[Federal Register Volume 65, Number 100 (Tuesday, May 23, 2000)]
[Proposed Rules]
[Pages 33266-33268]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-12970]



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LIBRARY OF CONGRESS

Copyright Office

37 CFR Part 201

[Docket No. RM 2000-4]


Public Performance of Sound Recordings: Definition of a Service

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of inquiry.

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SUMMARY: The Copyright Office is requesting comments on whether to 
grant a petition for rulemaking filed with the Copyright Office by the 
Digital Media Association. The petition requests an amendment to the 
rule that defines the term ``Service'' for purposes of the statutory 
license governing the public performance of sound recordings by means 
of digital audio transmissions. The requested amendment would expand 
the current definition of the term ``Service'' to state that a service 
is not interactive simply because it offers the consumer some degree of 
influence over the programming offered by the webcaster.

DATES: Written comments are due June 22, 2000. Reply comments are due 
July 7, 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, DC 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 SE., Washington, DC 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, DC 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 the copyrighted work publicly by 
means of a digital audio transmission.'' 17 U.S.C. 106(6). Among the 
limitations on the performance was the creation of a licensing scheme 
for interactive digital audio services and a compulsory license for 
nonexempt, noninteractive, digital subscription transmissions, 17 
U.S.C. 114(d)(2), (3) and (f) (1995). In addition, Congress exempted 
certain transmissions and retransmissions from the newly created 
performance right, 17 U.S.C. 114(d)(1) (1995).
    In enacting the DPRA, Congress had two purposes: (1) To ensure that 
recording artists and record companies will be protected as new 
technologies affect the way in which their creative works are used; and 
(2) 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. H.R. Rep. No. 105-796, 
at 79-80 (1998). 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 these goals.
    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. 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 (Comm. Print, Serial No. 6, 1998). Specifically, 
Congress amended section 114 by creating a new statutory license for 
nonexempt eligible nonsubscription transmissions (e.g., webcasting) and 
nonexempt transmissions by preexisting satellite digital audio radio 
services.

17 U.S.C. 114(f) (1998).

    For purposes of the DMCA, an ``eligible nonsubscription 
transmission'' is defined as:

a non-interactive nonsubscription digital audio transmission not 
exempt under subsection (d)(1) that is made as part of a service 
that provides audio programming consisting, in whole or in part, of 
performances of sound recordings, including retransmissions of 
broadcast transmissions, if the primary purpose of the service is to 
provide to the public such audio or other entertainment programming, 
and the primary purpose of the service is not to sell, advertise, or 
promote particular products or services other than sound recordings, 
live concerts, or other music-related events.

17 U.S.C. 114(j)(6) (1998).

    A key element of the definition is the requirement that the 
transmission must be ``non-interactive.'' Unless a service meets this 
criterion, it is ineligible for the statutory license and, therefore, 
must negotiate a voluntary agreement with the copyright owner(s) of the 
sound recordings before performing the works by means of digital audio 
transmissions.

17 U.S.C. 114(d)(3) (1998).

    This distinction between interactive and non-interactive has always 
been critical to determining the rights of a copyright user under 
section 114, since Congress believed ``interactive services [were] most 
likely to have a significant impact on traditional record sales, and 
therefore pose[d] the greatest threat to the livelihoods of those whose 
income depends upon revenues derived from traditional record sales.'' 
S. Rep. No. 104-128, at 16 (1995). For this reason, interactive 
services are excluded from the limitations placed upon the new 
performance right and, consequently, must conduct arms-length 
negotiations with the copyright owners of the sound recordings before 
making a digital transmission of the works.
    Congress first defined an ``interactive service'' in the DPRA as a 
service 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.

17 U.S.C. 114(j)(4) (1995).

    The second sentence was added to make clear that ``the term 
`interactive service' is not intended to cover traditional practices 
engaged in by, for example, radio broadcast stations, through which 
individuals can ask the station to play a particular sound recording as 
part of the service's general programming available for reception by 
members of the public at large.'' S. Rep. No. 104-128, at 33-34 (1995).
    In the DMCA, Congress expanded this definition to include further 
explanation of the type of activity that does not, in and of itself, 
make a service interactive. Specifically, the DMCA refined the 
definition of an ``interactive service'' as follows:

    (7) An ``interactive service'' is one that enables a member of the 
public to receive a transmission of a program specially created for the 
recipient, or on

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request, a transmission of a particular sound recording, whether or not 
as part of a program, which is selected 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, or in the 
case of a subscription service, by all subscribers of the service, does 
not make a service interactive, if the programming on each channel of 
the service does not substantially consist of sound recordings that are 
performed within 1 hour of the request or at a time designated by 
either the transmitting entity or the individual making such request. 
If an entity offers both interactive and noninteractive services 
(either concurrently or at different times), the noninteractive 
component shall not be treated as part of an interactive service.

17 U.S.C. 114(j)(7) (1998).

    In both cases, Congress sought to identify a service as interactive 
according to the amount of influence a member of the public would have 
on the selection and performance of a particular sound recording. 
Neither definition, however, draws a bright line delineating just how 
much input a member of the public may have upon the basic programming 
of the service. Consequently, the Digital Media Association (``DiMA'') 
seeks clarification on this point and a regulation that would prohibit 
designating a service as interactive merely because it offers a 
consumer some degree of influence over the streamed programming.

DiMA Petition

    On April 17, 2000, DiMA \1\ filed a petition for a rulemaking with 
the Copyright Office asking that the Office adopt a rule stating that a 
webcasting service does not become an interactive service merely 
because a consumer exerts some degree of influence over the streamed 
programming. DiMA seeks modification of the current regulation that 
defines a ``Service'' in order to better distinguish between activities 
that make a webcasting service non-interactive from those activities 
that make a service interactive. 37 CFR 201.35(b)(2). The amendment 
would add specific language to clarify that services which otherwise 
meet the requirements for the compulsory license set forth in section 
114(f) do not become ineligible for the section 114 statutory license 
merely because they offer the consumer some degree of influence over 
the streamed programming. DiMA then proposes additional language which, 
in its view, would clarify that such a webcasting service is not an 
``interactive service'' under section 114(j)(7) of the Copyright Act, 
provided that the service meet three criteria.
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    \1\ DiMA is a trade association that represents approximately 40 
companies that engage in various forms of Internet multimedia 
activities, including activities that permit consumers to influence 
the programming streamed to the public over the Internet.
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    The text of the proposed amendment, to be added at the end of the 
current regulatory text, would read as follows:

    A Service making transmissions that otherwise meet the 
requirements for the section 114(f) statutory license is not 
rendered ``interactive,'' and thus ineligible for the statutory 
license, simply because the consumer may express preferences to such 
Service as to the musical genres, artists and sound recordings that 
may be incorporated into the Service's music programming to the 
public. Such a Service is not ``interactive'' under section 
114(j)(7), as long as: (i) its transmissions are made available to 
the public generally; (ii) the features offered by the Service do 
not enable the consumer to determine or learn in advance what sound 
recordings will be transmitted over the Service at any particular 
time; and (iii) its transmissions do not substantially consist of 
sound recordings performed within one hour of a request or at a time 
designated by the transmitting entity or the individual making the 
request.

DiMA Petition at 14, Attachment A--Proposed Rule.

    In support of its petition, DiMA argues that the consumer input is 
merely a guide to program selections and that ``the actual 
transmissions of sound recordings over these consumer-influenced 
stations is generated by a computer according to programs and playlists 
created by the service, * * * such [that] listeners (including the 
`creator(s)' of consumer-influenced stations) never have the ability to 
determine or know in advance whether any particular song or album will 
be performed or even when, over an extended period, any particular 
artist's works will appear.'' Petition at 12. In summary, DiMA argues 
that consumer-influenced stations comply with the spirit and intent of 
the law because the contribution of the consumer does not increase the 
risk that the consumer will make copies of the transmissions and 
displace the sale of a sound recording in the marketplace.
    DiMA asserts that this issue must be resolved prior to the 
convening of the Copyright Arbitration Royalty Panel (``CARP'') which 
will determine the rates for the section 114 statutory license ``in 
order to define the appropriate bounds of the statutory license 
proceedings--which will be before this CARP.'' Petition at 2. DiMA 
requests this rulemaking for the purpose of defining the scope of the 
pending arbitration proceeding that will set rates and terms for the 
section 114 statutory license with respect to the known ``consumer-
influenced webcasting technologies presently developed or employed by 
DiMA members.'' Petition at 6 n.3.

Comments

    Under section 702 of the Copyright Act, title 17 of the United 
States Code, the Register of Copyrights can ``establish regulations not 
inconsistent with law for the administration of the functions and 
duties made the responsibility of the Register under this title.'' The 
question is whether a rulemaking proceeding is the appropriate forum 
for determining whether certain activities make a service 
``interactive.'' While this may, at first glance, appear to be an 
endeavor similar to the subject of the pending rulemaking regarding 
definition of a ``service,'' \2\ that proceeding presents a situation 
involving a clearly defined class of services (``any entity that 
transmits an AM/FM broadcast signal over a digital communications 
network such as the Internet''). See 65 FR 14227 (March 16, 2000). In 
contrast, it is debatable whether the DiMA petition has presented a 
clearly defined class of services. Moreover, assuming that this is an 
appropriate topic for a rulemaking proceeding, it is not clear whether 
there is sufficient information at this time to promulgate a regulation 
that could accurately distinguish between activities that are 
interactive and those that are not. The Office is concerned that it may 
be being asked to define a moving target.
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    \2\ On March 16, 2000, in response to a petition from the 
Recording Industry Association of America, the Office published a 
notice of proposed rulemaking 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. 
65 FR 14227 (March 16, 2000).
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    Interested parties are invited to comment on: (1) Whether the 
Office should conduct the rulemaking on the subject addressed in the 
DiMA petition, and (2), if so, what issues should the Office address 
and what should the Office's conclusion be?
    All interested parties are requested to file comments and replies 
with the Copyright Office in accordance with the information set forth 
in this document. The Copyright Office has posted the DiMA petition to 
its website (http://www.loc.gov/copyright/carp/DiMApetition.pdf) 

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in order to facilitate the 
dissemination of the information presented in the petition.

    Dated: May 18, 2000.
Marilyn Kretsinger,
Assistant General Counsel.
[FR Doc. 00-12970 Filed 5-22-00; 8:45 am]
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