[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5469 Engrossed Amendment Senate (EAS)]

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

                  In the Senate of the United States,

                                                     November 14, 2002.
    Resolved, That the bill from the House of Representatives (H.R. 
5469) entitled ``An Act to amend title 17, United States Code, with 
respect to the statutory license for webcasting, and for other 
purposes.'', do pass with the following

                               AMENDMENT:

            Strike out all after the enacting clause and insert:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Webcaster Settlement Act of 
2002''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Some small webcasters who did not participate in the 
        copyright arbitration royalty panel proceeding leading to the 
        July 8, 2002 order of the Librarian of Congress establishing 
        rates and terms for certain digital performances and ephemeral 
        reproductions of sound recordings, as provided in part 261 of 
        the Code of Federal Regulations (published in the Federal 
        Register on July 8, 2002) (referred to in this section as 
        ``small webcasters''), have expressed reservations about the 
        fee structure set forth in such order, and have expressed their 
        desire for a fee based on a percentage of revenue.
            (2) Congress has strongly encouraged representatives of 
        copyright owners of sound recordings and representatives of the 
        small webcasters to engage in negotiations to arrive at an 
        agreement that would include a fee based on a percentage of 
        revenue.
            (3) The representatives have arrived at an agreement that 
        they can accept in the extraordinary and unique circumstances 
        here presented, specifically as to the small webcasters, their 
        belief in their inability to pay the fees due pursuant to the 
        July 8 order, and as to the copyright owners of sound 
        recordings and performers, the strong encouragement of Congress 
        to reach an accommodation with the small webcasters on an 
        expedited basis.
            (4) The representatives have indicated that they do not 
        believe the agreement provides for or in any way approximates 
        fair or reasonable royalty rates and terms, or rates and terms 
        that would have been negotiated in the marketplace between a 
        willing buyer and a willing seller.
            (5) Congress has made no determination as to whether the 
        agreement provides for or in any way approximates fair or 
        reasonable fees and terms, or rates and terms that would have 
        been negotiated in the marketplace between a willing buyer and 
        a willing seller.
            (6) Congress likewise has made no determination as to 
        whether the July 8 order is reasonable or arbitrary, and 
        nothing in this Act shall be taken into account by the United 
        States Court of Appeals for the District of Columbia Circuit in 
        its review of such order.
            (7) It is, nevertheless, in the public interest for the 
        parties to be able to enter into such an agreement without fear 
        of liability for deviating from the fees and terms of the July 
        8 order, if it is clear that the agreement will not be 
        admissible as evidence or otherwise taken into account in any 
        government proceeding involving the setting or adjustment of 
        the royalties payable to copyright owners of sound recordings 
        for the public performance or reproduction in ephemeral 
        phonorecords or copies of such works, the determination of 
        terms or conditions related thereto, or the establishment of 
        notice or recordkeeping requirements.

SEC. 3. SUSPENSION OF CERTAIN PAYMENTS.

    (a) Noncommercial Webcasters.--
            (1) In general.--The payments to be made by noncommercial 
        webcasters for the digital performance of sound recordings 
        under section 114 of title 17, United States Code, and the 
        making of ephemeral phonorecords under section 112 of title 17, 
        United States Code, during the period beginning on October 28, 
        1998, and ending on May 31, 2003, which have not already been 
        paid, shall not be due until June 20, 2003.
            (2) Definition.--In this subsection, the term 
        ``noncommercial webcaster'' has the meaning given that term in 
        section 114(f)(5)(E)(i) of title 17, United States Code, as 
        added by section 4 of this Act.
    (b) Small Commercial Webcasters.--
            (1) In general.--The receiving agent may, in a writing 
        signed by an authorized representative thereof, delay the 
        obligation of any 1 or more small commercial webcasters to make 
        payments pursuant to sections 112 and 114 of title 17, United 
        States Code, for a period determined by such entity to allow 
        negotiations as permitted in section 4 of this Act, except that 
        any such period shall end no later than December 15, 2002. The 
        duration and terms of any such delay shall be as set forth in 
        such writing.
            (2) Definitions.--In this subsection--
                    (A) the term ``webcaster'' has the meaning given 
                that term in section 114(f)(5)(E)(iii) of title 17, 
                United States Code, as added by section 4 of this Act; 
                and
                    (B) the term ``receiving agent'' shall have the 
                meaning given that term in section 261.2 of title 37, 
                Code of Federal Regulations, as published in the 
                Federal Register on July 8, 2002.

SEC. 4. AUTHORIZATION FOR SETTLEMENTS.

    Section 114(f) of title 17, United States Code, is amended by 
adding after paragraph (4) the following:
            ``(5)(A) Notwithstanding section 112(e) and the other 
        provisions of this subsection, the receiving agent may enter 
        into agreements for the reproduction and performance of sound 
        recordings under section 112(e) and this section by any 1 or 
        more small commercial webcasters or noncommercial webcasters 
        during the period beginning on October 28, 1998, and ending on 
        December 31, 2004, that, once published in the Federal Register 
        pursuant to subparagraph (B), shall be binding on all copyright 
        owners of sound recordings and other persons entitled to 
        payment under this section, in lieu of any determination by a 
        copyright arbitration royalty panel or decision by the 
        Librarian of Congress. Any such agreement for small commercial 
        webcasters shall include provisions for payment of royalties on 
        the basis of a percentage of revenue or expenses, or both, and 
        include a minimum fee. Any such agreement may include other 
        terms and conditions, including requirements by which copyright 
        owners may receive notice of the use of their sound recordings 
        and under which records of such use shall be kept and made 
        available by small commercial webcasters or noncommercial 
        webcasters. The receiving agent shall be under no obligation to 
        negotiate any such agreement. The receiving agent shall have no 
        obligation to any copyright owner of sound recordings or any 
        other person entitled to payment under this section in 
        negotiating any such agreement, and no liability to any 
        copyright owner of sound recordings or any other person 
        entitled to payment under this section for having entered into 
        such agreement.
            ``(B) The Copyright Office shall cause to be published in 
        the Federal Register any agreement entered into pursuant to 
        subparagraph (A). Such publication shall include a statement 
        containing the substance of subparagraph (C). Such agreements 
        shall not be included in the Code of Federal Regulations. 
        Thereafter, the terms of such agreement shall be available, as 
        an option, to any small commercial webcaster or noncommercial 
        webcaster meeting the eligibility conditions of such agreement.
            ``(C) Neither subparagraph (A) nor any provisions of any 
        agreement entered into pursuant to subparagraph (A), including 
        any rate structure, fees, terms, conditions, or notice and 
        recordkeeping requirements set forth therein, shall be 
        admissible as evidence or otherwise taken into account in any 
        administrative, judicial, or other government proceeding 
        involving the setting or adjustment of the royalties payable 
        for the public performance or reproduction in ephemeral 
        phonorecords or copies of sound recordings, the determination 
        of terms or conditions related thereto, or the establishment of 
        notice or recordkeeping requirements by the Librarian of 
        Congress under paragraph (4) or section 112(e)(4). It is the 
        intent of Congress that any royalty rates, rate structure, 
        definitions, terms, conditions, or notice and recordkeeping 
        requirements, included in such agreements shall be considered 
        as a compromise motivated by the unique business, economic and 
        political circumstances of small webcasters, copyright owners, 
        and performers rather than as matters that would have been 
        negotiated in the marketplace between a willing buyer and a 
        willing seller, or otherwise meet the objectives set forth in 
        section 801(b).
            ``(D) Nothing in the Small Webcaster Settlement Act of 2002 
        or any agreement entered into pursuant to subparagraph (A) 
        shall be taken into account by the United States Court of 
        Appeals for the District of Columbia Circuit in its review of 
        the determination by the Librarian of Congress of July 8, 2002, 
        of rates and terms for the digital performance of sound 
        recordings and ephemeral recordings, pursuant to sections 112 
        and 114.
            ``(E) As used in this paragraph--
                    ``(i) the term `noncommercial webcaster' means a 
                webcaster that--
                            ``(I) is exempt from taxation under section 
                        501 of the Internal Revenue Code of 1986 (26 
                        U.S.C. 501);
                            ``(II) has applied in good faith to the 
                        Internal Revenue Service for exemption from 
                        taxation under section 501 of the Internal 
                        Revenue Code and has a commercially reasonable 
                        expectation that such exemption shall be 
                        granted; or
                            ``(III) is operated by a State or 
                        possession or any governmental entity or 
                        subordinate thereof, or by the United States or 
                        District of Columbia, for exclusively public 
                        purposes;
                    ``(ii) the term `receiving agent' shall have the 
                meaning given that term in section 261.2 of title 37, 
                Code of Federal Regulations, as published in the 
                Federal Register on July 8, 2002; and
                    ``(iii) the term `webcaster' means a person or 
                entity that has obtained a compulsory license under 
                section 112 or 114 and the implementing regulations 
                therefor to make eligible nonsubscription transmissions 
                and ephemeral recordings.
            ``(F) The authority to make settlements pursuant to 
        subparagraph (A) shall expire December 15, 2002, except with 
        respect to noncommercial webcasters for whom the authority 
        shall expire May 31, 2003.''.

SEC. 5. DEDUCTIBILITY OF COSTS AND EXPENSES OF AGENTS AND DIRECT 
              PAYMENT TO ARTISTS OF ROYALTIES FOR DIGITAL PERFORMANCES 
              OF SOUND RECORDINGS.

    (a) Findings.--Congress finds that--
            (1) in the case of royalty payments from the licensing of 
        digital transmissions of sound recordings under subsection (f) 
        of section 114 of title 17, United States Code, the parties 
        have voluntarily negotiated arrangements under which payments 
        shall be made directly to featured recording artists and the 
        administrators of the accounts provided in subsection (g)(2) of 
        that section;
            (2) such voluntarily negotiated payment arrangements have 
        been codified in regulations issued by the Librarian of 
        Congress, currently found in section 261.4 of title 37, Code of 
        Federal Regulations, as published in the Federal Register on 
        July 8, 2002;
            (3) other regulations issued by the Librarian of Congress 
        were inconsistent with the voluntarily negotiated arrangements 
        by such parties concerning the deductibility of certain costs 
        incurred for licensing and arbitration, and Congress is 
        therefore restoring those terms as originally negotiated among 
        the parties; and
            (4) in light of the special circumstances described in this 
        subsection, the uncertainty created by the regulations issued 
        by the Librarian of Congress, and the fact that all of the 
        interested parties have reached agreement, the voluntarily 
        negotiated arrangements agreed to among the parties are being 
        codified.
    (b) Deductibility.--Section 114(g) of title 17, United States Code, 
is amended by adding after paragraph (2) the following:
            ``(3) A nonprofit agent designated to distribute receipts 
        from the licensing of transmissions in accordance with 
        subsection (f) may deduct from any of its receipts, prior to 
        the distribution of such receipts to any person or entity 
        entitled thereto other than copyright owners and performers who 
        have elected to receive royalties from another designated agent 
        and have notified such nonprofit agent in writing of such 
        election, the reasonable costs of such agent incurred after 
        November 1, 1995, in--
                    ``(A) the administration of the collection, 
                distribution, and calculation of the royalties;
                    ``(B) the settlement of disputes relating to the 
                collection and calculation of the royalties; and
                    ``(C) the licensing and enforcement of rights with 
                respect to the making of ephemeral recordings and 
                performances subject to licensing under section 112 and 
                this section, including those incurred in participating 
                in negotiations or arbitration proceedings under 
                section 112 and this section, except that all costs 
                incurred relating to the section 112 ephemeral 
                recordings right may only be deducted from the 
                royalties received pursuant to section 112.
            ``(4) Notwithstanding paragraph (3), any designated agent 
        designated to distribute receipts from the licensing of 
        transmissions in accordance with subsection (f) may deduct from 
        any of its receipts, prior to the distribution of such 
        receipts, the reasonable costs identified in paragraph (3) of 
        such agent incurred after November 1, 1995, with respect to 
        such copyright owners and performers who have entered with such 
        agent a contractual relationship that specifies that such costs 
        may be deducted from such royalty receipts.''.
    (c) Direct Payment to Artists.--Section 114(g)(2) of title 17, 
United States Code, is amended to read as follows:
            ``(2) An agent designated to distribute receipts from the 
        licensing of transmissions in accordance with subsection (f) 
        shall distribute such receipts as follows:
                    ``(A) 50 percent of the receipts shall be paid to 
                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.
                    ``(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 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.
                    ``(C) 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.
                    ``(D) 45 percent of the receipts shall be paid, 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).''.

SEC. 6. REPORT TO CONGRESS.

    By not later than June 1, 2004, the Comptroller General of the 
United States, in consultation with the Register of Copyrights, shall 
conduct and submit to the Committee on the Judiciary of the House of 
Representatives and the Committee on the Judiciary of the Senate a 
study concerning the economic arrangements among small commercial 
webcasters covered by agreements entered into pursuant to section 
114(f)(5)(A) of title 17, United States Code, as added by section 4 of 
this Act, and third parties, and the effect of those arrangements on 
royalty fees payable on a percentage of revenue or expense basis.

            Attest:

                                                             Secretary.
107th CONGRESS

  2d Session

                               H. R. 5469

_______________________________________________________________________

                               AMENDMENT