[Congressional Record (Bound Edition), Volume 147 (2001), Part 11]
[Extensions of Remarks]
[Pages 16230-16231]
[From the U.S. Government Publishing Office, www.gpo.gov]



              INTRODUCTION OF MUSIC ONLINE COMPETITION ACT

                                 ______
                                 

                           HON. RICK BOUCHER

                              of virginia

                    in the house of representatives

                        Thursday, August 2, 2001

  Mr. BOUCHER. Mr. Speaker, I am pleased today to join with my 
colleague from Utah, Mr. Cannon, in the introduction of much-needed 
legislation to facilitate the rapid introduction of services which will 
meet the public demand for efficient delivery of music over the 
Internet in a manner which also assures that copyright owners receive 
compensation for the use of their works.
  I am among those who believe that most people are willing to pay a 
reasonable fee to be able to obtain musical selections over the 
Internet, and I applaud the planned introduction by the major record 
labels of websites that will make their music inventories available for 
streaming and downloading.
  There are a number of obstacles to the effective introduction of 
online music services in current copyright law. A recent hearing in the 
Judiciary Committee highlighted several of the problems in current 
copyright law which are impeding the deployment of innovative, 
legitimate Internet music services to an eager listening public. Some 
of these problems are practical, such as trying to locate and notify 
all of the publishers of a particular musical composition. Other 
obstacles are technical, such as needing to produce multiple copies of 
a song in different transmission speeds and different media formats. 
Current copyright law permits the placement ona server of only a single 
copy.
  The measure we introduce today, The Music Online Competition Act, is 
carefully crafted to remove these obstacles and thereby promote a 
legitimate online music marketplace that will benefit the public, the 
creators of copyrighted works and the technology industry. In 
particular, our bill makes the following changes:
  Updates the ``Ephemeral'' Recording Exemption: Our bill expands the 
law that allows broadcasters and webcasters to make a single in-house 
(or ``ephemeral'') copy of a transmission program to enable multiple 
copies so as to accommodate the need for different bit rates (e.g., 
dial-up, broadband), different formats (e.g., RealPlayer or 
MediaPlayer), and caching throughout the network to ensure efficient 
and timely delivery of music to consumers. Our bill extends the 
ephemeral copyright exemption to encompass not only the transmission 
program but also the individual songs.
  Expands the ``In-Store Sampling'' Exemption: Under current copyright 
law, ``brick and mortar'' music retailers pay no license fees to record 
CDs on a server so that customers may listen to music samples in the 
store. Our bill allows retailers to use a central server to

[[Page 16231]]

serve multiple retail establishments and applies the exemption to 
online retail establishments (such as Amazon.com or CDNow) that offer 
music samples of 30 or 60 seconds to promote sales of the associated 
sound recordings.
  Clarifies the Status of Incidental and Archival Copying: Our bill 
adapts existing law to two situations particular to Internet 
technology. First, the bill exempts from copyright liability buffer 
copies made in the course of browsing or webcasting, as these buffer 
copies are mere technical incidents of the operation of the Internet 
and have no independent economic value. Second, the bill allows 
consumers to make archival ``backup' copies of music that they lawfully 
acquire over the Internet in order to protect their collections against 
hard drive crashes, accidental damage or viruses. The bill leaves 
unchanged existing law with respect to computer programs.
  Facilitates Administration of the Section 115 Mechanical License: 
Witnesses at a recent hearing representing the major music labels, 
RealNetworks, and MP3.com uniformly urged the creation of an effective 
mechanism for administering the existing Section 115 statutory license 
for musical works, which is currently administered with paper 
submissions and notices to copyright owners. Under our bill, the 
administration of the statutory license would parallel the 
administration of other statutory licenses by permitting users to 
notify the Copyright Office of the use of the statutory license and to 
deposit royalty payments and accounting information with the Copyright 
Office, so as to ensure that funds and information are distributed to 
the owners of the copyright. Our bill specifically instructs the 
Copyright Office to develop an electronic filing system to receive such 
notices as a replacement for the current paper filing system.
  Assures Nondiscriminatory Licensing to Affiliated and Non-Affiliated 
Music Distribution Entities: Recording companies are now entering into 
the online music distribution business by establishing joint ventures 
with other record companies (e.g., MusicNet and Pressplay) and by 
acquiring well-known, formerly independent Internet services (such as 
CDNow, EMusic and MP3.com). It is anticipated that the distribution 
services owned by record companies will cross license each other, so 
that each site will be authorized to distribute over the internet 
approximately 80 percent of all recorded music. If the major record 
companies do not also license independent non-affilated distribution 
services, music will be distributed exclusively by a vertically 
integrated duopoly. In such a circumstance, there would be no 
competition in music distribution.
  In 1995, Congress had a similar concern with respect to cable and 
satellite subscription services, which Congress addressed by requiring 
vertically-integrated companies that both owned content and 
distribution services to offer nondiscriminatory license terms and 
conditions to all similarly-situated distribution services. Our bill 
extends this existing nondiscrimination provision to interactive 
performance services and digital distribution services.
  Requires an Examination of Programming Restrictions: The sound 
recording statutory license for digital cable, satellite and webcasting 
services includes programming restrictions that, for example, restrict 
the provider from playing more than 3 selections from a particular CD 
or more than 4 selections from a particular artist within a 3-hour 
window. Broadcast radio is not subject to these programming 
restrictions. Certain digital music services contend that some of these 
programming restrictions impose undue burdens upon their service, 
reduce their ability to compete with broadcast radio, and unfairly 
preclude their ability to take advantage of the statutory license to 
deliver the type of services that consumers expect from a radio 
offering. Our bill instructs the Copyright Office and the Department of 
Commerce jointly to study and report to Congress on the effect of these 
limitations upon such services, upon copyright owners and upon the 
public interest, and to make appropriate legislative recommendations.
  Requires Direct Payment to Artists: The sound recording statutory 
performance license provision specifies that royalty payments should be 
shared equally by performing artists and recording companies. Current 
law funnels these payments to artists through the recording companies. 
Our bill requires that these payments instead to be made directly to 
the artists or to a collective organization representing the artists.
  There is uniform agreement among record labels, online companies and 
consumers that changes to the copyright law are needed. Congress has a 
responsibility to promote an online marketplace which will allow 
legitimate, innovative services to thrive. I call upon my colleagues to 
join with us as we seek to facilitate the rapid introduction of 
legitimate online music services for the benefit of our constituents, 
the listening public, of the creators of copyrighted material and of 
the technology and other entrepreneurial companies which seek to 
deliver music to consumers. Mr. Speaker, I urge all of my colleagues to 
join with Mr. Cannon and me in supporting this measure.

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