```

[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 227 Reported in Senate (RS)]

                                                       Calendar No. 165

104th CONGRESS

  1st Session

                                 S. 227

                          [Report No. 104-128]

_______________________________________________________________________

                                 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.

_______________________________________________________________________

               August 4 (legislative day, July 10), 1995

                       Reported with an amendment

                                                       Calendar No. 165
104th CONGRESS
  1st Session
                                 S. 227

                          [Report No. 104-128]

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 SENATE OF THE UNITED STATES

             January 13 (legislative day, January 10), 1995

 Mr. Hatch (for himself, Mrs. Feinstein, Mr. Simpson, Mr. DeWine, Mr. 
  Lott, and Mr. Baucus) introduced the following bill; which was read 
          twice and referred to the Committee on the Judiciary

               August 4 (legislative day, July 10), 1995

                Reported by Mr. Hatch, with an amendment
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 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.
    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,
<DELETED>SECTION 1. SHORT TITLE.</DELETED>

<DELETED>    This Act may be cited as the ``Digital Performance Right 
in Sound Recordings Act of 1995''.</DELETED>

<DELETED>SEC. 2. EXCLUSIVE RIGHTS IN COPYRIGHTED WORKS.</DELETED>

<DELETED>    Section 106 of title 17, United States Code, is amended--
</DELETED>
        <DELETED>    (1) in paragraph (4) by striking ``and'' after the 
        semicolon;</DELETED>
        <DELETED>    (2) in paragraph (5) by striking the period and 
        inserting ``; and''; and</DELETED>
        <DELETED>    (3) by adding at the end the following:</DELETED>
        <DELETED>    ``(6) in the case of sound recordings, to perform 
        the copyrighted work publicly by means of a digital 
        transmission.''.</DELETED>

<DELETED>SEC. 3. SCOPE OF EXCLUSIVE RIGHTS IN SOUND 
              RECORDINGS.</DELETED>

<DELETED>    Section 114 of title 17, United States Code, is amended--
</DELETED>
        <DELETED>    (1) in subsection (a) by striking ``and (3)'' and 
        replacing it with ``(3) and (6)'';</DELETED>
        <DELETED>    (2) in subsection (b) by deleting from the first 
        sentence ``phonorecords, or of copies of motion pictures and 
        other audiovisual works,'' and inserting ``phonorecords or 
        copies'';</DELETED>
        <DELETED>    (3) by striking subsection (d) and replacing it 
        with the following new subsection (d):</DELETED>
<DELETED>    ``(d) Limitations on Exclusive Right.--Notwithstanding the 
provisions of section 106(6)--</DELETED>
        <DELETED>    ``(1) Exempt transmissions.--The performance of a 
        sound recording publicly by means of a digital transmission, 
        other than as part of an interactive service, is not an 
        infringement of section 106(6) if the performance is part of--
        </DELETED>
                <DELETED>    ``(A) a nonsubscription transmission, such 
                as a nonsubscription broadcast transmission;</DELETED>
                <DELETED>    ``(B) a prior or simultaneous transmission 
                incidental to a nonsubscription transmission, such as a 
                feed received by and then retransmitted by the 
                nonsubscription transmitter: Provided, That such 
                incidental transmissions do not include any 
                subscription transmission directly for reception by 
                members of the public;</DELETED>
                <DELETED>    ``(C) a retransmission of a 
                nonsubscription broadcast transmission: Provided, That, 
                in the case of a retransmission of a radio station's 
                broadcast transmission, the transmission is not 
                willfully or repeatedly retransmitted more than a 
                radius of one hundred and fifty miles from the site of 
                the radio broadcast transmitter;</DELETED>
                <DELETED>    ``(D) a further transmission by a 
                business, confined to its premises or the immediately 
                surrounding vicinity, of a transmission described in 
                paragraphs (A) or (B) of this subsection (d)(1); 
                or</DELETED>
                <DELETED>    ``(E) a retransmission otherwise subject 
                to liability, if such transmission is simultaneous with 
                the primary transmission and authorized by the primary 
                transmitter, and the primary transmitter has been 
                licensed to publicly perform the sound 
                recording.</DELETED>
        <DELETED>    ``(2) Subscription transmissions.--In the case of 
        a subscription transmission, the performance of a sound 
        recording publicly by means of a digital transmission shall be 
        subject to statutory licensing, in accordance with subsection 
        (f) of this section, if--</DELETED>
                <DELETED>    ``(A) the transmission is not part of an 
                interactive service; and</DELETED>
                <DELETED>    ``(B) the transmission does not exceed the 
                sound recording performance complement.</DELETED>
        <DELETED>    ``(3) Rights not otherwise limited.--</DELETED>
                <DELETED>    ``(A) Except as expressly provided herein, 
                this section does not limit or impair the exclusive 
                right to perform a sound recording publicly by means of 
                a digital transmission under section 106(6).</DELETED>
                <DELETED>    ``(B) Nothing in this section annuls or 
                limits in any way--</DELETED>
                        <DELETED>    ``(i) the exclusive right to 
                        publicly perform a musical work, including by 
                        means of a digital transmission, under section 
                        106(4),</DELETED>
                        <DELETED>    ``(ii) the exclusive rights to 
                        reproduce and distribute a sound recording or 
                        the musical work embodied therein under 
                        sections 106(1) and 106(3), including by means 
                        of a digital phonorecord delivery as defined in 
                        section 115, or</DELETED>
                        <DELETED>    ``(iii) any other rights under any 
                        other clause of section 106, or remedies 
                        available under this title, as such rights or 
                        remedies exist either before or after the date 
                        of enactment of this Act.''; and</DELETED>
        <DELETED>    ``(4) by adding after subsection (d) the 
        following:</DELETED>
<DELETED>    ``(e) Authority for Negotiations.--Any copyright owners of 
sound recordings and any entities performing sound recordings affected 
by this section may negotiate and agree upon the terms and rates of 
royalty payments for the performance of such sound recordings and the 
proportionate division of fees paid among copyright owners, and may 
designate common agents to negotiate, agree to, pay, or receive such 
royalty payments.</DELETED>
<DELETED>    ``(f) Licenses for Subscription Transmissions.--</DELETED>
        <DELETED>    ``(1) No later than thirty days after the 
        enactment of this legislation, the Librarian of Congress shall 
        cause notice to be published in the Federal Register of the 
        initiation of voluntary negotiation proceedings for the purpose 
        of determining reasonable terms and rates of royalty payments 
        for the activities specified by subsection (d)(2) of this 
        section during the period beginning on the effective date of 
        this legislation and ending on December 31, 2000. Such terms 
        and rates shall distinguish among the different types of 
        digital transmission services then in operation. Any copyright 
        owners of sound recordings or any entities performing sound 
        recordings affected by this section may submit to the Librarian 
        of Congress licenses covering such activities with respect to 
        such sound recordings. The parties to each negotiation 
        proceeding shall bear their own costs.</DELETED>
        <DELETED>    ``(2) In the absence of license agreements 
        negotiated under paragraph (1), the Librarian of Congress 
        shall, pursuant to chapter 8, convene a copyright arbitration 
        royalty panel to determine and publish in the Federal Register 
        a schedule of rates and terms which, subject to paragraph (3), 
        shall be binding on all copyright owners of sound recordings 
        and entities performing sound recordings. In establishing such 
        rates and terms the copyright arbitration royalty panel may 
        consider the rates for comparable types of digital transmission 
        services and comparable circumstances under voluntary license 
        agreements negotiated as provided in paragraph (1). The parties 
        to the proceeding shall bear the entire cost thereof in such 
        manner and proportion as the arbitration panels shall direct. 
        The Librarian of Congress shall also establish requirements by 
        which copyright owners may receive reasonable notice of the use 
        of their sound recordings under this section, and under which 
        records of such use shall be kept by entities performing sound 
        recordings.</DELETED>
        <DELETED>    ``(3) License agreements voluntarily negotiated at 
        any time between one or more copyright owners of sound 
        recordings and one or more entities performing sound recordings 
        shall be given effect in lieu of any determination by the 
        Librarian of Congress.</DELETED>
        <DELETED>    ``(4) the procedures specified in paragraphs (1) 
        and (2) shall be repeated and concluded, in accordance with 
        regulations that the Librarian of Congress shall prescribe--
        </DELETED>
                <DELETED>    ``(A) within a six-month period each time 
                that a petition is filed by any copyright owners of 
                sound recordings or any entities performing sound 
                recordings affected by this section indicating that a 
                new type of digital transmission service on which sound 
                recordings are performed is or is about to become 
                operational, and</DELETED>
                <DELETED>    ``(B) between June 30 and December 31, 
                2000 and at five-year intervals thereafter.</DELETED>
        <DELETED>    ``(5) Any person who wishes to perform a sound 
        recording publicly by means of a subscription transmission 
        under this subsection (f) may do so without infringing the 
        exclusive right of the copyright owner of the sound recording 
        by complying with such notice requirements as the Register of 
        Copyrights shall prescribe by regulation and by paying royalty 
        fees in accordance with this subsection, or, if such royalty 
        fees have not been set, by agreeing to pay such royalty fees as 
        shall be determined in accordance with this subsection, and any 
        royalty payments in arrears shall be made on or before the 
        twentieth day of the month next succeeding the month in which 
        the royalty fees are set.</DELETED>
<DELETED>    ``(g) Proceeds From Licensing of Subscription 
Transmissions.--In the case of a subscription transmission performance 
of a sound recording licensed under subsection (f) of this section, 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 
transmission shall allocate to recording artists in the following 
manner its receipts from the licensing of subscription transmission 
performances of the sound recording in accordance with subsection (f) 
of this section:</DELETED>
        <DELETED>    ``(1) 2</DELETED>\<DELETED>1/2</DELETED>\ 
        <DELETED>percent of the receipts shall be deposited in an 
        escrow account managed by an independent administrator jointly 
        appointed by copyright owners of sound recordings and the 
        American Federation of Musicians (or any successor entity) to 
        be distributed to nonfeatured musicians (whether or not members 
        of the American Federation of Musicians) who have performed on 
        sound recordings.</DELETED>
        <DELETED>    ``(2) 2</DELETED>\<DELETED>1/2</DELETED>\ 
        <DELETED>percent of the receipts shall be deposited in an 
        escrow account managed by an independent administrator jointly 
        appointed by copyright owners of sound recordings and the 
        American Federation of Television and Radio Artists (or any 
        successor entity) to be distributed to nonfeatured vocalists 
        (whether or not members of the American Federation of 
        Television and Radio Artists) who have performed on sound 
        recordings.</DELETED>
        <DELETED>    ``(3) 45 percent of the receipts shall be 
        allocated, on a per sound recording basis, to the recording 
        artist or artists featured on such sound recording (or the 
        persons conveying rights in the artists' performance in the 
        sound recordings).</DELETED>
<DELETED>    ``(h) Licensing to Affiliates.--Where the copyright owner 
of a sound recording owns a controlling interest in, or otherwise 
possesses the power directly or indirectly to exercise a controlling 
influence over the management or policies of, an entity engaging in 
digital transmissions covered by section 106(6) and licenses to such 
entity the right to publicly perform a sound recording by means of a 
digital transmission, the copyright owner shall make the licensed sound 
recording available under section 106(6) on similar terms and 
conditions to all other similarly-situated entities offering similar 
types of digital transmission services, except that such copyright 
owner may--</DELETED>
        <DELETED>    ``(1) impose reasonable requirements for 
        creditworthiness; and</DELETED>
        <DELETED>    ``(2) establish different prices, terms, and 
        conditions to take into account the types of services offered, 
        the duration of the license, the geographic region, the numbers 
        of subscribers served, and any other relevant 
        factors.</DELETED>
<DELETED>    ``(i) No Effect on Royalties for Underlying Works.--
License fees payable for the public performance of sound recordings 
under clause (6) of section 106 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.</DELETED>
<DELETED>    ``(j) Definitions.--As used in this section, the following 
terms have the following meanings:</DELETED>
        <DELETED>    ``(1) A `broadcast transmission' is a transmission 
        made by a broadcast station licensed as such by the Federal 
        Communications Commission.</DELETED>
        <DELETED>    ``(2) An `interactive service' is one that enables 
        a member of the public to receive, on request, a transmission 
        of a particular sound recording chosen by or on behalf of the 
        recipient. The ability of individuals to request that 
        particular sound recordings be performed for reception by the 
        public at large does not make a service interactive. If an 
        entity offers both interactive and non-interactive services 
        (either concurrently or at different times), the non-
        interactive component shall not be treated as part of an 
        interactive service.</DELETED>
        <DELETED>    ``(3) A `nonsubscription transmission' is any 
        transmission that is not a subscription transmission.</DELETED>
        <DELETED>    ``(4) The `sound recording performance complement' 
        is the transmission of no more than--</DELETED>
                <DELETED>    ``(A) two selections each day of sound 
                recordings embodied in any one phonorecord distributed 
                in the United States for ultimate sale to consumers; 
                or</DELETED>
                <DELETED>    ``(B) three selections each day of sound 
                recordings of performances--</DELETED>
                        <DELETED>    ``(i) by the same featured 
                        recording artist, or</DELETED>
                        <DELETED>    ``(ii) embodied in any set of 
                        phonorecords or compilation of sound recordings 
                        marketed together as a unit for ultimate sale 
                        to consumers.</DELETED>
        <DELETED>    ``(5) A `subscription transmission' is a 
        transmission that is controlled and limited to particular 
        recipients, and for which consideration is required to be paid 
        or otherwise given by or on behalf of the recipient to receive 
        the transmission or a package of transmissions including the 
        transmission.''.</DELETED>

<DELETED>SEC. 4. SCOPE OF EXCLUSIVE RIGHTS IN NONDRAMATIC MUSICAL 
              WORKS: COMPULSORY LICENSE FOR MAKING AND DISTRIBUTING 
              PHONORECORDS.</DELETED>

<DELETED>    Section 115 of title 17, United State Code, is amended--
</DELETED>
        <DELETED>    (1) by inserting before the period at the end of 
        the second sentence in subsection (a)(1) the words ``including 
        by means of a digital phonorecord delivery'';</DELETED>
        <DELETED>    (2) by inserting in the second sentence of 
        subsection (c)(2), after the words ``For this purpose,'' the 
        words ``and other than as provided in clause (3),'';</DELETED>
        <DELETED>    (3) by redesignating clauses (3), (4) and (5) of 
        subsection (c) as clauses (4), (5) and (6), respectively, and 
        by inserting the following new clause:</DELETED>
        <DELETED>    ``(3)(A) A compulsory license under this section 
        includes the right of the maker of a phonorecord of a 
        nondramatic musical work under subsection (a)(1) to distribute 
        or authorize distribution of the sound recording of such 
        phonorecord by means of a digital transmission which 
        constitutes a digital phonorecord delivery, regardless of 
        whether the digital transmission is also a public performance 
        of the sound recording under section 106(6) of this title or of 
        any nondramatic musical work embodied therein under section 
        106(4) of this title. For every digital phonorecord delivery by 
        or under the authority of the compulsory licensee, the royalty 
        payable by the compulsory licensee shall be the royalty 
        prescribed under clause (2) and chapter 8 of this 
        title.</DELETED>
        <DELETED>    ``(B) Independent of any right of public 
        performance under section 106(4), the copyright owner of a 
        nondramatic musical work embodied in a sound recording has the 
        right to receive royalty payments at the rates prescribed under 
        this subsection when the digital transmission of that sound 
        recording constitutes a digital phonorecord delivery. Unless 
        authorized by said copyright owner of the nondramatic musical 
        work or by any person who has obtained a compulsory license 
        under this section, such a digital transmission, by whomever 
        made, shall be actionable by the copyright owner in the 
        nondramatic musical work as an act of infringement: Provided, 
        however, That no such cause of action may be brought against a 
        copyright owner of a sound recording unless it authorized the 
        digital phonorecord delivery. Any such cause of action shall be 
        in addition to those available to the copyright owner of the 
        musical work under section 106(4) and the copyright owner of 
        the sound recording with respect to digital phonorecord 
        deliveries and under section 106(6).</DELETED>
        <DELETED>    ``(C) Nothing in section 1008 shall be construed 
        to prevent the exercise of the rights and remedies allowed by 
        clauses (3) and (7) and chapter 5 in the event of a digital 
        phonorecord delivery, except that no action alleging 
        infringement of copyright may be brought under this title 
        against a manufacturer, importer or distributor of a digital 
        audio recording device, a digital audio recording medium, an 
        analog recording device, or an analog recording medium, or 
        against a consumer, based on the actions described in such 
        section.</DELETED>
        <DELETED>    ``(D) Nothing in this section annuls or limits in 
        any way (i) the exclusive right to publicly perform a sound 
        recording or the musical work embodied therein, including by 
        means of a digital transmission, under sections 106(4) and 
        106(6), (ii) except for the compulsory licensing under the 
        conditions specified by this section, the exclusive rights to 
        reproduce and distribute the sound recording and the musical 
        work embodied therein under sections 106(1) and 106(3), 
        including by means of a digital phonorecord delivery, or (iii) 
        any other rights under any other clause of section 106, or 
        remedies available under this title, as such rights or remedies 
        exist either before or after the date of enactment of this 
        Act.''; and</DELETED>
        <DELETED>    (4) by adding after subsection (c) the 
        following:</DELETED>
<DELETED>    ``(d) Definitions.--As used in this section, the following 
term has the following meaning: A `digital phonorecord delivery' is 
each individual digital transmission of a sound recording which results 
in a specifically identified reproduction by or for any transmission 
recipient of a phonorecord of that sound recording, regardless of 
whether the digital transmission is also a public performance of the 
sound recording or any nondramatic musical work embodied 
therein.''.</DELETED>

<DELETED>SEC. 5. CONFORMING AMENDMENTS.</DELETED>

<DELETED>    (a) Definitions.--Section 101 of title 17, United States 
Code, is amended by inserting after the definition of ``device'', 
``machine'', or ``process'' the following:</DELETED>
        <DELETED>    ``A `digital transmission' is a transmission in 
        whole or in part in a digital or other non-analog 
        format.''.</DELETED>
<DELETED>    (b) Limitations on Exclusive Rights: Secondary 
Transmissions.--Section 111(c)(1) of title 17, United States Code, is 
amended in the first sentence by striking ``The'' and inserting 
``Except in the case of a performance of a sound recording in the 
course of a digital transmission, the''.</DELETED>
<DELETED>    (c) Limitations on Exclusive Rights: Secondary 
Transmissions of Superstations and Network Stations for Private Home 
Viewing.--Section 119(a)(1) of title 17, United States Code, is amended 
by striking ``Subject to'' and inserting ``Except in the case of a 
performance of a sound recording in the course of a digital 
transmission, and subject to''.</DELETED>
<DELETED>    (d) Copyright Arbitration Royalty Panels.--</DELETED>
        <DELETED>    (1) Section 801(b)(1) of title 17, United States 
        Code, is amended in the first and second sentences by inserting 
        ``114'' before ``115''.</DELETED>
        <DELETED>    (2) Section 802(c) of title 17, United States 
        Code, is amended in the third sentence by deleting ``section 
        111, 116, or 119,'' and inserting ``section 111, 114, 116, or 
        119, any person entitled to a compulsory license under section 
        114(d), any person entitled to a compulsory license under 
        section 115,''.</DELETED>
        <DELETED>    (3) Section 802(g) of title 17, United States 
        Code, is amended in the third sentence by inserting after 
        ``111'' ``, 114''.</DELETED>
        <DELETED>    (4) Section 802(h)(2) of title 17, United States 
        Code, is amended by inserting after ``111'' ``, 
        114''.</DELETED>

<DELETED>SEC. 6. EFFECTIVE DATE.</DELETED>

<DELETED>    This Act shall become effective three months after the 
date of enactment, except that the provisions of sections 114(e) and 
114(f) shall take effect immediately upon enactment.</DELETED>
SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Digital Performance Right in Sound 
Recordings Act of 1995''.

SEC. 2. EXCLUSIVE RIGHTS IN COPYRIGHTED WORKS.

    Section 106 of title 17, United States Code, is amended--
            (1) in paragraph (4) by striking ``and'' after the 
        semicolon;
            (2) in paragraph (5) by striking the period and inserting 
        ``; and''; and
            (3) by adding at the end the following:
            ``(6) in the case of sound recordings, to perform the 
        copyrighted work publicly by means of a digital audio 
        transmission.''.

SEC. 3. SCOPE OF EXCLUSIVE RIGHTS IN SOUND RECORDINGS.

    Section 114 of title 17, United States Code, is amended--
            (1) in subsection (a) by striking ``and (3)'' and inserting 
        ``(3) and (6)'';
            (2) in subsection (b) in the first sentence by striking 
        ``phonorecords, or of copies of motion pictures and other 
        audiovisual works,'' and inserting ``phonorecords or copies'';
            (3) by striking subsection (d) and inserting:
    ``(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 
        audio transmission or retransmission, 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 transmission, such as a 
                nonsubscription broadcast transmission;
                    ``(B) a retransmission of a nonsubscription 
                broadcast transmission: Provided, That, in the case of 
                a retransmission of a radio station's broadcast 
                transmission--
                            ``(i) the radio station's broadcast 
                        transmission is not willfully or repeatedly 
                        retransmitted more than a radius of 150 miles 
                        from the site of the radio broadcast 
                        transmitter, however--
                                    ``(I) the 150 mile limitation under 
                                this clause shall not apply when a 
                                nonsubscription broadcast transmission 
                                by a radio station licensed by the 
                                Federal Communications Commission is 
                                retransmitted on a nonsubscription 
                                basis by a terrestrial broadcast 
                                station, terrestrial translator, or 
                                terrestrial repeater licensed by the 
                                Federal Communications Commission; and
                                    ``(II) in the case of a 
                                subscription retransmission of a 
                                nonsubscription broadcast 
                                retransmission covered by subclause 
                                (I), the 150 mile radius shall be 
                                measured from the transmitter site of 
                                such broadcast retransmitter;
                            ``(ii) the retransmission is of radio 
                        station broadcast transmissions that are--
                                    ``(I) obtained by the retransmitter 
                                over the air;
                                    ``(II) not electronically processed 
                                by the retransmitter to deliver 
                                separate and discrete signals; and
                                    ``(III) retransmitted only within 
                                the local communities served by the 
                                retransmitter;
                            ``(iii) the radio station's broadcast 
                        transmission was being retransmitted to cable 
                        systems (as defined in section 111(f)) by a 
                        satellite carrier on January 1, 1995, and that 
                        retransmission was being retransmitted by cable 
                        systems as a separate and discrete signal, and 
                        the satellite carrier obtains the radio 
                        station's broadcast transmission in an analog 
                        format: Provided, That the broadcast 
                        transmission being retransmitted may embody the 
                        programming of no more than one radio station; 
                        or
                            ``(iv) the radio station's broadcast 
                        transmission is made by a noncommercial 
                        educational broadcast station funded on or 
                        after January 1, 1995, under section 396(k) of 
                        the Communications Act of 1934 (47 U.S.C. 
                        396(k)), consists solely of noncommercial 
                        educational and cultural radio programs, and 
                        the retransmission, whether or not 
                        simultaneous, is a nonsubscription terrestrial 
                        broadcast retransmission; or
                    ``(C) a transmission or retransmission that comes 
                within any of the following categories:
                            ``(i) a prior or simultaneous transmission 
                        or retransmission incidental to an exempt 
                        transmission or retransmission, such as a feed 
                        received by and then retransmitted by an exempt 
                        transmitter: Provided, That such incidental 
                        transmissions or retransmissions do not include 
                        any subscription transmission or
                         retransmission directly for reception by 
members of the public;
                            ``(ii) a transmission or retransmission 
                        within a business establishment, confined to 
                        its premises or the immediately surrounding 
                        vicinity;
                            ``(iii) a retransmission by any 
                        retransmitter, including a multichannel video 
                        programming distributor as defined in section 
                        522(12) of the Communications Act of 1934 (47 
                        U.S.C. 522(12)), of a transmission by a 
                        transmitter licensed to publicly perform the 
                        sound recording as a part of that transmission, 
                        if the retransmission is simultaneous with the 
                        licensed transmission and authorized by the 
                        transmitter; or
                            ``(iv) a transmission or retransmission to 
                        a business establishment for use in the 
                        ordinary course of its business: Provided, That 
                        the business recipient does not retransmit the 
                        transmission outside of its premises or the 
                        immediately surrounding vicinity, and that the 
                        transmission does not exceed the sound 
                        recording performance complement. Nothing in 
                        this clause shall limit the scope of the 
                        exemption in clause (ii).
            ``(2) Subscription transmissions.--In the case of a 
        subscription transmission not exempt under subsection (d)(1), 
        the performance of a sound recording publicly by means of a 
        digital audio transmission shall be subject to statutory 
        licensing, in accordance with subsection (f) of this section, 
        if--
                    ``(A) the transmission is not part of an 
                interactive service;
                    ``(B) the transmission does not exceed the sound 
                recording performance complement;
                    ``(C) the transmitting entity does not cause to be 
                published by means of an advance program schedule or 
                prior announcement the titles of the specific sound 
                recordings or phonorecords embodying such sound 
                recordings to be transmitted;
                    ``(D) except in the case of transmission to a 
                business establishment, the transmitting entity does 
                not automatically and intentionally cause any device 
                receiving the transmission to switch from one program 
                channel to another; and
                    ``(E) except as provided in section 1002(e) of this 
                title, the transmission of the sound recording is 
                accompanied by the information encoded in that sound 
                recording, if any, by or under the authority of the 
                copyright owner of that sound recording, that 
                identifies the title of the sound recording, the 
                featured recording artist who performs on the sound 
                recording, and related information, including 
                information concerning the underlying musical work and 
                its writer.
            ``(3) Licenses for transmissions by interactive services.--
                    ``(A) No interactive service shall be granted an 
                exclusive license under section 106(6) for the 
                performance of a sound recording publicly by means of 
                digital audio transmission for a period in excess of 12 
                months, except that with respect to an exclusive 
                license granted to an interactive service by a licensor 
                that holds the copyright to 1,000 or fewer sound 
                recordings, the period of such license shall not exceed 
                24 months: Provided, however, That the grantee of such 
                exclusive license shall be ineligible to receive 
                another exclusive license for the performance of that 
                sound recording for a period of 13 months from the 
                expiration of the prior exclusive license.
                    ``(B) The limitation set forth in subparagraph (A) 
                of this paragraph shall not apply if--
                            ``(i) the licensor has granted and there 
                        remain in effect licenses under section 106(6) 
                        for the public performance of sound recordings 
                        by means of digital audio transmission by at 
                        least 5 different interactive services: 
                        Provided, however, That each such license must 
                        be for a minimum of 10 percent of the 
                        copyrighted sound recordings owned by the 
                        licensor that have been licensed on an 
                        exclusive basis to interactive services, but in 
                        no event less than 50 sound recordings; or
                            ``(ii) the exclusive license is granted to 
                        perform publicly up to 45 seconds of a sound 
                        recording and the sole purpose of the 
                        performance is to promote the distribution or 
                        performance of that sound recording.
                    ``(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.
                    ``(D) The performance of a sound recording by means 
                of a digital audio retransmission is not an 
                infringement of section 106(6) if--
                            ``(i) the retransmission is of a 
                        transmission by an interactive service licensed 
                        to publicly perform the sound recording to a 
                        particular member of the public as part of that 
                        transmission; and
                            ``(ii) the retransmission is simultaneous 
                        with the licensed transmission, authorized by 
                        the transmitter, and limited to that particular 
                        member of the public intended by the 
                        interactive service to be the recipient of the 
                        transmission.
                    ``(E) For the purposes of this paragraph--
                            ``(i) a `licensor' shall include the 
                        licensing entity and any other entity under any 
                        material degree of common ownership, 
                        management, or control that owns copyrights in 
                        sound recordings; and
                            ``(ii) a `performing rights society' is an 
                        association or corporation that licenses the 
                        public performance of nondramatic musical works 
                        on behalf of the copyright owner, such as the 
                        American Society of Composers, Authors and 
                        Publishers, Broadcast Music, Inc., and SESAC, 
                        Inc.
            ``(4) Rights not otherwise limited.--
                    ``(A) Except as expressly provided in this section, 
                this section does not limit or impair the exclusive 
                right to perform a sound recording publicly by means of 
                a digital audio transmission under section 106(6).
                    ``(B) Nothing in this section annuls or limits in 
                any way--
                            ``(i) the exclusive right to publicly 
                        perform a musical work, including by means of a 
                        digital audio transmission, under section 
                        106(4);
                            ``(ii) the exclusive rights to reproduce 
                        and distribute a sound recording or the musical 
                        work embodied therein under sections 106(1) and 
                        106(3); or
                            ``(iii) any other rights under any other 
                        clause of section 106, or remedies available 
                        under this title, as such rights or remedies 
                        exist either before or after the date of 
                        enactment of the Digital Performance Right in 
                        Sound Recordings Act of 1995.
                    ``(C) Any limitations in this section on the 
                exclusive right under section 106(6) apply only to the 
                exclusive right under section 106(6) and not to any 
                other exclusive rights under section 106. Nothing in 
                this section shall be construed to annul, limit, impair 
                or otherwise affect in any way the ability of the owner 
                of a copyright in a sound recording to exercise the 
                rights under sections 106(1), 106(2) and 106(3), or to 
                obtain the remedies available under this title pursuant 
                to such rights, as such rights and remedies exist 
                either before or after the date of enactment of the 
                Digital Performance Right in Sound Recordings Act of 
                1995.''; and
            (4) by adding after subsection (d) the following:
    ``(e) Authority for Negotiations.--
            ``(1) Notwithstanding any provision of the antitrust laws, 
        in negotiating statutory licenses in accordance with subsection 
        (f), any copyright owners of sound recordings and any entities 
        performing sound recordings affected by this section may 
        negotiate and agree upon the royalty rates and license terms 
        and conditions for the performance of such sound recordings and 
        the proportionate division of fees paid among copyright owners, 
        and may designate common agents on a nonexclusive basis to 
        negotiate, agree to, pay, or receive payments.
            ``(2) For licenses granted under section 106(6), other than 
        statutory licenses, such as for performances by interactive 
        services or performances that exceed the sound recording 
        performance complement--
                    ``(A) copyright owners of sound recordings affected 
                by this section may designate common agents to act on 
                their behalf to grant licenses and receive and remit 
                royalty payments, Provided, That each copyright owner 
                shall establish the royalty rates and material license 
                terms and conditions unilaterally, that is, not in 
                agreement, combination, or concert with other copyright 
                owners of sound recordings; and
                    ``(B) entities performing sound recordings affected 
                by this section may designate common agents to act on 
                their behalf to obtain licenses and collect and pay 
                royalty fees, Provided, That each entity performing 
                sound recordings shall determine the royalty rates and 
                material license terms and conditions unilaterally, 
                that is, not in agreement, combination, or concert with 
                other entities performing sound recordings.
    ``(f) Licenses for Nonexempt Subscription Transmissions.--
            ``(1) No later than 30 days after the enactment of the 
        Digital Performance Right in Sound Recordings Act of 1995, the 
        Librarian of Congress shall cause notice to be published in the 
        Federal Register of the initiation of voluntary negotiation 
        proceedings for the purpose of determining reasonable terms and 
        rates of royalty payments for the activities specified by 
        subsection (d)(2) of this section during the period beginning 
        on the effective date of such Act and ending on December 31, 
        2000. Such terms and rates shall distinguish among the 
        different types of digital audio transmission services then in 
        operation. Any copyright owners of sound recordings or any 
        entities performing sound recordings affected by this section 
        may submit to the Librarian of Congress licenses covering such 
        activities with respect to such sound recordings. The parties 
        to each negotiation proceeding shall bear their own costs.
            ``(2) In the absence of license agreements negotiated under 
        paragraph (1), the Librarian of Congress shall, pursuant to 
        chapter 8, convene a copyright arbitration royalty panel to 
        determine and publish in the Federal Register a schedule of 
        rates and terms which, subject to paragraph (3), shall be 
        binding on all copyright owners of sound recordings and 
        entities performing sound recordings. In establishing such 
        rates and terms the copyright arbitration royalty panel may 
        consider the rates for comparable types of digital audio 
        transmission services and comparable circumstances under 
        voluntary license agreements negotiated as provided in 
        paragraph (1). The parties to the proceeding shall bear the 
        entire cost of the proceeding in such manner and proportion as 
        the arbitration panels shall direct. The Librarian of Congress 
        shall also establish requirements by which copyright owners may 
        receive reasonable notice of the use of their sound recordings 
        under this section, and under which records of such use shall 
        be kept by entities performing sound recordings.
            ``(3) License agreements voluntarily negotiated at any time 
        between one or more copyright owners of sound recordings and 
        one or more entities performing sound recordings shall be given 
        effect in lieu of any determination by a copyright arbitration 
        royalty panel or decision by the Librarian of Congress.
            ``(4) The procedures specified in paragraphs (1) and (2) 
        shall be repeated and concluded, in accordance with regulations 
        that the Librarian of Congress shall prescribe--
                    ``(A) within a 6-month period each time that a 
                petition is filed by any copyright owners of sound 
                recordings or any entities performing sound recordings 
                affected by this section indicating that a new type of 
                digital audio transmission service on which sound 
                recordings are performed is or is about to become 
                operational, and
                    ``(B) between June 30 and December 31, 2000 and at 
                5-year intervals thereafter.
            ``(5)(A) Any person who wishes to perform a sound recording 
        publicly by means of a nonexempt subscription transmission 
        under this subsection may do so without infringing the 
        exclusive right of the copyright owner of the sound recording--
                    ``(i) by complying with such notice requirements as 
                the Register of Copyrights shall prescribe by 
                regulation and by paying royalty fees in accordance 
                with this subsection; or
                    ``(ii) if such royalty fees have not been set, by 
                agreeing to pay such royalty fees as shall be 
                determined in accordance with this subsection.
            ``(B) Any royalty payments in arrears shall be made on or 
        before the twentieth day of the month next succeeding the month 
        in which the royalty fees are set.
    ``(g) Proceeds From Licensing of Subscription Transmissions.--
            ``(1) Except in the case of a subscription transmission 
        licensed 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 
                subscription 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 
                subscription 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.
            ``(2) 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 shall 
        allocate to recording artists in the following manner its 
        receipts from the statutory licensing of subscription 
        transmission performances of the sound recording in accordance 
        with subsection (f) of this section:
                    ``(A) 2\1/2\ percent of the receipts shall be 
                deposited in an escrow account managed by an 
                independent administrator jointly appointed by 
                copyright owners of sound recordings and the American 
                Federation of Musicians (or any successor entity) to be 
                distributed to nonfeatured musicians (whether or not 
                members of the American Federation of Musicians) who 
                have performed on sound recordings.
                    ``(B) 2\1/2\ percent of the receipts shall be 
                deposited in an escrow account managed by an 
                independent administrator jointly appointed by 
                copyright owners of sound recordings and the American 
                Federation of Television and Radio Artists (or any 
                successor entity) to be distributed to nonfeatured 
                vocalists (whether or not members of the American 
                Federation of Television and Radio Artists) who have 
                performed on sound recordings.
                    ``(C) 45 percent of the receipts shall be 
                allocated, on a per sound recording basis, to the 
                recording artist or artists featured on such sound 
                recording (or the persons conveying rights in the 
                artists' performance in the sound recordings).
    ``(h) Licensing to Affiliates.--
            ``(1) If the copyright owner of a sound recording licenses 
        an affiliated entity the right to publicly perform a sound 
        recording by means of a digital audio transmission under 
        section 106(6), the copyright owner shall make the licensed 
        sound recording available under section 106(6) on no less 
        favorable terms and conditions to all bona fide entities that 
        offer similar services, except that, if there are material 
        differences in the scope of the requested license with respect 
        to the type of service, the particular sound recordings 
        licensed, the frequency of use, the number of subscribers 
        served, or the duration, then the copyright owner may establish 
        different terms and conditions for such other services.
            ``(2) The limitation set forth in paragraph (1) of this 
        subsection shall not apply in the case where the copyright 
        owner of a sound recording licenses--
                    ``(A) an interactive service; or
                    ``(B) an entity to perform publicly up to 45 
                seconds of the sound recording and the sole purpose of 
                the performance is to promote the distribution or 
                performance of that sound recording.
    ``(i) No Effect on Royalties for Underlying Works.--License fees 
payable for the public performance of sound recordings under clause (6) 
of section 106 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).
    ``(j) Definitions.--As used in this section, the following terms 
have the following meanings:
            ``(1) An `affiliated entity' is an entity engaging in 
        digital audio transmissions covered by section 106(6), other 
        than an interactive service, in which the licensor has any 
        direct or indirect partnership or any ownership interest 
        amounting to 5 percent or more of the outstanding voting or 
        non-voting stock.
            ``(2) A `broadcast transmission' is a transmission made by 
        a broadcast station licensed as such by the Federal 
        Communications Commission.
            ``(3) A `digital audio transmission' is a digital 
        transmission as defined in section 101, that embodies the 
        transmission of a sound recording. This term does not include 
        the transmission of any audiovisual work.
            ``(4) An `interactive service' is one that enables a member 
        of the public to receive, on request, a transmission of a 
        particular sound recording chosen by or on behalf of the 
        recipient. The ability of individuals to request that 
        particular sound recordings be performed for reception by the 
        public at large does not make a service interactive. If an 
        entity offers both interactive and non-interactive services 
        (either concurrently or at different times), the non-
        interactive component shall not be treated as part of an 
        interactive service.
            ``(5) A `nonsubscription transmission', `nonsubscription 
        retransmission', or a `nonsubscription broadcast transmission' 
        is any transmission or retransmission that is not a 
        subscription transmission or retransmission.
            ``(6) A `retransmission' includes any further simultaneous 
        retransmission of the same transmission. Nothing in this 
        definition shall be construed to exempt a transmission that 
        fails to satisfy a separate element required to qualify for an 
        exemption under section 114(d)(1).
            ``(7) The `sound recording performance complement' is the 
        transmission during any 3-hour period, on a particular channel 
        used by a transmitting entity, of no more than--
                    ``(A) 3 different selections of sound recordings 
                from any one phonorecord lawfully distributed for 
                public performance or sale in the United States, if no 
                more than 2 such selections are transmitted 
                consecutively; or
                    ``(B) 4 different selections of sound recordings
                            ``(i) by the same featured recording 
                        artist; or
                            ``(ii) from any set or compilation of 
                        phonorecords lawfully distributed together as a 
                        unit for public performance or sale in the 
                        United States,
                if no more than three such selections are transmitted 
                consecutively:
        Provided, That the transmission of selections in excess of the 
        numerical limits provided for in clauses (A) and (B) from 
        multiple phonorecords shall nonetheless qualify as a sound 
        recording performance complement if the programming of the 
        multiple phonorecords was not willfully intended to avoid the 
        numerical limitations prescribed in such clauses.
            ``(8) A `subscription transmission' is a transmission that 
        is controlled and limited to particular recipients, and for 
        which consideration is required to be paid or otherwise given 
        by or on behalf of the recipient to receive the transmission or 
        a package of transmissions including the transmission.''.

SEC. 4. MECHANICAL ROYALTIES IN DIGITAL PHONORECORD DELIVERIES.

    Section 115 of title 17, United States Code, is amended--
            (1) in subsection (a)(1)--
                    (A) in the first sentence by striking out ``any 
                other person'' and inserting in lieu thereof ``any 
                other person, including those who make phonorecords or 
                digital phonorecord deliveries by means of a digital 
                audio transmission,''; and
                    (B) in the second sentence by inserting before the 
                period ``, including by means of a digital phonorecord 
                delivery'';
            (2) in subsection (c)(2) in the second sentence by 
        inserting ``and other than as provided in paragraph (3),'' 
        after ``For this purpose,'';
            (3) by redesignating paragraphs (3), (4), and (5) of 
        subsection (c) as paragraphs (4), (5), and (6), respectively, 
        and by inserting after paragraph (2) the following new 
        paragraph:
            ``(3)(A) A compulsory license under this section includes 
        the right of the compulsory licensee to distribute or authorize 
        the distribution of a phonorecord of a nondramatic musical work 
        by means of a digital transmission which constitutes a digital 
        phonorecord delivery, regardless of whether the digital 
        transmission is also a public performance of the sound 
        recording under section 106(6) of this title or of any 
        nondramatic musical work embodied therein under section 106(4) 
        of this title. For every digital phonorecord delivery by or 
        under the authority of the compulsory licensee--
                    ``(i) on or before December 31, 1997, the royalty 
                payable by the compulsory licensee shall be the royalty 
                prescribed under paragraph (2) and chapter 8 of this 
                title; and
                    ``(ii) on or after January 1, 1998, the royalty 
                payable by the compulsory licensee shall be the royalty 
                prescribed under subparagraphs (B) through (F) and 
                chapter 8 of this title.
            ``(B) Notwithstanding any provision of the antitrust laws, 
        for the purpose of this subparagraph, any copyright owners of 
        nondramatic musical works and any persons entitled to obtain a 
        compulsory license under subsection (a)(1) may negotiate and 
        agree upon the terms and rates of royalty payments under this 
        paragraph and the proportionate division of fees paid among 
        copyright owners, and may designate common agents to negotiate, 
        agree to, pay or receive such royalty payments. Such authority 
        to negotiate the terms and rates of royalty payments includes,
         but is not limited to, the authority to negotiate the year 
during which the royalty rates prescribed under subparagraphs (B) 
through (F) and chapter 8 of this title shall next be determined.
            ``(C) During the period of June 30, 1996, through December 
        31, 1996, Librarian of Congress shall cause notice to be 
        published in the Federal Register of the initiation of 
        voluntary negotiation proceedings for the purpose of 
        determining reasonable terms and rates of royalty payments for 
        the activities specified by subparagraph (A) during the period 
        beginning January 1, 1998, and ending on December 31, 2007, or 
        such earlier date (regarding digital transmissions) as the 
        parties may agree. Such terms and rates shall distinguish 
        between (i) digital phonorecord deliveries where the 
        reproduction or distribution of a phonorecord is incidental to 
        the transmission which constitutes the digital phonorecord 
        delivery, and (ii) digital phonorecord deliveries in general. 
        Any copyright owners of nondramatic musical works and any 
        persons entitled to obtain a compulsory license under 
        subsection (a)(1) may submit to the Librarian of Congress 
        licenses covering such activities. The parties to each 
        negotiation proceeding shall bear their own costs.
            ``(D) In the absence of license agreements negotiated under 
        subparagraph (C), the Librarian of Congress shall, pursuant to 
        chapter 8, convene a copyright arbitration royalty panel to 
        determine and publish in the Federal Register a schedule of 
        rates and terms which, subject to subparagraph (E), shall be 
        binding on all copyright owners of nondramatic musical works 
        and persons entitled to obtain a compulsory license under 
        subsection (a)(1) during the period beginning January 1, 1998, 
        and ending on December 31, 2007, or such earlier date 
        (regarding digital transmissions) as may be determined pursuant 
        to subparagraph (C) or chapter 8. Such terms and rates shall 
        distinguish between (i) digital phonorecord deliveries where 
        the reproduction or distribution of a phonorecord is incidental 
        to the transmission which constitutes the digital phonorecord 
        delivery, and (ii) digital phonorecord deliveries in general. 
        In addition to the objectives set forth in section 801(b)(1), 
        in establishing such rates and terms, the copyright arbitration 
        royalty panel may consider rates under voluntary license 
        agreements negotiated as provided in subparagraph (C). The 
        royalty rates payable for a compulsory license for a digital 
        phonorecord delivery under this section shall be established de 
        novo and no precedential effect shall be given to the amount of 
        the royalty payable by a compulsory licensee for digital 
        phonorecord deliveries on or before December 31, 1997. The 
        parties to the proceeding shall bear the entire cost thereof in 
        such manner and proportion as the arbitration panels shall 
        direct. The Librarian of Congress shall also establish 
        requirements by which copyright owners may receive reasonable 
        notice of the use of their works under this section, and under 
        which records of such use shall be kept and made available by 
        persons making digital phonorecord deliveries.
            ``(E)(i) License agreements voluntarily negotiated at any 
        time between one or more copyright owners of nondramatic 
        musical works and one or more persons entitled to obtain a 
        compulsory license under subsection (a)(1) shall be given 
        effect in lieu of any determination by the Librarian of 
        Congress. Subject to clause (ii), the royalty rates determined 
        pursuant to subparagraph (C) or (D) shall be given effect in 
        lieu of any contrary royalty rates specified in a contract 
        pursuant to which a recording artist who is the author of a 
        nondramatic musical work grants a license under that person's 
        exclusive rights in the musical work under section 106(1) or 
        (3) to a person desiring to fix in a tangible medium of 
        expression a sound recording embodying the musical work.
            ``(ii) Clause (i) shall not apply to--
                    ``(I) a contract entered into on or before June 22, 
                1995, and not modified thereafter for the purpose of 
                reducing such rates or of increasing the number of 
                musical works within the scope of the contract covered 
                by the reduced rates, except if a contract entered into 
                on or before June 22, 1995, is modified thereafter for 
                the purpose of increasing the number of musical works 
                within the scope of the contract, any contrary royalty 
                rates specified in the contract shall be given effect 
                in lieu of royalty rates determined pursuant to 
                subparagraph (C) or (D) for the number of musical works 
                within the scope of the contract as of June 22, 1995; 
                and
                    ``(II) a contract entered into after the date that 
                the sound recording is fixed in a tangible medium of 
                expression substantially in a form intended for 
                commercial release, if at the time the contract is 
                entered into, the recording artist retains the right to 
                grant licenses under sections 106(1) and 106(3).
            ``(F) The procedures specified in subparagraphs (C) and (D) 
        shall be repeated and concluded, in accordance with regulations 
        that the Librarian of Congress shall prescribe, as provided in 
        section 803(a)(3), except to the extent that different times 
        for the repeating and concluding of such proceedings may be 
        determined in accordance with subparagraph (C) or (D).
            ``(G) Except as provided in section 1002(e) of this title, 
        a digital phonorecord delivery licensed under this paragraph 
        shall be accompanied by the information encoded in the sound 
        recording, if any, by or under the authority of the copyright 
        owner of that sound recording, that identifies the title of the 
        sound recording, the featured recording artist who performs on 
        the sound recording, and related information, including 
        information concerning the underlying musical work and its 
        writer.
            ``(H)(i) A digital phonorecord delivery of a sound 
        recording is actionable as an act of infringement under section 
        501, and is fully subject to the remedies provided by sections 
        502 through 506 and sections 509 and 510, unless--
                    ``(I) the digital phonorecord delivery has been 
                authorized by the copyright owner of the sound 
                recording; and
                    ``(II) the owner of the copyright in the sound 
                recording or the entity making the digital phonorecord 
                delivery has obtained a compulsory license under this 
                section or has otherwise been authorized to distribute 
                or authorize the distribution, by means of a digital 
                phonorecord delivery, of each nondramatic musical work 
                embodied in the sound recording.
            ``(ii) Any cause of action under this subparagraph shall be 
        in addition to those available to the owner of the copyright in 
        the nondramatic musical work under subsection (c)(5) and 
        section 106(4) and the owner of the copyright in the sound 
        recording under section 106(6).
            ``(I) The liability of the copyright owner of a sound 
        recording for infringement of the copyright in a musical work 
        embodied in the sound recording shall be determined in 
        accordance with applicable law, except that the owner of a 
        copyright in a sound recording shall not be liable for a 
        digital phonorecord delivery by a third party if the owner of 
        the copyright in the sound recording does not license the 
        distribution of a phonorecord of the musical work.
            ``(J) Nothing in section 1008 shall be construed to prevent 
        the exercise of the rights and remedies allowed by this 
        paragraph, paragraph (7), and chapter 5 in the event of a 
        digital phonorecord delivery, except that no action alleging 
        infringement of copyright may be brought under this title 
        against a manufacturer, importer or distributor of a digital 
        audio recording device, a digital audio recording medium, an 
        analog recording device, or an analog recording medium, or 
        against a consumer, based on the actions described in such 
        section.
            ``(K) Nothing in this section annuls or limits (i) the 
        exclusive right to publicly perform a sound recording or the 
        musical work embodied therein, including by means of a digital 
        transmission, under sections 106(4) and 106(6), (ii) except for 
        compulsory licensing under the conditions specified by this 
        section, the exclusive rights to reproduce and distribute the 
        sound recording and the musical work embodied therein under 
        sections 106(1) and 106(3), including by means of a digital 
        phonorecord delivery, or (iii) any other rights under any other 
        provision of section 106, or remedies available under this 
        title, as such rights or remedies exist either before or after 
        the date of enactment of the Digital Performance Right in Sound 
        Recordings Act of 1995.
            ``(L) The provisions of this section concerning digital 
        phonorecord deliveries shall not apply to any exempt 
        transmissions or retransmissions under section 114(d)(1). The 
        exemptions created in section 114(d)(1) do not expand or reduce 
        the rights of copyright owners under section 106 (1) through 
        (5) with respect to such transmissions and retransmissions.''; 
        and
            (5) by adding after subsection (c) the following:
    ``(d) Definition.--As used in this section, the following term has 
the following meaning: A `digital phonorecord delivery' is each 
individual delivery of a phonorecord by digital transmission of a sound 
recording which results in a specifically identifiable reproduction by 
or for any transmission recipient of a phonorecord of that sound 
recording, regardless of whether the digital transmission is also a 
public performance of the sound recording or any nondramatic musical 
work embodied therein. A digital phonorecord delivery does not result 
from a real-time, noninteractive subscription transmission of a sound 
recording where no reproduction of the sound recording or the musical 
work embodied therein is made from the inception of the transmission 
through to its receipt by the transmission recipient in order to make 
the sound recording audible.''.

SEC. 5. CONFORMING AMENDMENTS.

    (a) Definitions.--Section 101 of title 17, United States Code, is 
amended by inserting after the definition of ``device'', ``machine'', 
or ``process'' the following:
            ``A `digital transmission' is a transmission in whole or in 
        part in a digital or other non-analog format.''.
    (b) Limitations on Exclusive Rights: Secondary Transmissions.--
Section 111(c)(1) of title 17, United States Code, is amended in the 
first sentence by inserting ``and section 114(d)'' after ``of this 
subsection''.
    (c) Limitations on Exclusive Rights: Secondary Transmissions of 
Superstations and Network Stations for Private Home Viewing.--
            (1) Section 119(a)(1) of title 17, United States Code, is 
        amended in the first sentence by inserting ``and section 
        114(d)'' after ``of this subsection''.
            (2) Section 119(a)(2)(A) of title 17, United States Code, 
        is amended in the first sentence by inserting ``and section 
        114(d)'' after ``of this subsection''.
    (d) Copyright Arbitration Royalty Panels.--
            (1) Section 801(b)(1) of title 17, United States Code, is 
        amended in the first and second sentences by striking ``115'' 
        each place it appears and inserting ``114, 115,''.
            (2) Section 802(c) of title 17, United States Code, is 
        amended in the third sentence by striking ``section 111, 116, 
        or 119,'' and inserting ``section 111, 114, 116, or 119, any 
        person entitled to a compulsory license under section 114(d), 
        any person entitled to a compulsory license under section 
        115,''.
            (3) Section 802(g) of title 17, United States Code, is 
        amended in the third sentence by inserting ``114,'' after 
        ``111,''.
            (4) Section 802(h)(2) of title 17, United States Code, is 
        amended by inserting ``114,'' after ``111,''.

SEC. 6. EFFECTIVE DATE.

    This Act and the amendments made by this Act shall take effect 3 
months after the date of enactment of this Act, except that the 
provisions of sections 114(e) and 114(f) of title 17, United States 
Code (as added by section 3 of this Act) shall take effect immediately 
upon the date of enactment of this Act.
S 227 RS----2
S 227 RS----3
```