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[House Report 111-680]
[From the U.S. Government Publishing Office]

111th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     111-680

======================================================================

 
                         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.
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------

                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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \5\Register of Copyrights, Report on Performance Right in Sound 
Recordings, H.R. Doc. No. 15, 95th Cong. (2d Sess. 1978).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
    \6\S. Rep. No. 104-128 (1995).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \10\17 U.S.C. Sec. 114(d)(1).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
    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\
---------------------------------------------------------------------------
    \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).
---------------------------------------------------------------------------
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\
---------------------------------------------------------------------------
    \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.
---------------------------------------------------------------------------
    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].

           *       *       *       *       *       *       *

                                  
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