scribe 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 trans-
mission licensed in accordance with subsection (f) of
this section—
‘‘(A) a featured recording artist who per-
forms on a sound recording that has been li-
censed 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 li-
censed 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 agree-
ment.
‘‘(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 trans-
mission shall allocate to recording artists in the fol-
lowing manner its receipts from the statutory licens-
ing of subscription transmission performances of the
sound recording in accordance with subsection (f) of
this section:
‘‘(A) 21⁄2 percent of the receipts shall be de-
posited 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 suc-
cessor entity) to be distributed to nonfeatured
musicians (whether or not members of the Amer-
ican Federation of Musicians) who have per-
formed on sound recordings.
‘‘(B) 21⁄2 percent of the receipts shall be de-
posited 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 re-
cordings.
‘‘(C) 45 percent of the receipts shall be allo-
cated, on a per sound recording basis, to the re-
cording 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 per-
form a sound recording by means of a digital audio
transmission under section 106(6), the copyright
owner shall make the licensed sound recording avail-
able 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 dif-
ferences in the scope of the requested license with re-
spect to the type of service, the particular sound re-
cordings 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 pur-
pose of the performance is to promote the dis-
tribution 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 section 106(6) shall not be taken
into account in any administrative, judicial, or other gov-
ernmental proceeding to set or adjust the royalties payable
to copyright owners of musical works for the public per-
formance 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 dimin-
ished in any respect as a result of the rights granted by
section 106(6).
‘‘(j) DEFINITIONS.—As used in this section, the follow-
ing 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 trans-
mission made by a terrestrial broadcast station li-
censed as such by the Federal Communications Com-
mission.
‘‘(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 trans-
mission of a particular sound recording chosen by or
on behalf of the recipient. The ability of individuals
to request that particular sound recordings be per-
formed for reception by the public at large does not
make a service interactive. If an entity offers both
interactive and non-interactive services (either con-
currently or at different times), the non-interactive
component shall not be treated as part of an inter-
active service.
‘‘(5) A ‘nonsubscription’ transmission is any
transmission that is not a subscription transmission.
‘‘(6) A ‘retransmission’ is a further transmission
of an initial transmission, and includes any further
retransmission of the same transmission. Except as
provided in this section, a transmission qualifies as
a ‘retransmission’ only if it is simultaneous with the
initial 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 com-
plement’ is the transmission during any 3-hour pe-
riod, on a particular channel used by a transmitting
entity, of no more than—
‘‘(A) 3 different selections of sound record-
ings from any one phonorecord lawfully distrib-
uted 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 record-
ings—
‘‘(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 trans-
mitted 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 limita-
tions prescribed in such clauses.
‘‘(8) A ‘subscription’ transmission is a trans-
mission 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 re-
cipient to receive the transmission or a package of
transmissions including the transmission.
‘‘(9) A ‘transmission’ includes both an initial
transmission and a retransmission.’’.
SEC. 4. MECHANICAL ROYALTIES IN DIGITAL PHONO-
RECORD DELIVERIES.
Section 115 of title 17, United States Code, is amend-
ed—
(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,’’;
and
(B) in the second sentence by inserting be-
fore the period ‘‘, including by means of a digi-
tal 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), re-
spectively, 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 dis-
tribute 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 trans-
mission is also a public performance of the sound re-
cording 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 phono-
record delivery by or under the authority of the com-
pulsory 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 roy-
alty 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 anti-
trust laws, any copyright owners of nondramatic mu-
sical works and any persons entitled to obtain a com-
pulsory license under subsection (a)(1) may negotiate
and agree upon the terms and rates of royalty pay-
ments under this paragraph and the proportionate di-
vision 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 in-
cludes, 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, the Librarian of Congress
shall cause notice to be published in the Federal Reg-
ister of the initiation of voluntary negotiation pro-
ceedings for the purpose of determining reasonable
terms and rates of royalty payments for the activities
specified by subparagraph (A) during the period be-
ginning January 1, 1998, and ending on the effective
date of any new terms and rates established pursuant
to subparagraph (C), (D) or (F), or such other date
(regarding digital phonorecord deliveries) as the par-
ties may agree. Such terms and rates shall distin-
guish 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 phono-
record 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 cov-
ering such activities. The parties to each negotiation
proceeding shall bear their own costs.
‘‘(D) In the absence of license agreements nego-
tiated under subparagraphs (B) and (C), upon the fil-
ing of a petition in accordance with section
803(a)(1), the Librarian of Congress shall, pursuant
to chapter 8, convene a copyright arbitration royalty
panel to determine and publish in the Federal Reg-
ister 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 sub-
section (a)(1) during the period beginning January 1,
1998, and ending on the effective date of any new
terms and rates established pursuant to subparagraph
(C), (D) or (F), or such other date (regarding digital
phonorecord deliveries) as may be determined pursu-
ant to subparagraphs (B) and (C). 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 es-
tablishing such rates and terms, the copyright arbi-
tration royalty panel may consider rates and terms
under voluntary license agreements negotiated as pro-
vided in subparagraphs (B) and (C). The royalty
rates payable for a compulsory license for a digital
phonorecord delivery under this section shall be estab-
lished de novo and no precedential effect shall be
given to the amount of the royalty payable by a com-
pulsory licensee for digital phonorecord deliveries on
or before December 31, 1997. The Librarian of Con-
gress shall also establish requirements by which copy-
right 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 nego-
tiated 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. Sub-
ject to clause (ii), the royalty rates determined pursu-
ant to subparagraph (C), (D) or (F) shall be given ef-
fect 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 sections 106(1) and (3) or com-
mits another person to grant a license in that musical
work under sections 106(1) and (3), to a person desir-
ing to fix in a tangible medium of expression a sound
recording embodying the musical work.
‘‘(ii) The second sentence of 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 the royalty rates deter-
mined pursuant to subparagraph (C), (D) or (F)
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 mu-
sical works within the scope of the contract, any
contrary royalty rates specified in the contract
shall be given effect in lieu of royalty rates deter-
mined pursuant to subparagraph (C), (D) or (F)
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 in-
tended for commercial release, if at the time the
contract is entered into, the recording artist re-
tains the right to grant licenses as to the musical
work under sections 106(1) and 106(3).
‘‘(F) The procedures specified in subparagraphs
(C) and (D) shall be repeated and concluded, in ac-
cordance with regulations that the Librarian of Con-
phonorecord delivery has obtained a compulsory
license under this section or has otherwise been
authorized by the copyright owner of the musical
work to distribute or authorize the distribution,
by means of a digital phonorecord delivery, of
each musical work embodied in the sound record-
ing.
‘‘(ii) Any cause of action under this subpara-
graph shall be in addition to those available to the
owner of the copyright in the nondramatic musical
work under subsection (c)(6) 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 nondramatic musical work embodied in the sound
recording shall be determined in accordance with ap-
plicable 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 nondramatic
musical work.
‘‘(J) Nothing in section 1008 shall be construed
to prevent the exercise of the rights and remedies al-
lowed by this paragraph, paragraph (6), and chapter
5 in the event of a digital phonorecord delivery, ex-
cept that no action alleging infringement of copyright
may be brought under this title against a manufac-
turer, importer or distributor of a digital audio re-
cording device, a digital audio recording medium, an
analog recording device, or an analog recording me-
dium, or against a consumer, based on the actions de-
scribed in such section.
‘‘(K) Nothing in this section annuls or limits (i)
the exclusive right to publicly perform a sound record-
ing or the musical work embodied therein, including
by means of a digital transmission, under sections
106(4) and 106(6), (ii) except for compulsory licens-
ing 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 enact-
ment of the Digital Performance Right in Sound Re-
cordings Act of 1995.
‘‘(L) The provisions of this section concerning
digital phonorecord deliveries shall not apply to any
exempt transmissions or retransmissions under sec-
tion 114(d)(1). The exemptions created in section
114(d)(1) do not expand or reduce the rights of copy-
right 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 follow-
ing 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 trans-
mission recipient of a phonorecord of that sound recording,
regardless of whether the digital transmission is also a pub-
lic performance of the sound recording or any nondramatic
musical work embodied therein. A digital phonorecord de-
livery does not result from a real-time, noninteractive sub-
scription transmission of a sound recording where no repro-
duction of the sound recording or the musical work em-
bodied therein is made from the inception of the trans-
mission 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 for-
mat.’’.
(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 STA-
TIONS 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 in-
serting ‘‘and section 114(d)’’ after ‘‘of this sub-
section’’.
(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 com-
pulsory license under section 114(d), any person enti-
tled 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,’’.
(5) Section 803(a)(1) of title 17, United States
Code, is amended in the first sentence by striking
‘‘115’’ and inserting ‘‘114, 115’’ and by striking ‘‘and
(4)’’ and inserting ‘‘(4) and (5)’’.
(6) Section 803(a)(3) of title 17, United States
Code, is amended by inserting before the period ‘‘or
as prescribed in section 115(c)(3)(D)’’.
(7) Section 803(a) of title 17, United States
Code, is amended by inserting after paragraph (4) the
following new paragraph:
‘‘(5) With respect to proceedings under section
801(b)(1) concerning the determination of reasonable
terms and rates of royalty payments as provided in
section 114, the Librarian of Congress shall proceed
when and as provided by that section.’’.
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 enact-
ment of this Act.
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