[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 227 Enrolled Bill (ENR)]

        S.227

                       One Hundred Fourth Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

         Begun and held at the City of Washington on Wednesday,
  the fourth day of January, one thousand nine hundred and ninety-five


                                 An Act


 
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, non-interactive 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.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.