Fair Play Fair Pay Act of 2017

To amend title 17, United States Code, to provide fair treatment of radio stations and artists for the use of sound recordings, and for other purposes. 1. Short title; table of contents (a) Short title This Act may be cited as the Fair Play Fair Pay Act of 2017 (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Equitable treatment for terrestrial broadcasts and Internet services. Sec. 3. Timing of proceedings under sections 112(e) 114(f) Sec. 4. Ensuring platform parity. Sec. 5. Special protection for small broadcasters, public and educational radio, religious services, and incidental use of music. Sec. 6. Distribution of certain royalties. Sec. 7. Equitable treatment of legacy sound recordings. Sec. 8. No harmful effects on songwriters. Sec. 9. Allocation of payments to music producers. Sec. 10. Effective date. 2. Equitable treatment for terrestrial broadcasts and Internet services (a) Performance right applicable to transmissions generally Paragraph (6) of section 106 of title 17, United States Code, is amended to read as follows: (6) in the case of sound recordings, to perform the copyrighted work publicly by means of an audio transmission. . (b) Inclusion of terrestrial broadcasts in existing performance right and statutory license Section 114(d)(1) of title 17, United States Code, is amended— (1) in the matter preceding subparagraph (A), by striking a digital an (2) in subparagraph (B)— (A) by striking clauses (i) and (iii); (B) by redesignating clauses (ii) and (iv) as clauses (i) and (ii), respectively; (C) in clause (i), as so redesignated, by adding or retransmitter; (D) in clause (ii), as so redesignated, by striking retransmission, whether or not simultaneous, is a retransmission is a non-simultaneous, (c) Technical and conforming amendments (1) Definition Section 101 of title 17, United States Code, is amended by inserting after the definition of architectural work An audio transmission . (2) Conforming removal of digital Title 17, United States Code, is amended— (A) in section 112(e)(8), by striking a digital audio transmission an audio transmission (B) in section 114— (i) in subsection (d)— (I) in paragraph (2)— (aa) in the matter preceding subparagraph (A), by striking subscription digital subscription (bb) in subparagraph (C)(viii), by striking digital signal signal (II) in paragraph (4)— (aa) in subparagraph (A), by striking a digital audio transmission an audio transmission (bb) in subparagraph (B)(i), by striking a digital audio transmission an audio transmission (ii) in subsection (g)(2)(A), by striking a digital an (iii) in subsection (j)— (I) in paragraph (6)— (aa) by striking digital (bb) by striking retransmissions of broadcast transmissions broadcast transmissions and retransmissions of broadcast transmissions (II) in paragraph (8), by striking subscription digital subscription 3. Timing of proceedings under sections 112(e) 114(f) Paragraph (3) of section 804(b) of title 17, United States Code, is amended by adding at the end the following new subparagraph: (D) A proceeding under this chapter shall be commenced as soon as practicable after the date of the enactment of the Fair Play Fair Pay Act of 2017 Fair Play Fair Pay Act of 2017 . 4. Ensuring platform parity (a) Uniform rate standard Section 114(f) of title 17, United States Code, is amended— (1) by striking paragraphs (1) and (2) and inserting the following: (1) (A) Proceedings under chapter 8 shall determine reasonable rates and terms of royalty payments for transmissions subject to statutory licensing under subsection (d)(2) during the 5-year period beginning on January 1 of the second year following the year in which the proceedings are to be commenced pursuant to subparagraph (A) or (B) of section 804(b)(3), as the case may be, or such other period as the parties may agree. The parties to each proceeding shall bear their own costs. (B) The schedule of reasonable rates and terms determined by the Copyright Royalty Judges shall, subject to paragraph (2), be binding on all copyright owners of sound recordings and entities performing sound recordings affected by this paragraph during the 5-year period specified in subparagraph (A), or such other period as the parties may agree. Such rates and terms shall distinguish among the different types of services then in operation and shall include a minimum fee for each such type of service, such differences to be based on criteria including the quantity and nature of the use of sound recordings and the degree to which use of the service may substitute for or may promote the purchase of phonorecords by consumers. The Copyright Royalty Judges shall establish rates and terms that most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller. In determining such rates and terms, the Copyright Royalty Judges— (i) shall base their decision on economic, competitive, and programming information presented by the parties, including— (I) whether use of the service may substitute for or may promote the sales of phonorecords or otherwise may interfere with or may enhance the sound recording copyright owner’s other streams of revenue from the copyright owner’s sound recordings; and (II) the relative roles of the copyright owner and the transmitting entity in the copyrighted work and the service made available to the public with respect to relative creative contribution, technological contribution, capital investment, cost, and risk; and (ii) may consider the rates and terms for comparable types of audio transmission services and comparable circumstances under voluntary license agreements. (C) The procedures under subparagraphs (A) and (B) shall also be initiated pursuant to a petition filed by any copyright owner of sound recordings or any transmitting entity indicating that a new type of service on which sound recordings are performed is or is about to become operational, for the purpose of determining reasonable terms and rates of royalty payments with respect to such new type of service for the period beginning with the inception of such new type of service and ending on the date on which the royalty rates and terms for eligible nonsubscription services and new subscription services, or preexisting services, as the case may be, most recently determined under subparagraph (A) or (B) and chapter 8 expire, or such other period as the parties may agree. ; and (2) by redesignating paragraphs (3), (4), and (5) as paragraphs (2), (3), and (4), respectively. (b) Technical and conforming amendments (1) Section 114 Section 114(f) of title 17, United States Code, as amended by subsection (a), is further amended in paragraph (4)(C), as so redesignated, by striking under paragraph (4) under paragraph (3) (2) Section 801 Section 801(b)(1) of title 17, United States Code, is amended by striking 114(f)(1)(B), 115, 115 (3) Section 804 Section 804(b)(3)(C) of title 17, United States Code, is amended— (A) in clause (i), by striking and 114(f)(2)(C) (B) in clause (iii)(II), by striking 114(f)(4)(B)(ii) 114(f)(3)(B)(ii) (C) in clause (iv), by striking or 114(f)(2)(C), as the case may be 5. Special protection for small broadcasters, public and educational radio, religious services, and incidental use of music (a) Special Protection for Small Broadcasters Section 114(f)(1) of title 17, United States Code, as amended by section 4(a), is further amended by inserting at the end the following new subparagraph: (D) (i) Notwithstanding the provisions of subparagraphs (A) through (C), the royalty rate for nonsubscription broadcast transmissions by each individual terrestrial broadcast station licensed as such by the Federal Communications Commission that is not a public broadcasting entity as defined in section 118(f) and that has revenues in any calendar year of less than $1,000,000 shall be $500 per year for any such year. For purposes of such determination, such revenues shall include all revenues from the operation of the station, calculated in accordance with generally accepted accounting principles in the United States. In the case of affiliated broadcast stations, revenues shall be allocated reasonably to individual stations associated with those revenues. . (b) Special Protection for Public Broadcasters, College Radio, and other Noncommercial Stations Subparagraph (D) of section 114(f)(1) of title 17, United States Code, as added by subsection (a), is amended by inserting at the end the following new clauses: (ii) Notwithstanding the provisions of subparagraphs (A) through (C), the royalty rate for nonsubscription broadcast transmissions by each individual terrestrial broadcast station licensed as such by the Federal Communications Commission that is a public broadcasting entity as defined in section 118(f) shall be $100 per year. (iii) The royalty rates specified in clauses (i) and (ii) shall not be admissible as evidence or otherwise taken into account in determining royalty rates in a proceeding under chapter 8, or in any other administrative, judicial, or other Federal Government proceeding involving the setting or adjustment of the royalties payable for the public performance or reproduction in ephemeral phonorecords or copies of sound recordings, the determination of terms or conditions related thereto, or the establishment of notice or recordkeeping requirements. . (c) No Royalties for Religious Services or Incidental Uses of Music Section 114(d)(1) of title 17, United States Code, as amended by section 2(b), is further amended by striking subparagraph (A) and inserting the following: (A) a nonsubscription broadcast transmission of— (i) services at a place of worship or other religious assembly; or (ii) an incidental use of a sound recording of a musical work; . (d) Technical correction Section 118(f) of title 17, United States Code, is amended by striking section 397 of title 47 section 397 of the Communications Act of 1934 ( 47 U.S.C. 397 6. Distribution of certain royalties Section 114(g) of title 17, United States Code, is amended— (1) in paragraph (1), by inserting or in the case of a transmission to which paragraph (5) applies this section (2) by adding at the end the following new paragraph: (5) Notwithstanding paragraph (1), to the extent that a license granted by the copyright owner of a sound recording to a transmitting entity eligible for a statutory license under subsection (d)(2) extends to such entity’s transmissions otherwise licensable under a statutory license in accordance with subsection (f), such entity shall pay to the agent designated to distribute statutory licensing receipts from the licensing of transmissions in accordance with subsection (f), 50 percent of the total royalties that such entity is required, pursuant to the applicable license agreement, to pay for such transmissions otherwise licensable under a statutory license in accordance with subsection (f). That agent shall distribute such payments in proportion to the distributions provided in subparagraphs (B) through (D) of paragraph (2), and such payments shall be the sole payments to which featured and nonfeatured artists are entitled by virtue of such transmissions under the direct license with such entity. . 7. Equitable treatment of legacy sound recordings (a) Payment for use of certain sound recordings Section 114(f)(3) of title 17, United States Code, as so redesignated, is amended by adding at the end the following: (D) (i) Any person publicly performing sound recordings protected under this title by means of transmissions under a statutory license under this section, or making reproductions of such sound recordings under section 112(e), shall make royalty payments for transmissions that person makes of sound recordings that were fixed before February 15, 1972, and reproductions that person makes of those sound recordings under the circumstances described in section 112(e)(1), in the same manner as such person does for sound recordings that are protected under this title. (ii) If a person fails to make royalty payments described in clause (i) for sound recordings fixed before February 15, 1972, there shall be available, in addition to any remedy that may be available under the laws of any State, a civil action in an appropriate United States district court for recovery limited to the payments described in clause (i), in addition to interest, costs, and attorneys’ fees. Any such recovery that is obtained shall be offset against any recovery for such violation that may be available under the laws of any State. (iii) No action may be brought under the laws of any State against a transmitting entity alleging infringement of a right equivalent to the right granted in section 106(6) based on a public performance of a sound recording fixed before February 15, 1972, or alleging infringement of a right equivalent to the right granted in section 106(1) based on a reproduction of such a sound recording, if— (I) the performance would have been subject to statutory licensing under subsection (d)(2) if the sound recording had been first fixed on or after February 15, 1972; (II) the reproduction would have been subject to statutory licensing under section 112(e)(1) if the sound recording had been first fixed on or after February 15, 1972; (III) the transmitting entity has satisfied the requirements for statutory licensing under subparagraph (B) and section 112(e)(6); and (IV) the applicable royalty was paid and accounted for under this subparagraph. (iv) This subparagraph does not confer copyright protection under this title upon sound recordings that were fixed before February 15, 1972. Such sound recordings are subject to the protection available under the laws of the States, and except as provided in clause (iii), are not subject to any limitation of rights or remedies, or any defense, provided under this title. (v) This subparagraph shall have no effect with respect to any public performance that is made of a sound recording, or reproduction that is made of a sound recording under the circumstances described in section 112(e)(1), on or after February 15, 2067. . (b) Effective date The amendments made by this section shall apply to performances and reproductions of sound recordings occurring on or after the date of the enactment of this Act. 8. No harmful effects on songwriters (a) No adverse effect on license fees for underlying musical works; necessity for other licenses (1) In general Section 114(i) of title 17, United States Code, is amended to read as follows: (i) No adverse effect on license fees for underlying musical works; necessity for other licenses (1) No adverse effect on license fees for underlying musical works License fees payable for the public performance of sound recordings under section 106(6) shall not be cited, taken into account, or otherwise used in any administrative, judicial, or other governmental forum or proceeding, or otherwise, to set or adjust the license fees payable to copyright owners of musical works or their representatives for the public performance of their works, for the purpose of reducing or adversely affecting such license fees. License fees payable to copyright owners for the public performance of their musical works shall not be reduced or adversely affected in any respect as a result of the rights granted by section 106(6). (2) Necessity for other licenses Notwithstanding the grant by an owner of copyright in a sound recording of an exclusive or nonexclusive license of the right under section 106(6) to perform the work publicly, a licensee of that sound recording may not publicly perform such sound recording unless a license has been granted for the public performance of any copyrighted musical work contained in the sound recording. Such license to publicly perform the copyrighted musical work may be granted either by a performing rights society representing the copyright owner or by the copyright owner. . (2) Conforming amendment Section 114(d)(3)(C) of title 17, United States Code, is hereby repealed. (b) Public performance rights and royalties Nothing in this Act, or the amendments made by this Act, shall adversely affect in any respect the public performance rights of or royalties payable to songwriters or copyright owners of musical works. (c) Preservation of royalties on underlying works publicly performed by terrestrial broadcast stations Section 114(f) of title 17, United States Code, as amended by section 4(a), is further amended by adding at the end the following new paragraph: (5) Notwithstanding any other provision of this section, under no circumstances shall the rates established by the Copyright Royalty Judges for the public performance of sound recordings be cited, taken into account, or otherwise used in any administrative, judicial, or other governmental forum or proceeding, or otherwise, to reduce or adversely affect the license fees payable to copyright owners of musical works or their representatives for the public performance of their works by terrestrial broadcast stations, and such license fees for the public performance of musical works shall be independent of license fees paid for the public performance of sound recordings. . 9. Allocation of payments to music producers (a) Letter of direction Section 114(g) of title 17, United States Code, as amended by section 6, is further amended by adding at the end the following new paragraph: (6) Letter of direction A collective designated by the Copyright Royalty Judges to distribute receipts from the licensing of transmissions in accordance with subsection (f) shall adopt and reasonably implement a policy that provides, in circumstances determined by the collective to be appropriate, for acceptance of instructions from a payee identified in subparagraph (A) or (D) of paragraph (2) to distribute a portion of the payments to which the payee otherwise would be entitled from the licensing of transmissions of a particular sound recording to a producer, mixer, or sound engineer who was part of the creative process that created the sound recording (in this section, referred to as a letter of direction . (b) Additional provisions for recordings fixed before November 1, 1995 Section 114(g) of title 17, United States Code, as amended by subsection (a), is further amended by adding at the end the following new paragraph: (7) Sound recordings fixed before November 1, 1995 (A) Payment absent letter of direction A collective designated by the Copyright Royalty Judges to distribute receipts from the licensing of transmissions in accordance with subsection (f) shall adopt and reasonably implement a policy that provides, in circumstances determined by the collective to be appropriate, for deduction of 2 percent of the receipts from the licensing of transmissions of a sound recording fixed before November 1, 1995, from receipts otherwise payable to the recording artist or artists featured on such sound recording (or the persons conveying rights in the artists’ performance in the sound recordings) pursuant to paragraph (2)(D) (which leaves the recording artist or artists featured on such sound recording (or the persons conveying rights in the artists’ performance in the sound recordings) 43 percent of the total receipts paid pursuant to paragraph (2)) and distribution of such amount to one or more persons described in subparagraph (B), after deduction of costs as described in paragraph (3) or (4), as applicable, if each of the following requirements is met: (i) Certification of attempt to obtain a letter of direction A person described in subparagraph (B) certified to the collective, under penalty of perjury, that— (I) for a period of at least 4 months, that person made reasonable efforts to contact the artist payee for such sound recording to request and obtain a letter of direction instructing the collective to pay a portion of the royalties from the featured recording artist or artists to that person; and (II) during the period beginning on the date that person began the reasonable efforts described in subclause (I) and ending on date of that person’s certification to the collective, the artist payee did not definitively affirm or deny the request for a letter of direction. (ii) Collective attempt to contact artist After receipt of the certification described in clause (i) and for a period of at least 4 months before the collective’s first distribution to the person described in subparagraph (B), the collective attempted to notify the artist payee of the certification made by the person described in subparagraph (B) in a manner reasonably determined by the collective. (iii) No objection received An objection to the distribution has not been submitted to the collective by the artist payee as of the date that is 10 business days before the date on which the first distribution is made. (B) Eligibility for payment A person shall be eligible for payment under subparagraph (A) if such person— (i) is a producer, mixer, or sound engineer of the relevant sound recording; (ii) has entered into a written contract with a record company involved in the creation or lawful exploitation of the relevant sound recording, or with the recording artist or artists featured on such sound recording (or the persons conveying rights in the artists performance in the sound recordings), pursuant to which such person is entitled to participate in royalty payments based on exploitation of the relevant sound recording that are payable from royalties otherwise payable to the recording artist or artists featured on such sound recording (or the persons conveying rights in the artists performance in the sound recordings); (iii) made a contribution, of a nature subject to copyright protection under section 102, to the creation of the relevant sound recording; and (iv) submits a written certification to the collective stating, under penalty of perjury, that such person meets the requirements in clauses (i) through (iii) and includes a true copy of the contract described in clause (ii). (C) Multiple certifications Subject to subparagraph (D), in a case in which more than one person described in subparagraph (B) has met the requirements for a distribution pursuant to subparagraph (A) with respect to a sound recording as of the date that is 10 business days before the date on which a distribution is made, the collective shall divide the 2 percent distribution equally among all such persons. (D) Objection to payment Not later than 10 days after the collective receives from the artist payee a written objection to a distribution made pursuant to subparagraph (A), the collective shall cease making any further payment related to such distribution. In any case in which the collective has made one or more distributions pursuant to subparagraph (A) to a person described in subparagraph (B) before the date that is 10 business days after the date on which the collective receives an objection by the artist payee to such distribution, the objection shall not affect that person’s entitlement to any distribution made before the collective ceases such distribution pursuant to this subparagraph. (E) Ownership of the right to receive payments To the extent that the collective determines that a distribution will be made pursuant to subparagraph (A) to a person described in subparagraph (B), such person shall during the period of such distribution be treated for all purposes as the owner of the right to receive such payments. (F) Artist payee defined In this paragraph, the term artist payee . (c) Technical and conforming amendments Section 114(g) of title 17, United States Code, as amended by subsections (a) and (b), is further amended— (1) in paragraph (2), by striking An agent designated Except as provided for in paragraph (7), a collective designated by the Copyright Royalty Judges (2) in paragraph (3)— (A) by striking agent designated collective designated by the Copyright Royalty Judges (B) by striking agent collective (3) in paragraph (4), by striking agent collective 10. Effective date This Act, and the amendments made by this Act, shall take effect on the date of enactment of this Act, and except as provided in the amendment made by section 3, shall apply to any proceeding that is pending on, or commenced on or after, such effective date.

Summary: Fair Play Fair Pay Act of 2017This bill amends federal copyright law to extend a sound recording copyright owner's rights to include the exclusive right to perform or authorize the performance of the recording publicly by means of any audio transmission, thereby requiring terrestrial AM/FM broadcast radio stations that play copyrighted sound recordings to pay royalties for the nondigital audio transmissions of the recordings. (Currently, sound recording copyright owners have a performance right that applies only to digital transmissions by cable, satellite, and Internet radio stations.) Copyright Royalty Judges (CRJs) must commence a proceeding to determine royalty rates and terms for nonsubscription broadcast transmissions. In determining royalty rates for statutory licensing of such digital or nondigital transmissions, the CRJs must: (1) distinguish among different types of services, and (2) include a minimum fee for each type of service. Differences may be based on the quantity and nature of the use of sound recordings and the degree to which use of the service may substitute for or promote consumer purchases of phonorecords. The CRJs must establish rates that most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller. The decision must be based on economic, competitive, and programming information presented by the parties, including: (1) the sound recording copyright owner's other streams of revenue from the recordings; and (2) the relative creative contribution, technological contribution, capital investment, cost, and risk of the copyright owner and the transmitting entity. The bill caps the annual royalty rate at: (1) $500 for small commercial broadcast stations with less than $1 million in revenues for the calendar year, and (2) $100 for public broadcasting stations. Exemptions are provided for religious service broadcasts or incidental uses of music from royalty payment requirements. Proceeds for direct licenses of transmissions otherwise licensable under the statutory license must be distributed in the same manner as statutory license proceeds. The bill requires payment of 45% to featured artists, 2.5% to nonfeatured musicians, and 2.5% to nonfeatured vocalists. Such payments shall be the sole payments to which featured and nonfeatured artists are entitled under a direct license. Performance royalties for sound recordings fixed before February 15, 1972, must be paid in the same manner as royalties for sound recordings fixed after such date. A collective designated by the CRJs must implement a policy to accept instructions (referred to as a "letter of direction") from a sound recording copyright owner, or from a recording artist, to distribute a portion of performance royalty payments to a producer, mixer, or sound engineer who was part of the creative process behind the sound recording. The collective must adopt special procedures for a producer, mixer, or sound engineer to receive a portion of royalties for recordings fixed before November 1, 1995, by certifying that a reasonable effort has been made to obtain a letter of direction from an artist who owns the right to receipts payable with respect to the sound recording.