[Federal Register Volume 65, Number 52 (Thursday, March 16, 2000)]
[Proposed Rules]
[Pages 14227-14229]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6419]


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LIBRARY OF CONGRESS

Copyright Office

37 CFR Part 201

[Docket No. RM 2000-3]


Public Performance of Sound Recordings: Definition of a Service

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Copyright Office is seeking comment on whether to amend 
its regulation that defines a ``Service'' for purposes of the statutory 
license governing the public performance of sound recordings by means 
of digital audio transmissions, in order to clarify that transmissions 
of a broadcast signal over a digital communications network, such as 
the Internet, are not exempt from copyright liability under section 
114(d)(1)(A) of the Copyright Act.

DATES: Written comments are due April 17, 2000. Reply comments are due 
May 1, 2000.

ADDRESSES: If sent by mail, an original and ten copies of comments and 
reply comments should be addressed to: Copyright Arbitration Royalty 
Panel (CARP), P.O. Box 70977, Southwest Station, Washington, D.C. 
20024. If hand delivered, they should be brought to: Office of the 
General Counsel, James Madison Memorial Building, Room LM-403, First 
and Independence Avenue, S.E., Washington, D.C. 20559-6000.

FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or 
Tanya M. Sandros, Senior Attorney, Copyright Arbitration Royalty Panel, 
P.O. Box 70977, Southwest Station, Washington, D.C. 20024. Telephone: 
(202) 707-8380. Telefax: (202) 252-3423.

SUPPLEMENTARY INFORMATION:

Background

    In 1995, Congress enacted the Digital Performance Right in Sound 
Recordings Act of 1995 (``DPRA''), Public Law 104-39, which created an 
exclusive right for copyright owners of sound recordings, subject to 
certain limitations, to perform publicly sound recordings by means of 
certain digital audio transmissions. Among the limitations on the 
performance was the creation of a new compulsory license for nonexempt, 
noninteractive, digital subscription transmissions, 17 U.S.C. 114(f), 
and an exemption for certain nonsubscription transmissions, 17 U.S.C. 
114(d)(1)(A)(i)-(iii) (1995).
    The scope of the exemption, however, has been debated since the 
passage of the DPRA. Broadcasters have taken the position that any 
broadcast, whether made over the air or over the Internet, falls within 
the scope of the section 114(d)(1)(A) exemptions. See Reply Comments of 
National Association of Broadcasters at 9-12 (dated June 20, 1997), 
submitted in Docket No. RM 97-1. On the other hand, copyright owners of 
the sound recordings have interpreted the scope of the exemption more 
narrowly. The Recording Industry Association of America (``RIAA''), on 
behalf of these copyright owners, has argued that transmissions over 
the Internet, generally known as webcasts, do not fall within the scope 
of the statutory exemptions and, instead, are subject to the copyright 
owners' exclusive rights under section 106(6). See, e.g., RIAA Petition 
and Comments of RIAA at 9-12 (dated April 28, 1997), submitted in 
Docket No. RM 97-1.
    Congress, however, did not consider this question when it first 
addressed the problems associated with the emergence of digital audio 
technology and its effects on the music industry because, at the time, 
it had insufficient information on which to act. It did not understand 
how nonsubscription services were utilizing the Internet to bring music 
to the public or how to license such enterprises. Therefore, it focused 
the initial legislation on the digital subscription services and the 
interactive services that were in operation at the time.
    The result was the DPRA, a law which created a licensing scheme for 
the subscription services and the interactive digital audio services. 
17 U.S.C. 114(d)(3) and (f) (1995). It soon became apparent, however, 
that with the rapid proliferation of the use of the Internet as a 
transmission medium and the confusion surrounding the question of how 
the DPRA applied to some nonsubscription digital audio services, 
further legislation was needed to achieve the dual purposes of the 
DPRA.\1\ Staff of the House of Representatives Comm. on the Judiciary, 
105th Cong., 2d Sess., Section-by-Section Analysis of H.R. 2281 as 
Passed by the United States House of Representatives on August 4, 1998 
at 50-51 (Comm. Print, Serial No. 6, 1998).
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    \1\ Congress had a two-fold purpose for enacting the DPRA: 
``first, * * * to ensure that recording artists and record companies 
will be protected as new technologies affect the ways in which their 
creative works are used; and second, to create fair and efficient 
licensing mechanisms that address the complex issues facing 
copyright owners and copyright users as a result of the rapid growth 
of digital audio services.'' Staff of the House of Representatives 
Comm. on the Judiciary, 105th Cong., 2d Sess., Section-by-Section 
Analysis of H.R. 2281 as passed by the United States House of 
Representatives on August 4, 1998 at 49 (Comm. Print, Serial No. 6, 
1998).
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    These changes were part of the Digital Millennium Copyright Act of 
1998 (``DMCA''), Public Law 105-304, which, among other things, amended 
sections 112 and 114 of the Copyright Act to clarify that ``the digital 
sound recording performance right applies to nonsubscription digital 
audio services such as webcasting'' and to address the licensing issues 
raised by the webcasters. Id. at 50. Specifically, Congress amended 
section 114 by creating a new statutory license for nonexempt eligible 
nonsubscription

[[Page 14228]]

transmissions (e.g., webcasting) and nonexempt transmissions by 
preexisting satellite digital audio radio services to perform publicly 
sound recordings in accordance with the terms and rates of the 
statutory license. 17 U.S.C. 114(f). The DMCA also amended section 
114(d)(1)(A) to ``delete two exemptions that were either the cause of 
confusion as to the application of the DPRA to certain nonsubscription 
services (especially webcasters) or which overlapped with other 
exemptions.'' H.R. Rep. No. 105-796, at 80 (1998).
    On March 1, 2000, RIAA filed a petition for a rulemaking with the 
Copyright Office asking that the Office determine the scope of the 
section 114(d)(1)(A) exemptions. Specifically, RIAA has requested that 
the Office adopt a rule ``clarifying that a broadcaster's transmissions 
of its AM or FM radio station over the Internet * * * is not exempt 
from copyright liability under section 114(d)(1)(A) of the Copyright 
Act.'' RIAA petition at 1 (filed March 1, 2000). RIAA states in its 
petition that it has attempted to negotiate voluntary agreements with 
broadcasters who stream their over-the-air AM or FM radio broadcast via 
the Internet or who have authorized a third party ``aggregator'' to 
retransmit an over-the-air radio broadcast via the Internet. It asserts 
that these discussions have not progressed beyond the initial stages 
because the parties cannot agree whether transmission of a broadcast 
over the Internet is subject to the digital performance right. 
Consequently, it has asked the Office to interpret section 114(d)(1)(A) 
and determine whether a broadcast transmission made via the Internet is 
exempt from copyright liability.
    The Office agrees with RIAA that the resolution of this question 
has implications for both the section 112 \2\ and the section 114 
statutory licenses. For example, if it is ultimately decided that a 
broadcast transmission over the Internet falls outside the safe harbor 
carved out by the section 114(d)(1) exemptions, the webcaster must 
decide whether to make use of the statutory license under section 
114(f) or whether to negotiate a private license with the copyright 
owners of the sound recordings. Alternatively, if the Office decides 
that a broadcast transmission which is streamed over the Internet is 
exempt under section 114(d)(1)(A), parties can avoid further 
negotiations over rates and terms for use of the sound recordings in 
those situations.
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    \2\ A transmitting organization that makes transmissions under 
the section 114(f) license may also make an ephemeral recording, 
under a separate statutory license, for the purpose of making the 
digital audio transmissions. 17 U.S.C. 112(e).
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RIAA's Initial Arguments in Support of Its Petition

    RIAA argues that the amendments to sections 112 and 114 support its 
view that broadcasters who engage in transmissions over the Internet 
are not exempt from copyright liability for these transmissions. First, 
RIAA notes that Congress had no intention of creating any new 
exemptions when it amended section 114(d)(1)(A), but merely sought to 
remove those exemptions that were the source of the confusion, either 
because it was unclear how the exemption applied to nonsubscription 
services or because the exemption was redundant. These changes were in 
no way intended to affect the provision that exempts nonsubscription 
broadcast transmissions. H.R. Rep. No. 105-796, at 80 (1998).
    While RIAA does not dispute that there is a recognized exemption 
for over-the-air broadcast transmissions, it continues its analysis by 
noting that the definition of an ``eligible nonsubscription 
service,''--the entity which, by statute, may make use of the statutory 
license--specifically includes retransmissions of broadcast 
transmissions. Consequently, it argues that Congress never intended 
that broadcasts over the Internet be exempt under the provisions of 
section 114(d)(1)(B). Instead, Congress carved out specific exemptions 
for retransmissions of a nonsubscription broadcast transmission, and 
none of these directly address a retransmission over the Internet. 17 
U.S.C. 114(d)(1)(B)(i)-(iv). Therefore, a retransmission of a 
nonsubscription broadcast transmission over the Internet would have to 
meet the requirements set forth in subsection (B) of section 114(d)(1) 
or be subject to the section 106(6) right of public performance.
    In further support of its interpretation of the statutory license, 
RIAA observes that a webcaster who utilizes the section 114(d)(2) 
license is also eligible for a statutory license pursuant to section 
112(e)(1)--a license which allows transmitting organizations to make 
one or more ephemeral recordings, depending upon the terms of the 
license. The section 112 license, however, allows only two different 
types of transmitting organizations to make use of the license: (1) A 
transmitting organization entitled to make a transmission of a sound 
recording under the section 114(f) license; or (2) A transmitting 
organization that makes use of the exemption specified in section 
114(d)(1)(C)(iv). These limitations on the section 112 license thus 
appear to present a dilemma for the broadcasters. Namely, how do they 
make the necessary ephemeral recordings incident to streaming 
nonsubscription broadcast transmissions over the Internet if they 
cannot take advantage of the statutory license in section 112? For this 
reason, RIAA suggests that Congress did not intend to exempt 
nonsubscription broadcast transmissions that are retransmitted over the 
Internet under the general exemption for broadcast transmissions set 
forth in section 114(d)(1)(A). Otherwise, Congress would have made 
provisions for the making of the necessary ephemeral recordings used in 
these transmissions.

Proposed Rule and Comments

    The foregoing discussion has been presented solely for the purpose 
of stating the arguments that have been made to the Office in support 
of the request to conduct this rulemaking. While the Office has made no 
determination on the merits of the arguments put forth by RIAA in its 
petition, the Office acknowledges that there appears to be a need to 
resolve the questions surrounding the applicability of the section 
114(d)(1)(A) exemption to the activities of a broadcaster when it makes 
a public performance of a sound recording by means of a digital audio 
transmission.
    The Copyright Office does not foresee any need to amend its current 
rule defining the term ``Service,'' 37 CFR 201.35(b)(2), in the event 
that a broadcast transmission is found to fall within the scope of the 
section 114(d)(1) exemptions. On the other hand, if the Office decides 
that transmissions of broadcast signals over a digital communications 
network, such as the Internet, are not exempt from copyright liability 
under section 114(d)(1)(A) of the Copyright Act, then it proposes 
amending the rule as set forth in this notice.
    All interested parties are requested to file comments and replies 
with the Copyright Office in accordance with the information set forth 
in this document. Comments are invited, first, on whether the Office 
should address this issue in a rulemaking and, second, on whether the 
Office should adopt the regulatory language set forth in the notice or 
some other regulatory language in its place. The Copyright Office has 
posted the RIAA petition to its website (http://www.loc.gov/copyright/CARP/RIAApetition.pdf) in order to facilitate the dissemination of the 
information presented by RIAA in its petition.

[[Page 14229]]

Statutory Authority

    The Copyright Office initiates this proceeding under its authority 
to establish regulations for the administration of its functions and 
duties under title 17. 17 U.S.C. 702. The Office exercises its 
authority under section 702 when it is necessary ``to interpret the 
statute in accordance with Congress' intentions and framework and, 
where Congress is silent, to provide reasonable and permissible 
interpretations of the statute.'' 57 FR 3284, 3292 (January 29, 1992); 
see also 63 FR 3685, 3686 (January 26, 1998) (invoking section 702 
authority to determine whether a local over-the-air broadcast signal 
may be retransmitted into the local market area under the provisions of 
the section 119 statutory license).

List of Subjects in 37 CFR Part 201

    Copyright.
    In consideration of the foregoing, it is proposed that part 201 of 
37 CFR be amended as follows:

PART 201--GENERAL PROVISIONS

    1. The authority citation for part 201 continues to read as 
follows:

    Authority: 17 U.S.C. 702.

    2. Section 201.35(b)(2) is revised to read as follows:


Sec. 201.35  Initial Notice of Digital Transmission of Sound Recordings 
under Statutory License.

* * * * *
    (b) * * *
    (1) * * *
    (2) A Service is an entity engaged in the digital transmission of 
sound recordings, pursuant to section 114(f) of title 17 of the United 
States Code, including, but not limited to, any entity that transmits 
an AM/FM broadcast signal over a digital communications network such as 
the Internet, regardless of whether the transmission is made by the 
broadcaster that originates the AM/FM signal or by a third party, and 
provided that such transmission meets the applicable requirements of 
the statutory license set forth in 17 U.S.C. 114(d)(2).
* * * * *

    Dated: March 10, 2000.
David O. Carson,
General Counsel.
[FR Doc. 00-6419 Filed 3-15-00; 8:45 am]
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