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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Free Market Royalty 
Act’’. 
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SEC. 2. BROADCAST PERFORMANCE RIGHT IN SOUND RE-
CORDINGS. 
Section 106(6) of title 17, United States Code, is 
amended by striking ‘‘a digital audio’’ and inserting ‘‘an 
audio’’. 
SEC. 3. FREE MARKET FOR LICENSING OF PUBLIC PER-
FORMANCES. 
Section 114 of title 17, United States Code, is 
amended as follows: 
(1) Subsection (d) is amended— 
(A) in paragraph (1)— 
(i) in the matter preceding subpara-
graph (A), by striking ‘‘a digital audio’’ 
and inserting ‘‘an audio’’; 
(ii) by striking subparagraph (A); and 
(iii) by redesignating subparagraphs 
(B) and (C) as subparagraphs (A) and 
(B), respectively; 
(B) by striking paragraph (2); 
(C) in paragraph (3)— 
(i) in subparagraphs (A) and (B)(i), 
by striking ‘‘of digital audio’’ and inserting 
‘‘of an audio’’; and 
(ii) in subparagraph (D), by striking 
‘‘a digital audio’’ and inserting ‘‘an audio’’; 
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(D) in paragraph (4), in subparagraphs 
(A) and (B)(i), by striking ‘‘a digital audio’’ 
and inserting ‘‘an audio’’; and 
(E) by redesignating paragraphs (3) and 
(4) as paragraphs (2) and (3), respectively. 
(2) Section 114 of title 17, United States Code, 
is amended by striking subsections (e), (f), and (g), 
and inserting the following: 
‘‘(e) EFFICIENCY OF LICENSING.— 
‘‘(1) COLLECTIVE
NEGOTIATION
FOR
NON-
INTERACTIVE
SERVICES.—Pursuant 
to 
section 
106(6), and notwithstanding any other provision of 
law, any noninteractive services performing sound 
recordings publicly by means of an audio trans-
mission may collectively negotiate and agree to roy-
alty rates and license terms and conditions for the 
performance of such sound recordings. 
‘‘(2) ONE-STOP
LICENSING
FOR
NONINTER-
ACTIVE SERVICES.— 
‘‘(A) NEGOTIATION OF LICENSES BY COM-
MON AGENT.—Pursuant to section 106(6), and 
notwithstanding any other provision of law, for 
licenses for noninteractive audio transmissions, 
SoundExchange, Inc., or any successor entity is 
designated as the sole common agent to nego-
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tiate, agree to, pay, and receive payments under 
this section. If a license for noninteractive audio 
transmissions is agreed to by such common 
agent, copyright owners of sound recordings 
may subsequently negotiate and agree to roy-
alty rates and license terms and conditions with 
any noninteractive services performing sound 
recordings publicly by means of an audio trans-
mission for the performance of such sound re-
cordings. 
‘‘(B) DIRECT PAYMENT AND EQUAL COM-
PENSATION.—The common agent under sub-
paragraph (A) shall make distributions directly 
to the following recipients from payments col-
lected under this section as follows: 
‘‘(i) 50 percent shall be paid to the 
copyright owner. 
‘‘(ii) 45 percent shall be paid to fea-
tured recording artists. 
‘‘(iii) 5 percent shall be paid to non-
featured musicians and vocalists (through 
the American Federation of Musicians and 
Screen Actors Guild-American Federation 
of Television and Radio Artists Intellectual 
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Property Rights Distribution Fund, or 
their successors). 
‘‘(f) PAYMENTS FROM INDIVIDUAL LICENSES FOR 
NONINTERACTIVE AUDIO TRANSMISSIONS.—In the case 
of a license granted by the copyright owner of a sound 
recording to a noninteractive service performing sound re-
cordings publicly by means of an audio transmission, such 
service shall pay to the common agent described in sub-
section (e) receipts from the licensing of such trans-
missions in an amount equal to 50 percent of the total 
royalties and other compensation that the service is re-
quired to pay for such transmissions under the applicable 
license agreement. Such common agent shall distribute 
such payments in proportion to the distributions provided 
in clauses (ii) and (iii) of subsection (e)(2)(B), and such 
payments shall be the sole payments to which featured and 
nonfeatured artists are entitled by reason of such trans-
missions under the license with that service. 
‘‘(g) BACKSTOP FOR PUBLIC AND NONCOMMERCIAL 
STATIONS.— 
‘‘(1) ESTABLISHMENT OF RATES AND TERMS.— 
If royalty rates and license terms and conditions for 
the audio transmission or retransmission of a non-
subscription broadcast consisting solely of non-
commercial educational and cultural radio programs 
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are not negotiated and agreed upon collectively 
under subsection (e) between the common agent and 
a noncommercial educational broadcast station fund-
ed on or after January 1, 1995, under section 
396(k) of the Communications Act of 1934 (47 
U.S.C. 396(k)), a proceeding under chapter 8 of this 
title shall determine the rates and terms for such 
transmissions and retransmissions. The Copyright 
Royalty Judges shall establish such rates and terms 
that most clearly represent the rates and terms that 
would have been negotiated in the marketplace be-
tween a willing buyer and a willing seller. In deter-
mining such rates and terms, the Copyright Royalty 
Judges shall base their decision on economic, com-
petitive, and programming information presented by 
the parties. 
‘‘(2) PAYMENT
OF
ROYALTIES.—All royalty 
payments under this subsection for over-the-air non-
subscription broadcast transmissions required to be 
paid by public broadcasting entities that are eligible 
to receive funding on the basis of the formula set 
forth in section 396(k)(6)(B) of the Communications 
Act of 1934 (47 U.S.C. 396(k)(6)(B)) or that are 
authorized to transmit over-the-air nonsubscription 
broadcast performances of nondramatic musical 
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works pursuant to arrangements negotiated or oth-
erwise made by the Corporation for Public Broad-
casting under section 118, shall first be made using 
funds 
made 
available 
pursuant 
to 
section 
396(k)(3)(A)(I)(II) of the Communications Act of 
1934.’’. 
(3) Subsection (h)(1) is amended by striking ‘‘a 
digital audio’’ and inserting ‘‘an audio’’. 
(4) Subsection (j) is amended— 
(A) in paragraph (1), by striking ‘‘digital 
audio’’ and inserting ‘‘audio’’; 
(B) by striking paragraphs (2), (4), (5), 
(6), (8), (10), and (11); 
(C) by inserting after paragraph (1) the 
following: 
‘‘(2) An ‘audio transmission’ is a transmission 
that embodies the transmission of a sound recording, 
and does not include the transmission of any audio-
visual work.’’; 
(D) by redesignating paragraph (7) as 
paragraph (4); 
(E) by inserting after paragraph (4), as re-
designated, the following: 
‘‘(5) A ‘noninteractive service’ is a service that 
would have been eligible for statutory licensing 
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under subsection (d)(2) of this section, as such sub-
section was in effect on September 1, 2013’’; and 
(F) by redesignating paragraphs (9), (12), 
(13), (14), and (15) as paragraphs (6), (7), (8), 
(9), and (10) respectively. 
SEC. 4. EPHEMERAL RECORDINGS. 
Section 112 of title 17, United States Code, is 
amended— 
(1) in subsection (a)(1), by striking ‘‘including 
a statutory license under section 114(f)’’ and insert-
ing ‘‘including a license to perform a sound record-
ing under section 114’’; and 
(2) by striking subsection (e) and inserting the 
following: 
‘‘(e) EFFICIENCY OF LICENSING.—The provisions of 
subsections (e)(1), (e)(2)(A), and (g) of section 114 shall 
apply to licensing of the right to reproduce phonorecords 
of a sound recording under section 106(1)— 
‘‘(1) for use solely to make noninteractive audio 
transmissions licensable under such subsections of 
section 114, or 
‘‘(2) for use solely under the limitation on ex-
clusive rights specified by section 114(d)(1)(B)(iv), 
under circumstances in which such reproductions would 
have been eligible for statutory licensing under this sub-
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(B) 
in 
subclause 
(IV), 
by 
striking 
‘‘804(b)(8)’’ and inserting ‘‘804(b)(7)’’; and 
(C) by redesignating subclauses (IV) and 
(V) as subclauses (II) and (III), respectively; 
and 
(2) in subsection (c)(2)(E)(i), by striking ‘‘on a 
specified date, then—’’ and all that follows through 
‘‘as of the date of that determination.’’ and inserting 
‘‘on a specified date, then the initial determination 
of the Copyright Royalty Judges that is the subject 
of the rehearing motion shall be effective as of the 
day following the date on which the rates and terms 
that were previously in effect expire.’’. 
(c) JUDICIAL REVIEW.—Section 803(d)(2)(C)(ii) of 
title 17, United States Code, is amended by striking ‘‘by 
the Copyright Royalty Judges’’ and inserting ‘‘under sec-
tion 114(e)(2) or 112(e), or, in any other case, by the 
Copyright Royalty Judges,’’. 
(d) INSTITUTION OF PROCEEDINGS.—Section 804 of 
title 17, United States Code, is amended— 
(1) in subsection (a)— 
(A) in the first sentence, by striking ‘‘112, 
114,’’; and 
(B) by striking the last sentence; and 
(2) in subsection (b)— 
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(A) by striking paragraph (2); 
(B) by striking paragraph (3) and insert-
ing the following: 
‘‘(2) CERTAIN
SECTIONS
114
AND
112
PRO-
CEEDINGS.—Proceedings under this chapter to de-
termine terms and rates of royalty payments under 
section 114(g) or 112(e) may be commenced only 
pursuant to petitions filed after the end of the 6- 
month period beginning on the effective date of the 
Free Market Royalty Act. Thereafter, proceedings 
described in the preceding sentence may be com-
menced only pursuant to a petition filed at any time 
within 1 year after negotiated licenses authorized by 
section 114 or 112(e) (as the case may be) expire 
and are not replaced by subsequent agreements. For 
purposes of proceedings to determine terms and 
rates under this paragraph, the Copyright Royalty 
Judges shall make a determination as to whether the 
petitioner has a significant interest in the terms and 
rates in which a determination by the Judges is re-
quested. If the Copyright Royalty Judges determine 
that the petitioner has such a significant interest, 
the Copyright Royalty Judges shall cause notice of 
this determination, with the reasons for such deter-
mination, to be published in the Federal Register, 
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together with the notice of commencement of pro-
ceedings under this chapter.’’; and 
(C) 
by 
redesignating 
paragraphs 
(4) 
through (8) as paragraphs (3) through (7), re-
spectively. 
(e) TECHNICAL AMENDMENTS.—Section 114 of title 
17, United States Code, is amended as follows: 
(1) Subsection (a) is amended by striking 
‘‘clauses’’ and inserting ‘‘paragraphs’’. 
(2) Subsection (b) is amended— 
(A) by striking ‘‘clause’’ each place it ap-
pears and inserting ‘‘paragraph’’; 
(B) by striking ‘‘clauses’’ each place it ap-
pears and inserting ‘‘paragraphs’’; and 
(C) by striking ‘‘section 397 of title 47’’ 
and inserting ‘‘section 397 of the Communica-
tions Act of 1934 (47 U.S.C. 397)’’. 
SEC. 6. STUDY BY COPYRIGHT OFFICE. 
The Register of Copyrights shall— 
(1) conduct a study on the protection of making 
available to the public copyrighted works under 
paragraph (3) of section 106 of title 17, United 
States Code, and communicating to the public copy-
righted works under paragraph (4) of such section, 
and recommend any amendments to such para-
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graphs necessary to so protect the rights of making 
available to the public copyrighted works and com-
municating to the public copyrighted works; and 
(2) not later than 9 months after the date of 
the enactment of this Act, submit to the Committees 
on the Judiciary of the House of Representatives 
and the Senate a report on the results of the studies 
conducted under paragraph (1), including any rec-
ommendations under such paragraph. 
SEC. 7. EFFECTIVE DATE. 
(a) PHASE-OUT
OF STATUTORY LICENSES.—The 
amendments made by sections 2, 3, 4, and 5— 
(1) shall take effect upon the expiration of the 
1-year period beginning on the date of the enact-
ment of this Act; and 
(2) shall apply with respect to audio trans-
missions of sound recordings that are made on or 
after the effective date under paragraph (1). 
(b) OTHER PROVISIONS.—Sections 1 and 6 shall take 
effect on the date of the enactment of this Act. 
Æ 
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