[Congressional Record Volume 141, Number 160 (Tuesday, October 17, 1995)]
[House]
[Pages H10098-H10108]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       DIGITAL PERFORMANCE RIGHT IN SOUND RECORDINGS ACT OF 1995

  Mr. MOORHEAD. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 1506) 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, as amended.
  The Clerk read as follows:

                               H.R. 1506

       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 

[[Page H 10099]]

       ``(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 

[[Page H 10100]]
     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--

[[Page H 10101]]

       ``(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.--

[[Page H 10102]]

       (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.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
California [Mr. Moorhead] will be recognized for 20 minutes, and the 
gentlewoman from Colorado [Mrs. Schroeder] will be recognized for 20 
minutes.
  The Chair recognizes the gentleman from California [Mr. Moorhead].
  (Mr. MOORHEAD asked and was given permission to revise and extend his 
remarks.)
  Mr. MOORHEAD. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of H.R. 1506, the Digital Performance 
Right in Sound Recordings Act of 1995. I would like to thank the 
gentlewoman from Colorado [Mrs. Schroeder] for her cooperation and hard 
work on this important legislation. I also want to commend the 
gentleman from Michigan [Mr. Conyers], an original cosponsor of H.R. 
1506, for his support and leadership in bringing about the compromise 
that made this legislation possible. The Subcommittee on Courts and 
Intellectual Property began last Congress to try and construct 
legislation to take care of what all parties agree is a likely problem 
for U.S. record companies and the people who sing and play music. The 
problem concerns home subscription services for the digital 
transmission of music offered by different companies. This type of 
service permits the home subscriber, for a monthly fee, to select 
music. The company providing a subscription service can purchase a 
single record and play it for hundreds of subscribers and by so doing 
displace record sales.
  Under current law, owners of almost every kind of copyright work have 
exclusive rights to authorize the public performance of that work. But 
sound recordings and the artists and companies that produce them have 
no such performance rights. Records sold at a store is the primary 
source of income for the record companies and for the singers. When a 
song is played on the radio or a digital audio cable service, neither 
the musicians who perform the work nor the record company have a legal 
right to control or receive compensation. H.R. 1506 will provide a very 
limited right for this purpose.
  This new right is limited in that it only applies to digital audio 
transmission services that are sold primarily to the home. It does not 
apply to traditional radio and TV broadcasts, or to background music 
services, such as Muzak or 3M nor does it apply to public radio, 
restaurants, department stores, hotels, amusement parks.
  The purpose of this legislation is to insure that performing artists, 
record companies and others whose livelihood depends upon effective 
copyright protection for sound recordings will be protected as new 
technologies affect the ways in which their creative works are 
marketed.


                     what about the public interest

  The Department of Justice's Antitrust Division reviewed the 
compromise agreement and sent a letter to the subcommittee supporting 
the compromise saying that it will ``advance competition'' and by 
adopting the two amendments that they recommended the new language will 
preclude the recording companies from acting as a cartel and exploiting 
the combined market power associated with the pooling of intellectual 
property rights and thereby prevent the driving up of prices that 
consumers will have to pay for their product.
  This legislation will also permit the development of new technologies 
that will be used and enjoyed by the consumer. It will also provide the 
consumer with access to a variety of choices of new entertainment which 
will be regulated by the market. We must remember that our copyright 
industries contribute more to the U.S. economy and employ more workers 
than any single manufacturing sector in the United States Between 1977 
and 1993, employment in the U.S. copyright industries more than doubled 
to 3 million workers, which is 2.5 percent of the total U.S. work 
force. During the same period, the U.S. copyright industry employment 
grew almost four times the annual rate of the whole economy--2.6 
percent versus 0.7 percent. In 1993, the U.S. copyright industries 
achieved estimated foreign sales of $45.8 billion. After automobiles 
and parts, the copyright industry is the second largest industry in 
exports.
  Again, I want to thank the committee members for their patience and 
support and I would like to congratulate the parties of interest for 
working together and coming up with what I believe is a good, solid 
piece of legislation, that's both good for the industry and good for 
the American consumer.
  Mr. Speaker, in conclusion, this legislation is the first step in 
bringing our copyright industries closer to the information 
superhighway. As we enter the digital and information age, the 
protection of America's intellectual property is essential. It's 
essential for two reasons. First, for the development, use, and 
advancement of new technology, and second, such protection will 
encourage more creative works from which society is the ultimate 
benefactor.
  I am not aware of any opposition to this legislation. It has the 
support of the American Federation of Musicians, the American 
Federation of Television and Radio Artists, the record industries, the 
songwriters, the radio and TV broadcast industry, and the 
administration.
  I urge a favorable vote on H.R. 1506.
  Mr. Speaker, I reserve the balance of my time.
  Mrs. SCHROEDER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 1506, and yield myself such 
time as I may consume.
  I strongly support the establishment in our copyright law of a 
digital performance right in sound recordings. In the digital age, 
creation of this right becomes imperative if we are to ensure that 
creators and copyright owners receive fair compensation for their 
property.
  I also want to emphasize how important the creation of this right is 
with respect to our efforts to ensure strong protection for 
intellectual property on a global basis. While complete harmonization 
of our copyright laws with those of other countries is not possible, it 
is difficult for us to persuade other countries to protect intellectual 
property if our own laws are not sufficiently strong.
  I particularly want to commend the various interested parties who 
have spent long and arduous hours in negotiations with respect to this 
bill. Under the leadership of our subcommittee chairman, the gentleman 
from California, we have seen the parties negotiate successfully in a 
way that makes the bill before us today as strong as possible. I think 
the result is a positive one for all parties involved, and I urge my 
colleagues to support it.
  Mr. Speaker, I reserve the balance of my time.
  
[[Page H 10103]]


                              {time}  1530

  Mr. MOORHEAD. Mr. Speaker, I yield such time as he may consume to the 
gentleman from Wisconsin [Mr. Sensenbrenner].
  Mr. SENSENBRENNER. Mr. Speaker, I rise in support for H.R. 1506, the 
Digital Performance Right in Sound Recordings Act of 1995. This bill 
gives recording artists and their recording companies copyright 
protection over the transmission of digital sound recordings. Under 
current law, songwriters, but not recording artists or companies, 
receive royalties when their music is played on radio or television.
  Artists and companies receive much of their compensation through the 
sale of compact discs, records, and tapes that are often promoted on 
radio and television. However, new interactive services are being 
created which allow consumers to use their TV's and computers to order 
any recording at any time. These subscriber services threaten sales of 
CD's, records and tapes. With this legislation recording artists will 
have a performance right in digital transmissions which will afford 
them the opportunity to receive compensation when their performances 
are transmitted digitally. Presently, under American copyright law, 
owners of almost every kind of copyrighted work have exclusive rights 
to authorize the public performance of that work. It is time to provide 
recording artists and companies some copyright protection.
  H.R. 1506 is equally important for what it doesn't do. This bill does 
not require businesses, such as bars and restaurants to pay an 
additional performance royalty when they play music. Such businesses 
should be allowed the play ``incidental'' or background music without 
having to pay fees to music performers. Background music is not now and 
will never be a substitute for consumer purchases of prerecorded music.
  I congratulate Chairman Moorhead and all the parties who contributed 
to the negotiations on this issue and made this compromise legislation 
possible. H.R. 1506 brings copyright law up-to-date to accommodate the 
new digital technologies in today's marketplace. I strongly urge its 
passage.
  Mrs. SCHROEDER. Mr. Speaker, I yield 4 minutes to the distinguished 
gentleman from Michigan [Mr. Conyers], the ranking member of the 
subcommittee.
  (Mr. CONYERS asked and was given permission to revise and extend his 
remarks.)
  Mr. CONYERS. Mr. Speaker, my congratulations again to the chairman of 
the subcommittee, the gentleman from California [Mr. Moorhead], who was 
joined by the gentlewoman from Colorado [Mrs. Schroeder] and the 
gentleman from California [Mr. Berman] to make sure that we got to this 
point.
  Mr. Speaker, I rise in support of the measure. The sounds of harmony 
that I hear today on H.R. 1506 are, well, music to my ears.
  I am truly delighted that our friends in the recording industry, the 
performing rights societies, the broadcasters and the background music 
services have, under the auspices of this subcommittee, done the tough 
job of hammering out a compromise agreement that is acceptable to all.
  When Mr. Moorhead asked me to join with him as a lead cosponsor of 
H.R. 1506, we both knew that such a process would be essential to the 
final resolution of this matter. We both knew that H.R. 1506 as 
introduced would not be the final word, but rather the logical starting 
point of a process which broke down in an unfortunate manner last year.
  Three major issues were critical to the resolution of this matter.
  First, there was disagreement about the exclusive rights to license 
performances of digital music on interactive or audio-on-demand 
services and whether this would be a right shared with the performance 
rights societies.
  Second, the commercial music services, like MUZAK, wanted an 
exemption such as provided for them in the House bill but not in the 
Senate bill.
  Third, there was a dispute over when there is a digital delivery 
which affects the record companies' ability to collect royalties.
  Under your leadership, Mr. Speaker, these three sticky matters have 
now become transformed into harmonic convergence.
  The agreement requires the interactive music distributor to obtain 
licenses from both the record company, for the sound recording, and 
from the performing rights societies, for the musical composition. That 
seems fair to me.
  Commercial background services, so long as they do not alter their 
operations to make copying easier, are fully exempt, and that, too, is 
similar to the exemption for broadcasters.
  Finally, the recording industry will pay mechanical royalties at two 
different rates, one when records are actually sold and the customer 
makes a permanent copy, and one in situations where there may be 
copying of albums by someone who is paying only for the right to listen 
to the music. This settles a dispute that received a lot of discussion 
at the June 21 hearing.
  By passing this legislation, Congress will open the door to a golden 
age of digital technology where--as described in a Boston University 
Law Review article--consumers may never have to set foot in a record 
store, yet have the ability to choose a musical selection from 
everything ever recorded without fear that it is out of stock, and be 
able to copy the album, at any time of the day or night, over a fiber 
optic cable by using a remote control while sitting in the comfort of 
their living rooms.
  Best of all, all this will be possible without the industrial 
meltdown that many had feared would put the record companies out of 
business as a result of the new digital technology or cut off a stream 
of income to the creative geniuses who are America's composers and song 
writers.
  I am especially pleased that performing artists will also benefit 
from this legislation. One estimate is that in 1987, performing artists 
should have received as much as half of the $120 million that is 
collected worldwide for the public performance of sound recordings; now 
they stand to recover royalties when recordings of their performances 
are distributed digitally. I urge strong support for this compromise.
  Mrs. SCHROEDER. Mr. Speaker, I yield 4 minutes to the distinguished 
gentleman from California [Mr. Berman] who probably knows more about 
this issue than I could ever learn.
  Mr. BERMAN. Mr. Speaker, I thank the gentlewoman for yielding time to 
me. I know longer about this bill, I do not know more about this bill. 
I am happy to voice my strong support of H.R. 1506, the Digital 
Performance Right in Sound Recordings Act, and I want to congratulate 
my colleague from California, Carlos Moorhead, because it is on his 
watch that this long overdue legislation is finally coming to fruition.
  The proliferation of new technologies capable of transmitting the 
fruits of American musical genius directly to consumers with compact 
disc quality, and what is more, transmitting to Americans what they 
want to hear when they want to hear it--commands a congressional 
response. It is not the technology itself which I lament; rather it is 
the fact that if we fail to act, then American intellectual property is 
highly likely to lose all meaningful protection.
  The constitutional imperative that the Congress protect copyright 
compels us from time to time to adjust our laws to fit new 
circumstances. While I have long felt that a performance right in sound 
recordings is the unfinished business of the omnibus overhaul of our 
copyright code in 1976, it is the proliferation of new technologies 
which makes the legislation before us today more important than ever.
  Some have criticized the bill for falling short of the ideal, but I 
have always been loathe to view the best as the enemy of the good. As a 
member of the Subcommittee on Intellectual Property who proudly 
represents many of the segments of the music industry with a deep 
interest in H.R. 1506, I am delighted that this legislation has finally 
come to fruition, and that it does justice to legitimate concerns which 
have been raised with us.
  This legislation is long overdue, and I commend it to my colleagues 
for their approval.
  Mrs. SCHROEDER. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from Maryland [Mr. Hoyer].
  Mr. HOYER. Mr. Speaker, I thank the gentlewoman for yielding time to 
me. 

[[Page H 10104]]

  Mr. Speaker, I rise in strong support of this legislation. As has 
been said in this modern age of technological advancement, this type of 
legislation is needed. Current copyright law cannot adequately address 
the numerous issues which arise when digital technology is used. 
Moreover, the number of subscribers obtaining access to digital 
transmissions is ever-increasing. Therefore, certain modifications to 
the law are necessary to ensure that recording artists' and record 
companies' rights are protected. This carefully crafted legislation 
will ensure that the recording community will not only have the ability 
to control the distribution of their work, but receive payment for the 
use of their creative works. From hip-hop to country, reggae to 
classical, this bill helps to ensure our talented recording artists and 
recording companies are fairly compensated for public performance of 
their work. Without this legislation many situations could and, I am 
sure, would arise where the artists and music companies would not be 
compensated for their creative work. For many of them, their livelihood 
depends upon their being appropriately compensated for the use of the 
songs they have created. It takes much time, energy, and labor to 
produce material which provides public enjoyment. The creators of these 
materials deserve to be adequately compensated.
  Mr. Speaker, as I am sure some on this floor know, Stephen Foster 
died essentially a pauper. He died a pauper not because his music was 
not popular, not because many thousands of people did not play or sing 
or enjoy his music on a daily, weekly, monthly, and annual basis. It 
was because there was no system for compensating the genius that was 
Stephen Foster.
  We have geniuses among us today, some of whom are incredibly well 
compensated, but unfortunately, some of the most creative, perhaps not 
the most famous or well-known, have not been fairly compensated. This 
legislation, targeted, is important in a particular area. There are 
many areas which copyright fails to adequately compensate those who 
create. Therefore, I think it is incumbent upon us, as has been said, I 
know, by the chairman and by the ranking member, in an increasingly 
technological age in which the reproduction of what others have done is 
much easier, and frankly, the copying and dissemination of that, 
without any compensation to those who created it, is becoming epidemic, 
it is important that this Congress act to protect those who create.
  Mrs. SCHROEDER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I want to once again urge people to please vote for 
this. As we see the information highway coming up, this is the 
information that will go over the highway. If we cannot protect the 
creators of that information so that they can get compensated when 
people pull this down and copy it, then there will not be any 
information on the highway. This is terribly important to the future of 
the country in the 21st century.
  I thank everyone who has worked so hard on this, especially my 
chairman and especially the industry, who negotiate the long and hard 
coming to this agreement.
  Mr. Speaker, I yield back the balance of my time.
  Mr. MOORHEAD. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, this is important legislation. It has been made possible 
by the leadership of the chairman of our full committee, by the ranking 
member of our full committee, by the ranking member of our 
subcommittee, and each and every member of the subcommittee. It is a 
group endeavor that has made it possible for us to move forward with 
this important bill in the new superhighway that we are building in the 
telecommunications industry. I ask every Member to vote ``aye'' on this 
bill.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from California [Mr. Moorhead] that the House suspend the 
rules and pass the bill, H.R. 1506, as amended.
  The question was taken; and (two-thirds having voted in favor 
thereof) the rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.
  Mr. MOORHEAD. Mr. Speaker, I ask unanimous consent to take from the 
Speaker's table the Senate bill (S. 227) 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, and 
ask for its immediate consideration.
  The Clerk red the title of the Senate bill.
  The SPEAKER pro tempore (Mr. Riggs). Is there objection to the 
request of the gentleman from California?
  Mrs. SCHROEDER. Mr. Speaker, reserving the right to object, I do so 
basically to yield to the gentleman from California [Mr. Moorhead] to 
explain the purpose of his request.
  Mr. MOORHEAD. Mr. Speaker, this is the companion Senate bill. This 
action will enable the bill to go to the President. Both this bill and 
the former bill basically originated in the House, but the Senate was 
able to get it passed in their House first, and we want the bills to go 
immediately to the President of the United States without having to go 
back to the Senate, so we are incorporating it into the Senate 
legislation.
  Mrs. SCHROEDER. I thank the gentleman from California for his 
explanation. That is exactly what we want to do. We want to get these 
bills moving as quickly as possible.
  Mr. Speaker, since the gentleman's motion does that, I withdraw my 
reservation of objection.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from California?
  There was no objection.
  The Clerk read the Senate bill, as follows:

                                 S. 227

       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--

[[Page H 10105]]


       ``(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 

[[Page H 10106]]
     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 

[[Page H 10107]]
     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 

[[Page H 10108]]
     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.

  The Senate bill was ordered to be read a third time, was read the 
third time, and passed, and a motion to reconsider was laid on the 
table.
  Similar House bills (H.R. 1506) and (H.R. 587) were laid on the 
table.

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