[House Report 111-139]
[From the U.S. Government Publishing Office]
111th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 111-139
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WEBCASTER SETTLEMENT ACT OF 2009
_______
June 8, 2009.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Conyers, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 2344]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the bill
(H.R. 2344) to amend section 114 of title 17, United States
Code, to provide for agreements for the reproduction and
performance of sound recordings by webcasters, having
considered the same, reports favorably thereon without
amendment and recommends that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 1
Background and Need for the Legislation.......................... 2
Hearings......................................................... 3
Committee Consideration.......................................... 4
Committee Votes.................................................. 4
Committee Oversight Findings..................................... 4
New Budget Authority and Tax Expenditures........................ 4
Congressional Budget Office Cost Estimate........................ 4
Performance Goals and Objectives................................. 5
Constitutional Authority Statement............................... 5
Advisory on Earmarks............................................. 5
Section-by-Section Analysis...................................... 5
Changes in Existing Law Made by the Bill, as Reported............ 5
Purpose and Summary
H.R. 2344 would amend section 114 of title 17, United
States Code, to allow the recording industry to negotiate and
enter into alternative royalty fee agreements with webcasters
within thirty days of its enactment. Any agreement reached
would replace the rates established under the Copyright Royalty
Board's 2007 decision.
Background and Need for the Legislation
BACKGROUND
In 1998, in the Digital Millenium Copyright Act
(``DMCA''),\1\ Congress amended several statutory licensing
statutes to provide for and clarify the treatment of different
types of Internet broadcasting, or webcasting. As a result, two
categories of webcasting qualify for a compulsory license--
``preexisting'' subscription services existing at the time of
the DMCA's enactment and ``an eligible nonsubscription
transmission.''\2\ A subscription service is one that is
limited to paying customers. The broader category of webcasters
who may qualify for the statutory license under 17 U.S.C.
Sec. 114(d) are those who transmit music over the Internet on a
nonsubscription, noninteractive basis.
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\1\Pub. L. No. 105-304 (October 28, 1995).
\2\Under the DMCA, while satellite radio and Internet radio
providers pay performance royalties in addition to publishing
royalties, traditional radio broadcasters pay only publishing
royalties.
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The initial ratemaking proceeding for statutory royalty
rates for webcasters for the period 1998 through 2005 proved to
be controversial. The Librarian of Congress, under the guidance
of the U.S. Copyright Office, rejected the recommendation
issued by the Copyright Arbitration Royalty Panel (``CARP'')
and revised rates downward. Congress intervened as well with
enactment of the Small Webcasters Settlement Act of 2002
(``SWSA''), Pub. L. No. 107-321, which permitted more options
than the royalty rates established by the Librarian's order.
Subsequent to passage of the SWSA and the initial
ratemaking proceeding, Congress substantially revised the
underlying adjudicative process. Enactment of the Copyright
Royalty and Distribution Reform Act of 2004, Pub. L. No. 108-
419, abolished the CARP system and substituted a Copyright
Royalty Board (``CRB'') composed of three judges. As required
by law, in March 2007, the CRB announced royalty rates for the
period from January 1, 2006, through December 31, 2010.
COPYRIGHT ROYALTY BOARD RATES
The final determination of the CRB establishes new rates
for commercial and noncommercial webcasters who qualify for the
Sec. 114 compulsory license under the ``willing buyer/willing
seller'' standard.\3\ The CRB considered the proposals by
representatives of smaller webcasters that rates be structured
as a percentage of revenue, but ultimately rejected them in
lieu of a minimum-payment-per-song-per-listener formula.
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\3\17 U.S.C. Sec. 114(f)(2)(B).
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The new rates were not well received in the small
webcasting business community. Some Members of Congress voiced
concern as well. Several parties filed suit to appeal the CRB
decision. Upon consolidation of the appeals, oral argument was
heard on March 19, 2009. A decision is likely to be issued by
summer 2009.
Parallel to the judicial proceedings, private negotiations
are ongoing between SoundExchange, the organization charged
with collecting and distributing performance royalties, and
both large and small webcasters, in an attempt to reach a
compromise royalty rate agreement that would serve as an
alternative to the payment scheme provided by the CRB decision.
THE WEBCASTER SETTLEMENT ACT OF 2008
H.R. 7084, the Webcaster Settlement Act of 2008 (``2008
WSA''), which became law in October 2008, provided limited
statutory authority for SoundExchange to negotiate and enter
into alternative royalty fee agreements with webcasters that
would replace the rates established under the CRB's decision.
Three negotiated royalty agreements have been made under
the authority of the 2008 WSA. The Corporation for Public
Broadcasting and SoundExchange announced on January 15, 2009,
that they had reached consensus on the royalty rates to be paid
for by approximately 450 public radio webcastings, including
NPR and Public Radio International.\4\ On February 15, 2009,
the National Association of Broadcasters (``NAB'') and
SoundExchange informed the Copyright Office that they had made
an agreement that covers an extended royalty period for
terrestrial AM or FM radio broadcasters who simulcast their
signal or stream other programming over the Internet.\5\ On
February 15, 2009, a limited number of small webcasters reached
an agreement with SoundExchange for the same royalty period as
the NAB's license.
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\4\Corporation for Public Broadcasting, Agreement Reached for
Public Radio's Webcasting Royalty Rates, available at http://
www.cpb.org/pressroom/release.php?prn=699.
\5\U.S. Copyright Office, Library of Congress, Notification of
Agreements Under the Webcaster Settlement Act of 2008, 74 Fed. Reg.
9293, 9299 (Mar. 3, 2009).
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Other small and large webcasters were not able to
successfully negotiate a new rate agreement with the recording
industry within the time allotted by the 2008 WSA.
On January 5, 2009, the CRB announced that it would soon
begin the third proceeding to determine royalty rates for the
statutory license covering Internet transmissions of sound
recordings, applicable to the next royalty period that runs
from January 1, 2011, through December 31, 2015.\6\
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\6\Copyright Royalty Board, Library of Congress, Digital
Performance in Sound Recordings and Ephemeral Recordings, 74 Fed. Reg.
318 (Jan. 5, 2009).
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THE WEBCASTER SETTLEMENT ACT OF 2009
H.R. 2344, the Webcaster Settlement Act of 2009, would
allow those small and large webcasters who have yet to reach an
agreement with SoundExchange another opportunity to do so. It
permits them to negotiate alternative rates within thirty days
of its enactment.
Hearings
The Committee held no hearings on H.R. 2344.
Committee Consideration
On May 13, 2009, the Committee met in open session and
ordered the bill H.R. 2344 favorably reported without
amendment, by voice vote, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that there
were no recorded votes during the Committee's consideration of
H.R. 2344.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 2344, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, May 18, 2009.
Hon. John Conyers, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2344, the
Webcaster Settlement Act of 2009.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie,
who can be reached at 226-2860.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure
cc:
Honorable Lamar S. Smith.
Ranking Member
H.R. 2344--Webcaster Settlement Act of 2009.
H.R. 2344 would allow entities that broadcast audio content
over the Internet (Webcasters) to continue to negotiate royalty
rates with SoundExchange, the entity designated to collect
royalties for the music industry. Under provisions of the
Webcaster Settlement Act of 2008 (Public Law 110-435),
SoundExchange was given limited authority to enter into royalty
fee agreements with Webcasters that would differ from the rates
established by the Copyright Royalty Board. This limited
authority expired on February 15, 2009; H.R. 2344 would extend
the authority for 30 days after the date of enactment of the
bill.
Because royalties collected and paid out by SoundExchange
do not flow through the federal budget, CBO estimates that
implementing H.R. 2344 would have no effect on federal receipts
or spending.
H.R. 2344 contains no intergovernmental or private-sector
mandates as defined in the Unfunded mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Susan Willie.
The estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
2344 would permit the recording industry and webcasters to
negotiate alternative royalty rates within thirty days of its
enactment.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the authority for
this legislation in article I, section 8, clause 3 of the
Constitution.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 2344 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(d), 9(e), or 9(f) of Rule XXI.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Sec. 1. Short title. Section 1 sets forth the short title
of the bill as the ``Webcaster Settlement Act of 2009.''
Sec. 2. Authorization of Agreements. Section 2 allows for
the implementation of any agreement(s) reached between
SoundExchange and webcasters by 11:59 p.m. on the thirtieth day
after the bill's enactment.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
SECTION 114 OF TITLE 17, UNITED STATES CODE
Sec. 114. Scope of exclusive rights in sound recordings
(a) * * *
* * * * * * *
(f) Licenses for Certain Nonexempt Transmissions.--
(1) * * *
* * * * * * *
(5)(A) * * *
* * * * * * *
(D) Nothing in the Webcaster Settlement Act of
[2008] 2008, the Webcaster Settlement Act of 2009, or
any agreement entered into pursuant to subparagraph (A)
shall be taken into account by the United States Court
of Appeals for the District of Columbia Circuit in its
review of the determination by the Copyright Royalty
Judges of May 1, 2007, of rates and terms for the
digital performance of sound recordings and ephemeral
recordings, pursuant to sections 112 and 114.
(E) As used in this paragraph--
(i) * * *
* * * * * * *
(iii) the term ``webcaster'' means a person
or entity that has obtained a compulsory
license under section 112 or 114 and the
implementing regulations therefor [to make
eligible nonsubscription transmissions and
ephemeral recordings].
(F) The authority to make settlements pursuant to
subparagraph (A) shall expire [February 15, 2009] at
11:59 p.m. Eastern time on the 30th day after the date
of the enactment of the Webcaster Settlement Act of
2009.
* * * * * * *