Platform Equality and Remedies for Rights Holders in Music Act of 2007 (S. 256): Section-by-Section Analysis

Platform Equality and Remedies for Rights Holders in Music Act of 2007 (S. 256): Section-by-Section Analysis

Order Code RL33922
Platform Equality and Remedies for Rights
Holders in Music Act of 2007 (S. 256):
Section-by-Section Analysis
March 15, 2007
Kate M. Manuel
Law Clerk
American Law Division
Brian T. Yeh
Legislative Attorney
American Law Division

Platform Equality and Remedies for Rights Holders in
Music Act of 2007 (S. 256): Section-by-Section Analysis
Summary
As new technologies have changed the ways in which copyrighted musical
works and sound recordings may be reproduced, distributed, and publicly performed,
copyright owners, broadcasters, and music vendors have become increasingly
concerned that the various compulsory licenses applicable to sound recordings result
in different treatment for entities offering similar services. S. 256, the Platform
Equality and Remedies for Rights Holders in Music Act of 2007 (the Perform Act),
represents one legislative approach to resolving these concerns, at least as they apply
to digital public performances of sound recordings.
The Perform Act would amend 17 U.S.C. § 112 to require that webcasters pay
copyright owners a compulsory license fee based on the fair market value of their
works when making “ephemeral recordings.” It would similarly change the terms
under which transmission services obtain compulsory licenses for digital public
performances of copyrighted sound recordings under 17 U.S.C. § 114(f) by (1)
providing for compulsory licenses for all types of transmission services under the
same statutory provision, (2) setting license fees for all types of transmission services
based on the same three criteria, and (3) using the fair market value of the works
licensed as the standard for determining all compulsory license fees.
The Perform Act also strengthens the requirements of 17 U.S.C. § 114(d) to
ensure that transmission services cannot rely on a compulsory license for digital
public performance in order to distribute sound recordings to listeners. It further
adds a concept of “reasonable recording” to 17 U.S.C. § 114(j), under which
transmission services, in order to qualify for the compulsory public performance
license, must employ technological measures to limit copying or recording by
listeners.
Finally, the Perform Act requires that the Register of Copyrights convene a
meeting between owners of copyrighted sound recordings and transmitting services
no later than 60 days after its enactment to discuss the creation of a new category for
“limited interactive services” and set appropriate compulsory license fees for these
services.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1: Short Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2: Rate-Setting Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 112 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 114 Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Content Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Technical and Conforming Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3: Register of Copyrights Meeting and Report . . . . . . . . . . . . . . . . . . . . . 8
Appendix A: A Side-by-Side Comparison of the Current Statutory Language and
the Changes That Would Be Made to It by the Perform Act . . . . . . . . . . . . . 9

Platform Equality and Remedies for Rights
Holders in Music Act of 2007 (S. 256):
Section-by-Section Analysis
Introduction
S. 256, the Platform Equality and Remedies for Rights Holders in Music Act of
2007 (the Perform Act), introduced on January 11, 2007, by Senator Dianne
Feinstein, seeks to promote parity in the music licensing fees paid by entities
involved in the digital performance and distribution of copyrighted music. It would
amend certain provisions of U.S. copyright law (17 U.S.C. §§ 112 and 114) to (1)
subject all digital public performances of copyrighted sound recordings to
compulsory licensing under the same statutory provision and standards, regardless
of whether they are transmitted by preexisting or new, subscription, or non-
subscription services; (2) require services that transmit digital public performances
of copyrighted sound recordings under compulsory licenses to use technological
measures to prevent the making of copies embodying the transmission of the sound
recordings; and (3) use the fair market value of the copyrighted sound recordings in
setting compulsory license fees for digital public performances of them. This report
provides a section-by-section analysis of the Perform Act and the changes it would
make to U.S. copyright law.
Background
Among the creative works that U.S. copyright law protects are sound recordings
(material or digital embodiments of performances of musical works) and musical
works (musical compositions consisting of musical notation and any accompanying
words).1 Owners of copyrighted sound recordings have exclusive rights to reproduce,
adapt, or distribute their works, or to perform them publicly by digital means.2
1 17 U.S.C. §§ 102(a)(1) & (7). Cole Porter’s song “I’ve Got You Under My Skin” is a
musical work. A tape, compact disk, or MP3 of Frank Sinatra singing “I’ve Got You Under
My Skin” is a sound recording.
2 17 U.S.C. §§ 106(1)-(3) & (6). The owners of copyrighted musical works, in contrast,
have exclusive rights to publicly perform their works by any means, digital or non-digital.
17 U.S.C. § 106(4). As defined by the Copyright Act, public performance includes (1)
performance at any place open to the public or where a “substantial number of persons
outside of a normal circle of a family and its social acquaintances” gather, or (2)
transmission or other communication to a public place or to the public by any device or
process allowing members of the public to receive the performance as a group or
(continued...)

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Normally, anyone who wants to exercise any of the copyright owner’s exclusive
rights must obtain the copyright owner’s permission to do so, typically by negotiating
a private licensing agreement.3 However, copyright law also provides several types
of “compulsory licenses” for sound recordings. These licenses allow third parties
who pay statutorily prescribed fees to use copyrighted sound recordings under certain
conditions, without having to negotiate private licensing agreements.4 Among other
things, compulsory licenses currently are available for “ephemeral recordings”
(reproductions of sound recordings made by webcasters or radio stations to facilitate
the “streaming” of their content on the Internet),5 as well as public performances of
sound recordings by digital transmission services, such as webcasters and satellite
digital audio radio services.6
As new technologies have changed the ways in which copyrighted musical
works and sound recordings may be reproduced, distributed, and publicly performed,
copyright owners, broadcasters, and music vendors have become increasingly
concerned that the various compulsory licenses applicable to sound recordings result
in different and inequitable treatment for entities offering similar services.
Webcasters object to paying compulsory license fees for “ephemeral” reproductions
and public performances when terrestrial (AM/FM) radio stations do not.7 They also
are concerned about paying more in compulsory license fees than existing satellite
radio services, whose license fees are separately established based upon factors that
recognize their infrastructure investments and seek to minimize disruption to their
business models.8 Copyright owners worry that satellite digital services are
2 (...continued)
individually. 17 U.S.C. § 101.
3 See CRS Report RL33631, Copyright Licensing in Music Distribution, Reproduction, and
Public Performance, by Jared Huber and Brian T. Yeh.
4 Id.
5 17 U.S.C. § 112(a)(1). Webcasters are radio stations that transmit their broadcasts through
the Internet instead of, or in addition to, through radio waves transmitted by air.
“Streaming” refers to the transmission of audio or video content via the Web in such a way
that the content is viewable while it is being transmitted.
6 17 U.S.C. § 114.
7 Parity, Platforms, and Protection: The Future of the Music Industry in the Digital Radio
Revolution: Hearing Before the Senate Comm. on the Judiciary [hereinafter Parity,
Platforms], 109th Cong., 2nd Sess. (2006) (statement of N. Mark Lam, Chairman and CEO
of Live365, Inc.) (noting that a terrestrial radio station with the same sized audience as
Live365 pays 3.5% of its revenue for use of copyrighted musical works and nothing for use
of copyrighted sound recordings, while Live365 pays 6.5% of its revenue for use of
copyrighted musical works and 33.4% of its revenue for use of copyrighted sound
recordings). See Bonneville Int’l Corp. v. Peters, 347 F.3d 485 (3d Cir. 2003) (rejecting
webcasters’ claim that they should be exempt from paying for use of copyrighted sound
recordings, like terrestrial radio stations are).
8 Parity, Platforms (noting that satellite digital audio radio services pay royalties on sound
recordings at a rate of 5-7% of revenue, 4-6% less than the rate paid by subscription Internet
radio services and the 22-28% less than paid by a webcaster of Live365’s size). Cf. 17
(continued...)

CRS-3
impermissibly “stretching” the compulsory public performance license in order to
distribute sound recordings because they have developed portable devices that allow
users not only to record musical programming but also to save and re-sequence
selected songs from such recordings.9 Satellite radio services, on the other hand, note
that they face more expenses in transmitting public performances than webcasters do
because they must purchase spectrum and launch satellites prior to transmitting
music.10 They argue that listeners recording from satellite radio are no different than
listeners recording from terrestrial radio and thus are covered by the Audio Home
Recording Act (AHRA) (P.L. 102-563).11 The Perform Act represents one legislative
approach to resolving these concerns, at least as they apply to digital public
performances of sound recordings.
Section 1: Short Title
Section 1 of the bill contains its short title, the Platform Equality and Remedies
for Rights Holders in Music Act of 2007, or the Perform Act of 2007. Bills with the
same name and largely identical content were introduced in both houses of the 109th
Congress but not enacted.12
8 (...continued)
U.S.C. §§ 801(b)(1)(C)-(D) (applying only to 17 U.S.C. § 114(f)(1)(B), or preexisting
satellite digital audio radio services, and stating that the compulsory fee is to be set based
upon consideration of (1) “the relative roles of the copyright owners and the copyright user
in the product made available to the public with respect to relative creative contribution,
technological contribution, capital investment, cost, risk, and contribution to the opening of
new markets” and (2) “minimiz[ing] any disruptive impact on the structure of the industries
involved and on generally prevailing industry practices”).
9 Parity, Platforms (statement of Edgar Bronfman, chairman and CEO of Warner Music
Group) (“Satellite services are now offering new devices, which can essentially transform
a satellite service like XM and Sirius into a distribution service like iTunes.”). Owners of
copyrights in sound recordings have also sued, claiming that satellite digital audio radio
services violate their distribution rights with these recording and playback devices. See
Atlantic Recording Corp. v. XM Satellite Radio, Inc., 2007 WL 136186 (S.D.N.Y. Jan. 19,
2007). For more information, see CRS Report RL33538, Satellite Digital Audio Radio
Services and Copyright Law Issues, by Brian T. Yeh.
10 Parity, Platforms (statement of Gary Parsons, chairman of the board of XM Satellite
Radio, Inc.) (noting an investment of nearly $4 billion in start-up costs).
11 Id. But see Protecting Digital Broadcast Content: Hearing Before the House Comm. on
the Judiciary, 109th Cong., 1st Sess. (2005) (statement of Mitch Bainwol, chairman and
CEO of the Recording Industry Association of America, Inc.) (“Satellite radio should ... not
be able to rely on [AHRA] to create an unlicensed download service.”). AHRA requires that
importers and manufacturers of certain digital audio recording devices pay a percentage of
each device’s sale price to owners of copyrighted musical works.
12 H.R. 5361, 109th Cong., 2d Sess. (2006) (sponsored by Representative Howard L.
Berman) and S. 2644, 109th Cong., 2d Sess. (2006) (sponsored by Senator Dianne
Feinstein).

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Section 2: Rate-Setting Standards
Section 112 Licenses
The Digital Millennium Copyright Act (DMCA) of 1998 (P.L. 105-304) created
a new compulsory license for webcasters who temporarily reproduce copyrighted
sound recordings while publicly performing them (e.g., creating cache or buffer
copies prior to or during streaming).13 Under the current version of 17 U.S.C. §
112(e)(4), if the webcasters and copyright owners fail to negotiate a fee for these
“ephemeral recordings,” the U.S. Copyright Office’s Copyright Royalty Judges are
to determine a fee corresponding to that which willing buyers and sellers would
negotiate in the marketplace. The Perform Act amends 17 U.S.C. § 112(e)(4) by
replacing the willing buyer/seller standard with a standard based on “the fair market
value of the rights licensed.” The rationale for this change is unclear; even the
sponsor of S. 256, Senator Feinstein, notes that there is “some concern about what
fair market value means, especially under a government licensing scheme where
there is not an actual competitive market.”14 However, one possibility is that the use
of the fair market value in setting compulsory license fees may parallel its use in
assessing actual damages for copyright infringement under 17 U.S.C. § 504(a)(1).15
Section 114 Licenses
In amending the Copyright Act to grant owners of copyrighted sound recordings
exclusive rights in digital public performances of their works, the Digital
Performance Right in Sound Recordings Act (DPRSRA) of 1995 (P.L. 104-39) also
created a compulsory license for digital public performances of copyrighted sound
recordings. The DMCA later modified the DPRSRA compulsory license system by
distinguishing between licenses for (1) preexisting subscription services and satellite
radio services, such as cable services, XM Satellite Radio, and SIRIUS Satellite
Radio, and (2) transmissions by new subscription or satellite services and all other
13 17 U.S.C. § 112(e). Although § 112 licenses are available for both (1) services
transmitting under any type of license or transfer of copyright and (2) broadcasters licensed
by the Federal Communications Commission that make nonsubscription digital
transmissions of sound recordings, discussions of § 112 typically use the term “webcaster”
as a shorthand for both groups. That convention is followed in this report in reference to
§ 112 licenses.
14 152 CONG. REC. S3510-01 (Apr. 25, 2006).
15 Yet, in assessing fair market value when setting actual damages, courts have treated fair
market value as synonymous with the rate that “a willing buyer would have ... [paid] a
willing seller” for use of the work. Christopher Phelps & Assocs., LLC v. Galloway, — -
F.3d — -, 2007 WL 438806, at *6 (4th Cir. Feb. 12, 2007); see also United States v. Broad.
Music, Inc., 316 F.3d 189, 194 (2d Cir. 2003) (fair market value is “the price that a willing
buyer and a willing seller would agree to in an arm’s length transaction”). Later litigation
involving the performing rights organization BMI established that fair market value can be
set higher than the retail price in order to cover the costs of processes and services necessary
to bring the product to market. United States v. Broad. Music, Inc., 426 F.3d 91, 97 (2d Cir.
2005).

CRS-5
eligible nonsubscription transmissions, such as webcasters.16 Currently, under
DPRSRA as amended by the DMCA, only the preexisting subscription or satellite
services17 have their rates set under standards that consider the services’ role in
creating new markets and seek to minimize disruption of their industry.18 New
subscription or satellite services, as well as eligible nonsubscription services, do not
have their rates determined under such standards. Their rate setting standards do not
consider their role in creating new markets, or seek to minimize disruption to their
industries19 — and their rates thus tend to be higher.20
The Perform Act eliminates the DMCA’s distinction between preexisting
subscription or satellite services and all other services by deleting 17 U.S.C. §
114(f)(1). Instead, it renumbers the current § 114(f)(2) as the new § 114(f)(1) and
revises it to cover all “transmissions.”21 The Perform Act further revises the new §
114(f)(1)(B) to use the same three factors in setting compulsory license fees for all
transmission services. Two of these factors — (1) the transmission’s impact on
sound recordings’ sales or the copyright owners’ revenue stream and (2) the creative,
technological and financial contributions of the copyright owner and transmission
provider — are included in the current § 114(f)(2)(B). However, the Perform Act
adds a third factor that more directly addresses copyright owners’ concerns that
public performance licences are being used to avoid negotiating distribution rights.
This factor is “the degree to which reasonable recording affects the potential market
for sound recordings, and the additional fees that are required to be paid by services
for compensation.” The Perform Act also changes § 114(f) in the same way that it
changes § 112(e), by providing that compulsory license fees are to correspond to the
fair market value of the works, not the price that would be negotiated by willing
buyers and sellers in the marketplace. Further, the Perform Act revises the new §
114(f)(1)(C) to allow owners of copyrighted sound recordings to seek re-calculation
of the compulsory license fee whenever services digitally transmitting public
performances of copyrighted sound recordings introduce new technologies or
devices.
To the degree that the Perform Act applies the same statutory provision and rate-
setting factors to all services that publicly perform copyrighted sound recordings by
digital means, it does promote parity. However, the Perform Act does not require
absolute rate parity between all services publicly performing sound recordings by
digital means under § 114 compulsory licenses. Rather, the Perform Act leaves
language in the new § 114(f) that requires different transmitting entities to pay
different compulsory license fees:
16 Compare 17 U.S.C. §§ 114(f)(1) and (f)(2).
17 Governed by 17 U.S.C. § 114(f)(1).
18 See 17 U.S.C. §§ 801(b)(1)(C)-(D) (applying only to subsection (f)(1) of 17 U.S.C. § 114).
19 17 U.S.C. § 804(b)(3)(C).
20 See supra note 8.
21 Specifically, the Perform Act deletes from the new 17 U.S.C. § 114(f)(1) language
describing “eligible nonsubscription transmission services” and “transmissions by new
transmission services specified by subsection (d)(2).”

CRS-6
[R]ates 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, but not limited to, 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 phonorecords22 by
consumers.23
Content Protection
The Perform Act attempts to ensure that transmission services cannot rely upon
compulsory licenses for public performances to distribute copyrighted sound
recordings. Currently, under 17 U.S.C. § 114(d)(2), transmission services are eligible
for compulsory licenses only if (1) their transmissions are not part of an interactive
service;24 (2) they do not automatically and intentionally cause any device receiving
the transmission to switch from one program channel to another unless they are
transmitting to a business entity; and (3) they accompany their transmissions,
whenever technically feasible, with any information encoded into the sound recording
by the copyright owner to identify its title, performer, or underlying musical work.
The Perform Act would add a fourth requirement to this listing, allowing a
transmission service to rely on the compulsory license only where it
takes no affirmative steps to authorize, enable, cause or induce25 the
making of a copy or phonorecord by or for the transmission recipient
and uses technology that is reasonably available, technologically
22 Under U.S. copyright law, a phonorecord is “any material object[] in which sounds ... are
fixed by any method ... and from which the sounds can be perceived, reproduced, or
otherwise communicated, either directly or with the aid of a machine or device.” 17 U.S.C.
§ 101.
23 Congressional proponents of the Perform Act typically say that it will subject “Internet,
cable and satellite ... to the same rate standards,” not the same rates. Parity, Platforms
(statement of Senator Arlen Specter, Chairman of the Senate Judiciary Committee).
24 The meaning of “interactive service” has been a matter of some dispute, as the sponsors
of the Perform Act note. See 152 CONG. REC. S3510-01 (Apr. 25, 2006) (statement of
Senator Feinstein). Under the DPRSRA, an “interactive service” was defined as “one that
enables a member of the public to receive, on request, a transmission of a particular sound
recording chosen by or on behalf of that recipient.” The DMCA amended that definition to
“one that enables a member of the public to receive a transmission of a program specially
created for the recipient, or on request, a transmission of a particular sound recording,
whether or not as part of a program, which is selected by or on behalf of the recipient.”
Many people have objected that in changing this definition, the DMCA replaced a “fairly
straightforward and objective test [with] one requiring a complex subjective analysis.”
Music Licensing Issues: Hearing Before the Senate Comm. on the Judiciary, 109th Cong.,
1st Sess. (2005) (statement of Rob Glaser, Chairman and CEO of RealNetworks, Inc.).
25 It is unclear whether the Perform Act’s usage of “induce” here is intended to correspond
to the meaning of “induce” in the Supreme Court’s decision in MGM Studios, Inc. v.
Grokster, Ltd., 545 U.S. 913 (2005), which held that manufacturers of devices can face
secondary liability for copyright infringement when they “induce” their customers to use
their products illegally. The verb “induce” is used in the current § 114(d)(2)(C)(vi), which
predates the Grokster decision.

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feasible, and economically reasonable to prevent the making of copies
or phonorecords embodying the transmission in whole or in part,
except for reasonable recording.
Language similar to the fourth requirement is currently in § 114(d)(2)(C)(vi),
although the Perform Act would remove this subsection. Presently, § 114(2)(C)(vi)
applies only to new subscription services or preexisting subscription services using
different transmission mechanisms than those they used on July 31, 1998; it does not
reach the activities of preexisting subscription or satellite services such as XM or
SIRIUS so long as they do not change their transmission mechanisms.26 Moreover,
the Perform Act’s proposed language for the new § 114(d)(2)(A)(iv) is broader in
terms of what a transmitting service must do to qualify for a compulsory license than
is current law. Under the current § 114(d)(2)(C)(vi), a service cannot rely on the
compulsory license if it (1) causes or induces recipients to make recordings and (2)
to the degree its transmission technologies enable it to limit the making of recordings,
fails to impose such limits. Under the new § 114(d)(2)(A)(iv), a service cannot rely
on the compulsory license if it (1) authorizes or enables, as well as causes or induces,
recipients to make copies or recordings and (2) fails to use technologies that are
reasonably available, technologically feasible, and economically reasonable to
prevent copying or recording by listeners. Thus, under the Perform Act, a
transmitting service must satisfy additional conditions to qualify for a § 114
compulsory license, including potentially using digital rights management (DRM)
technologies to limit the recipient’s ability to reproduce, distribute, or perform the
transmitted music.27
Definition
The Perform Act adds a new definition describing “reasonable recording” to 17
U.S.C. § 114(j). Under the Perform Act, a recording cannot be reasonable where an
entity, which is transmitting digital public performances under a § 114 compulsory
license for private, noncommercial use, fails to employ technological measures
incorporated into recording devices to prevent
! automated recording or playback of user-selected sound recordings,
albums, or artists;
26 New devices promoted by XM and SIRIUS allow consumers to record segments of
transmissions and then save only selected songs, or re-sequence the songs from their
broadcast order. These would not fall within the category of “transmission medium”
because they are devices for receiving, not sending, content. See 17 U.S.C. § 101 (defining
“transmit”). Some critics contend that the entire Perform Act is targeted at XM and SIRIUS.
See Joseph Palenchar, Senate Bill Targets Sat-Radio Recording, 21 TWICE 1 (2006).
27 Some observers have noted that this requirement of the Perform Act may force webcasters
to stream music to the public using a DRM-enabled digital music file format, such as
Microsoft’s Windows Media Audio (WMA) or Real’s RealAudio (RA) format.
MP3-encoded audio is not DRM-compliant, and thus webcasters may need to switch their
Internet radio streams to a non-MP3 format. Such a change may require additional license
fees to be paid to the owners of those proprietary music file formats. See Fred von
Lohmann, The Season of Bad Laws, Part 3: Banning MP3 Streaming, Apr. 26, 2006,
available on March 12, 2007, at [http://www.eff.org/deeplinks/archives/004587.php].

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! separation of a transmission into its component segments (e.g.,
songs) so as to permit their playback in a different sequence; and
! redistribution, retransmission or exporting of a phonorecord
containing any part of a sound recording licensed under § 114 unless
the destination device is a secure, in-home network complying with
these requirements.
The Perform Act does not, however, prohibit automated recording or playback of
user-selected programs, time periods or channels, or noninfringing, non-automated
manual recording and playback by consumers.
The Perform Act relies upon this definition of “reasonable recording” as one of
the factors to be considered in setting compulsory license fees under the new §
114(f)(1)(B) and in establishing when a preexisting satellite digital audio radio
service may rely on the statutory license under § 114(d).
Technical and Conforming Amendments
The Perform Act removes references to § 114(f)(2)(C), which the Perform Act
renumbers as § 114(f)(1)(C), from 17 U.S.C. § 803(b)(3)(B).
Section 3: Register of Copyrights Meeting and
Report
Finally, the Perform Act requires that the Register of Copyrights convene a
meeting between owners of copyrighted sound recordings and transmitting services
no later than 60 days after its enactment to discuss the creation of a new category for
“limited interactive services” and set appropriate compulsory license fees for these
services.

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Appendix A: A Side-by-Side Comparison of the
Current Statutory Language and the Changes That
Would Be Made to It by the Perform Act
Current Statute
Statute as Amended by the Perform Act
§ 112(e)(4)
§ 112(e)(4)
The schedule of reasonable rates and terms The schedule of reasonable rates and terms
determined by the Copyright Royalty
determined by the Copyright Royalty
Judges shall, subject to paragraph (5), be
Judges shall, subject to paragraph (5), be
binding on all copyright owners of sound
binding on all copyright owners of sound
recordings and transmitting organizations
recordings and transmitting organizations
entitled to a statutory license under this
entitled to a statutory license under this
subsection during the 5-year period
subsection during the 5-year period
specified in paragraph (3), or such other
specified in paragraph (3), or such other
period as the parties may agree. Such rates period as the parties may agree. Such rates
shall include a minimum fee for each type
shall include a minimum fee for each type
of service offered by transmitting
of service offered by transmitting
organizations. The Copyright Royalty
organizations. The Copyright Royalty
Judges shall establish rates that most
Judges shall establish rates that most
clearly represent the fees that would have clearly represent the fair market value of
been negotiated in the marketplace
the rights licensed under this subsection.
between a willing buyer and a willing
seller.
§ 114(d)(2)(A)
§ 114(d)(2)(A)
[The performance of a sound recording
[The performance of a sound recording
publicly by means of a subscription digital publicly by means of a subscription digital
audio transmission not exempt under
audio transmission not exempt under
paragraph (1), an eligible nonsubscription
paragraph (1), an eligible nonsubscription
transmission, or a transmission not exempt transmission, or a transmission not exempt
under paragraph (1) that is made by a
under paragraph (1) that is made by a
preexisting satellite digital audio radio
preexisting satellite digital audio radio
service shall be subject to statutory
service shall be subject to statutory
licensing, in accordance with subsection
licensing, in accordance with subsection
(f) if — ]
(f) if — ]
(i) the transmission is not part of an
(i) the transmission is not part of an
interactive service;
interactive service;
(ii) except in the case of a transmission to
(ii) except in the case of a transmission to
a business establishment, the transmitting
a business establishment, the transmitting
entity does not automatically and
entity does not automatically and
intentionally cause any device receiving
intentionally cause any device receiving
the transmission to switch from one
the transmission to switch from one
program channel to another; and
program channel to another; and
(iii) except as provided in section 1002(e)
the transmission of the sound recording is
(iii) except as provided in section 1002(e)
accompanied, if technically feasible, by
the transmission of the sound recording is
the information encoded in that sound
accompanied, if technically feasible, by
recording, if any, by or under the authority the information encoded in that sound
of the copyright owner of that sound
recording, if any, by or under the authority
recording, that identifies the title of the
of the copyright owner of that sound
recording, that identifies the title of the

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Current Statute
Statute as Amended by the Perform Act
sound recording, the featured recording
sound recording, the featured recording
artist who performs on the sound
artist who performs on the sound
recording, and related information,
recording, and related information,
including information concerning the
including information concerning the
underlying musical work and its writer;
underlying musical work and its writer;
and
(iv) the transmitting entity takes no
affirmative steps to authorize, enable,
cause or induce the making of a copy or
phonorecord by or for the transmission
recipient and uses technology that is
reasonably available, technologically
feasible, and economically reasonable to
prevent the making of copies or
phonorecords embodying the
transmission in whole or in part, except
for reasonable recording as defined in
this subsection;
§ 114(d)(2)(C)
§ 114(d)(2)(C)
[The performance of a sound recording
[The performance of a sound recording
publicly by means of a subscription digital publicly by means of a subscription digital
audio transmission not exempt under
audio transmission not exempt under
paragraph (1), an eligible nonsubscription
paragraph (1), an eligible nonsubscription
transmission, or a transmission not exempt transmission, or a transmission not exempt
under paragraph (1) that is made by a
under paragraph (1) that is made by a
preexisting satellite digital audio radio
preexisting satellite digital audio radio
service shall be subject to statutory
service shall be subject to statutory
licensing, in accordance with subsection
licensing, in accordance with subsection
(f) if — ]
(f) if — ]
(C) in the case of an eligible
(C) in the case of an eligible
nonsubscription transmission or a
nonsubscription transmission or a
subscription transmission not exempt
subscription transmission not exempt
under paragraph (1) that is made by a new
under paragraph (1) that is made by a new
subscription service or by a preexisting
subscription service or by a preexisting
subscription service other than in the same subscription service other than in the same
transmission medium used by such service transmission medium used by such service
on July 31, 1998 —
on July 31, 1998 —
(vi) the transmitting entity takes no
(vi) the transmitting entity takes no
affirmative steps to cause or induce the
affirmative steps to cause or induce the
making of a phonorecord by the
making of a phonorecord by the
transmission recipient, and if the
transmission recipient, and if the
technology used by the transmitting entity
technology used by the transmitting
enables the transmitting entity to limit the
entity enables the transmitting entity to
making by the transmission recipient of
limit the making by the transmission
phonorecords of the transmission directly
recipient of phonorecords of the
in a digital format, the transmitting entity
transmission directly in a digital format,
sets such technology to limit such making
the transmitting entity sets such
of phonorecords to the extent permitted by technology to limit such making of
such technology;
phonorecords to the extent permitted by

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Current Statute
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such technology;
New text added at end of § 114(d)(2)(C)
For purposes of subparagraph (A)(iv), the
mere offering of a transmission and
accompanying metadata does not in itself
authorize, enable, cause, or induce the
making of a phonorecord. Nothing shall
preclude or prevent a performing rights
society or a mechanical rights
organization, or any entity owned in whole
or in part by, or acting on behalf of, such
organizations or entities, from monitoring
public performances or other uses of
copyrighted works contained in such
transmissions. Any such organization or
entity shall be granted a license on either a
gratuitous basis or for a de minimus fee to
cover only the reasonable costs to the
licensor of providing the license, and on
reasonable, nondiscriminatory terms, to
access and retransmit as necessary any
content contained in such transmissions
protected by content protection or similar
technologies, if such licenses are for
purposes of carrying out the activities of
such organizations or entities in
monitoring the public performance or
other uses of copyrighted works, and such
organizations or entities employ
reasonable methods to protect any such
content accessed from further distribution.
§ 114(f)(1)
Deleted and replaced with what was
(1) (A) Proceedings under chapter 8 shall
formerly § 114(f)(2)
determine reasonable rates and terms of
royalty payments for subscription
transmissions by preexisting subscription
services and transmissions by preexisting
satellite digital audio radio services
specified by 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,
except where a different transitional period
is provided under section 6(b)(3) of the
Copyright Royalty and Distribution
Reform Act of 2004 or such other period.
Such terms and rates shall distinguish
among the different types of digital audio
transmission services then in operation.
Any copyright owners of sound
recordings, preexisting subscription
services, or preexisting satellite digital

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Current Statute
Statute as Amended by the Perform Act
audio radio services may submit to the
Copyright Royalty Judges licenses
covering such subscription transmissions
with respect to such sound recordings. 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
(3), 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), a
transitional period provided under section
6(b)(3) of the Copyright Royalty and
Distribution Reform Act of 2004, or such
other period as the parties may agree. In
establishing rates and terms for preexisting
subscription services and preexisting
satellite digital audio radio services, in
addition to the objectives set forth in
section 801 (b)(1) the Copyright Royalty
Judges may consider the rates and terms
for comparable types of subscription
digital audio transmission services and
comparable circumstances under voluntary
license agreements described in
subparagraph (A).
(C) The procedures under subparagraphs
(A) and (B) also shall be initiated pursuant
to a petition filed by any copyright owners
of sound recordings, any preexisting
subscription services, or any preexisting
satellite digital audio radio services
indicating that a new type of subscription
digital audio transmission 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 transmission 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 subscription digital audio
transmission services most recently
determined under subparagraph (A) or (B)
and chapter 8 expire, or such other period
as the parties may agree.

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Current Statute
Statute as Amended by the Perform Act
§ 114(f)(2)(A)
Renumbered as § 114(f)(1)(A)
Proceedings under chapter 8 shall
Proceedings under chapter 8 shall
determine reasonable rates and terms of determine reasonable rates and terms of
royalty payments for subscription
royalty payments for transmissions
transmissions by eligible
during 5-year periods beginning on
nonsubscription transmission services
January 1 of the second year following
and transmissions by new subscription
the year in which the proceedings are to
services specified by subsection (d)(2)
be commenced, except where a different
during the 5-year period beginning on
transitional period is provided under
January 1 of the second year following
section 6(b)(3) of the Copyright Royalty
the year in which the proceedings are to and Distribution Reform Act of 2004, or
be commenced, except where a different such other period as the parties may
transitional period is provided under
agree.
section 6(b)(3) of the Copyright Royalty
and Distribution Reform Act of 2004, or
such other period as the parties may
agree. Such rates and terms shall
distinguish among the different types of
eligible nonsubscription transmission
services and new subscription services
then in operation and shall include a
minimum fee for each such type of
service. Any copyright owners of sound
recordings or any entities performing
sound recordings affected by this
paragraph may submit to the Copyright
Royalty Judges licenses covering such
eligible nonsubscription transmissions
and new subscription services with
respect to such sound recordings. The
parties to each proceeding shall bear
their own costs.
§ 114(f)(2)(B)
Renumbered as § 114(f)(1)(B)
The schedule of reasonable rates and terms The schedule of reasonable rates and terms
determined by the Copyright Royalty
determined by the Copyright Royalty
Judges shall, subject to paragraph (3), be
Judges shall, subject to paragraph (3), be
binding on all copyright owners of sound
binding on all copyright owners of sound
recordings and entities performing sound
recordings and entities performing sound
recordings affected by this paragraph
recordings under this section during the
during the 5-year period specified in
5-year period specified in subparagraph
subparagraph (A), a transitional period
(A), a transitional period provided under
provided under section 6(b)(3) of the
section 6(b)(3) of the Copyright Royalty
Copyright Royalty and Distribution Act of
and Distribution Act of 2004, or such other
2004, or such other period as the parties
period as the parties may agree. Such rates
may agree. Such rates and terms shall
and terms shall distinguish among the
distinguish among the different types of
different types of eligible
eligible nonsubscription transmission
nonsubscription transmission services
services then in operation and shall include then in operation and shall include a
a minimum fee for each such type of
minimum fee for each such type of service,
service, such differences to be based on
such differences to be based on criteria
criteria including, but not limited to, the
including, but not limited to, the quantity
quantity and nature of the use of sound
and nature of the use of sound recordings

CRS-14
Current Statute
Statute as Amended by the Perform Act
recordings and the degree to which use of
and the degree to which use of the service
the service may substitute for or may
may substitute for or may promote the
promote the purchase of phonorecords by
purchase of phonorecords by consumers.
consumers. In establishing rates and terms
In establishing rates and terms for
for transmissions by eligible
transmissions by eligible nonsubscription
nonsubscription services and new
services and new subscription services,
subscription services, the Copyright
the Copyright Royalty Judges shall
Royalty Judges shall establish rates and
establish the fair market value of the
terms that most clearly represent the
rights licensed under this section. In
rates and terms that would have been
determining such rates and terms, the
negotiated in the marketplace between a Copyright Royalty Judges shall base their
willing buyer and a willing seller. In
decision on economic, competitive and
determining such rates and terms, the
programming information presented by the
Copyright Royalty Judges shall base its
parties, including —
decision on economic, competitive and
(i) whether use of the service may
programming information presented by the substitute for or may promote the sales of
parties, including —
phonorecords or otherwise may interfere
(i) whether use of the service may
with or may enhance the sound recording
substitute for or may promote the sales of
copyright owner’s other streams of
phonorecords or otherwise may interfere
revenue from its sound recordings; and
with or may enhance the sound recording
(ii) the relative roles of the copyright
copyright owner’s other streams of
owner and the transmitting entity in the
revenue from its sound recordings; and
copyrighted work and the service made
(ii) the relative roles of the copyright
available to the public with respect to
owner and the transmitting entity in the
relative creative contribution,
copyrighted work and the service made
technological contribution, capital
available to the public with respect to
investment, cost, and risk; and
relative creative contribution,
technological contribution, capital
(iii) the degree to which reasonable
investment, cost, and risk.
recording affects the potential market
In establishing such rates and terms, the
for sound recordings, and the additional
Copyright Royalty Judges may consider
fees that are required to be paid by
the rates and terms for comparable types of services for compensation.
digital audio transmission services and
comparable circumstances under voluntary In establishing such rates and terms, the
license agreements negotiated under
Copyright Royalty Judges may consider
subparagraph (A).
the rates and terms for comparable types of
digital audio transmission services and
comparable circumstances under voluntary
license agreements negotiated under
subparagraph (A).
§ 114(f)(2)(C)
Renumbered as § 114(f)(1)(C)
The procedures under subparagraphs (A)
The procedures under subparagraphs (A)
and (B) shall also be initiated pursuant to a and (B) shall also be initiated pursuant to a
petition filed by any copyright owners of
petition filed by any copyright owners of
sound recordings or any eligible
sound recordings or any transmitting
nonsubscription service or new
entity indicating that a new type of
subscription service indicating that a new
service on which sound recordings are
type of eligible nonsubscription service
performed is or is about to become
or new subscription service on which
operational, for the purpose of
sound recordings are performed is or is
determining reasonable terms and rates of
about to become operational, for the
royalty payments with respect to such new

CRS-15
Current Statute
Statute as Amended by the Perform Act
purpose of determining reasonable terms
type of service for the period beginning
and rates of royalty payments with respect
with the inception of such new type of
to such new type of service for the period
service and ending on the date on which
beginning with the inception of such new
the royalty rates and terms for preexisting
type of service and ending on the date on
subscription digital audio transmission
which the royalty rates and terms for
services, eligible nonsubscription
preexisting subscription digital audio
services, or new subscription services, as
transmission services or preexisting
the case may be, most recently determined
satellite digital radio audio services, as
under subparagraph (A) or (B) and chapter
the case may be, most recently determined
8 expire, or such other period as the parties
under subparagraph (A) or (B) and chapter may agree.
8 expire, or such other period as the parties
may agree.
§ 114(j)
New text added at end of § 114(j)(10)
(A) A ‘reasonable recording’ means the
making of a phonorecord embodying all or
part of a performance licensed under this
section for private, noncommercial use
where technological measures used by the
transmitting entity, and which are
incorporated into a recording device —
(i) permit automated recording or playback
based on specific programs, time periods,
or channels as selected by or for the user;
(ii) do not permit automated recording or
playback based on specific sound
recordings, albums, or artists;
(iii) do not permit the separation of
component segments of the copyrighted
material contained in the transmission
program which results in the playback of a
manipulated sequence; and
(iv) do not permit the redistribution,
retransmission or other exporting of a
phonorecord embodying all or part of a
performance licensed under this section
from the device by digital outputs or
removable media, unless the destination
device is part of a secure in-home network
that also complies with each of the
requirements in this paragraph.
(B) Nothing in this paragraph shall prevent
a consumer from engaging in non-
automated manual recording and playback
in a manner that is not an infringement of
copyright.

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Current Statute
Statute as Amended by the Perform Act
§ 804(b)(3)(C)(i)
§ 804(b)(3)(C)(i)
(i) Notwithstanding any other provision of
(i) Notwithstanding any other provision of
this chapter, this subparagraph shall
this chapter, this subparagraph shall
govern proceedings commenced pursuant
govern proceedings commenced pursuant
to section 114 (f)(1)(C) and 114 (f)(2)(C)
to section 114 (f)(1)(C) and 114 (f)(2)(C)
concerning new types of services.
concerning new types of services.
§ 804(b)(3)(C)(iv)
§ 804(b)(3)(C)(iv)
The rates and terms shall remain in effect
The rates and terms shall remain in effect
for the period set forth in section
for the period set forth in section
114(f)(1)(C) or 114(f)(2)(C), as the case
114(f)(1)(C) or 114(f)(2)(C), as the case
may be.
may be.
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