by Howie Cockrill
In Part 1 of this article, I introduced the Performance Rights Act which is pending in the House and Senate and briefly examined the background leading to this legislation. (Senate version) (House version)
In Part 2, I compare the current Copyright Act with the proposed changes of the Performance Rights Act.
Interestingly, some of the most profound changes would arise because of the deletion of 1 word - "digital."
CURRENTLY:
Section 106 of the Copyright Act lists the exclusive rights that belong to a copyright owner.
Summarized, they are the rights to:
- copy
- distribute
- alter
- display publicly
- perform publicly
Particularly important here is the language in Section 106(6), which gives copyright holders an exclusive right:
“in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission.”
PERFORMANCE RIGHTS ACT:
The PRA would omit the word “digital” from Section 106(6).
This means that the public performance copyright for sound recordings would extend to ALL transmissions – not just digital ones.
And this means that sound recording copyright owners (artists and labels) would be entitled to royalties from analog audio transmissions (i.e., AM/FM radio).
CURRENTLY:
Section 114 of the Copyright Act covers the scope of the exclusive rights in sound recordings.
Section 114(d)(1) carves out certain transmissions that are exempt from the sound recording copyright.
The first exemption listed is “nonsubscription broadcast transmissions.”
Without reading the legislative history – it is difficult to know why Congress felt the need to include this as an exemption, because nonsubscription broadcast transmissions are essentially AM/FM radio broadcasts – which are already exempt from the sound recording performance right under the Copyright Act.
PERFORMANCE RIGHTS ACT:
The PRA would again cut out the word “digital” and apply the exemptions to all audio transmissions that can meet the (d)(1) requirements.
However, because one of the main purposes of this legislation is to bring AM/FM broadcasts within the scope of the sound recording public performance right – the exemption for “nonsubscription broadcast transmissions” would be stricken.
The PRA would also add as exemptions “eligible nonsubscription transmissions” of (1) services at a place of worship and (2) “incidental” uses of musical sound recordings.
CURRENTLY:
Section 114(j)(6)
provides a definition of an "eligible nonsubscription transmission:"
A noninteractive nonsubscription digital audio transmission not exempt under subsection (d)(1) that is made as part of a service that provides audio programming consisting, in whole or in part, of performances of sound recordings, including retransmissions of broadcast transmissions, if the primary purpose of the service is to provide to the public such audio or other entertainment programming, and the primary purpose of the service is not to sell, advertise, or promote particular products or services other than sound recordings, live concerts, or other music-related events.
So what does this mean?
“Eligible” means that these transmissions are eligible to receive a license (at a statutory rate set by the Copyright Royalty Board) to be able to use music in the programming.
“Nonsubscription” means you do not have to sign up to receive the transmission.
“Digital” means transmissions other than AM/FM ones.
Thus, taken together – an “eligible nonsubscription transmission” is a digital broadcast featuring music that you do not have to sign up for to receive and where the broadcasters can get a license at a locked-in rate from the copyright owners of the music that is played.
PERFORMANCE RIGHTS ACT:
Once again – the proposed legislation cuts the word “digital.”
The effect would be that much of AM/FM radio would be included under the umbrella of “eligible nonsubscription transmissions.”
As previously mentioned - in the current Copyright Act, AM/FM radio is exempt from paying performance royalties to labels and artists.
The PRA eliminates this exemption and also requires AM/FM broadcasters featuring music to pay a statutory rate.
CURRENTLY:
Section 114(f) sets the stage for statutory royalty rates, allowing the Copyright Royalty Board (CRB) to establish a set fee paid by digital broadcasters for their performance of sound recordings.
In particular, 114(f)(2) gives the CRB the power to set statutory minimum fees to be paid by digital broadcasters providing “eligible nonsubscription transmissions.”
These minimum fees are supposed to represent the fees that would have
been negotiated in the marketplace between a “willing buyer and a
willing seller.”
PERFORMANCE RIGHTS ACT:
The PRA would add some interesting language to 114(f)(2) regarding the statutory rates.
It states that each AM/FM broadcaster with annual gross revenues less than $1.25 million can choose to pay an annual fee of $5,000 in lieu of what it would otherwise owe under the statutory rates.
This establishes a $5,000 minimum for AM/FM broadcasters grossing less than $1.25 million.
The effect of this minimum is that AM/FM broadcasters with over $1.25 million in annual gross revenue would be subject to the statutory royalty rate set by the Copyright Royalty Board and paid by broadcasters to labels/artists (or a performance rights organization like ASCAP or BMI, but for sound recordings – not compositions).
The PRA also states that AM/FM public radio would pay a $1,000 minimum.
AM/FM broadcasters who make only occasional use of music would have the option of paying a “per program” license, instead of paying for each sound recording they use.
In Part 3, I will explain who the parties are that are in favor and opposed to the Performance Rights Act, and I will provide a quick timeline showing the recent history of the bill as it winds its way through Congress.
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