[Congressional Record (Bound Edition), Volume 152 (2006), Part 6]
[Extensions of Remarks]
[Pages 8140-8141]
[From the U.S. Government Publishing Office, www.gpo.gov]




 THE PLATFORM EQUALITY AND REMEDIES FOR RIGHTS HOLDERS IN MUSIC ACT OF 
                                  2006

                                 ______
                                 

                         HON. HOWARD L. BERMAN

                             of california

                    in the house of representatives

                         Thursday, May 11, 2006

  Mr. BERMAN. Mr. Speaker, today I join my colleague Mary Bono in 
introducing ``The Platform Equality and Remedies for Rights Holders in 
Music Act of 2006'' (Perform Act) which we hope will be the first step 
in addressing the convergence of digital radio and distribution 
technology. This bill mirrors the PERFORM ACT introduced by my 
colleagues two weeks ago in the Senate. The purpose of the PERFORM Act 
is to address current inequities in the Section 114 compulsory license 
of the Copyright Act.
  One of America's greatest treasures is its intellectual property. In 
cities and towns across the nation and in countries around the world, 
American music is heard throughout the streets. People are consuming 
more music than ever. Yet the music industry is in crisis. The total 
value for the music industry at retail declined from $14.5 billion in 
1999 to $12.1 billion in 2004. In March 2005 alone, 243 million songs 
were downloaded from illicit peer-to-peer services (NPD Musicwatch).
  Our Founding Fathers recognized that in order for America to be at 
the forefront of creativity they must support and incentivize musicians 
to pursue their art by providing necessary protection to these original 
works to produce a return on investment in those works.
  In that vein, in 1995 Congress took a step forward and established a 
limited performance right for digital sound recordings. However, while 
with one hand Congress granted a right to creators when their music is 
performed digitally, with the other hand it took away by requiring that 
this new limited right be subject to a government compulsory license 
for radio-like services. Therefore, as we continue with this debate we 
must remember that copyright owners cannot negotiate a fair market 
price for their works in the marketplace for digital radio, and cannot 
withhold access to their works as leverage in the marketplace to 
negotiate for necessary content protection on digital radio.
  Cable, satellite, and Internet radio services are granted a 
compulsory license to broadcast (perform) music as long as they pay the 
statutorily defined fee (or another negotiated rate) and abide by the 
terms and conditions of the government license.
  We are fortunate that with the evolution of new technologies there 
are many legal music distribution services currently available. Cable, 
Internet and satellite platform providers all compete to provide 
consumers their choice of music, anytime, in any place, in any format. 
While I am encouraged by the many options, I am concerned that certain 
features of the new devices turn radio, or performance services, into 
distribution services. This increased functionality may cause the 
unintended consequence of bypassing the typical marketplace 
distribution channels by allowing the consumer to turn broadcasts into 
downloads. This utility enables consumers to create an unlicensed music 
library without paying the artist.
  However, just as consumers have certain expectations when it comes to 
radio usage, copyright owners have a reasonable expectation to be 
compensated for both the performance right (where a copy is listened to 
but not kept by the consumer such as a broadcast or concert) and the 
copying of their works into a library (such as a download or 
reproduction). This bill seeks the appropriate balance between 
promoting the creativity of music and fostering the innovation of 
technology.
  Some say the legislation is unnecessary because they assert that 
current business models are technically legal. While I myself refrain 
from statutory interpretation, the question for Congress now is how to 
formulate the right policy to ensure that creators receive adequate 
compensation for their work and that fair rules apply evenly across all 
platforms of music that deliver similar services to consumers. Some say 
this legislation is lacking because it does not provide parity across 
all broadcasting platforms. While I believe there should be a full 
performance right for all digital transmissions, across all 
broadcasting platforms, the bill provides a step in the right 
direction.
  We hope that with introduction of this companion bill in the House to 
the PERFORM Act in the Senate, Congress will act quickly to level the 
playing field between technologies and ensure rightful compensation to 
artists.
  In order to level the playing field for those technologies currently 
covered by Section 114, this bill establishes parity in the rules and 
regulations covering service platforms (satellite, webcasters, cable) 
by ensuring that satellite, webcasters, and cable operators are 
required to operate under the same rate standard and content protection 
rules. Under the bill, the performance license will only be available 
for behavior that constitutes a performance, and will require a radio 
service that wants to engage in a distribution business model to get a 
distribution license in the free marketplace like its competitors.
  For services coupled with new and proposed devices that permit 
subscribers to search for and keep permanent copies of songs included 
in the broadcaster's programming without ever listening to the program 
and where subscribers simply scroll through a list of songs and pick 
those they want to keep without ever buying the song or paying 
additional subscription fees a service will not be

[[Page 8141]]

able to take advantage of the 114 license unless they get a necessary 
distribution license in the marketplace.
  The ability to enable automatic, organized copying and storage of 
individual songs that replace the sale of downloads or subscriptions by 
competitive distribution services such as Napster, Rhapsody, and iTunes 
should not be allowed without similar rules and compensation 
requirements. If listeners are able to instantly make a free copy of 
the song they are listening to, they will have little reason to 
purchase it. The use of a performance license should not be a shield 
against providing the requisite payment for the reproduction or 
distribution.
  Section 1 provides parity in the rate standard for the technologies 
currently covered under the section 114 license. All licenses under 
section 112 and 114 will have their rates set under the same standard, 
a fair market value standard, that would more closely replicate 
aggregate deals in the marketplace. Fair Market Value is a standard 
that is used hundreds of times in the laws of the United States and is 
one that replicates to the closest extent possible to free marketplace. 
Currently, the rate for satellite and cable music services are set 
under factors contained in Section 801(b) of the Copyright Act. The 
rate for Internet services is a ``willing buyer, willing seller'' 
standard that approximates what a particular willing buyer would pay a 
particular willing seller in the marketplace. The bill sets the 
standard at ``fair market value'' to provide broad-based market-
influenced compensation to creators across all platforms.
  Section 2 provides that the technologies which broadcast sound 
recordings provide adequate protection to the content. These provisions 
ensure that all licensees under section 114 have similar content 
protection requirements, which respond to marketplace developments but 
include recording for legitimate time shifting purposes.
  The bill also requires that licensees use reasonably available 
technology to prevent copying of the transmission to prevent against 
third party ``stream-ripping''--the use of tools created by third 
parties that captures the stream, and then disaggregates the songs for 
storage in a manner that substitutes for a sale. However, any content 
protection system must allow for reasonable recording. Most notably the 
bill allows for all manual consumer recording to the extent such 
recording is consistent with fair use under Section 107 of the 
Copyright Act.
  Section 3 provides a placeholder for the Copyright Office to convene 
a meeting with interested stakeholders to discuss creation of a 
category of new interactive services. Currently, one of the most 
contested issues in the license is the definition of interactivity. The 
question is ``how much consumer influence is allowed before the 
experience has transitioned from a purely listening service to an 
interactive service?''. The definition of interactivity itself impacts 
whether one can take advantage of the compulsory license, and the share 
of the royalty to the artists, musicians and other vocalists. I am 
hopeful that the Copyright Office will be able to provide some guidance 
and recommendations for Congress.
  Finally, while not included in the bill, I do believe at some point 
soon, Congress needs to take another look at the Audio Home Recording 
Act. I don't believe that the royalties provided by the AHRA were ever 
intended to substitute for the marketplace licenses afforded end-to-end 
transmission and distribution services. The AHRA was intended to 
protect music creators from serial copying using off-the-shelf consumer 
electronics devices, not to enable transmission services to transform 
themselves into distribution services that provide an unlicensed 
download that substitutes for record sales. The time has come to re-
evaluate the act in light of new technologies and changing business 
models.
  I do not want to suggest that this bill is a ``perfect'' solution. 
Thus, I remain open to suggestions for amending the language to improve 
its efficacy or rectify any unintended consequences.
  This bill attempts to strike a balance between providing adequate 
protection to our musicians and continuing to support new innovative 
technologies. My goal is to preserve the legitimate marketplace by 
reserving downloading capability for those services that appropriately 
pay for it. I hope the parties can work together to reach further 
consensus on how to achieve parity between technologies and provide 
rightful compensation to our artists.

                          ____________________