Expanding the Scope of the Public Performance Right for Sound Recordings: A Legal Analysis of the Performance Rights Act of 2007 (H.R. 4789 and S. 2500
Expanding the Scope of the Public Performance
Right for Sound Recordings: A Legal Analysis of
the Performance Rights Act of 2007 (H.R. 4789
and S. 2500)
Updated July 9, 2008
Brian T. Yeh
American Law Division
Expanding the Scope of the Public Performance Right
for Sound Recordings: A Legal Analysis of the
Performance Rights Act of 2007 (H.R. 4789 and S.
The transmission of copyrighted sound recordings to the public by over-the-air
AM/FM radio stations is an activity that implicates the right of public performance
under the Copyright Act. However, under current law, terrestrial radio broadcasters
who play copyrighted music need only compensate songwriters for the performance
of their musical compositions and not the holders of the copyright in the sound
recording (who may include the recording artist, musicians, and record label). Yet
if music is publicly performed by digital audio transmission, such as by Internet radio
stations (“webcasters”) or satellite digital radio companies, both the songwriter and
the recording artist are entitled by law to receive royalty payments from the
Sound recording copyright holders assert that there is no justifiable reason for
the copyright law to treat sound recordings differently from other categories of
performable copyrighted works. They maintain that recording artists deserve to be
fairly compensated by broadcast radio for public performance of their works just as
songwriters and music publishers are currently being paid for such activity. They
also believe that the copyright law should require the same royalty obligations for
terrestrial broadcasters and digital music services, so as not to advantage some of
these commercial competitors over others.
The broadcast radio industry, however, has defended its statutory exemption
from paying royalties to recording artists for non-digital public performances, by
arguing that radio broadcasts serve as free publicity and promotion of the sound
recordings, and that performers and record producers are compensated through sales
of compact discs or MP3 music download files, concert tickets, and merchandise.
Furthermore, the broadcasters are concerned that any new royalty obligation imposed
on radio stations could result in less copyrighted music being performed (either
because stations may change their format to talk radio or they may need to broadcast
an increased number of advertisements), or that the additional royalties could
adversely impact the financial health and existence of smaller radio stations.
The Performance Rights Act of 2007 (H.R. 4789 and S. 2500) would amend the
Copyright Act to expand the public performance right of sound recording copyright
holders to include analog audio transmissions, a change that would require terrestrial
radio stations to begin making royalty payments to performers. In contrast,
resolutions have been introduced in both houses, the Supporting the Local Radio
Freedom Act (H.Con.Res. 244 and S.Con.Res. 82), that express that Congress should
not impose any new performance fees, royalties, or other charges for over-the-air
broadcasts of sound recordings by local radio stations. These opposing legislative
measures reflect the contentious debate between the recording industry that desires
compensation from AM/FM radio stations for performers and producers of sound
recordings, and the broadcast industry that opposes changes to the status quo.
In troduction ..................................................1
History of the Sound Recording Performance Right...................3
Licenses for Public Performance of Copyrighted Music................5
The Debate Over Altering the Existing Performance Royalty System.....6
Legislation in the 110th Congress..................................8
Performance Rights Act of 2007..............................8
Supporting the Local Radio Freedom Act......................11
Appendix. License Fees for Public Performance of Music.................12
Expanding the Scope of the Public
Performance Right for Sound Recordings: A
Legal Analysis of the Performance Rights
Act of 2007 (H.R. 4789 and S. 2500)
The scope of the public performance right granted by the Copyright Act is
broader for musical works than for sound recordings. This difference accounts for
the current structure of the royalty obligations of terrestrial radio stations that
publicly perform copyrighted music: whereas the musical work copyright holders
(songwriters and music publishers) are entitled to receive royalty fees from the radio
broadcasters, the sound recording copyright holders (singers, musicians, and record
labels) lack any right to demand payment for over-the-air broadcasts of their work.
However, since 1995, sound recording copyright holders have possessed a limited
public performance right — the right to control public performance of their work by
means of a digital audio transmission. Thus, the royalty obligations for Internet radio
broadcasters, satellite radio broadcasters, and cable television operators that transmit
copyrighted music to their audiences are different than those of terrestrial AM/FM
radio stations: entities that digitally transmit music to their listeners must pay
royalties not only to the songwriters, but also to the recording artists.
Several hearings have been held in the 110th Congress examining whether the
performance right should be expanded for sound recordings to encompass non-digital
audio transmissions, in order to allow performers and record companies to receive
compensation when broadcast radio stations play their sound recordings.1 This report
offers information regarding this issue and a legal analysis of two bills currently
pending, H.R. 4789 and S. 2500 (the Performance Rights Act of 2007), that would
amend the Copyright Act to provide sound recording copyright holders with a right
to receive royalties from terrestrial radio stations that publicly perform their work.
1 Ensuring Artists Fair Compensation: Updating the Performance Right and Platform Parity
for the 21st Century: Hearings Before the House Subcomm. on Courts, the Internet, andthst
Intellectual Property, 110 Cong., 1 sess. (2007); Exploring the Scope of Publicthst
Performance Rights: Hearings Before the Senate Comm. on the Judiciary, 110 Cong., 1
sess. (2007); H.R. 4789, the “Performance Rights Act:” Hearings Before the Houseth
Subcomm. on Courts, the Internet, and Intellectual Property, 110 Cong., 2d sess. (2008).
Copyright is a federal grant of legal protection for certain works of creative
expression, including books, movies, photographs, and music.2 A copyright holder
possesses several exclusive legal entitlements under the Copyright Act, which
together provide the holder with the right to determine whether and under what
circumstances the protected work may be used by third parties.3 Generally, a party
desiring to reproduce, adapt, distribute, publicly display, or publicly perform a
copyrighted work must either (1) obtain the permission of the copyright holder
(usually granted in the form of a license agreement that establishes conditions of use
and an amount of monetary compensation known as a royalty fee), (2) comply with
the terms of compulsory licenses established by law,4 or (3) assert that such use falls
within the scope of certain statutory limitations on the exclusive rights such as the
“fair use” doctrine — but the validity of such claim may be subject to the judgment
of a federal court.5 The unauthorized use of one of the exclusive rights of the
copyright holder constitutes infringement.6
Federal law recognizes copyright protection for two separate categories of works
in the musical realm: “musical works” and “sound recordings.”7 A musical work
refers to the notes and lyrics of a song, while a sound recording is a recorded version
of a musician singing or playing a musical work, as that rendition is captured in a
tangible medium of expression such as a compact disc, cassette tape, vinyl album, or
MP3 file. Thus, there are potentially two different creative artists (and two different
copyrights) when it comes to a single piece of recorded music: the holder of the
copyright in the underlying musical work embodied in the sound recording, and the
holder of the copyright in the sound recording itself. The musical work copyright
holder is typically the individual who writes the notes and lyrics of a musical
composition, or a music publisher who purchases or licenses copyrights from song
composers. The sound recording copyright holder may include the recording artist,
the background musicians, and the record label that helps with the production of the
sound recording. It is possible that one individual can be both the sound recording
copyright holder as well as the holder of the copyright in the musical work; for
example, someone who is both a singer and songwriter may hold two independent
copyrights to a piece of recorded music. However, many songwriters are not
performers, and many performers are not songwriters.
2 17 U.S.C. § 102(a).
3 17 U.S.C. §§ 106. For a detailed description of the major provisions of the Copyright Act,
see CRS Report RS22801, General Overview of U.S. Copyright Law, by Brian T. Yeh.
4 A detailed explanation of compulsory licenses is offered infra.
5 17 U.S.C. § 107.
6 17 U.S.C. § 501.
7 17 U.S.C. §§ 102(a)(2), (7). For more information regarding copyright law and music, see
CRS Report RL33631, Copyright Licensing in Music Distribution, Reproduction, and
Public Performance, by Brian T. Yeh.
While both musical works and sound recordings are eligible for copyright
protection, the Copyright Act does not provide the same degree of public
performance8 protection to sound recordings that it grants to the underlying musical
composition contained in the sound recording. The holder of a copyright in the
musical work has a more robust right to control public performance in a wide variety
of situations, while the sound recording copyright holder has a far more limited right
to control public performance of sound recordings — only when the sound recording
is transmitted to the public through digital means.9 The difference in the scope of the
public performance right under the Copyright Act for these two copyright holders,
and its impact on royalty obligations for third parties wishing to publicly perform
sound recordings, may be illustrated by the following scenarios:
!An entity that wants to broadcast a sound recording for the public
through non-digital transmissions, such as a terrestrial AM/FM
broadcast radio station,10 must pay royalties to the musical work
copyright holder (e.g., the songwriter) for the right to publicly
perform the musical work, but the radio station does not have to pay
royalties or otherwise get permission from the sound recording
copyright holders (the recording artist, musicians, and record label).
!In contrast, if the music is transmitted to the public through digital
means, the two music copyright holders’ public performance rights
(and the transmitting entity’s royalty obligations) are different. If the
public performance of the sound recording involves a digital audio
transmission — as used by an Internet radio broadcaster (or
“webcaster”), satellite digital radio company, or a traditional
AM/FM radio station offering a simultaneous Internet stream of its
over-the-air programming — then both the songwriters and
recording artists have the legal entitlement to be paid for that
activity. Stated differently, the webcasters and satellite radio
companies, because they transmit audio using digital technologies,
are required to pay royalties to both the musical work copyright
holder and the sound recording copyright holder.
History of the Sound Recording Performance Right
A review of the history of the performance right in the Copyright Act is helpful
in understanding why the scope of public performance protection differs for sound
recordings and musical works. While musical works have enjoyed a full right of
public performance for over 100 years, the Copyright Act did not offer any legal
protection to sound recordings until 1971, when Congress enacted a law that granted
exclusive rights to reproduction and distribution to sound recording copyright holders
8 According to the Copyright Act, to “perform” a work means to recite, render, play, dance,
or act it, either directly or by means of any device or process. 17 U.S.C. § 101.
9 17 U.S.C. § 106(6).
10 A “broadcast” transmission is defined as a transmission made by a terrestrial broadcast
station licensed by the Federal Communications Commission. 17 U.S.C. § 114(j)(3).
as a response to the increased amount of unauthorized duplication of records and
tapes.11 However, at that time, Congress decided not to grant sound recording
copyright holders the right to control public performance, partly due to opposition by
television and radio broadcasters and jukebox operators who resisted any changes to
the Copyright Act that would require any additional royalty payments beyond those
already mandated for songwriters and music publishers, and also because Congress
considered the rights to control reproduction and distribution to be sufficient enough
to address the immediate problem of record piracy.12 In the most recent general
revision of the Copyright Act in 1976, Congress directed the U.S. Copyright Office
to submit a report by January 8, 1978, that would recommend whether Congress
should grant a public performance right for sound recordings. In that report, the
Register of Copyrights believed that a public performance right for sound recordings
Broadcasters and other users of recordings have performed them without
permission or payment for generations. Users today look upon any requirement
that they pay royalties as an unfair imposition in the nature of a “tax.” However,
any economic burden on the users of recordings for public performance is
heavily outweighed ... by the commercial benefits accruing directly from the use
of copyrighted sound recordings.... To leave the creators of sound recordings
without any protection or compensation for their widespread commercial use can13
no longer be justified.
However, at the time, Congress took no action in response to the advice of the
Technological advances in music transmission methods in the early 1990s
helped persuade Congress to reexamine the issue of public performance rights for
sound recording copyright holders. Record companies were concerned that
consumers would use certain new technologies such as on-demand digital cable
music services and other interactive services to listen to music and potentially record
the digital audio transmissions, thereby eliminating their need to purchase physical
sound recording media.14
In response, in 1995, Congress passed the Digital Performance Right in Sound
Recordings Act,15 which for the first time ever granted copyright owners of sound
recordings an exclusive right to perform their works publicly — although the right
11 Sound Recording Amendment, P.L. 92-140, 85 Stat. 391 (1971). By its terms, the law was
effective on February 15, 1972, and applies to sound recordings made on or after that date.
12 Internet Streaming of Radio Broadcasts: Balancing the Interests of Sound Recording
Copyright Owners with Those of Broadcasters: Hearings Before the House Subcomm. on
Courts, the Internet and Intellectual Property, 108th Cong., 2d sess. (2004) (statement of
David Carson, General Counsel, U.S. Copyright Office), at 3.
13 U.S. Register of Copyrights, Report on Performance Rights in Sound Recordings, H.R.
Doc. No. 15, 95th Cong., 2d sess. 1063 (1978).
14 William H. O’Dowd, The Need for a Public Performance Right in Sound Recordings, 31
HARV. J. LEGIS. 249, 254-59 (1993).
15 P.L. 104-39, 109 Stat. 336 (1995).
was limited only to digital audio transmission of their sound recordings. However,
the law specifically exempted traditional over-the-air radio broadcasts from the newly
created right to control digital public performances of sound recordings.16 The
Senate report accompanying the Digital Performance Right in Sound Recordings Act
The Committee, in reviewing the record before it and the goals of this legislation,
recognizes that the sale of many sound recordings and the careers of many
performers have benefitted considerably from airplay and other promotional
activities provided by both noncommercial and advertiser-supported, free
over-the-air broadcasting. The Committee also recognizes that the radio industry
has grown and prospered with the availability and use of prerecorded music.
This legislation should do nothing to change or jeopardize the mutually
beneficial economic relationship between the recording and traditional17
In 1998, with the passage of the Digital Millennium Copyright Act,18 Congress
clarified that the digital performance right also applied to sound recordings
performed by noninteractive, nonsubscription Internet radio broadcasters
(webcasters).19 As a result of these two laws, webcasters, satellite radio broadcasters,
and cable broadcasters are now required to pay royalties to sound recording copyright
holders when they digitally transmit their recordings, in addition to the royalties that
are due to the musical work copyright holders. Terrestrial radio stations that stream
(simulcast) their programming on the Internet also are required to pay royalties to
sound recording copyright holders because that activity involves a digital audio
transmission. Radio stations that only broadcast copyrighted sound recordings over-
the-air, however, are not subject to the digital performance right for sound recordings
and thus need only compensate the musical work copyright holder for the public
Licenses for Public Performance of Copyrighted Music
A license is a form of legal permission in which the copyright owner authorizes
third parties to use the work, in exchange for a payment of royalty fees and
compliance with certain conditions specified in the license. Some licenses are
negotiated voluntarily between a copyright owner and the third party wishing to use
the work. Other licenses are created by Congress and appear in the Copyright Act.
These “statutory” or “compulsory” licenses compel copyright owners to allow third
parties to use creative works under certain conditions and according to specific
requirements, in exchange for payment of royalty fees at a rate determined by a
federal government body known as the Copyright Royalty Board.20 Therefore, a user
16 Section 3 of P.L. 104-39.
17 S.Rept. 104-128, at 4 (1995).
18 P.L. 105-304 (1998).
19 Section 405 of P.L. 105-304.
20 For more background on the Copyright Royalty Board, see CRS Report RS21512, The
of a statutory license need not obtain or negotiate permission for using a copyrighted
work from the copyright owner; that permission is “compulsory.”
When copyrighted sound recordings are transmitted through either analog or
digital means, the songwriter who composed the underlying musical composition
contained in that sound recording is compensated according to a voluntary license
agreement that was the product of private negotiations between the transmitting
entities and the musical work copyright holders, who are represented by performing
rights organizations such as the American Society of Composers, Authors, and
Publishers (ASCAP), Broadcast Music, Inc. (BMI), and the Society for European
Stage Authors and Composers (SESAC). A broadcast radio station, webcaster, or
satellite radio company must pay license fees to ASCAP, BMI, and/or SESAC for the
right to publicly perform the copyrighted musical works made by composers,
songwriters, and music publishers who are represented by those organizations.
However, public performance of sound recordings through digital transmission
is subject to a compulsory license created by Congress and found in Section 114 of
the Copyright Act. Webcasters and satellite radio companies need not negotiate with
recording artists for permission to digitally transmit their sound recordings; they only
have to comply with the terms of the Section 114 compulsory license and pay the
royalty rate prescribed by the Copyright Royalty Board.21 Collection of royalty
payments under the compulsory license for digital transmissions of sound recordings
is handled on behalf of sound recording copyright holders by SoundExchange, a
nonprofit entity originally created by the Recording Industry Association of America.
The Debate Over Altering the Existing
Performance Royalty System
The broadcast radio industry has defended its statutory exemption from paying
sound recording copyright holders for non-digital public performances, by arguing
that radio broadcasts serve as free publicity and promotion of the music, and that
performers and producers of sound recordings are compensated through sales of
compact discs or MP3 music download files, concert tickets, and merchandise.22
Furthermore, radio broadcasters observe that the broadcaster exemption reflects a
balanced, symbiotic economic relationship between the broadcasting, music, and
sound recording industries, that Congress has chosen not to disturb for over 80 years
despite repeated appeals by the recording industry to alter the existing performance
Copyright Royalty and Distribution Reform Act of 2004, by Robin Jeweler.
21 For Internet radio broadcasters, see Library of Congress, Copyright Royalty Board,
Digital Performance Right in Sound Recordings and Ephemeral Recordings, 72 Fed. Reg.
24084 (May 1, 2007); for satellite radio companies, see Library of Congress, Copyright
Royalty Board, Determination of Rates and Terms for Preexisting Subscription Services and
Satellite Digital Audio Radio Services, 73 Fed. Reg. 4080 (Jan. 24, 2008).
22 Ensuring Artists Fair Compensation: Updating the Performance Right and Platform
Parity for the 21st Century: Hearings Before the House Subcomm. on Courts, the Internet,thst
and Intellectual Property, 110 Cong., 1 sess. (2007) (statement of Charles M. Warfield,
Jr., President, ICBC Broadcast Holdings, Inc.), at 2.
royalty system.23 The broadcasters also predict that any new royalty obligations
imposed on radio stations could result in less copyrighted music being performed,
either because stations may change their format to talk radio or they may need to
broadcast an increased number of advertisements to pay for the additional royalty
fees.24 They are also concerned that any new royalty fees will adversely impact
financially strapped radio stations’ ability to provide non-music services such as local
news reporting, weather information, and public service announcements, or even
force them to cease operations entirely.25 Finally, they object to comparisons
between the United States and other countries with respect to royalty obligations for
public performance of sound recordings because of important differences in the
intellectual property law of all countries as well as the fact that many foreign
broadcasters are owned or heavily subsidized by their governments.26
Sound recording copyright holders have advanced several arguments in support
of expanding their performance right. First, they argue that recording artists deserve
to be compensated for public performance of their works by broadcast radio just as
songwriters and music publishers are currently being paid for such activity.27 They
point out that “simple fairness” requires terrestrial radio to pay them for performing
their work, as the artists are the ones “who bring the music to life, who attract
listeners to a station, and who make it possible for radio to make money by selling
advertising.”28 Second, they claim that the promotional value offered by terrestrial
radio for the performance of their sound recordings has been diminished by listeners
seeking out alternative sources of music distribution such as satellite radio and
Internet music services.29 Third, they observe that all developed countries in the
world except the United States require their radio broadcasters to compensate
24 Exploring the Scope of Public Performance Rights: Hearings Before the Senate Comm.
on the Judiciary, 110th Cong., 1st sess. (2007)(statement of Steven W. Newberry, President,
Commonwealth Broadcasting Corporation).
25 Free Radio Alliance, Frequently Asked Questions, at [http://www.freeradioalliance.org/
26 Exploring the Scope of Public Performance Rights: Hearings Before the Senate Comm.
on the Judiciary, 110th Cong., 1st sess. (2007)(statement of Steven W. Newberry, President,
Commonwealth Broadcasting Corporation).
27 Exploring the Scope of Public Performance Rights: Hearings Before the Senate Comm.
on the Judiciary, 110th Cong., 1st sess. (2007)(statement of Lyle Lovett) (“[T]he songwriter
who created the song deserves to be compensated when that work generates value for
another business, as it does for radio. I’m proud to be an ASCAP member, and grateful for
the performance royalties that have helped me to earn my living as a songwriter. But the
musicians and singers who perform the song are also creators and deserve to be
compensated as well.”)
28 MusicFirst, Frequently Asked Questions About the Performance Right, at
[http://www.mu sicf irstcoalition.org/ #/faq/].
29 MusicFirst, Get Smart on the Performance Right, at [http://www.musicfirstcoalition.org/
performers and record labels.30 However, because the United States does not require
U.S. radio broadcasters to compensate foreign performers when they play their sound
recordings, reciprocity allows foreign broadcasters to deny paying royalties to U.S.
performers when they play their works in their countries.31 Industry estimates suggest
that the loss to U.S. artists in potential foreign performance royalties is about $70
The Register of Copyrights has also offered Congress her opinion on this issue,
asserting that there is no legal justification for why the copyright law should treat
sound recordings differently from other categories of performable copyrighted works,
such as books, plays, and movies.33 She also believes that the copyright law should
require the same royalty obligations for both terrestrial broadcasters and digital music
services, to provide a more level playing field for these commercial competitors.34
Legislation in the 110th Congress
Performance Rights Act of 2007. Legislation has been introduced in theth
110 Congress that would expand the scope of the public performance right for
sound recording copyright holders. The changes proposed by the Performance Rights
Act, H.R. 4789 (introduced by Representative Howard Berman) and S. 2500
(introduced by Senator Leahy), would require terrestrial radio broadcasters to begin
paying a royalty to recording artists and record labels when they play their sound
recordings.35 Section 2 of the bills would amend sections of the Copyright Act that
currently relate to digital audio transmission of sound recordings by deleting the
qualifying term “digital.”36 The bills also remove the express statutory exemption for
nonsubscription broadcast transmissions (which are the type made by traditional
AM/FM radio stations) from the Section 114 compulsory license for public37
performance of sound recordings. Therefore, if this legislation is enacted, copyright
owners of sound recordings would be granted a performance right for all types of
audio transmissions, both analog and digital. This right would be subject to a Section
30 MusicFirst, Frequently Asked Questions About the Performance Right, at
[http://www.mu sicf irstcoalition.org/ #/faq/].
32 Ensuring Artists Fair Compensation: Updating the Performance Right and Platform
Parity for the 21st Century: Hearings Before the House Subcomm. on Courts, the Internet,thst
and Intellectual Property, 110 Cong., 1 sess. (2007) (statement of Marybeth Peters,
Register of Copyrights), at 14.
33 Id. at 2, 4.
34 Id. at 8-9.
35 The Copyright Act requires the following division and distribution of the royalty
payments made pursuant to a Section 114 compulsory license: 45% of the fee is to be paid
to the recording artist, 5% to the background musicians, and 50% to the record label. 17
U.S.C. § 114(g)(2).
36 17 U.S.C. §§ 106(6), 114(d)(1), 114(j)(6).
37 17 U.S.C. § 114(d)(1)(A).
digitally and over the air. The Copyright Royalty Board would be responsible for
determining the royalty rate that radio stations would have to pay to sound recording
H.R. 4789 and S. 2500 would provide special treatment for certain small or
noncommercial radio stations by permitting them not to pay the royalty fee
established by the Copyright Royalty Board; rather, qualifying stations would only
pay a flat annual rate for a blanket license. Commercial radio stations that have
annual revenue of less than $1.25 million could elect to pay a fixed royalty amount
of $5,000 per year, while public broadcasting entities (noncommercial educational
broadcast stations, including college radio stations) — regardless of their revenue or
number of listeners — could choose to pay a flat fee of $1,000 a year. The sponsors
of the bills claim that 77% of existing broadcasting stations in the country (which
includes college stations and public broadcasters) would be eligible for either of these
flat fee, blanket license options.39 In addition, the bills statutorily exempt from the
Section 114 compulsory license a nonsubscription radio broadcast of religious
services at a place of worship or other religious assembly, and any incidental uses of
a musical sound recording (for example, talk radio, including news and sports
programming, that uses brief musical transitions in and out of commercials or
program segments would be exempt from paying a sound recording performance
Finally, Section 5 of the bills states that nothing in the Performance Rights Act
shall adversely affect the public performance rights or royalties payable to
songwriters or copyright owners of musical works. This provision is intended to
preserve songwriters’ existing public performance rights and clarify that the
provisions of the Performance Rights Act shall not diminish them.41
The two bills are nearly identical in language, although the House bill would
require that traditional radio stations adhere to certain performance limitations that
are currently imposed on webcasters and satellite radio (referred to as the “sound
38 The standard that would be used by the Copyright Royalty Board in determining this rate
would be the “willing buyer, willing seller” standard, which is the same one used in
calculating the rate applicable to webcasters. For more information on the use of this
standard in setting royalty rates for webcasters, see CRS Report RL34020, Statutory Royalty
Rates for Digital Performance of Sound Recordings: Decision of the Copyright Royalty
Board, by Robin Jeweler and Brian T. Yeh. The so-called “801(b) standard,” used by the
Board to determine the royalty rate for cable audio and satellite radio companies, would not
be used for the rate applicable to terrestrial radio. The 801(b) standard requires the Board
to develop a rate that reflects consideration of several factors beyond strictly market-rate
calculations. Among those objectives include “to minimize any disruptive impact on the
structure of the industries involved and on generally prevailing industry practices.” 17
39 153 CONG. REC. E2606 (extension of remarks, Dec. 19, 2007) (statement of Rep. Howard
40 153 CONG. REC. E2605 (extension of remarks, Dec. 19, 2007) (statement of Rep. Darrell
41 153 CONG. REC. S15918 (daily ed. Dec. 18, 2007) (statement of Sen. Leahy).
recording performance complement”), such as restrictions on their ability to pre-
announce the titles of songs that are to be played at a specific time, and limiting the
transmission of songs from the same sound recording or by the same artist within a
certain period of time. The Senate bill, however, would not subject traditional radio
stations to these same conditions.42
On June 26, 2008, the House Judiciary Committee’s Subcommittee on Courts,
the Internet, and Intellectual Property passed H.R. 4789 by voice vote along with a
manager’s amendment offered by Representatives Howard Berman and Sheila
Jackson-Lee.43 The manager’s amendment amends Section 5 of the bill to further
clarify that the license fees payable for the public performance of sound recordings
are not to be cited, taken into account, or otherwise used to adjust the license fees
payable to musical work copyright owners for public performance of their works; for
the purpose of reducing or adversely affecting such license fees; in any
administrative, judicial, or other governmental forum or proceeding; or otherwise.
In addition, license fees paid by terrestrial broadcast stations for the public
performance of musical works “shall be independent of license fees paid for the
public performance of sound recordings.” Essentially, this provision of the
amendment is intended to ensure that the royalties currently being paid to songwriters
are not reduced by radio broadcasters in order to pay the new, additional license fees
to recording artists, musicians, and performers.
The amendment also adds a new Section 6 that expressly states that a “music
user” may not publicly perform a sound recording unless he has also obtained a
license for the public performance of any copyrighted musical work contained in the
sound recording (from the songwriters or the performing rights society representing
the musical work copyright owners).
Finally, the amendment adds a new Section 7 that establishes the following
requirements for the payment of royalties:
!A featured recording artist who performs on a sound recording that
has been licensed for public performance by means of a digital audio
transmission is entitled to receive payments from the copyright
owner of the sound recording in accordance with the terms of the
!Sound recording copyright owners must deposit 1% of the receipts
from their licensing of public performance rights by means of a
digital audio transmission, into a fund established by the American
Federation of Musicians and American Federal of Television and
42 Section 2(d) of S. 2500.
43 Andrew Noyes, Subcommittee Passes Bill Ending Radio Royalties Loophole,
CONGRESSDAILYPM, June 26, 2008.
Radio Artists, for the benefit of nonfeatured performers who also
perform on sound recordings.44
!Radio broadcasters must pay 50% of the total royalties owed for the
public performance of sound recordings directly to featured and
Supporting the Local Radio Freedom Act. Introduced by
Representatives Gene Green and Mike Conaway on October 31, 2007, the Supporting
the Local Radio Freedom Act, H.Con.Res. 244, expresses that Congress should not
impose any new performance fees, royalties, or other charges relating to the over-the-
air broadcasts of sound recordings by local radio stations or by any business engaged
in such activity. Representative Green stated that “[r]adio provides free exposure and
promotion for record labels’ acts; broadcasters shouldn’t have to pay labels for the
privilege of supporting them. If the stations ‘pay to play,’ the cost will go up for
everyone and free over-the-air radio could be hurt.”46 As of the date of this report,
over 220 Members of the House have signed onto the non-binding resolution as co-
sponsors, a number that represents a majority of House members.
A similar resolution, S.Con.Res. 82, was introduced on May 12, 2008, by
Senator Blanche Lincoln, along with Senator Roger Wicker, and has been referred
to the Senate Committee on Commerce, Science, and Transportation. Senator
Lincoln commented that “[t]his resolution will ensure that local radio stations across
the country can continue to serve listeners without being subjected to additional fees
that could diminish the quality of radio programming, including news, weather and
AMBER Alert information that at times proves lifesaving.”47
44 The manager’s amendment specifies that the fund shall be distributed 50% to nonfeatured
musicians and 50% to nonfeatured vocalists.
45 Under the Copyright Act, the distribution of payments to all artists who performed on
sound recordings are to be made as follows: 2.5% to nonfeatured musicians, 2.5% to
nonfeatured vocalists, and 45% to featured artists. 17 U.S.C. § 114(g)(2)(B)-(D).
46 Press Release, Rep. Green Introduces Resolution Against Radio Performance Taxes,
available at [http://www.house.gov/apps/list/press/tx29_green/
47 Public Statement, Lincoln Introduces Resolution Recognizing Value of Radio Airplay,
available at [http://lincoln.senate.gov/press_show.cfm?id=297700].
Appendix. License Fees for Public Performance
Publicly Performing aPublicly Performing a Work
Work Through AnalogThrough Digital Transmission
RoyaltiesAs an example, ASCAPASCAP offers several types of
Due to theoffers two types of license48licensing agreements for Internet
Musicalagreements:music uses, the fees for which vary
Workdepending on the size of the audience,
Copyright1) A “blanket license” isrevenue, whether the Internet service
Holder — available for radio stationsis interactive or non-interactive, the
includes thethat broadcast musicnumber of music performances,50
songwriterfrequently. The annual feeamong other things. The minimum
and theis a percentage of thefee for non-interactive Internet
musicstation’s annual revenues;websites is $288, while the minimum
publisherthe rate for 1996 throughfee for interactive sites is $340.
2000 was 1.615% for
stations with annual gross
revenue over $150,000, or a
minimum of 1% of adjusted49
For stations that have less
than $150,000 in annual
revenue, there is a flat fee
schedule that ranges from
$450 to $1,800.
is available for talk and
news radio stations that use
less copyrighted music; the
fee is 0.24% of Adjusted
Gross Revenue and covers
incidental uses of music.
48 The fee examples on this page are the product of private, voluntary negotiations between
ASCAP and the radio broadcasters. No government entity is involved in setting these rates.
49 ASCAP, Customer Licensees, Radio Licensing FAQs, at [http://www.ascap.com/
licensing/radio/radiofaq.html]. These are the rates now shown on ASCAP’s website; more
up-to-date rates are not available.
50 ASCAP, Customer Licensees, New Media & Internet Licenses, at [http://www.ascap.com/
RoyaltiesNone.The Copyright Royalty Board has
Due to theestablished the following rates:
RecordingCommercial webcasters: $.000852
CopyrightHowever, the Performanceper performance for 2006, $.0011
Holder — Rights Act (H.R. 4789, S.per performance for 2007, $.0014 per
includes the2005), introduced inthperformance for 2008, $.0018 per
performingthe110 Congress, wouldperformance for 2009, and $.0019 per
artist,require terrestrialperformance for 2010.
musicians,broadcasters to pay artists
and recordand record labels for theNoncommercial webcasters:
labelright to play sound(1) For Internet transmissions totaling
recordings over the air.less than 159,140 Aggregate Tuning53
Hours (ATH) a month, an annual per
The royalty rate would bechannel royalty of $500.
determined by the Copyright
Royalty Board in a(2) For Internet transmissions totaling
ratemaking proceeding.more than 159,140 ATH a month, a
royalty of $.0008 per performance for
In lieu of this rate, the bills2006, $.0011 per performance for
permit commercial2007, $.0014 per performance for
broadcasters that have an2008, $.0018 per performance for
annual revenue of less than2009, and $.0019 per performance for
$1.25 million to elect to pay2010.
a fixed $5,000 royalty fee
per year, and publicAll webcasters must also pay an
broadcasting entities,annual minimum fee of $500 per
including college radiochannel.
stations, could choose to
pay $1,000 a year,Satellite radio:54
regardless of their annual6 % of gross revenues for 2007 &
revenue.2008; 6.5% for 2009; 7% for 2010;
51 Copyright Royalty Board, Digital Performance Right in Sound Recordings and Ephemeral
Recordings, 72 Fed. Reg. 24084 (May 1, 2007).
52 A performance is a single sound recording publicly performed by digital audio
transmission, heard by a single listener. For example, if a webcaster streams 30 songs to
53 ATH is the total hours of programming transmitted during a certain period of time to all
listeners. For example, if a webcaster streamed one hour of music to 1 listener, the ATH for
that webcaster would be 1. If 2 listeners each listened for half an hour, the ATH would also
be 1. If 10 listeners listened to 1 hour, the ATH would be 10, and so forth.
54 Copyright Royalty Board, Determination of Rates and Terms for Preexisting Subscription
Services and Satellite Digital Audio Radio Services, 73 Fed. Reg. 4080 (Jan. 24, 2008).