[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1506 Reported in House (RH)]

                                                 Union Calendar No. 143

104th CONGRESS

  1st Session

                               H. R. 1506

                          [Report No. 104-274]

_______________________________________________________________________

                                 A BILL

To amend title 17, United States Code, to provide an exclusive right to 
 perform sound recordings publicly by means of digital transmissions, 
                        and for other purposes.

_______________________________________________________________________

                            October 11, 1995

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
                                                 Union Calendar No. 143
104th CONGRESS
  1st Session
                                H. R. 1506

                          [Report No. 104-274]

To amend title 17, United States Code, to provide an exclusive right to 
 perform sound recordings publicly by means of digital transmissions, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 7, 1995

   Mr. Moorhead (for himself, Mr. Hyde, Mr. Conyers, and Mr. Gekas) 
 introduced the following bill; which was referred to the Committee on 
                             the Judiciary

                            October 11, 1995

 Additional sponsors: Mr. Bono, Mr. Fattah, Mr. Peterson of Minnesota, 
                  Mr. LaHood, Mr. Barr, and Mr. Bliley

                            October 11, 1995

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on April 
                                7, 1995]

_______________________________________________________________________

                                 A BILL


 
To amend title 17, United States Code, to provide an exclusive right to 
 perform sound recordings publicly by means of digital transmissions, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Digital Performance Right in Sound 
Recordings Act of 1995''.

SEC. 2. EXCLUSIVE RIGHTS IN COPYRIGHTED WORKS.

    Section 106 of title 17, United States Code, is amended--
            (1) in paragraph (4) by striking ``and'' after the 
        semicolon;
            (2) in paragraph (5) by striking the period and inserting 
        ``; and''; and
            (3) by adding at the end the following:
            ``(6) in the case of sound recordings, to perform the 
        copyrighted work publicly by means of a digital audio 
        transmission.''.

SEC. 3. SCOPE OF EXCLUSIVE RIGHTS IN SOUND RECORDINGS.

    Section 114 of title 17, United States Code, is amended--
            (1) in subsection (a) by striking ``and (3)'' and inserting 
        ``(3) and (6)'';
            (2) in subsection (b) in the first sentence by striking 
        ``phonorecords, or of copies of motion pictures and other 
        audiovisual works,'' and inserting ``phonorecords or copies'';
            (3) by striking subsection (d) and inserting:
    ``(d) Limitations on Exclusive Right.--Notwithstanding the 
provisions of section 106(6)--
            ``(1) Exempt transmissions and retransmissions.--The 
        performance of a sound recording publicly by means of a digital 
        audio transmission, other than as a part of an interactive 
        service, is not an infringement of section 106(6) if the 
        performance is part of--
                    ``(A)(i) a nonsubscription transmission other than 
                a retransmission;
                    ``(ii) an initial nonsubscription retransmission 
                made for direct reception by members of the public of a 
                prior or simultaneous incidental transmission that is 
                not made for direct reception by members of the public; 
                or
                    ``(iii) a nonsubscription broadcast transmission;
                    ``(B) a retransmission of a nonsubscription 
                broadcast transmission: Provided, That, in the case of 
                a retransmission of a radio station's broadcast 
                transmission--
                            ``(i) the radio station's broadcast 
                        transmission is not willfully or repeatedly 
                        retransmitted more than a radius of 150 miles 
                        from the site of the radio broadcast 
                        transmitter, however--
                                    ``(I) the 150 mile limitation under 
                                this clause shall not apply when a 
                                nonsubscription broadcast transmission 
                                by a radio station licensed by the 
                                Federal Communications Commission is 
                                retransmitted on a nonsubscription 
                                basis by a terrestrial broadcast 
                                station, terrestrial translator, or 
                                terrestrial repeater licensed by the 
                                Federal Communications Commission; and
                                    ``(II) in the case of a 
                                subscription retransmission of a 
                                nonsubscription broadcast 
                                retransmission covered by subclause 
                                (I), the 150 mile radius shall be 
                                measured from the transmitter site of 
                                such broadcast retransmitter;
                            ``(ii) the retransmission is of radio 
                        station broadcast transmissions that are--
                                    ``(I) obtained by the retransmitter 
                                over the air;
                                    ``(II) not electronically processed 
                                by the retransmitter to deliver 
                                separate and discrete signals; and
                                    ``(III) retransmitted only within 
                                the local communities served by the 
                                retransmitter;
                            ``(iii) the radio station's broadcast 
                        transmission was being retransmitted to cable 
                        systems (as defined in section 111(f)) by a 
                        satellite carrier on January 1, 1995, and that 
                        retransmission was being retransmitted by cable 
                        systems as a separate and discrete signal, and 
                        the satellite carrier obtains the radio 
                        station's broadcast transmission in an analog 
                        format: Provided, That the broadcast 
                        transmission being retransmitted may embody the 
                        programming of no more than one radio station; 
                        or
                            ``(iv) the radio station's broadcast 
                        transmission is made by a noncommercial 
                        educational broadcast station funded on or 
                        after January 1, 1995, under section 396(k) of 
                        the Communications Act of 1934 (47 U.S.C. 
                        396(k)), consists solely of noncommercial 
                        educational and cultural radio programs, and 
                        the retransmission, whether or not 
                        simultaneous, is a nonsubscription terrestrial 
                        broadcast retransmission; or
                    ``(C) a transmission that comes within any of the 
                following categories:
                            ``(i) a prior or simultaneous transmission 
                        incidental to an exempt transmission, such as a 
                        feed received by and then retransmitted by an 
                        exempt transmitter: Provided, That such 
                        incidental transmissions do not include any 
                        subscription transmission directly for 
                        reception by members of the public;
                            ``(ii) a transmission within a business 
                        establishment, confined to its premises or the 
                        immediately surrounding vicinity;
                            ``(iii) a retransmission by any 
                        retransmitter, including a multichannel video 
                        programming distributor as defined in section 
                        602(12) of the Communications Act of 1934 (47 
                        U.S.C. 522(12)), of a transmission by a 
                        transmitter licensed to publicly perform the 
                        sound recording as a part of that transmission, 
                        if the retransmission is simultaneous with the 
                        licensed transmission and authorized by the 
                        transmitter; or
                            ``(iv) a transmission to a business 
                        establishment for use in the ordinary course of 
                        its business: Provided, That the business 
                        recipient does not retransmit the transmission 
                        outside of its premises or the immediately 
                        surrounding vicinity, and that the transmission 
                        does not exceed the sound recording performance 
                        complement. Nothing in this clause shall limit 
                        the scope of the exemption in clause (ii).
            ``(2) Subscription transmissions.--In the case of a 
        subscription transmission not exempt under subsection (d)(1), 
        the performance of a sound recording publicly by means of a 
        digital audio transmission shall be subject to statutory 
        licensing, in accordance with subsection (f) of this section, 
        if--
                    ``(A) the transmission is not part of an 
                interactive service;
                    ``(B) the transmission does not exceed the sound 
                recording performance complement;
                    ``(C) the transmitting entity does not cause to be 
                published by means of an advance program schedule or 
                prior announcement the titles of the specific sound 
                recordings or phonorecords embodying such sound 
                recordings to be transmitted;
                    ``(D) except in the case of transmission to a 
                business establishment, the transmitting entity does 
                not automatically and intentionally cause any device 
                receiving the transmission to switch from one program 
                channel to another; and
                    ``(E) except as provided in section 1002(e) of this 
                title, the transmission of the sound recording is 
                accompanied by the information encoded in that sound 
                recording, if any, by or under the authority of the 
                copyright owner of that sound recording, that 
                identifies the title of the sound recording, the 
                featured recording artist who performs on the sound 
                recording, and related information, including 
                information concerning the underlying musical work and 
                its writer.
            ``(3) Licenses for transmissions by interactive services.--
                    ``(A) No interactive service shall be granted an 
                exclusive license under section 106(6) for the 
                performance of a sound recording publicly by means of 
                digital audio transmission for a period in excess of 12 
                months, except that with respect to an exclusive 
                license granted to an interactive service by a licensor 
that holds the copyright to 1,000 or fewer sound recordings, the period 
of such license shall not exceed 24 months: Provided, however, That the 
grantee of such exclusive license shall be ineligible to receive 
another exclusive license for the performance of that sound recording 
for a period of 13 months from the expiration of the prior exclusive 
license.
                    ``(B) The limitation set forth in subparagraph (A) 
                of this paragraph shall not apply if--
                            ``(i) the licensor has granted and there 
                        remain in effect licenses under section 106(6) 
                        for the public performance of sound recordings 
                        by means of digital audio transmission by at 
                        least 5 different interactive services: 
                        Provided, however, That each such license must 
                        be for a minimum of 10 percent of the 
                        copyrighted sound recordings owned by the 
                        licensor that have been licensed to interactive 
                        services, but in no event less than 50 sound 
                        recordings; or
                            ``(ii) the exclusive license is granted to 
                        perform publicly up to 45 seconds of a sound 
                        recording and the sole purpose of the 
                        performance is to promote the distribution or 
                        performance of that sound recording.
                    ``(C) Notwithstanding the grant of an exclusive or 
                nonexclusive license of the right of public performance 
                under section 106(6), an interactive service may not 
                publicly perform a sound recording unless a license has 
                been granted for the public performance of any 
                copyrighted musical work contained in the sound 
                recording: Provided, That 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.
                    ``(D) The performance of a sound recording by means 
                of a retransmission of a digital audio transmission is 
                not an infringement of section 106(6) if--
                            ``(i) the retransmission is of a 
                        transmission by an interactive service licensed 
                        to publicly perform the sound recording to a 
                        particular member of the public as part of that 
                        transmission; and
                            ``(ii) the retransmission is simultaneous 
                        with the licensed transmission, authorized by 
                        the transmitter, and limited to that particular 
                        member of the public intended by the 
                        interactive service to be the recipient of the 
                        transmission.
                    ``(E) For the purposes of this paragraph--
                            ``(i) a `licensor' shall include the 
                        licensing entity and any other entity under any 
                        material degree of common ownership, 
                        management, or control that owns copyrights in 
                        sound recordings; and
                            ``(ii) a `performing rights society' is an 
                        association or corporation that licenses the 
                        public performance of nondramatic musical works 
                        on behalf of the copyright owner, such as the 
                        American Society of Composers, Authors and 
                        Publishers, Broadcast Music, Inc., and SESAC, 
                        Inc.
            ``(4) Rights not otherwise limited.--
                    ``(A) Except as expressly provided in this section, 
                this section does not limit or impair the exclusive 
                right to perform a sound recording publicly by means of 
                a digital audio transmission under section 106(6).
                    ``(B) Nothing in this section annuls or limits in 
                any way--
                            ``(i) the exclusive right to publicly 
                        perform a musical work, including by means of a 
                        digital audio transmission, under section 
                        106(4);
                            ``(ii) the exclusive rights in a sound 
                        recording or the musical work embodied therein 
                        under sections 106(1), 106(2) and 106(3); or
                            ``(iii) any other rights under any other 
                        clause of section 106, or remedies available 
                        under this title, as such rights or remedies 
                        exist either before or after the date of 
                        enactment of the Digital Performance Right in 
                        Sound Recordings Act of 1995.
                    ``(C) Any limitations in this section on the 
                exclusive right under section 106(6) apply only to the 
                exclusive right under section 106(6) and not to any 
                other exclusive rights under section 106. Nothing in 
                this section shall be construed to annul, limit, impair 
                or otherwise affect in any way the ability of the owner 
                of a copyright in a sound recording to exercise the 
                rights under sections 106(1), 106(2) and 106(3), or to 
                obtain the remedies available under this title pursuant 
                to such rights, as such rights and remedies exist 
                either before or after the date of enactment of the 
                Digital Performance Right in Sound Recordings Act of 
                1995.''; and
            (4) by adding after subsection (d) the following:
    ``(e) Authority for Negotiations.--
            ``(1) Notwithstanding any provision of the antitrust laws, 
        in negotiating statutory licenses in accordance with subsection 
        (f), any copyright owners of sound recordings and any entities 
        performing sound recordings affected by this section may 
        negotiate and agree upon the royalty rates and license terms 
        and conditions for the performance of such sound recordings and 
        the proportionate division of fees paid among copyright owners, 
        and may designate common agents on a nonexclusive basis to 
        negotiate, agree to, pay, or receive payments.
            ``(2) For licenses granted under section 106(6), other than 
        statutory licenses, such as for performances by interactive 
        services or performances that exceed the sound recording 
        performance complement--
                    ``(A) copyright owners of sound recordings affected 
                by this section may designate common agents to act on 
                their behalf to grant licenses and receive and remit 
                royalty payments: Provided, That each copyright owner 
                shall establish the royalty rates and material license 
                terms and conditions unilaterally, that is, not in 
                agreement, combination, or concert with other copyright 
                owners of sound recordings; and
                    ``(B) entities performing sound recordings affected 
                by this section may designate common agents to act on 
                their behalf to obtain licenses and collect and pay 
                royalty fees: Provided, That each entity performing 
                sound recordings shall determine the royalty rates and 
                material license terms and conditions unilaterally, 
                that is, not in agreement, combination, or concert with 
                other entities performing sound recordings.
    ``(f) Licenses for Nonexempt Subscription Transmissions.--
            ``(1) No later than 30 days after the enactment of the 
        Digital Performance Right in Sound Recordings Act of 1995, the 
        Librarian of Congress shall cause notice to be published in the 
        Federal Register of the initiation of voluntary negotiation 
        proceedings for the purpose of determining reasonable terms and 
        rates of royalty payments for the activities specified by 
        subsection (d)(2) of this section during the period beginning 
        on the effective date of such Act and ending on December 31, 
        2000. Such terms and rates shall distinguish among the 
        different types of digital audio transmission services then in 
        operation. Any copyright owners of sound recordings or any 
        entities performing sound recordings affected by this section 
        may submit to the Librarian of Congress licenses covering such 
        activities with respect to such sound recordings. The parties 
        to each negotiation proceeding shall bear their own costs.
            ``(2) In the absence of license agreements negotiated under 
        paragraph (1), during the 60-day period commencing 6 months 
        after publication of the notice specified in paragraph (1), and 
        upon the filing 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 Register a schedule of rates and 
        terms which, subject to paragraph (3), shall be binding on all 
        copyright owners of sound recordings and entities performing 
        sound recordings. In addition to the objectives set forth in 
        section 801(b)(1), in establishing such rates and terms, the 
        copyright arbitration royalty panel may consider the rates and 
        terms for comparable types of digital audio transmission 
        services and comparable circumstances under voluntary license 
        agreements negotiated as provided in paragraph (1). The 
        Librarian of Congress shall also establish requirements by 
        which copyright owners may receive reasonable notice of the use 
        of their sound recordings under this section, and under which 
        records of such use shall be kept and made available by 
        entities performing sound recordings.
            ``(3) License agreements voluntarily negotiated at any time 
        between one or more copyright owners of sound recordings and 
        one or more entities performing sound recordings shall be given 
        effect in lieu of any determination by a copyright arbitration 
        royalty panel or decision by the Librarian of Congress.
            ``(4)(A) Publication of a notice of the initiation of 
        voluntary negotiation proceedings as specified in paragraph (1) 
        shall be repeated, in accordance with regulations that the 
        Librarian of Congress shall prescribe--
                    ``(i) no later than 30 days after a petition is 
                filed by any copyright owners of sound recordings or 
                any entities performing sound recordings affected by 
                this section indicating that a new type of digital 
                audio transmission service on which sound recordings 
                are performed is or is about to become operational; and
                    ``(ii) in the first week of January, 2000 and at 5-
                year intervals thereafter.
            ``(B)(i) The procedures specified in paragraph (2) shall be 
        repeated, in accordance with regulations that the Librarian of 
        Congress shall prescribe, upon the filing of a petition in 
        accordance with section 803(a)(1) during a 60-day period 
        commencing--
                    ``(I) six months after publication of a notice of 
                the initiation of voluntary negotiation proceedings 
                under paragraph (1) pursuant to a petition under 
                paragraph (4)(A)(i); or
                    ``(II) on July 1, 2000 and at 5-year intervals 
                thereafter.
            ``(ii) The procedures specified in paragraph (2) shall be 
        concluded in accordance with section 802.
            ``(5)(A) Any person who wishes to perform a sound recording 
        publicly by means of a nonexempt subscription transmission 
        under this subsection may do so without infringing the 
        exclusive right of the copyright owner of the sound recording--
                    ``(i) by complying with such notice requirements as 
                the Librarian of Congress shall prescribe 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 transmission 
        licensed in accordance with subsection (f) of this section--
                    ``(A) a featured recording artist who performs on a 
                sound recording that has been licensed 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 licensed 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 agreement.
            ``(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 transmission shall 
        allocate to recording artists in the following manner its 
        receipts from the statutory licensing of subscription 
        transmission performances of the sound recording in accordance 
        with subsection (f) of this section:
                    ``(A) 2\1/2\ percent of the receipts shall be 
                deposited 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 successor entity) to be 
                distributed to nonfeatured musicians (whether or not 
                members of the American Federation of Musicians) who 
                have performed on sound recordings.
                    ``(B) 2\1/2\ percent of the receipts shall be 
                deposited 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 recordings.
                    ``(C) 45 percent of the receipts shall be 
                allocated, on a per sound recording basis, to the 
                recording 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 perform a sound 
        recording by means of a digital audio transmission under 
        section 106(6), the copyright owner shall make the licensed 
        sound recording available 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 
        differences in the scope of the requested license with respect 
        to the type of service, the particular sound recordings 
        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 purpose of 
                the performance is to promote the distribution 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 governmental proceeding to set or adjust the royalties payable 
to copyright owners of musical works for the public performance 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 diminished in any respect as a result of the rights 
granted by section 106(6).
    ``(j) Definitions.--As used in this section, the following 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 transmission made by 
        a terrestrial broadcast station licensed as such by the Federal 
        Communications Commission.
            ``(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 transmission of a 
        particular sound recording chosen by or on behalf of the 
        recipient. The ability of individuals to request that 
        particular sound recordings be performed for reception by the 
        public at large does not make a service interactive. If an 
        entity offers both interactive and non-interactive services 
        (either concurrently or at different times), the non-
        interactive component shall not be treated as part of an 
        interactive 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 complement' is the 
        transmission during any 3-hour period, on a particular channel 
        used by a transmitting entity, of no more than--
                    ``(A) 3 different selections of sound recordings 
                from any one phonorecord lawfully distributed 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 recordings--
                            ``(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 transmitted 
                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 limitations prescribed in such clauses.
            ``(8) A `subscription' transmission is a transmission 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 recipient 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 PHONORECORD DELIVERIES.

    Section 115 of title 17, United States Code, is amended--
            (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 before the 
                period ``, including by means of a digital 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), respectively, 
        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 distribute 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 
        transmission is also a public performance of the sound 
        recording 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 phonorecord delivery by or 
        under the authority of the compulsory 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 royalty 
                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 antitrust laws, 
        any copyright owners of nondramatic musical works and any 
        persons entitled to obtain a compulsory license under 
        subsection (a)(1) may negotiate and agree upon the terms and 
        rates of royalty payments under this paragraph and the 
        proportionate division 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 includes, 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 Register of the initiation of 
        voluntary negotiation proceedings for the purpose of 
        determining reasonable terms and rates of royalty payments for 
        the activities specified by subparagraph (A) 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 the parties may agree. 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. 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 covering such activities. The parties to each 
        negotiation proceeding shall bear their own costs.
            ``(D) In the absence of license agreements negotiated under 
        subparagraphs (B) and (C), upon the filing 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 Register 
        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 subsection (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 pursuant 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 establishing such 
        rates and terms, the copyright arbitration royalty panel may 
        consider rates and terms under voluntary license agreements 
        negotiated as provided in subparagraphs (B) and (C). The 
        royalty rates payable for a compulsory license for a digital 
        phonorecord delivery under this section shall be established de 
        novo and no precedential effect shall be given to the amount of 
        the royalty payable by a compulsory licensee for digital 
        phonorecord deliveries on or before December 31, 1997. The 
Librarian of Congress shall also establish requirements by which 
copyright 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 negotiated 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. Subject to clause (ii), the royalty rates determined 
        pursuant to subparagraph (C), (D) or (F) shall be given effect 
        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 commits another person to grant a license in that 
        musical work under sections 106(1) and (3), to a person 
        desiring 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 determined 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 musical works within the scope of the 
                contract, any contrary royalty rates specified in the 
                contract shall be given effect in lieu of royalty rates 
                determined 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 intended for 
                commercial release, if at the time the contract is 
                entered into, the recording artist retains 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 accordance with regulations 
        that the Librarian of Congress shall prescribe, in each fifth 
        calendar year after 1997, except to the extent that different 
        years for the repeating and concluding of such proceedings may 
        be determined in accordance with subparagraphs (B) and (C).
            ``(G) Except as provided in section 1002(e) of this title, 
        a digital phonorecord delivery licensed under this paragraph 
        shall be accompanied by the information encoded in the sound 
        recording, if any, by or under the authority of the copyright 
        owner of that sound recording, that identifies the title of the 
        sound recording, the featured recording artist who performs on 
        the sound recording, and related information, including 
        information concerning the underlying musical work and its 
        writer.
            ``(H)(i) A digital phonorecord delivery of a sound 
        recording is actionable as an act of infringement under section 
        501, and is fully subject to the remedies provided by sections 
        502 through 506 and section 509, unless--
                    ``(I) the digital phonorecord delivery has been 
                authorized by the copyright owner of the sound 
                recording; and
                    ``(II) the owner of the copyright in the sound 
                recording or the entity making the digital 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 recording.
            ``(ii) Any cause of action under this subparagraph 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 applicable 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 allowed by this 
        paragraph, paragraph (6), and chapter 5 in the event of a 
        digital phonorecord delivery, except that no action alleging 
        infringement of copyright may be brought under this title 
        against a manufacturer, importer or distributor of a digital 
        audio recording device, a digital audio recording medium, an 
        analog recording device, or an analog recording medium, or 
        against a consumer, based on the actions described in such 
        section.
            ``(K) Nothing in this section annuls or limits (i) the 
        exclusive right to publicly perform a sound recording or the 
        musical work embodied therein, including by means of a digital 
        transmission, under sections 106(4) and 106(6), (ii) except for 
        compulsory licensing 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 enactment of the Digital Performance Right in Sound 
        Recordings Act of 1995.
            ``(L) The provisions of this section concerning digital 
        phonorecord deliveries shall not apply to any exempt 
        transmissions or retransmissions under section 114(d)(1). The 
        exemptions created in section 114(d)(1) do not expand or reduce 
        the rights of copyright 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 following 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 transmission recipient of a phonorecord of that sound 
recording, regardless of whether the digital transmission is also a 
public performance of the sound recording or any nondramatic musical 
work embodied therein. A digital phonorecord delivery does not result 
from a real-time, noninteractive subscription transmission of a sound 
recording where no reproduction of the sound recording or the musical 
work embodied therein is made from the inception of the transmission 
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 format.''.
    (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 Stations 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 inserting ``and section 
        114(d)'' after ``of this subsection''.
    (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 compulsory license under section 114(d), 
        any person entitled 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 enactment of this Act.
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