I 

113TH CONGRESS 

1ST SESSION H. R. 3219 

To amend title 17, United States Code, to provide copyright owners in 

sound recordings with the exclusive right to negotiate in the marketplace 

the performance of their works to the public by means of an audio 

transmission, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 30, 2013 

Mr. WATT introduced the following bill; which was referred to the Committee 

on the Judiciary 

A BILL 

To amend title 17, United States Code, to provide copyright 

owners in sound recordings with the exclusive right to 

negotiate in the marketplace the performance of their 

works to the public by means of an audio transmission, 

and for other purposes. 

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 ‘‘Free Market Royalty 

5 Act’’. 

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1 SEC. 2. BROADCAST PERFORMANCE RIGHT IN SOUND RE2 CORDINGS. 

3 Section 106(6) of title 17, United States Code, is 

4 amended by striking ‘‘a digital audio’’ and inserting ‘‘an 

5 audio’’. 

6 SEC. 3. FREE MARKET FOR LICENSING OF PUBLIC PER7 FORMANCES. 

8 Section 114 of title 17, United States Code, is 

9 amended as follows: 

10 (1) Subsection (d) is amended— 

11 (A) in paragraph (1)— 

12 (i) in the matter preceding subpara13 graph (A), by striking ‘‘a digital audio’’ 

14 and inserting ‘‘an audio’’; 

15 (ii) by striking subparagraph (A); and 

16 (iii) by redesignating subparagraphs 

17 (B) and (C) as subparagraphs (A) and 

18 (B), respectively; 

19 (B) by striking paragraph (2); 

20 (C) in paragraph (3)— 

21 (i) in subparagraphs (A) and (B)(i), 

22 by striking ‘‘of digital audio’’ and inserting 

23 ‘‘of an audio’’; and 

24 (ii) in subparagraph (D), by striking 

25 ‘‘a digital audio’’ and inserting ‘‘an audio’’; 

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1 (D) in paragraph (4), in subparagraphs 

2 (A) and (B)(i), by striking ‘‘a digital audio’’ 

3 and inserting ‘‘an audio’’; and 

4 (E) by redesignating paragraphs (3) and 

5 (4) as paragraphs (2) and (3), respectively. 

6 (2) Section 114 of title 17, United States Code, 

7 is amended by striking subsections (e), (f), and (g), 

8 and inserting the following: 

9 ‘‘(e) EFFICIENCY OF LICENSING.— 

10 ‘‘(1) COLLECTIVE NEGOTIATION FOR NON11 INTERACTIVE SERVICES.—Pursuant to section 

12 106(6), and notwithstanding any other provision of 

13 law, any noninteractive services performing sound 

14 recordings publicly by means of an audio trans15 mission may collectively negotiate and agree to roy16 alty rates and license terms and conditions for the 

17 performance of such sound recordings. 

18 ‘‘(2) ONE-STOP LICENSING FOR NONINTER19 ACTIVE SERVICES.— 

20 ‘‘(A) NEGOTIATION OF LICENSES BY COM21 MON AGENT.—Pursuant to section 106(6), and 

22 notwithstanding any other provision of law, for 

23 licenses for noninteractive audio transmissions, 

24 SoundExchange, Inc., or any successor entity is 

25 designated as the sole common agent to negomstockstill on DSK4VPTVN1PROD with BILLS

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1 tiate, agree to, pay, and receive payments under 

2 this section. If a license for noninteractive audio 

3 transmissions is agreed to by such common 

4 agent, copyright owners of sound recordings 

5 may subsequently negotiate and agree to roy6 alty rates and license terms and conditions with 

7 any noninteractive services performing sound 

8 recordings publicly by means of an audio trans9 mission for the performance of such sound re10 cordings. 

11 ‘‘(B) DIRECT PAYMENT AND EQUAL COM12 PENSATION.—The common agent under sub13 paragraph (A) shall make distributions directly 

14 to the following recipients from payments col15 lected under this section as follows: 

16 ‘‘(i) 50 percent shall be paid to the 

17 copyright owner. 

18 ‘‘(ii) 45 percent shall be paid to fea19 tured recording artists. 

20 ‘‘(iii) 5 percent shall be paid to non21 featured musicians and vocalists (through 

22 the American Federation of Musicians and 

23 Screen Actors Guild-American Federation 

24 of Television and Radio Artists Intellectual 

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1 Property Rights Distribution Fund, or 

2 their successors). 

3 ‘‘(f) PAYMENTS FROM INDIVIDUAL LICENSES FOR

4 NONINTERACTIVE AUDIO TRANSMISSIONS.—In the case 

5 of a license granted by the copyright owner of a sound 

6 recording to a noninteractive service performing sound re7 cordings publicly by means of an audio transmission, such 

8 service shall pay to the common agent described in sub9 section (e) receipts from the licensing of such trans10 missions in an amount equal to 50 percent of the total 

11 royalties and other compensation that the service is re12 quired to pay for such transmissions under the applicable 

13 license agreement. Such common agent shall distribute 

14 such payments in proportion to the distributions provided 

15 in clauses (ii) and (iii) of subsection (e)(2)(B), and such 

16 payments shall be the sole payments to which featured and 

17 nonfeatured artists are entitled by reason of such trans18 missions under the license with that service. 

19 ‘‘(g) BACKSTOP FOR PUBLIC AND NONCOMMERCIAL

20 STATIONS.— 

21 ‘‘(1) ESTABLISHMENT OF RATES AND TERMS.— 

22 If royalty rates and license terms and conditions for 

23 the audio transmission or retransmission of a non24 subscription broadcast consisting solely of non25 commercial educational and cultural radio programs 

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1 are not negotiated and agreed upon collectively 

2 under subsection (e) between the common agent and 

3 a noncommercial educational broadcast station fund4 ed on or after January 1, 1995, under section 

5 396(k) of the Communications Act of 1934 (47 

6 U.S.C. 396(k)), a proceeding under chapter 8 of this 

7 title shall determine the rates and terms for such 

8 transmissions and retransmissions. The Copyright 

9 Royalty Judges shall establish such rates and terms 

10 that most clearly represent the rates and terms that 

11 would have been negotiated in the marketplace be12 tween a willing buyer and a willing seller. In deter13 mining such rates and terms, the Copyright Royalty 

14 Judges shall base their decision on economic, com15 petitive, and programming information presented by 

16 the parties. 

17 ‘‘(2) PAYMENT OF ROYALTIES.—All royalty 

18 payments under this subsection for over-the-air non19 subscription broadcast transmissions required to be 

20 paid by public broadcasting entities that are eligible 

21 to receive funding on the basis of the formula set 

22 forth in section 396(k)(6)(B) of the Communications 

23 Act of 1934 (47 U.S.C. 396(k)(6)(B)) or that are 

24 authorized to transmit over-the-air nonsubscription 

25 broadcast performances of nondramatic musical 

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1 works pursuant to arrangements negotiated or oth2 erwise made by the Corporation for Public Broad3 casting under section 118, shall first be made using 

4 funds made available pursuant to section 

5 396(k)(3)(A)(I)(II) of the Communications Act of 

6 1934.’’. 

7 (3) Subsection (h)(1) is amended by striking ‘‘a 

8 digital audio’’ and inserting ‘‘an audio’’. 

9 (4) Subsection (j) is amended— 

10 (A) in paragraph (1), by striking ‘‘digital 

11 audio’’ and inserting ‘‘audio’’; 

12 (B) by striking paragraphs (2), (4), (5), 

13 (6), (8), (10), and (11); 

14 (C) by inserting after paragraph (1) the 

15 following: 

16 ‘‘(2) An ‘audio transmission’ is a transmission 

17 that embodies the transmission of a sound recording, 

18 and does not include the transmission of any audio19 visual work.’’; 

20 (D) by redesignating paragraph (7) as 

21 paragraph (4); 

22 (E) by inserting after paragraph (4), as re23 designated, the following: 

24 ‘‘(5) A ‘noninteractive service’ is a service that 

25 would have been eligible for statutory licensing 

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1 under subsection (d)(2) of this section, as such sub2 section was in effect on September 1, 2013’’; and 

3 (F) by redesignating paragraphs (9), (12), 

4 (13), (14), and (15) as paragraphs (6), (7), (8), 

5 (9), and (10) respectively. 

6 SEC. 4. EPHEMERAL RECORDINGS. 

7 Section 112 of title 17, United States Code, is 

8 amended— 

9 (1) in subsection (a)(1), by striking ‘‘including 

10 a statutory license under section 114(f)’’ and insert11 ing ‘‘including a license to perform a sound record12 ing under section 114’’; and 

13 (2) by striking subsection (e) and inserting the 

14 following: 

15 ‘‘(e) EFFICIENCY OF LICENSING.—The provisions of 

16 subsections (e)(1), (e)(2)(A), and (g) of section 114 shall 

17 apply to licensing of the right to reproduce phonorecords 

18 of a sound recording under section 106(1)— 

19 ‘‘(1) for use solely to make noninteractive audio 

20 transmissions licensable under such subsections of 

21 section 114, or 

22 ‘‘(2) for use solely under the limitation on ex23 clusive rights specified by section 114(d)(1)(B)(iv), 

24 under circumstances in which such reproductions would 

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1 section, as this subsection was in effect on September 1, 

2 2013.’’. 

3 SEC. 5. CHAPTER 8 PROCEEDINGS OF COPYRIGHT ROY4 ALTY JUDGES; TECHNICAL AMENDMENTS. 

5 (a) FUNCTIONS.—Section 801(b) of title 17, United 

6 States Code, is amended— 

7 (1) in paragraph (1)— 

8 (A) by striking ‘‘112(e), 114,’’; and 

9 (B) by striking ‘‘sections 114(f)(1)(B), 

10 115,’’ and inserting ‘‘sections 115’’; 

11 (2) in paragraph (3)(C), by striking 

12 ‘‘804(b)(8)’’ and inserting ‘‘804(b)(7)’’; 

13 (3) in paragraph (7)(B), by striking ‘‘112(e)(5), 

14 114(f)(3),’’; 

15 (4) by redesignating paragraph (8) as para16 graph (9); and 

17 (5) by inserting after paragraph (7) the fol18 lowing: 

19 ‘‘(8) To determine the rates and terms for 

20 transmissions under section 114(g) and reproduc21 tions under section 112(e).’’. 

22 (b) PROCEEDINGS.—Section 803 of title 17, United 

23 States Code, is amended— 

24 (1) in subsection (b)(1)(A)(i)— 

25 (A) by striking subclauses (II) and (III); 

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1 (B) in subclause (IV), by striking 

2 ‘‘804(b)(8)’’ and inserting ‘‘804(b)(7)’’; and 

3 (C) by redesignating subclauses (IV) and 

4 (V) as subclauses (II) and (III), respectively; 

5 and 

6 (2) in subsection (c)(2)(E)(i), by striking ‘‘on a 

7 specified date, then—’’ and all that follows through 

8 ‘‘as of the date of that determination.’’ and inserting 

9 ‘‘on a specified date, then the initial determination 

10 of the Copyright Royalty Judges that is the subject 

11 of the rehearing motion shall be effective as of the 

12 day following the date on which the rates and terms 

13 that were previously in effect expire.’’. 

14 (c) JUDICIAL REVIEW.—Section 803(d)(2)(C)(ii) of 

15 title 17, United States Code, is amended by striking ‘‘by 

16 the Copyright Royalty Judges’’ and inserting ‘‘under sec17 tion 114(e)(2) or 112(e), or, in any other case, by the 

18 Copyright Royalty Judges,’’. 

19 (d) INSTITUTION OF PROCEEDINGS.—Section 804 of 

20 title 17, United States Code, is amended— 

21 (1) in subsection (a)— 

22 (A) in the first sentence, by striking ‘‘112, 

23 114,’’; and 

24 (B) by striking the last sentence; and 

25 (2) in subsection (b)— 

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1 (A) by striking paragraph (2); 

2 (B) by striking paragraph (3) and insert3 ing the following: 

4 ‘‘(2) CERTAIN SECTIONS 114 AND 112 PRO5 CEEDINGS.—Proceedings under this chapter to de6 termine terms and rates of royalty payments under 

7 section 114(g) or 112(e) may be commenced only 

8 pursuant to petitions filed after the end of the 6- 

9 month period beginning on the effective date of the 

10 Free Market Royalty Act. Thereafter, proceedings 

11 described in the preceding sentence may be com12 menced only pursuant to a petition filed at any time 

13 within 1 year after negotiated licenses authorized by 

14 section 114 or 112(e) (as the case may be) expire 

15 and are not replaced by subsequent agreements. For 

16 purposes of proceedings to determine terms and 

17 rates under this paragraph, the Copyright Royalty 

18 Judges shall make a determination as to whether the 

19 petitioner has a significant interest in the terms and 

20 rates in which a determination by the Judges is re21 quested. If the Copyright Royalty Judges determine 

22 that the petitioner has such a significant interest, 

23 the Copyright Royalty Judges shall cause notice of 

24 this determination, with the reasons for such deter25 mination, to be published in the Federal Register, 

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1 together with the notice of commencement of pro2 ceedings under this chapter.’’; and 

3 (C) by redesignating paragraphs (4) 

4 through (8) as paragraphs (3) through (7), re5 spectively. 

6 (e) TECHNICAL AMENDMENTS.—Section 114 of title 

7 17, United States Code, is amended as follows: 

8 (1) Subsection (a) is amended by striking 

9 ‘‘clauses’’ and inserting ‘‘paragraphs’’. 

10 (2) Subsection (b) is amended— 

11 (A) by striking ‘‘clause’’ each place it ap12 pears and inserting ‘‘paragraph’’; 

13 (B) by striking ‘‘clauses’’ each place it ap14 pears and inserting ‘‘paragraphs’’; and 

15 (C) by striking ‘‘section 397 of title 47’’ 

16 and inserting ‘‘section 397 of the Communica17 tions Act of 1934 (47 U.S.C. 397)’’. 

18 SEC. 6. STUDY BY COPYRIGHT OFFICE. 

19 The Register of Copyrights shall— 

20 (1) conduct a study on the protection of making 

21 available to the public copyrighted works under 

22 paragraph (3) of section 106 of title 17, United 

23 States Code, and communicating to the public copy24 righted works under paragraph (4) of such section, 

25 and recommend any amendments to such paramstockstill on DSK4VPTVN1PROD with BILLS

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1 graphs necessary to so protect the rights of making 

2 available to the public copyrighted works and com3 municating to the public copyrighted works; and 

4 (2) not later than 9 months after the date of 

5 the enactment of this Act, submit to the Committees 

6 on the Judiciary of the House of Representatives 

7 and the Senate a report on the results of the studies 

8 conducted under paragraph (1), including any rec9 ommendations under such paragraph. 

10 SEC. 7. EFFECTIVE DATE. 

11 (a) PHASE-OUT OF STATUTORY LICENSES.—The 

12 amendments made by sections 2, 3, 4, and 5— 

13 (1) shall take effect upon the expiration of the 

14 1-year period beginning on the date of the enact15 ment of this Act; and 

16 (2) shall apply with respect to audio trans17 missions of sound recordings that are made on or 

18 after the effective date under paragraph (1). 

19 (b) OTHER PROVISIONS.—Sections 1 and 6 shall take 

20 effect on the date of the enactment of this Act. 

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