause (i) that are
not paid by the date specified in such clause shall be
subject to interest at the rate of 6 percent per annum
for each day of nonpayment after the date the payment
was due.'';
(2) in paragraph (2)(A), by striking ``digital''; and
(3) by adding at the end the following new paragraph:
``(5) Notwithstanding paragraph (1), to the extent that a
license granted by the copyright owner of a sound recording to
a terrestrial broadcast station extends to such station's
nonsubscription broadcast transmissions otherwise licensable
under a statutory license in accordance with subsection (f),
the station shall pay to the agent designated to distribute
statutory licensing receipts from the licensing of
transmissions in accordance with subsection (f), 50 percent of
the total royalties that the station is required to pay for
such transmissions under the applicable license agreement. That
agent shall distribute such payments in proportion to the
distributions provided in subparagraphs (B) through (D) of
paragraph (2), and such payments shall be the sole payments to
which featured and nonfeatured artists are entitled by virtue
of such transmissions under the direct license with that
station.''.
SEC. 7. NO EFFECT ON LOCAL COMMUNITIES.
Section 114(f) of title 17, United States Code, (as amended by
section 5(c)) is further amended by adding at the end the following new
paragraph:
``(6) Neither this subsection nor the payment of royalties
by broadcasters hereunder shall affect in any respect the
public interest obligations of a broadcaster to its local
community under part 73 of title 47 of the Code of Federal
Regulations.''.
SEC. 8. PRESERVATION OF DIVERSITY.
Section 114(f) of title 17, United States Code, (as amended by
section 7) is further amended by adding at the end the following new
paragraph:
``(7) Preservation of diversity.--The Copyright Royalty
Judges shall, in making determinations or adjustments of rates
and terms of copyright royalty payments for public performances
of sound recordings, consider evidence on the effect of such
rates and terms on--
``(A) religious, minority-owned, female-owned,
small, and noncommercial broadcasters;
``(B) non-music programming, including local news
and information programming for stations that are part
of station groups in which all stations within the
group are located in one designated market area (as
such term is defined in section 122(j)(2)(C)); and
``(C) religious, minority or minority-owned, and
female or female-owned royalty recipients.''.
Purpose and Summary
H.R. 848, the ``Performance Rights Act,'' extends the scope
of public performance rights to terrestrial broadcast
performances. Under current law, owners of underlying ``musical
works'' (i.e., the lyrics and musical notations), who in most
cases include the songwriter or music publisher, are entitled
to receive royalties from statutory licenses for the public
performance of their works in terrestrial radio broadcasts.
However, the copyright owners of sound recordings\1\ and the
artists featured in sound recordings do not have a comparable
right to royalties for the public performance of their works in
terrestrial radio broadcasts. This is in contrast to certain
digital broadcast performances of songs, including cable,
satellite, or webcasts--where the songwriters, performing
artists, and copyright holders of sound recordings are all
typically entitled to public performance royalties. H.R. 848
grants performers the right to receive compensation from
terrestrial radio, and contains significant protections for the
broadcast radio industry, including a scale-based fee system
for radio stations with gross annual revenues of less than
$1.25 million, a one-to-three-year-delay of the bill's
implementation as to smaller and noncommercial broadcasters,
and a requirement that, in making any royalty determinations,
the Copyright Royalty Judges consider the effect on minority
and religious broadcasters and religious and minority royalty
recipients.
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\1\``Sound recordings'' are works that result from the fixation of
a series of musical, spoken, or other sounds, but not including the
sounds accompanying a motion picture or other audiovisual work,
regardless of the nature of the material objects, such as disks, tapes,
or other phonorecords, in which they are embodied. 17 U.S.C. Sec. 101.
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Background and Need for the Legislation
I. BACKGROUND
A. History of Public Performance Rights
Article I, section 8, clause 8 of the Constitution grants
Congress the power ``[t]o promote the progress of science and
useful arts, by securing for limited times to authors and
inventors the exclusive right to their respective writings and
discoveries.''\2\ Congress first established copyright
protection in sound recordings in 1971, when it granted the
holders of such copyrights the right to control the
reproduction, distribution, and adaptation of their works. The
Copyright Act defines ``sound recordings'' as ``works that
result from the fixation of a series of musical, spoken, or
other sounds . . . regardless of the nature of the material
objects . . . in which they are embodied.''\3\ Congress did not
grant copyright holders the right to control the public
performance of their sound recordings, since it believed that
possession of the three aforementioned rights would adequately
compensate sound recording copyright holders.\4\
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\2\U.S. Const. art I, Sec. 8, cl. 8.
\3\17 U.S.C. Sec. 101.
\4\``To perform or display a work `publicly' means--(1) to perform
or display it at a place open to the public or at any place where a
substantial number of persons outside of a normal circle of a family
and its social acquaintances is gathered; or (2) to transmit or
otherwise communicate a performance or display of the work to a place
specified by clause (1) or to the public, by means of any device or
process, whether the members of the public capable of receiving the
performance or display receive it in the same place or in separate
places and at the same time or at different times.'' 17 U.S.C.
Sec. 101.
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Controversy has always existed over whether the ``bundle of
rights'' to a sound recording should include the right to
control its public performance. In a 1978 report mandated by
the 1976 amendments to the Copyright Act, the Register of
Copyrights recommended that Congress add a sound recording
performance right. The Register predicted that new
``technological developments could well cause substantial
changes in existing systems for public delivery of sound
recordings . . . [and] [i]n that event, it [would be] . . .
possible that a performance right would become the major source
of income from, and incentive to, the creation of such
works.''\5\
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\5\Register of Copyrights, Report on Performance Right in Sound
Recordings, H.R. Doc. No. 15, 95th Cong. (2d Sess. 1978).
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B. Internet Developments and the 1995 Solution
As the Register predicted, with the advent of significant
technological advancements, including ``[s]atellite and digital
technologies [that made] possible the celestial jukebox, music
on demand, and pay-per-listen services''\6\ on the Internet,
came a potentially substantial new revenue stream. In
particular, the growing popularity of Internet broadcasting (or
``webcasting'') created an environment where the public
performance of copyrighted sound recordings became an important
new source of both revenue and piracy.
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\6\S. Rep. No. 104-128 (1995).
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Congress was concerned that ``in the absence of appropriate
copyright protection in the digital environment . . . the
creation of new sound recordings and musical works would be
discouraged . . .''\7\ In 1995, Congress responded by enacting
the Digital Performance Right in Sound Recordings Act
(DPRA),\8\ amending section 106 of the Copyright Act to provide
an exclusive performance right for digital audio
transmissions.\9\
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\7\S. Rep. No. 104-128 (1995).
\8\109 Stat. 336, Pub. L. No. 104-39 (Nov. 1, 1995).
\9\A digital audio transmission is a ``transmission in whole or in
part in a digital or other non-analog format.'' 17 U.S.C. Sec. 101.
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SoundExchange was created to administer the digital
performance right and revenue stream created by the DPRA.
SoundExchange is a non-profit organization that collects and
distributes performance royalties for musicians, record labels,
and other copyright holders of sound recordings. SoundExchange
is the sole administrative entity for subscription services'
statutory license fees. The Copyright Royalty Board, comprising
three Copyright Royalty Judges, governs the setting of fair
market rates for recordings. The Copyright Royalty Judges are
responsible for determining and adjusting the rates and terms
of statutory copyright licenses and determining the
distribution of royalties.
Significantly, the Digital Performance Right in Sound
Recordings Act (DPRA) exempted ``nonsubscription''
transmissions and retransmissions of sound recordings such as
television, radio, and business establishment broadcasts. The
exemption was premised on the rationale that the public
performance of sound recordings on television and radio
benefits the owners of the sound recording by increasing record
sales, and thus should not be compensable.\10\
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\10\17 U.S.C. Sec. 114(d)(1).
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For ``subscription transmissions,'' the DPRA created a
statutory licensing scheme that mandated that the transmitter
pay a royalty and comply with ``other requirements.''\11\ These
``other requirements'' include refraining from 1) playing too
many songs by one artist in close proximity, 2) publishing a
program schedule in advance, or 3) causing a listener's
receiver equipment to switch from one channel to another in
order to listen to more than one song of a single artist in a
row, and 4) providing copyright management information for the
songs broadcast.
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\11\``A `new subscription service' is a service that performs sound
recordings by means of noninteractive subscription digital audio
transmissions and that is not a preexisting subscription service or a
preexisting satellite digital audio radio service.'' Subscribers pay
for subscription services. 17 U.S.C. Sec. 114(j)(8).
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For ``interactive'' transmissions, however, the Act did not
include a statutory licensing mechanism, but instead required
``interactive'' transmission services to contract directly with
the sound recording copyright owners, thus making licensing
more difficult for these transmissions.\12\
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\12\``An `interactive service' is one that enables a member of the
public to receive a transmission of a program specially 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 by or
on behalf of the recipient.'' 17 U.S.C. Sec. 114(j)(7).
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C. Discussion Over the Intervening Years
Over the intervening years, commentators have debated the
benefits and drawbacks of extending the public performance
right to all sound recordings. The primary beneficiaries of the
absence of a full public performance right in sound recordings
are terrestrial radio stations. These broadcasters strongly
oppose the recognition of a public performance right for sound
recordings on a number of grounds, which include the expense
involved in directly compensating copyright owners of such
works, as well as the perception that recording artists are
adequately compensated indirectly through the ``free''
promotional value that airplay provides. Others maintain that a
general public performance right will encourage those who make
sound recordings to increase their production and justly
benefit the artists and musicians featured on sound recordings.
During the 109th Congress, Representatives Howard Berman
and Mary Bono introduced H.R. 5361, the Platform Equality and
Remedies for Rights Holders in Music Act of 2006, otherwise
referred to as the PERFORM Act of 2006. The PERFORM Act sought
to establish parity in the obligation to pay public performance
royalties among all digital broadcasters, and required
transmitting entities to employ reasonably available,
technologically feasible, and economically reasonable measures
to prevent the recording of such broadcasts. During the 110th
Congress, the Subcommittee on Courts, the Internet and
Intellectual Property continued to explore performance rights
platform parity. On July 31, 2007, the Subcommittee held an
oversight hearing entitled, ``Ensuring Artists Fair
Compensation: Updating the Performance Right and Platform
Parity for the 21st Century.''\13\
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\13\On October 31, 2007, a non-binding resolution, H. Con. Res.
244, was introduced opposing any legislation to repeal the terrestrial
radio broadcast exemption. The resolution attracted 226 cosponsors
during the course of the 110th Congress. A similar resolution H. Con.
Res 49, was introduced on February 12, 2009, during the 111th Congress.
The resolution had attracted 143 cosponsors as of March 10, 2009, the
date of the Committee's hearing in the current Congress.
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On December 18, 2007, H.R. 4789, the Performance Rights
Act, was introduced by Representatives Berman, Darrell Issa,
John Shadegg, Jane Harman, Marsha Blackburn, and Chairman John
Conyers. The Subcommittee on Courts, the Internet and
Intellectual Property held a legislative hearing on the bill on
June 11, 2008, and reported the bill favorably by a voice vote
at a markup on June 26, 2008.
On February 4, 2009, H.R., 848, the ``Performance Rights
Act,'' was introduced by Chairman Conyers and eighteen Members
of Congress including the following members of the Judiciary
Committee: Representatives Issa, Berman, Debbie Wasserman
Schultz, Anthony Weiner, Steve Cohen, Jerrold Nadler, Robert
Wexler, Hank Johnson of Georgia, Adam Schiff, Brad Sherman,
Sheila Jackson Lee of Texas, and Linda Sanchez. H.R. 848 is
identical to the bill that the Courts Subcommittee had amended
and reported favorably by voice vote to the full Judiciary
Committee in 2008. The Judiciary Committee held a legislative
hearing on H.R. 848 on March 10, 2009.
The Committee's hearings and discussions have highlighted
the need for Congress to correct a glaring omission within the
copyright law and establish a performance right for sound
recordings for terrestrial broadcasts. In an effort to ensure
that royalties established take into account possible effects
on minority and religious broadcasters, a provision was added
to H.R. 848 at markup to require that the Copyright Royalty
Judges consider the effect that determinations and adjustments
of copyright royalty payments rates for sound recordings would
have on religious, minority-owned, female-owned, small, and
noncommercial broadcasters.
Hearings
The full Committee on the Judiciary held a hearing on March
10, 2009, to examine the merits of the Performance Rights Act.
Testimony was received from Billy Corgan, Vocalist and Lead
Guitarist, The Smashing Pumpkins; Mitch Bainwol, Chairman and
Chief Executive Officer, Recording Industry Artist Association
(RIAA); Paul Almeida, President, Department for Professional
Employees, AFL-CIO; W. Lawrence Patrick, President, Patrick
Communications; Stan Liebowitz, Ph.D., Ashbel Smith
Distinguished Professor of Managerial Economics, University of
Texas at Dallas; and Steve Newberry, Chairman of the Radio
Board, National Association of Broadcasters (NAB).
Committee Consideration
On May 13, 2009, the Committee met in open session to mark
up H.R. 848, and ordered the bill, as amended, favorably
reported by a rollcall vote of 21 to 9, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that the
following rollcall votes occurred during the Committee's
consideration of H.R.848.
1. An amendment offered by Mr. Lungren to instruct the
Government Accountability Office (GAO) to conduct a study
within 6 months to determine the impact of the proposed
legislation on local communities, on radio broadcasters and
their stations, and on artists in the recording industry.
Defeated 10 to 20.
ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Conyers, Jr., Chairman...................................... X
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................
Ms. Lofgren..................................................... X
Ms. Jackson Lee................................................. X
Ms. Waters...................................................... X
Mr. Delahunt.................................................... X
Mr. Wexler...................................................... X
Mr. Cohen....................................................... X
Mr. Johnson.....................................................
Mr. Pierluisi...................................................
Mr. Quigley..................................................... X
Mr. Gutierrez...................................................
Mr. Sherman..................................................... X
Ms. Baldwin.....................................................
Mr. Gonzalez....................................................
Mr. Weiner...................................................... X
Mr. Schiff...................................................... X
Ms. Sanchez.....................................................
Ms. Wasserman Schultz........................................... X
Mr. Maffei...................................................... X
Mr. Smith, Ranking Member....................................... X
Mr. Sensenbrenner, Jr........................................... X
Mr. Coble....................................................... X
Mr. Gallegly....................................................
Mr. Goodlatte................................................... X
Mr. Lungren..................................................... X
Mr. Issa........................................................ X
Mr. Forbes...................................................... X
Mr. King........................................................
Mr. Franks...................................................... X
Mr. Gohmert..................................................... X
Mr. Jordan...................................................... X
Mr. Poe......................................................... X
Mr. Chaffetz.................................................... X
Mr. Rooney...................................................... X
Mr. Harper...................................................... X
-----------------------------------------------
Total....................................................... 10 20
----------------------------------------------------------------------------------------------------------------
2. Motion to order the bill favorably reported, as amended.
Approved 21 to 9.
ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
Ayes Nays Present
----------------------------------------------------------------------------------------------------------------
Mr. Conyers, Jr., Chairman...................................... X
Mr. Berman...................................................... X
Mr. Boucher.....................................................
Mr. Nadler...................................................... X
Mr. Scott....................................................... X
Mr. Watt........................................................ X
Ms. Lofgren..................................................... X
Ms. Jackson Lee................................................. X
Ms. Waters...................................................... X
Mr. Delahunt.................................................... X
Mr. Wexler...................................................... X
Mr. Cohen....................................................... X
Mr. Johnson..................................................... X
Mr. Pierluisi...................................................
Mr. Quigley..................................................... X
Mr. Gutierrez...................................................
Mr. Sherman..................................................... X
Ms. Baldwin.....................................................
Mr. Gonzalez....................................................
Mr. Weiner...................................................... X
Mr. Schiff...................................................... X
Ms. Sanchez.....................................................
Ms. Wasserman Schultz........................................... X
Mr. Maffei......................................................
Mr. Smith, Ranking Member....................................... X
Mr. Sensenbrenner, Jr........................................... X
Mr. Coble....................................................... X
Mr. Gallegly....................................................
Mr. Goodlatte................................................... X
Mr. Lungren..................................................... X
Mr. Issa........................................................ X
Mr. Forbes...................................................... X
Mr. King........................................................
Mr. Franks......................................................
Mr. Gohmert..................................................... X
Mr. Jordan...................................................... X
Mr. Poe......................................................... X
Mr. Chaffetz.................................................... X
Mr. Rooney...................................................... X
Mr. Harper...................................................... X
-----------------------------------------------
Total....................................................... 21 9
----------------------------------------------------------------------------------------------------------------
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill H.R. 848, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 7, 2009.
Hon. John Conyers, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 848, the
``Performance Rights Act.''
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie,
who can be reached at 226-2860.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure
cc:
Honorable Lamar S. Smith.
Ranking Member
H.R. 848--Performance Rights Act.
SUMMARY
H.R. 848 would expand the protections of certain copyright
holders with respect to sound recordings broadcast by analog
radio stations. Under current law, those copyright protections
are extended to digital transmissions only. This expansion of
copyright protections would allow performers to seek and
collect royalties from radio stations that broadcast their
work. H.R. 848 would require the Copyright Office to set rates
and terms for royalty payments, with specific limits set for
certain types of radio stations.
Based on information from the Copyright Office, CBO expects
that the new requirement for Copyright Royalty Judges to set
royalty rates and terms would be accomplished through its
regular rate-setting procedures. Therefore, CBO estimates that
implementing H.R. 848 would not have a significant effect on
spending subject to appropriation.
Royalties for sound recordings are administered by
SoundExchange, the private entity designated by the Copyright
Office to perform the service. Because the amounts collected
and spent by SoundExchange are not recorded on the Federal
budget, CBO estimates that enacting H.R. 848 would have no
effect on Federal revenues or direct spending. (Under current
law, royalties for cable and satellite broadcast transmissions
are administered by the Copyright Office and are recorded on
the budget as Federal revenues and direct spending.)
H.R. 848 would impose an intergovernmental and private-
sector mandate, as defined in the Unfunded Mandates Reform Act
(UMRA), on over-the-air radio broadcasters by requiring them to
pay new royalty fees to copyright holders of sound recordings.
Based on information from industry sources, CBO estimates that
the cost of complying with the mandate for public entities
would be small and would fall well below the annual threshold
for intergovernmental mandates ($69 million in 2009, adjusted
annually for inflation). Because the royalty rates for some
broadcasters would be established after enactment, CBO cannot
determine whether the aggregate cost of complying with the
mandate would exceed the annual threshold for private-sector
mandates ($139 million in 2009, adjusted annually for
inflation).
ESTIMATED COST TO THE FEDERAL GOVERNMENT
CBO estimates that enacting H.R. 848 would have no
significant impact on the Federal budget.
INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT
H.R. 848 would impose an intergovernmental and private-
sector mandate, as defined in UMRA, on over-the-air radio
broadcasters by requiring them to pay royalty fees to holders
of copyrights on sound recordings. Based on information from
industry sources, CBO estimates that the cost of complying with
the mandate would be small and would fall well below the annual
threshold for intergovernmental mandates ($69 million in 2009,
adjusted annually for inflation). However, because the rate of
royalty fees for some broadcasters would have to be established
by the Copyright Royalty Judges, CBO cannot determine whether
the aggregate cost of complying with the mandate would exceed
the annual threshold for private-sector mandates ($139 million
in 2009, adjusted annually for inflation).
Under current law, over-the-air radio broadcasters only pay
royalties to songwriters for the performance of their musical
compositions. The bill would require those radio broadcasters
to also pay royalties to holders of the copyrights on
recordings (which may include performers and record companies).
Under the bill, small, publicly owned, and religious stations
would pay lower royalty fees than large and commercial
stations. Those broadcasters could elect to pay a flat annual
rate set by the bill and based on their annual revenues.
However, royalty rates for stations that have gross revenues of
$1.25 million per year or more would be established by the
Copyright Royalty Judges if broadcasters and performers are
unable to negotiate rates on their own.
Based on data from industry sources regarding the number of
over-the-air radio broadcasters, CBO estimates that the cost of
complying with the mandate for publicly owned stations would be
about $500,000 a year. Also, based on those data, CBO estimates
that commercial broadcasters that have gross revenues of less
than $1.25 million in any calendar year would pay a total of
about $16 million annually in royalty fees.
Data on the amount of royalty fees currently paid by cable
stations, satellite operators, Internet broadcasters, and other
digital media suggest that the total cost of new performance
royalties for commercial radio broadcasters affected by the
bill could be substantial. Information from industry sources
indicates that about 1,800 over-the-air radio broadcasters
currently have gross revenues in any year of $1.25 million or
more. However, because royalty fees have not been established
for such broadcasters and because such fees could cause some
broadcasters to shift their programming from music to other
formats, CBO cannot determine whether the aggregate cost of
complying with the mandate would exceed the annual threshold
for private-sector mandates.
ESTIMATE PREPARED BY:
Federal Costs: Susan Willie
Impact on State, Local, and Tribal Governments: Elizabeth Cove
Delisle
Impact on the Private Sector: Paige Piper/Bach
ESTIMATE APPROVED BY:
Peter H. Fontaine
Assistant Director for Budget Analysis
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
848 amends Title 17 of the U.S. Code to provide parity in radio
performance rights, to afford the performers of a musical work
the right to receive compensation when their work is broadcast
over terrestrial radio, while providing significant safeguards
for all non-commercial stations and commercial stations with
gross annual revenues totaling less than $1.25 million,
principally through a fee scale and delays in implementation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds authority for
this legislation in article I, section 8, clause 8 of the
Constitution.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R.848 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in such clause 9.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Sec. 1. Short Title. Section 1 sets forth the short title
of the bill as the ``Performance Rights Act.''
Sec. 2. Equitable Treatment for Terrestrial Broadcasts.
Section 2 repeals the exemption for terrestrial broadcasters,
and makes conforming changes by deleting references to the word
``digital'' from the types of audio transmissions that are
subject to a performance right. With these changes, all
terrestrial (over-the-air) broadcast transmissions, including
analog audio transmissions, would be subject to sound recording
performance rights, thereby providing parity for the
technologies currently covered under the section 114 license.
The section further establishes rate standard parity among
terrestrial broadcasters, cable, satellite, and Internet
services, by creating one rate standard for Copyright Royalty
Judges (CRJs) to consider, regardless of the platform involved.
The new standard will be the old 801(b) standard minus subpart
(D), which directed the CRJs to ``minimize any disruptive
impact on the structure of the industries involved and on
generally prevailing industry practices.'' The CRJs will
consider only 801(b)(1)(A)-(C).
Sec. 3. Treatment for Minority, Female, Religious, Rural,
Small, Noncommercial, Public, Educational, and Community
Stations and Certain Uses. Section 3 would create an
accommodation for certain qualifying broadcasters from the
negotiation and arbitrated rate-setting. Instead, such
broadcasters would pay a prescribed flat fee. The section
provides for a fee scale for commercial radio stations with
gross annual revenues of less than $1.25 million and all non-
commercial stations, under which:
1. LCommercial and non-commercial stations that have
gross annual revenues of less than $100,000 per year
pay $500 per year for the unlimited use of music.
2. LCommercial stations with gross annual revenues of
less than $500,000 but more than $100,000 per year pay
$2,500 per year for the unlimited use of music.
3. LCommercial stations with gross annual revenues of
less than $1,250,000 but more than $500,000 per year
pay $5,000 per year for the unlimited use of music.
4. LNon-commercial radio stations with gross annual
revenues of more than $100,000 per year pay $1,000 per
year for the unlimited use of music.
Finally, the section provides a complete exemption for
those stations that broadcast religious services or make
``incidental use of musical sound recordings,'' such as brief
musical transitions in and out of commercials or program
segments, or brief performances during news, talk, and sports
programming.
The section delays the effect of royalty payments for 3
years for those broadcasters whose total gross revenue during
the four full calendar quarters immediately preceding the date
of enactment is less than $5,000,000. For those with revenue
over $5,000,000, the bill delays any royalty payments for 1
year.
Sec. 4. Availability of Per Program License. Section 4
allows terrestrial radio stations to obtain program licenses
for sound recordings (at separately set rates), in lieu of
blanket licenses. In some cases, as with mixed-format stations,
a radio station may not broadcast many featured uses of music.
In such cases, rather than requiring a station to pay a general
blanket license fee in the same amount paid by a station that
primarily makes featured uses of music, this section requires
the CRJs to establish a ``per program license'' so that such
stations can choose only to pay for the music they use, which
may be less costly than the general blanket license. This
parallels the licenses offered by the performance rights
organizations for performing the underlying musical copyright.
Sec. 5. No Harmful Effects on Songwriters. Section 5
protects songwriters from possible unintended consequences of
providing this new performance right in sound recordings. It
expressly provides that nothing in the Act shall adversely
affect the royalties to songwriters, and ensures that license
fees for the public performance of sound recordings will not be
taken into account or cited to set or adjust the license fees
payable to copyright owners of musical works. This section also
makes clear that any licensing of the right under section
106(6) by an owner of a sound recording copyright does not
allow the licensee to publicly perform the sound recording
unless the licensee has obtained a license from the copyright
owner of the underlying musical work.
Sec. 6. Payment of Certain Royalties. Section 6 codifies an
agreement from 1994 among the major record companies, the
American Federation of Television and Radio Artists (AFTRA),
and the American Federation of Musicians (AFM). It requires
payment by the labels to the unions equal to 1% of royalties
from uses outside this statutory license for distribution to
non-featured performers. This section also provides for direct
payment to SoundExchange of 50% of any monies due pursuant to
an agreement between the label and broadcaster for over-the-air
performances that fall outside the statutory license. This
portion will be distributed by SoundExchange to the performers
independently, rather than via the labels.
Sec. 7. No Effect on Local Communities. Section 7 provides
that the payment of royalties by a broadcaster shall not affect
in any respect the public interest obligations for a
broadcaster to its local community under part 73 of title 47 of
the Code of Federal Regulations.
Sec. 8. Preservation of Diversity. Section 8 directs the
CRJs to consider how their performance royalty determinations
will affect: religious, small, non-commercial, minority-owned
and religious-owned broadcasters; religious, minority or
minority-owned, and female or female-owned royalty recipients;
and non-music programming (such as news and informational
programming) for stations part of a group located in a single
designated market area.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
TITLE 17, UNITED STATES CODE
* * * * * * *
CHAPTER 1--SUBJECT MATTER AND SCOPE OF COPYRIGHT
* * * * * * *
Sec. 106. Exclusive rights in copyrighted works
Subject to sections 107 through 122, the owner of copyright
under this title has the exclusive rights to do and to
authorize any of the following:
(1) * * *
* * * * * * *
[(6) in the case of sound recordings, to perform
the copyrighted work publicly by means of a digital
audio transmission.]
(6) in the case of sound recordings, to perform the
copyrighted work publicly by means of an audio
transmission.
* * * * * * *
Sec. 114. Scope of exclusive rights in sound recordings
(a) * * *
* * * * * * *
(d) Limitations on Exclusive Right.--Notwithstanding the
provisions of section 106(6)--
(1) Exempt transmissions and retransmissions.--The
performance of a sound recording publicly by means of
[a digital] an audio transmission, other than as a part
of an interactive service, is not an infringement of
section 106(6) if the performance is part of--
[(A) a nonsubscription broadcast
transmission;]
(A) an eligible nonsubscription
transmission of--
(i) services at a place of worship
or other religious assembly; and
(ii) an incidental use of a musical
sound recording;
* * * * * * *
(3) Licenses for transmissions by interactive
services.--
(A) * * *
* * * * * * *
[(C) Notwithstanding the grant of an
exclusive or nonexclusive license of the right
of public performance under section 106(6), an
interactive service may not publicly perform a
sound recording unless a license has been
granted for the public performance of any
copyrighted musical work contained in the sound
recording: Provided, That such license to
publicly perform the copyrighted musical work
may be granted either by a performing rights
society representing the copyright owner or by
the copyright owner.]
* * * * * * *
(f) Licenses for Certain Nonexempt Transmissions.--
[(1)(A) Proceedings under chapter 8 shall determine
reasonable rates and terms of royalty payments for
subscription transmissions by preexisting subscription
services and transmissions by preexisting satellite
digital audio radio services specified by subsection
(d)(2) during the 5-year period beginning on January 1
of the second year following the year in which the
proceedings are to be commenced, except in the case of
a different transitional period provided under section
6(b)(3) of the Copyright Royalty and Distribution
Reform Act of 2004, or such other period as the parties
may agree. Such terms and rates shall distinguish among
the different types of digital audio transmission
services then in operation. Any copyright owners of
sound recordings, preexisting subscription services, or
preexisting satellite digital audio radio services may
submit to the Copyright Royalty Judges licenses
covering such subscription transmissions with respect
to such sound recordings. The parties to each
proceeding shall bear their own costs.
[(B) The schedule of reasonable rates and terms
determined by the Copyright Royalty Judges shall,
subject to paragraph (2), be binding on all copyright
owners of sound recordings and entities performing
sound recordings affected by this paragraph during the
5-year period specified in subparagraph (A), a
transitional period provided under section 6(b)(3) of
the Copyright Royalty and Distribution Reform Act of
2004, or such other period as the parties may agree. In
establishing rates and terms for preexisting
subscription services and preexisting satellite digital
audio radio services, in addition to the objectives set
forth in section 801(b)(1), the Copyright Royalty
Judges may consider the rates and terms for comparable
types of subscription digital audio transmission
services and comparable circumstances under voluntary
license agreements described in subparagraph (A).
[(C) The procedures under subparagraphs (A) and (B)
also shall be initiated pursuant to a petition filed by
any copyright owners of sound recordings, any
preexisting subscription services, or any preexisting
satellite digital audio radio services indicating that
a new type of subscription digital audio transmission
service on which sound recordings are performed is or
is about to become operational, for the purpose of
determining reasonable terms and rates of royalty
payments with respect to such new type of transmission
service for the period beginning with the inception of
such new type of service and ending on the date on
which the royalty rates and terms for subscription
digital audio transmission services most recently
determined under subparagraph (A) or (B) and chapter 8
expire, or such other period as the parties may agree.]
[(2)] (1)(A) Proceedings [under chapter 8 shall
determine reasonable rates and terms of royalty
payments for public performances of sound recordings by
means of eligible nonsubscription transmission services
and new subscription services specified by subsection
(d)(2) during the 5-year period beginning on January 1
of the second year following the year in which the
proceedings are to be commenced, except in the case of
a different transitional period provided under section
6(b)(3) of the Copyright Royalty and Distribution
Reform Act of 2004, or such other period as the parties
may agree. Such rates and terms shall distinguish among
the different types of eligible nonsubscription
transmission services and new subscription services
then in operation and shall include a minimum fee for
each such type of service. Any copyright owners of
sound recordings or any entities performing sound
recordings affected by this paragraph may submit to the
Copyright Royalty Judges licenses covering such
eligible nonsubscription transmissions and new
subscription services with respect to such sound
recordings.] under chapter 8 shall determine reasonable
rates and terms of royalty payments for transmissions
subject to statutory licensing under subsection (d)(2)
during 5-year periods beginning on January 1 of the
second year following the year in which the proceedings
are to be commenced, except in the case of a different
transitional period provided under section 6(b)(3) of
the Copyright Royalty and Distribution Reform Act of
2004, or such other period as the parties may agree.
The parties to each proceeding shall bear their own
costs.
(B) The schedule of reasonable rates and terms
determined by the Copyright Royalty Judges shall,
subject to [paragraph (3)] paragraph (2), be binding on
all copyright owners of sound recordings and entities
performing sound recordings affected by this paragraph
during the 5-year period specified in subparagraph (A),
a transitional period provided under section 6(b)(3) of
the Copyright Royalty and Distribution Act of 2004, or
such other period as the parties may agree. Such rates
and terms shall distinguish among the different types
of [eligible nonsubscription transmission] services
then in operation and shall include a minimum fee for
each such type of service, such differences to be based
on criteria including, but not limited to, the quantity
and nature of the use of sound recordings and the
degree to which use of the service may substitute for
or may promote the purchase of phonorecords by
consumers. Such rates and terms shall include a per
program license option for terrestrial broadcast
stations that make limited feature uses of sound
recordings. In establishing rates and terms for
transmissions by [eligible nonsubscription services and
new subscription services, the Copyright Royalty Judges
shall establish rates and terms that most clearly
represent the rates and terms that would have been
negotiated in the marketplace between a willing buyer
and a willing seller. In determining such rates and
terms, the Copyright Royalty Judges shall base its
decision on economic, competitive and programming
information presented by the parties, including--
[(i) whether use of the service may
substitute for or may promote the sales of
phonorecords or otherwise may interfere with or
may enhance the sound recording copyright
owner's other streams of revenue from its sound
recordings; and
[(ii) the relative roles of the copyright
owner and the transmitting entity in the
copyrighted work and the service made available
to the public with respect to relative creative
contribution, technological contribution,
capital investment, cost, and risk.
In establishing such rates and terms, the Copyright
Royalty Judges may consider the rates and terms for
comparable types of digital audio transmission services
and comparable circumstances under voluntary license
agreements described in subparagraph (A)] services, in
addition to the objectives set forth in subparagraphs
(A), (B), and (C) of section 801(b)(1), the Copyright
Royalty Judges may consider the rates and terms for
comparable types of services and comparable
circumstances under voluntary license agreements.
Notwithstanding section 801(b)(1), the provisions of
section 801(b)(1)(D) shall not be taken into account by
the Copyright Royalty Judges in any proceeding under
this section.
[(C) The procedures under subparagraphs (A) and (B)
shall also be initiated pursuant to a petition filed by
any copyright owners of sound recordings or any
eligible nonsubscription service or new subscription
service indicating that a new type of eligible
nonsubscription service or new subscription service on
which sound recordings are performed is or is about to
become operational, for the purpose of determining
reasonable terms and rates of royalty payments with
respect to such new type of service for the period
beginning with the inception of such new type of
service and ending on the date on which the royalty
rates and terms for preexisting subscription digital
audio transmission services or preexisting satellite
digital radio audio services, as the case may be, most
recently determined under subparagraph (A) or (B) and
chapter 8 expire, or such other period as the parties
may agree.]
(C) The procedures under subparagraphs (A) and (B)
shall also be initiated pursuant to a petition filed by
any copyright owner of sound recordings or any
transmitting entity indicating that a new type of
service on which sound recordings are performed is or
is about to become operational, for the purpose of
determining reasonable terms and rates of royalty
payments with respect to such new type of service for
the period beginning with the inception of such new
type of service and ending on the date on which the
royalty rates and terms for preexisting services most
recently determined under subparagraph (A) or (B) and
chapter 8 expire, or such other period as the parties
may agree.
(D)(i) Notwithstanding the provisions of
subparagraphs (A) through (C), each individual
terrestrial broadcast station that has gross revenues
within a range specified in clause (ii) may elect to
pay for its over-the-air nonsubscription broadcast
transmissions a royalty fee as provided in clause (ii),
in lieu of the amount such station would otherwise be
required to pay under this paragraph. Such royalty fee
shall not be taken into account in determining royalty
rates in a proceeding under chapter 8, or in any other
administrative, judicial, or other Federal Government
proceeding.
(ii) As provided in clause (i), each individual
terrestrial broadcast station that has gross revenues
in any calendar year of--
(I) less than $100,000 may elect to pay for
its over-the-air nonsubscription broadcast
transmissions a royalty fee of $500 per year;
(II) at least $100,000 but less than
$500,000 may elect to pay for its over-the-air
nonsubscription broadcast transmissions a
royalty fee of $2,500 per year; and
(III) at least $500,000 but less than
$1,250,000 may elect to pay for its over-the-
air nonsubscription broadcast transmissions a
royalty fee of $5,000 per year.
(E)(i) Notwithstanding the provisions of
subparagraphs (A) through (C), each individual
terrestrial broadcast station that is a public
broadcasting entity as defined in section 118(f) and
that has gross revenues within a range specified in
clause (ii) may elect to pay for its over-the-air
nonsubscription broadcast transmissions a royalty fee
as provided in clause (ii), in lieu of the amount such
station would otherwise be required to pay under this
paragraph. Such royalty fee shall not be taken into
account in determining royalty rates in a proceeding
under chapter 8, or in any other administrative,
judicial, or other Federal Government proceeding.
(ii) As provided in clause (i), each individual
terrestrial broadcast station that is a public
broadcasting entity as defined in section 118(f) and
has gross receipts in any calendar year of--
(I) less than $100,000 may elect to pay for
its over-the-air nonsubscription broadcast
transmissions a royalty fee of $500 per year;
and
(II) $100,000 or more may elect to pay for
its over-the-air nonsubscription broadcast
transmissions a royalty fee of $1,000 per year.
(F) Notwithstanding the provisions of subparagraphs
(A) through (E), each individual terrestrial broadcast
station that had total gross revenues during the 4 full
calendar quarters immediately preceding the date of
enactment of the Performance Rights Act of--
(i) less than $5,000,000 shall not be
required to pay a royalty under this paragraph
during the 3 years immediately following the
date of enactment of the Performance Rights
Act; and
(ii) $5,000,000 or more shall not be
required to pay a royalty under this paragraph
during the 1 year immediately following the
date of enactment of the Performance Rights
Act.
The provisions of this subparagraph shall not be taken
into account in determining royalty rates in a
proceeding under chapter 8, or in any other
administrative, judicial, or other Federal Government
proceeding.
[(3)] (2) License agreements voluntarily negotiated
at any time between 1 or more copyright owners of sound
recordings and 1 or more entities performing sound
recordings shall be given effect in lieu of any
decision by the Librarian of Congress or determination
by the Copyright Royalty Judges.
[(4)] (3)(A) * * *
* * * * * * *
[(5)] (4)(A) * * *
* * * * * * *
(C) Neither subparagraph (A) nor any provisions of
any agreement entered into pursuant to subparagraph
(A), including any rate structure, fees, terms,
conditions, or notice and recordkeeping requirements
set forth therein, shall be admissible as evidence or
otherwise taken into account in any administrative,
judicial, or other government proceeding involving the
setting or adjustment of the royalties payable for the
public performance or reproduction in ephemeral
phonorecords or copies of sound recordings, the
determination of terms or conditions related thereto,
or the establishment of notice or recordkeeping
requirements by the Copyright Royalty Judges [under
paragraph (4)] under paragraph (3) or section
112(e)(4). It is the intent of Congress that any
royalty rates, rate structure, definitions, terms,
conditions, or notice and recordkeeping requirements,
included in such agreements shall be considered as a
compromise motivated by the unique business, economic
and political circumstances of webcasters, copyright
owners, and performers rather than as matters that
would have been negotiated in the marketplace between a
willing buyer and a willing seller, or otherwise meet
the objectives set forth in section 801(b). This
subparagraph shall not apply to the extent that the
receiving agent and a webcaster that is party to an
agreement entered into pursuant to subparagraph (A)
expressly authorize the submission of the agreement in
a proceeding under this subsection.
* * * * * * *
(5) Notwithstanding any other provision of this
section, under no circumstances shall the rates
established by the Copyright Royalty Judges for the
public performance of sound recordings be cited, taken
into account, or otherwise used in any administrative,
judicial, or other governmental forum or proceeding, or
otherwise, to reduce or adversely affect the license
fees payable to copyright owners of musical works or
their representatives for the public performance of
their works by terrestrial broadcast stations, and such
license fees for the public performance of musical
works shall be independent of license fees paid for the
public performance of sound recordings.
(6) Neither this subsection nor the payment of
royalties by broadcasters hereunder shall affect in any
respect the public interest obligations of a
broadcaster to its local community under part 73 of
title 47 of the Code of Federal Regulations.
(7) Preservation of diversity.--The Copyright
Royalty Judges shall, in making determinations or
adjustments of rates and terms of copyright royalty
payments for public performances of sound recordings,
consider evidence on the effect of such rates and terms
on--
(A) religious, minority-owned, female-
owned, small, and noncommercial broadcasters;
(B) non-music programming, including local
news and information programming for stations
that are part of station groups in which all
stations within the group are located in one
designated market area (as such term is defined
in section 122(j)(2)(C)); and
(C) religious, minority or minority-owned,
and female or female-owned royalty recipients.
(g) Proceeds From Licensing of Transmissions.--
[(1) Except in the case of a transmission licensed
under a statutory license in accordance with subsection
(f) of this section--
[(A) a featured recording artist who
performs on a sound recording that has been
licensed for a transmission shall be entitled
to receive payments from the copyright owner of
the sound recording in accordance with the
terms of the artist's contract; and
[(B) a nonfeatured recording artist who
performs on a sound recording that has been
licensed for a transmission shall be entitled
to receive payments from the copyright owner of
the sound recording in accordance with the
terms of the nonfeatured recording artist's
applicable contract or other applicable
agreement.]
(1) Except in the case of a transmission to which
paragraph (5) applies or a transmission licensed under
a statutory license in accordance with subsection (f)
of this section, the following shall apply:
(A) A featured recording artist who
performs on a sound recording that has been
licensed for public performance by means of an
audio transmission shall be entitled to receive
payments from the copyright owner of the sound
recording in accordance with the terms of the
artist's contract.
(B)(i) In a case in which the copyright
owner of a sound recording has licensed the
sound recording for the public performance of
the sound recording by means of an audio
transmission, the copyright owner shall deposit
1 percent of the receipts from the license with
the American Federation of Musicians and
American Federation of Television and Radio
Artists Intellectual Property Rights
Distribution Fund (or any successor entity) (in
this subparagraph referred to as the ``Fund'')
to be distributed to nonfeatured performers who
have performed on sound recordings. The sound
recording copyright owner shall make such
deposits for receipts received during the first
half of a calendar year by August 15 and for
receipts received during the second half of a
calendar year by February 15 of the following
calendar year.
(ii) A sound recording copyright owner
shall include with deposits under clause (i)
information regarding the amount of such
deposits attributable to each licensee and,
subject to obtaining consent, if necessary,
from such licensee, for each sound recording
performed by means of an audio transmission by
such licensee during the applicable time
period, and to the extent included in the
accounting reports provided by the licensee to
the sound recording copyright owner--
(I) the identity of the artist;
(II) the International Standard
Recording Code of the sound recording;
(III) the title of the sound
recording;
(IV) the number of times the sound
recording was transmitted; and
(V) the total amount of receipts
collected from that licensee.
(iii) The Fund shall make the distributions
described in clause (i) as follows: 50 percent
shall be paid to nonfeatured musicians (whether
or not members of the American Federation of
Musicians) and 50 percent shall be paid to
nonfeatured vocalists (whether or not members
of the American Federation of Television and
Radio Artists). The Fund may, prior to making
such distributions, deduct the reasonable costs
related to making such distributions.
(iv) The sound recording copyright owner
shall not be required to provide any additional
information to the Fund other than what is
required under this subparagraph. Sound
recording copyright owners shall use reasonable
good faith efforts to include in all relevant
licenses a requirement to report the
information identified in subclauses (I)
through (V) of clause (ii). Amounts required
under clause (i) that are not paid by the date
specified in such clause shall be subject to
interest at the rate of 6 percent per annum for
each day of nonpayment after the date the
payment was due.
(2) An agent designated to distribute receipts from
the licensing of transmissions in accordance with
subsection (f) shall distribute such receipts as
follows:
(A) 50 percent of the receipts shall be
paid to the copyright owner of the exclusive
right under section 106(6) of this title to
publicly perform a sound recording by means of
a [digital] audio transmission.
* * * * * * *
(5) Notwithstanding paragraph (1), to the extent
that a license granted by the copyright owner of a
sound recording to a terrestrial broadcast station
extends to such station's nonsubscription broadcast
transmissions otherwise licensable under a statutory
license in accordance with subsection (f), the station
shall pay to the agent designated to distribute
statutory licensing receipts from the licensing of
transmissions in accordance with subsection (f), 50
percent of the total royalties that the station is
required to pay for such transmissions under the
applicable license agreement. That agent shall
distribute such payments in proportion to the
distributions provided in subparagraphs (B) through (D)
of paragraph (2), and such payments shall be the sole
payments to which featured and nonfeatured artists are
entitled by virtue of such transmissions under the
direct license with that station.
* * * * * * *
[(i) No Effect on Royalties for Underlying Works.--License
fees payable for the public performance of sound recordings
under section 106(6) shall not be taken into account in any
administrative, judicial, or other governmental proceeding to
set or adjust the royalties payable to copyright owners of
musical works for the public performance of their works. It is
the intent of Congress that royalties payable to copyright
owners of musical works for the public performance of their
works shall not be diminished in any respect as a result of the
rights granted by section 106(6).]
(i) No Adverse Affect on License Fees for Underlying
Musical Works; Necessity for Other Licenses.--
(1) No adverse affect on license fees for
underlying musical works.--License fees payable for the
public performance of sound recordings under section
106(6) shall not be cited, taken into account, or
otherwise used in any administrative, judicial, or
other governmental forum or proceeding, or otherwise,
to set or adjust the license fees payable to copyright
owners of musical works or their representatives for
the public performance of their works, for the purpose
of reducing or adversely affecting such license fees.
License fees payable to copyright owners for the public
performance of their musical works shall not be reduced
or adversely affected in any respect as a result of the
rights granted by section 106(6).
(2) Necessity for other licenses.--Notwithstanding
the grant by an owner of copyright in a sound recording
of an exclusive or nonexclusive license of the right
under section 106(6) to perform the work publicly, a
licensee of that sound recording may not publicly
perform such sound recording unless a license has been
granted for the public performance of any copyrighted
musical work contained in the sound recording. Such
license to publicly perform the copyrighted musical
work may be granted either by a performing rights
society representing the copyright owner or by the
copyright owner.
(j) Definitions.--As used in this section, the following
terms have the following meanings:
(1) * * *
* * * * * * *
(6) An ``eligible nonsubscription transmission'' is
a noninteractive nonsubscription [digital] audio
transmission not exempt under subsection (d)(1) that is
made as part of a service that provides audio
programming consisting, in whole or in part, of
performances of sound recordings, including
[retransmissions of broadcast transmissions] broadcast
transmissions and retransmissions of broadcast
transmissions, if the primary purpose of the service is
to provide to the public such audio or other
entertainment programming, and the primary purpose of
the service is not to sell, advertise, or promote
particular products or services other than sound
recordings, live concerts, or other music-related
events.
* * * * * * *
CHAPTER 8--PROCEEDINGS BY COPYRIGHT ROYALTY JUDGES
* * * * * * *
Sec. 804. Institution of proceedings
(a) * * *
(b) Timing of Proceedings.--
(1) * * *
* * * * * * *
(3) Section 114 and corresponding 112
proceedings.--
(A) * * *
* * * * * * *
(C)(i) Notwithstanding any other provision
of this chapter, this subparagraph shall govern
proceedings commenced pursuant to section
114(f)(1)(C) [and 114(f)(2)(C)] concerning new
types of services.
* * * * * * *
(iii) The proceeding shall follow the
schedule set forth in subsections (b), (c), and
(d) of section 803, except that--
(I) * * *
(II) the decision shall take effect
as provided in subsections (c)(2) and
(d)(2) of section 803 and section
[114(f)(4)(B)(ii)] 114(f)(3)(B)(ii) and
(C).
(iv) The rates and terms shall remain in
effect for the period set forth in section
114(f)(1)(C) [or 114(f)(2)(C), as the case may
be].
* * * * * * *