Union Calendar No. 143

104TH CONGRESS

1ST SESSION H. R. 1506

[Report No. 104–274]

A BILL

To amend title 17, United States Code, to provide

for other purposes.publicly by means of digital transmissions, andan exclusive right to perform sound recordings

OCTOBER 11, 1995

Reported with an amendment, committed to the Commitordered to be printed tee of the Whole House on the State of the Union, and
IB

Union Calendar No. 143

104TH CONGRESS

1ST SESSION H. R. 1506

[Report No. 104–274]

To amend title 17, United States Code, to provide an exclusive right to

perform sound recordings publicly by means of digital transmissions,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

APRIL 7, 1995

Mr. MOORHEAD (for himself, Mr. HYDE, Mr. CONYERS, and Mr. GEKAS) introduced the following bill; which was referred to the Committee on the

Judiciary

OCTOBER 11, 1995

Additional sponsors: Mr. BONO, Mr. FATTAH, Mr. PETERSON of Minnesota,

Mr. LAHOOD, Mr. BARR, and Mr. BLILEY

OCTOBER 11, 1995

Reported with an amendment, committed to the Committee of the Whole

House on the State of the Union, and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in italic]

[For text of introduced bill, see copy of bill as introduced on April 7, 1995]

A BILL

To amend title 17, United States Code, to provide an exclusive right to perform sound recordings publicly by means

of digital transmissions, and for other purposes.
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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Digital Performance

5 Right in Sound Recordings Act of 1995’’.

6 SEC. 2. EXCLUSIVE RIGHTS IN COPYRIGHTED WORKS.

7 Section 106 of title 17, United States Code, is amend8 ed—

9 (1) in paragraph (4) by striking ‘‘and’’ after the

10 semicolon;

11 (2) in paragraph (5) by striking the period and

12 inserting ‘‘; and’’; and

13 (3) by adding at the end the following:

14 ‘‘(6) in the case of sound recordings, to perform

15 the copyrighted work publicly by means of a digital

16 audio transmission.’’.

17 SEC. 3. SCOPE OF EXCLUSIVE RIGHTS IN SOUND RECORD18 INGS.

19 Section 114 of title 17, United States Code, is amend20 ed—

21 (1) in subsection (a) by striking ‘‘and (3)’’ and

22 inserting ‘‘(3) and (6)’’;

23 (2) in subsection (b) in the first sentence by

24 striking ‘‘phonorecords, or of copies of motion pictures
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1 and other audiovisual works,’’ and inserting

2 ‘‘phonorecords or copies’’;

3 (3) by striking subsection (d) and inserting:

4 ‘‘(d) LIMITATIONS ON EXCLUSIVE RIGHT.—Notwith5 standing the provisions of section 106(6)—

6 ‘‘(1) EXEMPT TRANSMISSIONS AND

7 RETRANSMISSIONS.—The performance of a sound re8 cording publicly by means of a digital audio trans9 mission, other than as a part of an interactive serv10 ice, is not an infringement of section 106(6) if the

11 performance is part of—

12 ‘‘(A)(i) a nonsubscription transmission

13 other than a retransmission;

14 ‘‘(ii) an initial nonsubscription

15 retransmission made for direct reception by

16 members of the public of a prior or simultaneous

17 incidental transmission that is not made for di18 rect reception by members of the public; or

19 ‘‘(iii) a nonsubscription broadcast trans20 mission;

21 ‘‘(B) a retransmission of a nonsubscription

22 broadcast transmission: Provided, That, in the

23 case of a retransmission of a radio station’s

24 broadcast transmission—
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1 ‘‘(i) the radio station’s broadcast

2 transmission is not willfully or repeatedly

3 retransmitted more than a radius of 150

4 miles from the site of the radio broadcast

5 transmitter, however—

6 ‘‘(I) the 150 mile limitation under

7 this clause shall not apply when a

8 nonsubscription broadcast trans9 mission by a radio station licensed by

10 the Federal Communications Commis11 sion is retransmitted on a

12 nonsubscription basis by a terrestrial

13 broadcast station, terrestrial trans14 lator, or terrestrial repeater licensed by

15 the Federal Communications Commis16 sion; and

17 ‘‘(II) in the case of a subscription

18 retransmission of a nonsubscription

19 broadcast retransmission covered by

20 subclause (I), the 150 mile radius shall

21 be measured from the transmitter site

22 of such broadcast retransmitter;

23 ‘‘(ii) the retransmission is of radio sta24 tion broadcast transmissions that are—
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1 ‘‘(I) obtained by the retransmitter

2 over the air;

3 ‘‘(II) not electronically processed

4 by the retransmitter to deliver separate

5 and discrete signals; and

6 ‘‘(III) retransmitted only within

7 the local communities served by the

8 retransmitter;

9 ‘‘(iii) the radio station’s broadcast

10 transmission was being retransmitted to

11 cable systems (as defined in section 111(f))

12 by a satellite carrier on January 1, 1995,

13 and that retransmission was being

14 retransmitted by cable systems as a separate

15 and discrete signal, and the satellite carrier

16 obtains the radio station’s broadcast trans17 mission in an analog format: Provided,

18 That the broadcast transmission being

19 retransmitted may embody the program20 ming of no more than one radio station; or

21 ‘‘(iv) the radio station’s broadcast

22 transmission is made by a noncommercial

23 educational broadcast station funded on or

24 after January 1, 1995, under section 396(k)

25 of the Communications Act of 1934 (47
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1 U.S.C. 396(k)), consists solely of non2 commercial educational and cultural radio

3 programs, and the retransmission, whether

4 or not simultaneous, is a nonsubscription

5 terrestrial broadcast retransmission; or

6 ‘‘(C) a transmission that comes within any

7 of the following categories:

8 ‘‘(i) a prior or simultaneous trans9 mission incidental to an exempt trans10 mission, such as a feed received by and then

11 retransmitted by an exempt transmitter:

12 Provided, That such incidental trans13 missions do not include any subscription

14 transmission directly for reception by mem15 bers of the public;

16 ‘‘(ii) a transmission within a business

17 establishment, confined to its premises or

18 the immediately surrounding vicinity;

19 ‘‘(iii) a retransmission by any

20 retransmitter, including a multichannel

21 video programming distributor as defined

22 in section 602(12) of the Communications

23 Act of 1934 (47 U.S.C. 522(12)), of a trans24 mission by a transmitter licensed to pub25 licly perform the sound recording as a part
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1 of that transmission, if the retransmission

2 is simultaneous with the licensed trans3 mission and authorized by the transmitter;

4 or

5 ‘‘(iv) a transmission to a business es6 tablishment for use in the ordinary course

7 of its business: Provided, That the business

8 recipient does not retransmit the trans9 mission outside of its premises or the imme10 diately surrounding vicinity, and that the

11 transmission does not exceed the sound re12 cording performance complement. Nothing

13 in this clause shall limit the scope of the ex14 emption in clause (ii).

15 ‘‘(2) SUBSCRIPTION TRANSMISSIONS.—In the

16 case of a subscription transmission not exempt under

17 subsection (d)(1), the performance of a sound record18 ing publicly by means of a digital audio transmission

19 shall be subject to statutory licensing, in accordance

20 with subsection (f) of this section, if—

21 ‘‘(A) the transmission is not part of an

22 interactive service;

23 ‘‘(B) the transmission does not exceed the

24 sound recording performance complement;
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1 ‘‘(C) the transmitting entity does not cause

2 to be published by means of an advance program

3 schedule or prior announcement the titles of the

4 specific sound recordings or phonorecords em5 bodying such sound recordings to be transmitted;

6 ‘‘(D) except in the case of transmission to

7 a business establishment, the transmitting entity

8 does not automatically and intentionally cause

9 any device receiving the transmission to switch

10 from one program channel to another; and

11 ‘‘(E) except as provided in section 1002(e)

12 of this title, the transmission of the sound record13 ing is accompanied by the information encoded

14 in that sound recording, if any, by or under the

15 authority of the copyright owner of that sound

16 recording, that identifies the title of the sound re17 cording, the featured recording artist who per18 forms on the sound recording, and related infor19 mation, including information concerning the

20 underlying musical work and its writer.

21 ‘‘(3) LICENSES FOR TRANSMISSIONS BY INTER22 ACTIVE SERVICES.—

23 ‘‘(A) No interactive service shall be granted

24 an exclusive license under section 106(6) for the

25 performance of a sound recording publicly by
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1 means of digital audio transmission for a period

2 in excess of 12 months, except that with respect

3 to an exclusive license granted to an interactive

4 service by a licensor that holds the copyright to

5 1,000 or fewer sound recordings, the period of

6 such license shall not exceed 24 months: Pro7 vided, however, That the grantee of such exclusive

8 license shall be ineligible to receive another exclu9 sive license for the performance of that sound re10 cording for a period of 13 months from the expi11 ration of the prior exclusive license.

12 ‘‘(B) The limitation set forth in subpara13 graph (A) of this paragraph shall not apply if—

14 ‘‘(i) the licensor has granted and there

15 remain in effect licenses under section

16 106(6) for the public performance of sound

17 recordings by means of digital audio trans18 mission by at least 5 different interactive

19 services: Provided, however, That each such

20 license must be for a minimum of 10 per21 cent of the copyrighted sound recordings

22 owned by the licensor that have been li23 censed to interactive services, but in no

24 event less than 50 sound recordings; or
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1 ‘‘(ii) the exclusive license is granted to

2 perform publicly up to 45 seconds of a

3 sound recording and the sole purpose of the

4 performance is to promote the distribution

5 or performance of that sound recording.

6 ‘‘(C) Notwithstanding the grant of an exclu7 sive or nonexclusive license of the right of public

8 performance under section 106(6), an interactive

9 service may not publicly perform a sound record10 ing unless a license has been granted for the pub11 lic performance of any copyrighted musical work

12 contained in the sound recording: Provided, That

13 such license to publicly perform the copyrighted

14 musical work may be granted either by a per15 forming rights society representing the copyright

16 owner or by the copyright owner.

17 ‘‘(D) The performance of a sound recording

18 by means of a retransmission of a digital audio

19 transmission is not an infringement of section

20 106(6) if—

21 ‘‘(i) the retransmission is of a trans22 mission by an interactive service licensed to

23 publicly perform the sound recording to a

24 particular member of the public as part of

25 that transmission; and
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1 ‘‘(ii) the retransmission is simulta2 neous with the licensed transmission, au3 thorized by the transmitter, and limited to

4 that particular member of the public in5 tended by the interactive service to be the

6 recipient of the transmission.

7 ‘‘(E) For the purposes of this paragraph—

8 ‘‘(i) a ‘licensor’ shall include the licens9 ing entity and any other entity under any

10 material degree of common ownership, man11 agement, or control that owns copyrights in

12 sound recordings; and

13 ‘‘(ii) a ‘performing rights society’ is an

14 association or corporation that licenses the

15 public performance of nondramatic musical

16 works on behalf of the copyright owner, such

17 as the American Society of Composers, Au18 thors and Publishers, Broadcast Music, Inc.,

19 and SESAC, Inc.

20 ‘‘(4) RIGHTS NOT OTHERWISE LIMITED.—

21 ‘‘(A) Except as expressly provided in this

22 section, this section does not limit or impair the

23 exclusive right to perform a sound recording

24 publicly by means of a digital audio trans25 mission under section 106(6).
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1 ‘‘(B) Nothing in this section annuls or lim2 its in any way—

3 ‘‘(i) the exclusive right to publicly per4 form a musical work, including by means of

5 a digital audio transmission, under section

6 106(4);

7 ‘‘(ii) the exclusive rights in a sound re8 cording or the musical work embodied there9 in under sections 106(1), 106(2) and

10 106(3); or

11 ‘‘(iii) any other rights under any other

12 clause of section 106, or remedies available

13 under this title, as such rights or remedies

14 exist either before or after the date of enact15 ment of the Digital Performance Right in

16 Sound Recordings Act of 1995.

17 ‘‘(C) Any limitations in this section on the

18 exclusive right under section 106(6) apply only

19 to the exclusive right under section 106(6) and

20 not to any other exclusive rights under section

21 106. Nothing in this section shall be construed to

22 annul, limit, impair or otherwise affect in any

23 way the ability of the owner of a copyright in

24 a sound recording to exercise the rights under

25 sections 106(1), 106(2) and 106(3), or to obtain
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1 the remedies available under this title pursuant

2 to such rights, as such rights and remedies exist

3 either before or after the date of enactment of the

4 Digital Performance Right in Sound Recordings

5 Act of 1995.’’; and

6 (4) by adding after subsection (d) the following:

7 ‘‘(e) AUTHORITY FOR NEGOTIATIONS.—

8 ‘‘(1) Notwithstanding any provision of the anti9 trust laws, in negotiating statutory licenses in accord10 ance with subsection (f), any copyright owners of

11 sound recordings and any entities performing sound

12 recordings affected by this section may negotiate and

13 agree upon the royalty rates and license terms and

14 conditions for the performance of such sound record15 ings and the proportionate division of fees paid

16 among copyright owners, and may designate common

17 agents on a nonexclusive basis to negotiate, agree to,

18 pay, or receive payments.

19 ‘‘(2) For licenses granted under section 106(6),

20 other than statutory licenses, such as for performances

21 by interactive services or performances that exceed the

22 sound recording performance complement—

23 ‘‘(A) copyright owners of sound recordings

24 affected by this section may designate common

25 agents to act on their behalf to grant licenses and
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1 receive and remit royalty payments: Provided,

2 That each copyright owner shall establish the

3 royalty rates and material license terms and

4 conditions unilaterally, that is, not in agree5 ment, combination, or concert with other copy6 right owners of sound recordings; and

7 ‘‘(B) entities performing sound recordings

8 affected by this section may designate common

9 agents to act on their behalf to obtain licenses

10 and collect and pay royalty fees: Provided, That

11 each entity performing sound recordings shall

12 determine the royalty rates and material license

13 terms and conditions unilaterally, that is, not in

14 agreement, combination, or concert with other

15 entities performing sound recordings.

16 ‘‘(f) LICENSES FOR NONEXEMPT SUBSCRIPTION

17 TRANSMISSIONS.—

18 ‘‘(1) No later than 30 days after the enactment

19 of the Digital Performance Right in Sound Record20 ings Act of 1995, the Librarian of Congress shall

21 cause notice to be published in the Federal Register

22 of the initiation of voluntary negotiation proceedings

23 for the purpose of determining reasonable terms and

24 rates of royalty payments for the activities specified

25 by subsection (d)(2) of this section during the period
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1 beginning on the effective date of such Act and ending

2 on December 31, 2000. Such terms and rates shall

3 distinguish among the different types of digital audio

4 transmission services then in operation. Any copy5 right owners of sound recordings or any entities per6 forming sound recordings affected by this section may

7 submit to the Librarian of Congress licenses covering

8 such activities with respect to such sound recordings.

9 The parties to each negotiation proceeding shall bear

10 their own costs.

11 ‘‘(2) In the absence of license agreements nego12 tiated under paragraph (1), during the 60-day period

13 commencing 6 months after publication of the notice

14 specified in paragraph (1), and upon the filing of a

15 petition in accordance with section 803(a)(1), the Li16 brarian of Congress shall, pursuant to chapter 8, con17 vene a copyright arbitration royalty panel to deter18 mine and publish in the Federal Register a schedule

19 of rates and terms which, subject to paragraph (3),

20 shall be binding on all copyright owners of sound re21 cordings and entities performing sound recordings. In

22 addition to the objectives set forth in section

23 801(b)(1), in establishing such rates and terms, the

24 copyright arbitration royalty panel may consider the

25 rates and terms for comparable types of digital audio
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1 transmission services and comparable circumstances

2 under voluntary license agreements negotiated as pro3 vided in paragraph (1). The Librarian of Congress

4 shall also establish requirements by which copyright

5 owners may receive reasonable notice of the use of

6 their sound recordings under this section, and under

7 which records of such use shall be kept and made

8 available by entities performing sound recordings.

9 ‘‘(3) License agreements voluntarily negotiated

10 at any time between one or more copyright owners of

11 sound recordings and one or more entities performing

12 sound recordings shall be given effect in lieu of any

13 determination by a copyright arbitration royalty

14 panel or decision by the Librarian of Congress.

15 ‘‘(4)(A) Publication of a notice of the initiation

16 of voluntary negotiation proceedings as specified in

17 paragraph (1) shall be repeated, in accordance with

18 regulations that the Librarian of Congress shall pre19 scribe—

20 ‘‘(i) no later than 30 days after a petition

21 is filed by any copyright owners of sound record22 ings or any entities performing sound recordings

23 affected by this section indicating that a new

24 type of digital audio transmission service on
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1 which sound recordings are performed is or is

2 about to become operational; and

3 ‘‘(ii) in the first week of January, 2000 and

4 at 5-year intervals thereafter.

5 ‘‘(B)(i) The procedures specified in paragraph

6 (2) shall be repeated, in accordance with regulations

7 that the Librarian of Congress shall prescribe, upon

8 the filing of a petition in accordance with section

9 803(a)(1) during a 60-day period commencing—

10 ‘‘(I) six months after publication of a notice

11 of the initiation of voluntary negotiation pro12 ceedings under paragraph (1) pursuant to a pe13 tition under paragraph (4)(A)(i); or

14 ‘‘(II) on July 1, 2000 and at 5-year inter15 vals thereafter.

16 ‘‘(ii) The procedures specified in paragraph (2)

17 shall be concluded in accordance with section 802.

18 ‘‘(5)(A) Any person who wishes to perform a

19 sound recording publicly by means of a nonexempt

20 subscription transmission under this subsection may

21 do so without infringing the exclusive right of the

22 copyright owner of the sound recording—

23 ‘‘(i) by complying with such notice require24 ments as the Librarian of Congress shall pre-
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1 scribe by regulation and by paying royalty fees

2 in accordance with this subsection; or

3 ‘‘(ii) if such royalty fees have not been set,

4 by agreeing to pay such royalty fees as shall be

5 determined in accordance with this subsection.

6 ‘‘(B) Any royalty payments in arrears shall be

7 made on or before the twentieth day of the month next

8 succeeding the month in which the royalty fees are

9 set.

10 ‘‘(g) PROCEEDS FROM LICENSING OF SUBSCRIPTION

11 TRANSMISSIONS.—

12 ‘‘(1) Except in the case of a subscription trans13 mission licensed in accordance with subsection (f) of

14 this section—

15 ‘‘(A) a featured recording artist who per16 forms on a sound recording that has been li17 censed for a subscription transmission shall be

18 entitled to receive payments from the copyright

19 owner of the sound recording in accordance with

20 the terms of the artist’s contract; and

21 ‘‘(B) a nonfeatured recording artist who

22 performs on a sound recording that has been li23 censed for a subscription transmission shall be

24 entitled to receive payments from the copyright

25 owner of the sound recording in accordance with
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1 the terms of the nonfeatured recording artist’s

2 applicable contract or other applicable agree3 ment.

4 ‘‘(2) The copyright owner of the exclusive right

5 under section 106(6) of this title to publicly perform

6 a sound recording by means of a digital audio trans7 mission shall allocate to recording artists in the fol8 lowing manner its receipts from the statutory licens9 ing of subscription transmission performances of the

10 sound recording in accordance with subsection (f) of

11 this section:

‘‘(A) 21 12 ⁄2 percent of the receipts shall be de13 posited in an escrow account managed by an

14 independent administrator jointly appointed by

15 copyright owners of sound recordings and the

16 American Federation of Musicians (or any suc17 cessor entity) to be distributed to nonfeatured

18 musicians (whether or not members of the Amer19 ican Federation of Musicians) who have per20 formed on sound recordings.

‘‘(B) 21 21 ⁄2 percent of the receipts shall be de22 posited in an escrow account managed by an

23 independent administrator jointly appointed by

24 copyright owners of sound recordings and the

25 American Federation of Television and Radio
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1 Artists (or any successor entity) to be distributed

2 to nonfeatured vocalists (whether or not members

3 of the American Federation of Television and

4 Radio Artists) who have performed on sound re5 cordings.

6 ‘‘(C) 45 percent of the receipts shall be allo7 cated, on a per sound recording basis, to the re8 cording artist or artists featured on such sound

9 recording (or the persons conveying rights in the

10 artists’ performance in the sound recordings).

11 ‘‘(h) LICENSING TO AFFILIATES.—

12 ‘‘(1) If the copyright owner of a sound recording

13 licenses an affiliated entity the right to publicly per14 form a sound recording by means of a digital audio

15 transmission under section 106(6), the copyright

16 owner shall make the licensed sound recording avail17 able under section 106(6) on no less favorable terms

18 and conditions to all bona fide entities that offer

19 similar services, except that, if there are material dif20 ferences in the scope of the requested license with re21 spect to the type of service, the particular sound re22 cordings licensed, the frequency of use, the number of

23 subscribers served, or the duration, then the copyright

24 owner may establish different terms and conditions

25 for such other services.
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1 ‘‘(2) The limitation set forth in paragraph (1) of

2 this subsection shall not apply in the case where the

3 copyright owner of a sound recording licenses—

4 ‘‘(A) an interactive service; or

5 ‘‘(B) an entity to perform publicly up to 45

6 seconds of the sound recording and the sole pur7 pose of the performance is to promote the dis8 tribution or performance of that sound recording.

9 ‘‘(i) NO EFFECT ON ROYALTIES FOR UNDERLYING

10 WORKS.—License fees payable for the public performance

11 of sound recordings under section 106(6) shall not be taken

12 into account in any administrative, judicial, or other gov13 ernmental proceeding to set or adjust the royalties payable

14 to copyright owners of musical works for the public per15 formance of their works. It is the intent of Congress that

16 royalties payable to copyright owners of musical works for

17 the public performance of their works shall not be dimin18 ished in any respect as a result of the rights granted by

19 section 106(6).

20 ‘‘(j) DEFINITIONS.—As used in this section, the follow21 ing terms have the following meanings:

22 ‘‘(1) An ‘affiliated entity’ is an entity engaging

23 in digital audio transmissions covered by section

24 106(6), other than an interactive service, in which the

25 licensor has any direct or indirect partnership or any
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1 ownership interest amounting to 5 percent or more of

2 the outstanding voting or non-voting stock.

3 ‘‘(2) A ‘broadcast’ transmission is a trans4 mission made by a terrestrial broadcast station li5 censed as such by the Federal Communications Com6 mission.

7 ‘‘(3) A ‘digital audio transmission’ is a digital

8 transmission as defined in section 101, that embodies

9 the transmission of a sound recording. This term does

10 not include the transmission of any audiovisual work.

11 ‘‘(4) An ‘interactive service’ is one that enables

12 a member of the public to receive, on request, a trans13 mission of a particular sound recording chosen by or

14 on behalf of the recipient. The ability of individuals

15 to request that particular sound recordings be per16 formed for reception by the public at large does not

17 make a service interactive. If an entity offers both

18 interactive and non-interactive services (either con19 currently or at different times), the non-interactive

20 component shall not be treated as part of an inter21 active service.

22 ‘‘(5) A ‘nonsubscription’ transmission is any

23 transmission that is not a subscription transmission.

24 ‘‘(6) A ‘retransmission’ is a further transmission

25 of an initial transmission, and includes any further
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1 retransmission of the same transmission. Except as

2 provided in this section, a transmission qualifies as

3 a ‘retransmission’ only if it is simultaneous with the

4 initial transmission. Nothing in this definition shall

5 be construed to exempt a transmission that fails to

6 satisfy a separate element required to qualify for an

7 exemption under section 114(d)(1).

8 ‘‘(7) The ‘sound recording performance com9 plement’ is the transmission during any 3-hour pe10 riod, on a particular channel used by a transmitting

11 entity, of no more than—

12 ‘‘(A) 3 different selections of sound record13 ings from any one phonorecord lawfully distrib14 uted for public performance or sale in the United

15 States, if no more than 2 such selections are

16 transmitted consecutively; or

17 ‘‘(B) 4 different selections of sound record18 ings—

19 ‘‘(i) by the same featured recording

20 artist; or

21 ‘‘(ii) from any set or compilation of

22 phonorecords lawfully distributed together

23 as a unit for public performance or sale in

24 the United States,
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1 if no more than three such selections are trans2 mitted consecutively:

3 Provided, That the transmission of selections in excess

4 of the numerical limits provided for in clauses (A)

5 and (B) from multiple phonorecords shall nonetheless

6 qualify as a sound recording performance complement

7 if the programming of the multiple phonorecords was

8 not willfully intended to avoid the numerical limita9 tions prescribed in such clauses.

10 ‘‘(8) A ‘subscription’ transmission is a trans11 mission that is controlled and limited to particular

12 recipients, and for which consideration is required to

13 be paid or otherwise given by or on behalf of the re14 cipient to receive the transmission or a package of

15 transmissions including the transmission.

16 ‘‘(9) A ‘transmission’ includes both an initial

17 transmission and a retransmission.’’.

18 SEC. 4. MECHANICAL ROYALTIES IN DIGITAL PHONO19 RECORD DELIVERIES.

20 Section 115 of title 17, United States Code, is amend21 ed—

22 (1) in subsection (a)(1)—

23 (A) in the first sentence by striking out

24 ‘‘any other person’’ and inserting in lieu thereof

25 ‘‘any other person, including those who make
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1 phonorecords or digital phonorecord deliveries,’’;

2 and

3 (B) in the second sentence by inserting be4 fore the period ‘‘, including by means of a digi5 tal phonorecord delivery’’;

6 (2) in subsection (c)(2) in the second sentence by

7 inserting ‘‘and other than as provided in paragraph

8 (3),’’ after ‘‘For this purpose,’’;

9 (3) by redesignating paragraphs (3), (4), and (5)

10 of subsection (c) as paragraphs (4), (5), and (6), re11 spectively, and by inserting after paragraph (2) the

12 following new paragraph:

13 ‘‘(3)(A) A compulsory license under this section

14 includes the right of the compulsory licensee to dis15 tribute or authorize the distribution of a phonorecord

16 of a nondramatic musical work by means of a digital

17 transmission which constitutes a digital phonorecord

18 delivery, regardless of whether the digital trans19 mission is also a public performance of the sound re20 cording under section 106(6) of this title or of any

21 nondramatic musical work embodied therein under

22 section 106(4) of this title. For every digital phono23 record delivery by or under the authority of the com24 pulsory licensee—
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1 ‘‘(i) on or before December 31, 1997, the

2 royalty payable by the compulsory licensee shall

3 be the royalty prescribed under paragraph (2)

4 and chapter 8 of this title; and

5 ‘‘(ii) on or after January 1, 1998, the roy6 alty payable by the compulsory licensee shall be

7 the royalty prescribed under subparagraphs (B)

8 through (F) and chapter 8 of this title.

9 ‘‘(B) Notwithstanding any provision of the anti10 trust laws, any copyright owners of nondramatic mu11 sical works and any persons entitled to obtain a com12 pulsory license under subsection (a)(1) may negotiate

13 and agree upon the terms and rates of royalty pay14 ments under this paragraph and the proportionate di15 vision of fees paid among copyright owners, and may

16 designate common agents to negotiate, agree to, pay

17 or receive such royalty payments. Such authority to

18 negotiate the terms and rates of royalty payments in19 cludes, but is not limited to, the authority to negotiate

20 the year during which the royalty rates prescribed

21 under subparagraphs (B) through (F) and chapter 8

22 of this title shall next be determined.

23 ‘‘(C) During the period of June 30, 1996,

24 through December 31, 1996, the Librarian of Congress

25 shall cause notice to be published in the Federal Reg-
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1 ister of the initiation of voluntary negotiation pro2 ceedings for the purpose of determining reasonable

3 terms and rates of royalty payments for the activities

4 specified by subparagraph (A) during the period be5 ginning January 1, 1998, and ending on the effective

6 date of any new terms and rates established pursuant

7 to subparagraph (C), (D) or (F), or such other date

8 (regarding digital phonorecord deliveries) as the par9 ties may agree. Such terms and rates shall distin10 guish between (i) digital phonorecord deliveries where

11 the reproduction or distribution of a phonorecord is

12 incidental to the transmission which constitutes the

13 digital phonorecord delivery, and (ii) digital phono14 record deliveries in general. Any copyright owners of

15 nondramatic musical works and any persons entitled

16 to obtain a compulsory license under subsection (a)(1)

17 may submit to the Librarian of Congress licenses cov18 ering such activities. The parties to each negotiation

19 proceeding shall bear their own costs.

20 ‘‘(D) In the absence of license agreements nego21 tiated under subparagraphs (B) and (C), upon the fil22 ing of a petition in accordance with section

23 803(a)(1), the Librarian of Congress shall, pursuant

24 to chapter 8, convene a copyright arbitration royalty

25 panel to determine and publish in the Federal Reg-
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1 ister a schedule of rates and terms which, subject to

2 subparagraph (E), shall be binding on all copyright

3 owners of nondramatic musical works and persons

4 entitled to obtain a compulsory license under sub5 section (a)(1) during the period beginning January 1,

6 1998, and ending on the effective date of any new

7 terms and rates established pursuant to subparagraph

8 (C), (D) or (F), or such other date (regarding digital

9 phonorecord deliveries) as may be determined pursu10 ant to subparagraphs (B) and (C). Such terms and

11 rates shall distinguish between (i) digital phonorecord

12 deliveries where the reproduction or distribution of a

13 phonorecord is incidental to the transmission which

14 constitutes the digital phonorecord delivery, and (ii)

15 digital phonorecord deliveries in general. In addition

16 to the objectives set forth in section 801(b)(1), in es17 tablishing such rates and terms, the copyright arbi18 tration royalty panel may consider rates and terms

19 under voluntary license agreements negotiated as pro20 vided in subparagraphs (B) and (C). The royalty

21 rates payable for a compulsory license for a digital

22 phonorecord delivery under this section shall be estab23 lished de novo and no precedential effect shall be

24 given to the amount of the royalty payable by a com25 pulsory licensee for digital phonorecord deliveries on
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1 or before December 31, 1997. The Librarian of Con2 gress shall also establish requirements by which copy3 right owners may receive reasonable notice of the use

4 of their works under this section, and under which

5 records of such use shall be kept and made available

6 by persons making digital phonorecord deliveries.

7 ‘‘(E)(i) License agreements voluntarily nego8 tiated at any time between one or more copyright

9 owners of nondramatic musical works and one or

10 more persons entitled to obtain a compulsory license

11 under subsection (a)(1) shall be given effect in lieu of

12 any determination by the Librarian of Congress. Sub13 ject to clause (ii), the royalty rates determined pursu14 ant to subparagraph (C), (D) or (F) shall be given ef15 fect in lieu of any contrary royalty rates specified in

16 a contract pursuant to which a recording artist who

17 is the author of a nondramatic musical work grants

18 a license under that person’s exclusive rights in the

19 musical work under sections 106(1) and (3) or com20 mits another person to grant a license in that musical

21 work under sections 106(1) and (3), to a person desir22 ing to fix in a tangible medium of expression a sound

23 recording embodying the musical work.

24 ‘‘(ii) The second sentence of clause (i) shall not

25 apply to—
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1 ‘‘(I) a contract entered into on or before

2 June 22, 1995, and not modified thereafter for

3 the purpose of reducing the royalty rates deter4 mined pursuant to subparagraph (C), (D) or (F)

5 or of increasing the number of musical works

6 within the scope of the contract covered by the

7 reduced rates, except if a contract entered into

8 on or before June 22, 1995, is modified thereafter

9 for the purpose of increasing the number of mu10 sical works within the scope of the contract, any

11 contrary royalty rates specified in the contract

12 shall be given effect in lieu of royalty rates deter13 mined pursuant to subparagraph (C), (D) or (F)

14 for the number of musical works within the scope

15 of the contract as of June 22, 1995; and

16 ‘‘(II) a contract entered into after the date

17 that the sound recording is fixed in a tangible

18 medium of expression substantially in a form in19 tended for commercial release, if at the time the

20 contract is entered into, the recording artist re21 tains the right to grant licenses as to the musical

22 work under sections 106(1) and 106(3).

23 ‘‘(F) The procedures specified in subparagraphs

24 (C) and (D) shall be repeated and concluded, in ac25 cordance with regulations that the Librarian of Con-
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1 gress shall prescribe, in each fifth calendar year after

2 1997, except to the extent that different years for the

3 repeating and concluding of such proceedings may be

4 determined in accordance with subparagraphs (B)

5 and (C).

6 ‘‘(G) Except as provided in section 1002(e) of

7 this title, a digital phonorecord delivery licensed

8 under this paragraph shall be accompanied by the in9 formation encoded in the sound recording, if any, by

10 or under the authority of the copyright owner of that

11 sound recording, that identifies the title of the sound

12 recording, the featured recording artist who performs

13 on the sound recording, and related information, in14 cluding information concerning the underlying musi15 cal work and its writer.

16 ‘‘(H)(i) A digital phonorecord delivery of a

17 sound recording is actionable as an act of infringe18 ment under section 501, and is fully subject to the

19 remedies provided by sections 502 through 506 and

20 section 509, unless—

21 ‘‘(I) the digital phonorecord delivery has

22 been authorized by the copyright owner of the

23 sound recording; and

24 ‘‘(II) the owner of the copyright in the

25 sound recording or the entity making the digital
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1 phonorecord delivery has obtained a compulsory

2 license under this section or has otherwise been

3 authorized by the copyright owner of the musical

4 work to distribute or authorize the distribution,

5 by means of a digital phonorecord delivery, of

6 each musical work embodied in the sound record7 ing.

8 ‘‘(ii) Any cause of action under this subpara9 graph shall be in addition to those available to the

10 owner of the copyright in the nondramatic musical

11 work under subsection (c)(6) and section 106(4) and

12 the owner of the copyright in the sound recording

13 under section 106(6).

14 ‘‘(I) The liability of the copyright owner of a

15 sound recording for infringement of the copyright in

16 a nondramatic musical work embodied in the sound

17 recording shall be determined in accordance with ap18 plicable law, except that the owner of a copyright in

19 a sound recording shall not be liable for a digital

20 phonorecord delivery by a third party if the owner of

21 the copyright in the sound recording does not license

22 the distribution of a phonorecord of the nondramatic

23 musical work.

24 ‘‘(J) Nothing in section 1008 shall be construed

25 to prevent the exercise of the rights and remedies al-
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1 lowed by this paragraph, paragraph (6), and chapter

2 5 in the event of a digital phonorecord delivery, ex3 cept that no action alleging infringement of copyright

4 may be brought under this title against a manufac5 turer, importer or distributor of a digital audio re6 cording device, a digital audio recording medium, an

7 analog recording device, or an analog recording me8 dium, or against a consumer, based on the actions de9 scribed in such section.

10 ‘‘(K) Nothing in this section annuls or limits (i)

11 the exclusive right to publicly perform a sound record12 ing or the musical work embodied therein, including

13 by means of a digital transmission, under sections

14 106(4) and 106(6), (ii) except for compulsory licens15 ing under the conditions specified by this section, the

16 exclusive rights to reproduce and distribute the sound

17 recording and the musical work embodied therein

18 under sections 106(1) and 106(3), including by means

19 of a digital phonorecord delivery, or (iii) any other

20 rights under any other provision of section 106, or

21 remedies available under this title, as such rights or

22 remedies exist either before or after the date of enact23 ment of the Digital Performance Right in Sound Re24 cordings Act of 1995.
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1 ‘‘(L) The provisions of this section concerning

2 digital phonorecord deliveries shall not apply to any

3 exempt transmissions or retransmissions under sec4 tion 114(d)(1). The exemptions created in section

5 114(d)(1) do not expand or reduce the rights of copy6 right owners under section 106(1) through (5) with

7 respect to such transmissions and retransmissions.’’;

8 and

9 (5) by adding after subsection (c) the following:

10 ‘‘(d) DEFINITION.—As used in this section, the follow11 ing term has the following meaning: A ‘digital phonorecord

12 delivery’ is each individual delivery of a phonorecord by

13 digital transmission of a sound recording which results in

14 a specifically identifiable reproduction by or for any trans15 mission recipient of a phonorecord of that sound recording,

16 regardless of whether the digital transmission is also a pub17 lic performance of the sound recording or any nondramatic

18 musical work embodied therein. A digital phonorecord de19 livery does not result from a real-time, noninteractive sub20 scription transmission of a sound recording where no repro21 duction of the sound recording or the musical work em22 bodied therein is made from the inception of the trans23 mission through to its receipt by the transmission recipient

24 in order to make the sound recording audible.’’.
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1 SEC. 5. CONFORMING AMENDMENTS.

2 (a) DEFINITIONS.—Section 101 of title 17, United

3 States Code, is amended by inserting after the definition

4 of ‘‘device’’, ‘‘machine’’, or ‘‘process’’ the following:

5 ‘‘A ‘digital transmission’ is a transmission in

6 whole or in part in a digital or other non-analog for7 mat.’’.

8 (b) LIMITATIONS ON EXCLUSIVE RIGHTS: SECONDARY

9 TRANSMISSIONS.—Section 111(c)(1) of title 17, United

10 States Code, is amended in the first sentence by inserting

11 ‘‘and section 114(d)’’ after ‘‘of this subsection’’.

12 (c) LIMITATIONS ON EXCLUSIVE RIGHTS: SECONDARY

13 TRANSMISSIONS OF SUPERSTATIONS AND NETWORK STA14 TIONS FOR PRIVATE HOME VIEWING.—

15 (1) Section 119(a)(1) of title 17, United States

16 Code, is amended in the first sentence by inserting

17 ‘‘and section 114(d)’’ after ‘‘of this subsection’’.

18 (2) Section 119(a)(2)(A) of title 17, United

19 States Code, is amended in the first sentence by in20 serting ‘‘and section 114(d)’’ after ‘‘of this sub21 section’’.

22 (d) COPYRIGHT ARBITRATION ROYALTY PANELS.—

23 (1) Section 801(b)(1) of title 17, United States

24 Code, is amended in the first and second sentences by

25 striking ‘‘115’’ each place it appears and inserting

26 ‘‘114, 115,’’.
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1 (2) Section 802(c) of title 17, United States

2 Code, is amended in the third sentence by striking

3 ‘‘section 111, 116, or 119,’’ and inserting ‘‘section

4 111, 114, 116, or 119, any person entitled to a com5 pulsory license under section 114(d), any person enti6 tled to a compulsory license under section 115,’’.

7 (3) Section 802(g) of title 17, United States

8 Code, is amended in the third sentence by inserting

9 ‘‘114,’’ after ‘‘111,’’.

10 (4) Section 802(h)(2) of title 17, United States

11 Code, is amended by inserting ‘‘114,’’ after ‘‘111,’’.

12 (5) Section 803(a)(1) of title 17, United States

13 Code, is amended in the first sentence by striking

14 ‘‘115’’ and inserting ‘‘114, 115’’ and by striking ‘‘and

15 (4)’’ and inserting ‘‘(4) and (5)’’.

16 (6) Section 803(a)(3) of title 17, United States

17 Code, is amended by inserting before the period ‘‘or

18 as prescribed in section 115(c)(3)(D)’’.

19 (7) Section 803(a) of title 17, United States

20 Code, is amended by inserting after paragraph (4) the

21 following new paragraph:

22 ‘‘(5) With respect to proceedings under section

23 801(b)(1) concerning the determination of reasonable

24 terms and rates of royalty payments as provided in
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1 section 114, the Librarian of Congress shall proceed

2 when and as provided by that section.’’.

3 SEC. 6. EFFECTIVE DATE.

4 This Act and the amendments made by this Act shall

5 take effect 3 months after the date of enactment of this Act,

6 except that the provisions of sections 114(e) and 114(f) of

7 title 17, United States Code (as added by section 3 of this

8 Act) shall take effect immediately upon the date of enact9 ment of this Act.

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