Copyright Licensing in Music Distribution, Reproduction, and Public Performance
Prepared for Members and Committees of Congress
This report provides an overview of the complexities of the Copyright Act’s provisions
concerning music licensing in the digital age. Copyright law provides protection for original
works of authorship by conferring certain exclusive rights upon their creators. Music is an
example of a kind of literary and artistic work that falls squarely within the scope of copyright
law. The realm of music copyright is characterized by two types of copyright holders: the holder
of the musical work and the holder of the sound recording. The musical work copyright holder is
typically the one who composes the piece of music. The sound recording copyright holder is the
recorder of a rendition of the musical work.
If a third party wants to use a copyrighted work in a particular way, he or she must seek
permission from the copyright holder. However, for holders of copyrights in musical works and
sound recordings, three of their rights (distribution, reproduction, and public performance) may
be subject to a form of permission called “licensing.” Licenses vary according to the type of user
and the type of use. When the copyright law creates a compulsory license for a particular use of a
copyrighted work, the parties need not negotiate the right to use the work. If the type of use or
type of user does not qualify for the compulsory license, the parties must negotiate, voluntarily,
compulsory license for the reproduction or distribution of mechanical copies of the work,
including digital copies that come within the definition of a digital phonorecord delivery (DPD).
The compulsory license is seldom used, however, because many music publishers authorize the
Harry Fox Agency to issue licenses on their behalf. Public performance of a musical work is
typically licensed through a performing rights organization, such as ASCAP or BMI.
The licensing system behind non-digital music differs from that of digital music. Whenever a user
reproduces or distributes a non-digital or digital phonorecord, the sound recording copyright
holder and musical work copyright holder are both entitled to payment. Whenever a user publicly
performs a phonorecord via non-digital transmission, authorization from only the musical work
copyright holder is needed. However, if the phonorecord is publicly performed through digital
audio transmission, both the musical work copyright holder and the sound recording copyright
holder have a right to receive royalties.
A more comprehensive understanding of music licensing requires a familiarity with the Digital
Performance Right in Sound Recordings Act (DPRSRA), the Digital Millennium Copyright Act
(DMCA), and the Audio Home Recording Act (AHRA). These laws amend the Copyright Act to,
among other things, refine the scope of licensing for both types of copyright holders.
The Copyright Act also sets forth several exemptions from infringement liability for certain
unauthorized uses, including the fair use doctrine (17 U.S.C. § 107) and limitations on the public
performance right under specific situations (17 U.S.C. § 110).
Introduc tion ..................................................................................................................................... 1
The Music Copyrights.....................................................................................................................1
Copyright Law Basic Principles................................................................................................1
The Musical Work.....................................................................................................................2
The Sound Recording................................................................................................................2
An Example: Part One..............................................................................................................2
The Exclusive Rights in Music Copyrights.....................................................................................3
The Rights of the Musical Work Copyright Holder..................................................................3
The Rights of the Sound Recording Copyright Holder.............................................................3
An Example: Part Two..............................................................................................................4
The Traditional Licensing System...................................................................................................4
Permission and the License.......................................................................................................4
The Core Rights of Music Copyright........................................................................................5
The Licensing of Reproduction and Distribution Rights..........................................................5
The Licensing of Public Performances.....................................................................................7
An Example: Part Three............................................................................................................8
The Licensing of Jukeboxes......................................................................................................8
The Digital Music Licensing System..............................................................................................9
Digital vs. Analog......................................................................................................................9
Amending the Licensing System: The DPRSRA......................................................................9
The Licensing of Digital Reproduction and Distribution........................................................10
The Licensing of Digital Public Performances........................................................................11
Amending the Licensing System: The DMCA.......................................................................13
An Example: Part Four............................................................................................................14
The Licensing of Ephemeral Recordings................................................................................15
Amending the Licensing System: The AHRA........................................................................15
Exceptions to Licensing Requirements.........................................................................................16
The Teaching Exemptions.......................................................................................................18
Public Performance Without Commercial Advantage.............................................................18
The Home Receiving Apparatus.............................................................................................18
Eligible Establishment Transmissions.....................................................................................19
Table 1. Eligibility for Performance Exemptions Pursuant to 17 U.S.C. § 110(5)(B)..................19
Appendix A. Types of Licenses Required For Copyright Holders in Non-Digital and
Digital Music Contexts...............................................................................................................21
Appendix B. Glossary...................................................................................................................22
Author Contact Information..........................................................................................................24
Every essential Frank Sinatra collection contains the song “I’ve Got You Under My Skin.” While
Sinatra fans may know the words and the melody, how many of those fans understand the
compensation structure behind this particular song? The answer is probably very few. The public
may know that the proceeds of any given song flow to the record company and to the recording
artist. However, the compensation structure is actually more complex and involves more parties
than just the recording artist and the record label.
Further, there are increasingly steady pressures, economic and otherwise, that the compensation
scheme for music be dynamic to adapt to frequent changes in music delivery methods. For
instance, how consumers purchase and listen to music has undergone significant changes in the
last 15 years with the advent of the computer and digital music deliveries. Thus, advancing
technology has an important role in further complicating the music compensation regime.
Appreciating the intricacies of music compensation requires an understanding of the development
of copyright law. What follows is an explanation of the music licensing provisions of copyright
law, and why enforcing rights to a song like “I’ve Got You Under My Skin” can sound so
The source of federal copyright law originates with the Copyright and Patent Clause of the U.S.
Constitution, which authorizes Congress “[t]o promote the Progress of Science and useful Arts,
by securing for limited Times to Authors and Inventors the exclusive Right to their respective 1
Writings and Discoveries.” Copyright refers to the exclusive rights granted by law to authors for 2
the protection of original works of authorship fixed in any tangible medium of expression.
Original works must be captured in some form beyond a transitory duration. The types of original
works eligible for copyright protection include literary, musical, dramatic, and pictorial works; 3
motion pictures; and sound recordings. Copyright is based on authorship and exists separate and
apart from its physical embodiment. For example, if a person purchases a collection of books or
records, the purchaser owns those particular material objects but not the rights afforded to the
The rights conferred on copyright holders do not last forever. Copyrights are limited in the
number of years that copyright holders may exercise their exclusive rights. An author of a work 4
may enjoy copyright protection for the term of his or her life plus 70 additional years. At the
1 U.S. CONST. art. I, § 8, cl. 8.
2 17 U.S.C. § 102.
4 17 U.S.C. § 302. Other terms have been established for different works and different periods of time. For a concise
chart explaining the different terms, see http://www.copyright.cornell.edu/training/Hirtle_Public_Domain.htm.
expiration of a term, the copyrighted work becomes part of the public domain. Works in the
public domain are available for anyone to use without fear of infringement. The unauthorized use
of a copyrighted work constitutes infringement of the particular exclusive right at issue, unless 5
the action is permitted by a statutory exception, such as “fair use” for limited purposes.
In the realm of music, there are two types of copyright: the musical work copyright and the sound
recording copyright. Each of these copyrights confers a particular set of rights—some exclusive
to a particular copyright holder. To understand these rights, one must first comprehend the
difference between the two different copyright holders.
A “musical work” is a lyrical and/or notational composition of a song, transcribed on a material
object such as a sheet of paper. A holder of a musical work copyright is typically a composer, who
authors the work, or a music publisher, who purchases copyrights from composers and exercises
the rights of those composers.
The sound recording is the recorded version of a musician singing or playing a musical work. The
Copyright Act distinguishes the terms “sound recording” and “phonorecord.” A sound recording 6
is an original work of authorship that “result[s] from the fixation of a series of musical, spoken, 7
or other sounds” in a tangible medium of expression. The sound recording copyright protects the
elements of original authorship expressed in a particular recorded rendition. A phonorecord is the
actual physical object from which the sound recording can be perceived, reproduced, or 8
communicated directly or with a machine’s aid. Examples of phonorecords include compact
discs, vinyl albums, and MP3-format digital music files. A holder of a sound recording copyright 9
is typically a recording artist or the recording artist’s record label.
Different rights attach to different uses and expressions of copyrighted work. The convergence of
copyright interests in a sound recording is a prime illustration. Using the example of Cole Porter’s
5 17 U.S.C. § 107. This and other exceptions to infringement liability will be discussed infra.
6 A fixed work is one “in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under
the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise
communicated for a period of more than transitory duration.” 17 U.S.C. § 101. Fixation is an example of the many
terms of art that the Copyright Act frequently employs; these terms often have meanings that differ from ordinary usage
in everyday language. The copyright law-specific terms of art that are pertinent to the topics discussed in this report are
defined in various footnotes or in the body text; for easier reference, they are also arranged in a glossary at the end of
9 A sound recording copyright holder (e.g., a recording artist or a record label) could also hold a copyright in the
musical work as well. For clarity and convenience, this report addresses these music copyright holders as separate
song “I’ve Got You Under My Skin,”10 the composer of this musical work was Cole Porter, 11
represented by the music publisher Warner/Chappell Music, Inc. Warner/Chappell Music holds
the copyright in the musical work for “I’ve Got You Under My Skin.”
When a performance of the musical work is then recorded to a phonorecord, as was done by
Frank Sinatra, a new sound recording copyright attaches to the Sinatra version so captured,
separate from the musical work copyright of the composer/publisher. Typically, a recording label
(Reprise Records, in this example) may own the sound recording copyright.
The Copyright Act confers discrete, exclusive rights for each type of music copyright. Holders of
copyright in musical works have the right to do or to authorize the
• reproduction of the copyrighted musical work;
• preparation of derivative works based on the copyrighted musical work;
• distribution of the musical work to the public by sale, rental, lease or lending;
• performance of the musical work publicly; and
• display of the musical work publicly.12
Holders of rights in sound recordings have exclusive right to control the
• reproduction of the copyrighted sound recording;
• preparation of derivative works based on the copyrighted sound recording;
• distribution of phonorecords of the sound recording to the public by sale, rental,
lease or lending.
In addition, holders of sound recording copyrights have a qualified and limited public
performance right. The Act covers the performance of the sound recording publicly by means of a 13
digital audio transmission only. Thus, unlike musical work copyright holders who have robust
10 The leading music licensing treatise, as well as other copyright law scholars, use this example. See, AL KOHN & BOB
KOHN, KOHN ON MUSIC LICENSING 11 (3rd ed. 2002). See also, Bob Kohn, A Primer on the Law of Webcasting and
Digital Music Delivery, 20 ENT.L.REP. 4 (1998).
11 The Harry Fox Agency lists Warner/Chappell Music as the publisher of and Cole Porter as the writer of “I’ve Got
You Under My Skin.” See http://www.harryfox.com/songfile/public/public search.jsp. The HFA song code for this
song is I60620.
12 17 U.S.C. §§ 106(1)-(5). These five rights comprise the copyright holder’s so-called “bundle of rights,” which are
cumulative and may overlap in some cases.
13 17 U.S.C. § 106(6). This right was added pursuant to the Digital Performance Right in Sound Recordings Act of
1995, which is discussed infra.
public performance rights that apply in both digital and non-digital settings, sound recording
copyright holders have no legal entitlement to control the performance of their works by non-
digital means. One consequence of this lack of right is that terrestrial radio stations (AM and FM
stations) that broadcast sound recordings through analog means need not compensate recording
artists or record labels (or otherwise obtain their prior permission) in order to perform the work to
the public (whereas all radio stations must compensate musical work copyright holders when the
songs they have written are broadcast). However, transmissions of music by digital means (for
example, by Internet radio broadcasters (“webcasters”) or cable and satellite radio broadcasters)
would trigger the performance right for the musical work copyright holder and the sound
recording copyright holder; thus, both copyright holders would have the right to receive royalties 14
for a performance made by digital audio transmission.
Different uses of Sinatra’s “I’ve Got You Under My Skin” implicate the rights of the musical
work copyright holder, Warner/Chappell, and the sound recording copyright holder, Reprise
Records, in different ways.
As the musical work copyright holder, Warner/Chappell Music has the exclusive right, among
other rights, to authorize the reproduction, distribution, and public performance of the “I’ve Got
You Under My Skin” musical work.
As the holder of the copyright in the sound recording, Reprise Records (Sinatra’s recording label)
has the right to authorize the reproduction, distribution, and digital audio public performance of
Sinatra’s sound recording of “I’ve Got You Under My Skin.”
At the core of a copyright holder’s bundle of rights is the concept of exclusivity. This exclusivity
allows a copyright holder to exercise particular rights for the sole benefit of the holder. However,
a copyright holder may confer these rights onto other users through permission; in some
circumstances, statutes allow use by others under a specified compensation scheme.
Permission is often granted in the form of a license. In the context of copyright, a license permits
a third party to do something with a copyrighted work that implicates a copyright holder’s
exclusive right, possibly for a fee, without concern of infringing the copyright holder’s rights.
Some licenses are negotiated instruments between a copyright holder and a third party (referred to
as “voluntary licenses”). Other licenses are created by statute. Statutory licenses are instruments
that compel copyright holders to allow others to exercise a holder’s rights without negotiated
permission. In copyright law, these are commonly referred to as “compulsory” licenses. When
14 The Performance Rights Act, introduced in the 110th Congress (H.R. 4789 and S. 2500), would have eliminated this
disparity in royalties obligation between traditional radio stations and entities that transmit music digitally. For more
information about this issue, see CRS Report RL34411, 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), by Brian T. Yeh.
statutory requirements are satisfied by the party interested in using the copyrighted work, a
compulsory license is available at statutory rates. Three Copyright Royalty Judges (CRJs) 15
establish these copyright statutory licenses and rates.
Although the music licensing system is a complex area of overlapping and sometimes competing
interests and responsibilities, the essence of licensing remains in the context of permission—
whether voluntarily negotiated or statutorily compelled.
Among the rights granted to copyright holders, three rights are essential in the music licensing
context: the reproduction right, the distribution right, and the public performance right.
The right of reproduction is the right to duplicate, transcribe, imitate, or simulate a work in a
fixed form. In the context of music copyrights, the right of reproduction authorizes the copying of
musical works (e.g., duplicating sheet music) or sound recordings. Infringement of these rights
would be the unlawful copying of the copyrighted work.
The right of distribution establishes the right to distribute copies or phonorecords of a copyrighted 16
work to the public by sale or other transfer of ownership, or by rental, lease, or lending. In the
context of music copyrights, the right of distribution permits the sale of copies (sheet music) or
phonorecords (sound recordings) to the public. Infringement of this right would be any
unauthorized public distribution of a copy or phonorecord.
The right of public17 performance means the exhibition, rendition, or playing of a copyrighted 18
work, either directly or by means of any device or process. Public performance not only covers
the initial rendition, but also any further act by which the rendition is transmitted or
communicated to the public. In the context of music copyrights, the public performance right
allows promotion and performance of the music. Infringement of this right would be the public
performance of a copyrighted work without the consent of the copyright holder.
The legal landscape concerning music copyrights and licensing originates in the 1908 Supreme 19
Court case of White Smith v. Apollo Music. In White Smith, a composer challenged piano roll
15 With the enactment of the Copyright Royalty and Distribution Reform Act of 2004 (P.L. 108-419) on Nov. 30, 2004,
the Copyright Arbitration Royalty Panel (CARP) system that had been part of the U.S. Copyright Office since 1993
was replaced with a board of three Copyright Royalty Judges. The CRJs are full-time employees of the Library of
Congress who are appointed for six-year terms with an opportunity for reappointment. For more information on this
law, see CRS Report RS21512, The Copyright Royalty and Distribution Reform Act of 2004, by Robin Jeweler.
16 17 U.S.C. § 106(3).
17 To perform a work “publicly” means (1) to perform a work at a place open to the public, or at any place where a
substantial number of persons outside a normal circle of a family and its social acquaintances is gathered; or (2) to
transmit or otherwise communicate a performance of the work to a place specified by clause (1) or to the public by
means of any device or process, whether the members of the public capable of receiving the performance receive it in
the same place or in separate places and at the same time or at different times. 17 U.S.C. § 101.
18 17 U.S.C. §§ 106(4), 101.
19 209 U.S. 1 (1908).
technology20 as a violation of a musical work copyright holder’s right to make copies of a work.21
The Court ruled that the rolls were not copies of musical compositions, but rather component 22
parts of a player piano machine. Hence, there was no infringement of the composer’s 23
Through legislation, Congress overturned White Smith in 1909 by granting to musical work 2425
copyright holders the right to control the “mechanical reproduction” of their works. As a
consequence, piano rolls would be infringements of the musical composition copyright. However,
piano roll companies could still acquire the rights to make the rolls from musical work holders.
To prevent monopolization by a large manufacturer of piano rolls, Congress subjected the
mechanical reproduction right to a compulsory license, allowing any manufacturer of piano rolls
to mechanically reproduce a musical work in exchange for a payment of a royalty fee, without
negotiating with the copyright holder for permission. Thus, the compulsory license for the
reproduction of musical works is commonly referred to as a “mechanical license.”
Section 115 of the Copyright Act of 1976, as amended, is the current authority for a compulsory 26
license (or a statutory mechanical license) for reproduction and distribution of musical works.
The license protects the musical work copyright holder’s right to control certain reproductions of
the work (e.g., copying the sheet music) but permits the recording of a song by a third party on 27
“mechanical” media such as a piano roll or record. In its present form, it essentially allows 28
reproduction of musical compositions that may be heard with the aid of a mechanical device.
The mechanical license is validly obtained only after a musical work has been initially distributed
publicly under the authority of the copyright holder. The license is authorized when the licensee’s
(recipient or user) primary purpose is to distribute the work publicly for private use. Currently,
the mechanical license rate is 9.1 cents for songs 5 minutes or less, or 1.75 cents per minute or 29
fraction thereof for songs over 5 minutes, whichever is greater.
Although the §115 mechanical license compensates the musical work copyright holder for 30
reproduction and distribution rights, it does not authorize the duplication of a sound recording.
20 Piano rolls are cylinder rolls with perforations that mechanically cause notes to be played on self-playing pianos. Id.
21 Id. at 9.
22 Id. at 12.
24 The term “mechanical” was derived from a determination that the reproduction is heard with the aid of a machine. AL
KOHN & BOB KOHN, KOHN ON MUSIC LICENSING 677 (3rd ed. 2002).
25 Act of Mar. 4, 1909, ch. 320, § 1(b), 35 Stat.1075.
26 17 U.S.C. § 115. In 1995, the Digital Performance Right in Sound Recordings Act (DPRSRA) amended the
compulsory license to include the reproduction and distribution of digital phonorecord deliveries (DPDs) over the
Internet. DPDs will be discussed infra.
27 2 MELVILLE B.NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT § 8.04[A] (2006).
28 KOHN ON MUSIC LICENSING, supra footnote 10 at 677.
29 U.S. Copyright Office, Copyright Royalty Rates, Section 115, the Mechanical License, available on Jan. 16, 2009, at
http://www.copyright.gov/carp/m200a.html. However, the Harry Fox Agency, a wholly owned subsidiary of the
National Music Publisher’s Association, typically negotiates and issues these licenses on behalf of songwriters, and the
mechanical license is seldom used for the permission to make or distribute copyrighted musical compositions; such rate
rarely exceeds that set by the U.S. Copyright Office. See http://www.harryfox.com/public/FAQ.jsp.
30 17 U.S.C. § 115(a)(1) (“A person may not obtain a compulsory license for the use of the work in the making of
phonorecords duplicating a sound recording fixed by another, unless (i) such sound recording was fixed lawfully; and
(ii) the making of the phonorecords was authorized by the owner of copyright in the sound recording.... ”).
Permission to duplicate a sound recording must be obtained from whoever owns the sound
recording copyright—likely either the recording artist or record studio.
Most phonorecord creators do not use the compulsory license system to obtain permission to use 3132
musical works. In 1927, the National Music Publishers Company (NMPC) created the Harry
Fox Agency (HFA) to issue and administer mechanical licenses. Currently, most mechanical
licenses are obtained through HFA because there is a reduction in the transaction costs offered by
HFA. Although HFA has the right to authorize licenses only for musical works it represents, HFA 33
represents 27,000 music publishers, which represent more than 160,000 songwriters.
Prior to the 1909 Copyright Act, Congress granted musical works copyright holders the right to 34
control the public performance of their works. The 1909 Act further recognized a public 35
performance right but limited the right only to performances engaged in for profit. Not until
Despite possessing the right to control public performance, musical work copyright holders had
difficulty in collecting licensing fees for performances. This problem was alleviated by the
creation of performing rights organizations (PROs). In 1914, a group of nine music business 36
leaders established the American Society of Composers, Authors, and Publishers (ASCAP).
ASCAP licenses thousands of musical compositions for public performances under blanket 37
license agreements. For business owners, these blanket licenses significantly reduce the
transaction costs involved in complying with the requirements of the Copyright Act. For musical
work copyright holders, these licenses allow receipt of a share of the royalties that were
previously not of much value.
Due to ASCAP’s attempt to raise the royalty rates charged to radio stations, Broadcast Music, Inc. 38
(BMI), became a new PRO in 1939. The Society for European Stage Authors and Composers
31 Indeed, the Copyright Royalty Judges have acknowledged this anomaly: “[V]irtually no one uses Section 115 to
license reproductions of musical works ... The Judges are, therefore, seemingly tasked with setting rates and terms of a
useless license. The testimony in this proceeding makes clear, however, that despite its disuse, the Section 115 license
exerts a ghost-in-the-attic like effect on all those who live below it. ... Thus, the rates and terms that we set today will
have considerable impact on the private agreements that enable copyright users to clear the rights for reproduction and
distribution of musical works.” Copyright Royalty Board, Library of Congress, In the Matter of Mechanical and
Digital Phonorecord Delivery Rate Determination Proceeding: Final Determination of Rates and Terms, at 13,
available on Jan. 16, 2009, at http://www.loc.gov/crb/proceedings/2006-3/dpra-public-final-rate-terms.pdf.
32 The NMPC is now known as the NMPA, or National Music Publishers’ Association.
33 Oversight Hearing on the Discussion Draft of H.R. ____, the “Section 115 Reform Act (SIRA) of 2006”: Hearing
Before the House Subcommittee on Courts, the Internet, and Intellectual Property, 109th Cong., 2nd Sess.
(2006)(statement of David Israelite, President and CEO of NMPA), at 4, available on July 20, 2006 at
http://judiciary.house.gov/media/pdfs/israelite051606.pdf (“However, even though HFA represents most commercially
relevant musical works, it does not currently represent all music publishers or all musical works, and, therefore, digital
music services cannot receive all the licenses they need from HFA.”).
34 Act of Jan. 6, 1897, ch. 4, 29 Stat. 481-82, amended by Act of Mar. 4, 1909, ch. 320, § 25, 35 Stat. 1081.
35 Act. of Mar. 4, 1909, ch. 320, § 1(e), 35 Stat. 1075.
36 For a chronological history of ASCAP’s development, see http://www.ascap.com/about/history/.
37 A blanket license is a single license that covers multiple works or all works permitted to be licensed. For an
explanation of ASCAP’s blanket license calculations, see http://www.ascap.com/about/payment/royalties.html.
38 For a background of BMI and its development, see http://www.bmi.com/about/entry/C1508. For a summation of
(SESAC), another PRO, was formed in 1930.39 Each PRO can only license public performances
of musical works under contract with that PRO.
In the landscape of traditional licensing, the example of “I’ve Got You Under My Skin”
demonstrates the intricacies of gaining permission through licensing. Prior to Frank Sinatra
recording “I’ve Got You Under My Skin,” Reprise Records must get permission to use Cole
Porter’s work from Warner/Chappell. This permission may be in the form of a mechanical license
(under § 115) paid to Porter (or, more likely, to the Harry Fox Agency). Once this fee is paid,
Reprise can reproduce and distribute Frank Sinatra’s version of “I’ve Got You Under My Skin”
on phonorecords. If another artist, DJ, wants to sell a remix version of “I’ve Got You Under My
Skin,” DJ would have to obtain a mechanical license to use Porter’s work (pursuant to § 115) but
would, in addition, have to negotiate a voluntary license with Reprise (the holder of sound
If traditional radio wanted to play Sinatra’s version of “I’ve Got You Under My Skin,” radio
would have to pay a royalty to Warner/Chappell to get permission for the public performance of
Porter’s musical work. This royalty would likely be paid to a PRO such as ASCAP or BMI.
However, traditional radio would not have to pay royalties to Reprise Records because sound
recording copyright holders do not have a public performance right for non-digital transmissions.
The licensing structure for the public performance of music using jukeboxes has a unique history. 40
Under the Copyright Act, a “jukebox” is called a “coin-operated phonorecord player.” To
qualify, a player must perform only non-dramatic musical works activated by the insertion of a
coin or token, must be located in an establishment making no charge for admission, must have an
accompanying list of titles available to the public, and must allow for a choice of works to be 41
made by patrons.
Under the Copyright Act of 1909, owners of jukeboxes were exempted from paying public
performance fees unless a fee was charged for admission to a place where such jukebox 42
performances occurred. Over the course of 67 years, jukeboxes made substantial profits through
popularity and widespread growth. As a result, § 116 of the Copyright Act of 1976 established a
compulsory license for operators of “coin operated phonorecord players” to compensate musical
work copyright holders for the loss of substantial profits.
In 1993, Congress repealed § 116 of the Copyright Act of 1976 and replaced it with a voluntary 43
licensing scheme between copyright holders and jukebox operators. The intent of the provision
BMI’s royalty calculation system, see http://www.bmi.com/career/print/C1516.
39 For more information on SESAC, see http://www.sesac.com/aboutsesac/about.aspx.
40 17 U.S.C. § 116(d)(1).
41 17 U.S.C. §§ 116(d)(1)(A)-(D).
42 17 U.S.C. § 1(e) (1909 Act).
43 17 U.S.C. § 116(b)(1).
is to grant PROs (ASCAP, BMI, and SESAC) the right to negotiate licenses for music played
through jukeboxes with the trade group representing jukebox owners (the Amusement and Music 44
Operators of America [AMOA]).
To understand the nature of digital music, it is helpful to have a general understanding of how
analog and digital technology differ. Analog technology is characterized by an output system
where the signal output is always proportional to the signal input. Because the outputs are
analogous, the word “analog” is used. Basically, an analog mechanism is one where data is
represented by continuously variable physical quantities like sound waves or electricity. In the
context of music, analog technologies refer to traditional radio, cassettes, and vinyl, among
others. These technologies may deliver imprecise signals and background noise. Thus, the
duplication of analog music often erodes in quality over time.
The term “digital” derives from the word “digit,” as in a counting device. Digital services
represent data in a binary (using 1s and 0s) fashion. Rather than a physical quantity, a digital
signal is an informational stream of code that tells a computer to compile a perfect replica of the
original code stream. This means the digital code can be duplicated nearly infinitely and without
any degradation of quality. In the context of music, compact discs and MP3-format song files are
examples of digital music.
The new methods of digital music delivery caused sound recording copyright holders to fear that
the ability to make perfect copies of music and the ease of distribution would damage revenues
from record sales. In 1995, Congress enacted the Digital Performance Right in Sound Recordings 45
Act (DPRSRA) to fill the void in legislation for the protection of copyrighted works that are
digitally transmitted over the Internet. The DPRSRA addresses the licensing of digital
reproduction and distribution of music works and the digital performance and distribution of
Traditionally, only public performances of musical works were eligible for performance royalties.
The DPRSRA created a public performance right for sound recordings performed through digital
audio transmissions, thereby establishing a mechanism for controlling digital deliveries that posed
a threat to the sales of CDs. Because sound recording copyright holders do not have a general
public performance right, the DPRSRA established an actionable right in “digital audio 46
transmissions” for sound recorders.
44 Although § 116 refers only to the copyright holder’s ability to negotiate, common agents, such as PROs, may
negotiate on behalf of owners for the voluntary license.
45 P.L. 104-39, 109 Stat. 336 (1995).
46 17 U.S.C. § 101 defines “to ‘transmit’ a performance” as “to communicate [a performance] by any device or process
whereby images or sounds are received beyond the place from which they are sent.” A “digital transmission” is a
“transmission in whole or in part in a digital or other non-analog format.”
Under the language of § 115 prior to the DPRSRA, each distributed “mechanical” copy of a 47
musical work entitled the musical work copyright holder to a royalty payment. The DPRSRA
amended the statute to encompass digital downloads under the mechanical license.
The Copyright Act refers to digital downloads as “digital phonorecord deliveries,” or DPDs. A
DPD is “each individual delivery of a phonorecord by a digital transmission of a sound recording 48
which results in a specifically identifiable reproduction.” Thus, a downloaded digital file of a
“phonorecord” is a DPD. In addition to DPDs, the § 115 mechanical license distinguishes a
different royalty rate for DPDs “where the reproduction or distribution of a phonorecord is 49
incidental to the transmission which constitutes a [DPD].” However, real-time transmissions,
where no reproduction of a sound recording is made for the purposes of the transmission, does 50
not constitute a DPD. Because of this exclusion, a streamed transmission is not considered a
DPD. Notwithstanding this statutory distinction, however, in May 2008 musicians, publishers,
record labels and high-tech companies reached an agreement that proposed, for the first time ever,
to establish royalty rates and terms covering limited downloads (such as those offered by online 51
music subscription services), interactive streaming, and “all known incidental DPDs.” Under the
settlement agreement that was submitted to the Copyright Royalty Judges in the form of draft
regulations, limited download and interactive streaming service providers would pay a 52
mechanical royalty of 10.5% of revenue, minus any amounts owed for performance royalties. In
November 2008, the Copyright Royalty Judges adopted these rates and terms as final regulations, 53
pursuant to its statutory authority under Section 801(b)(7) of the Copyright Act.
Also in the same rate determination proceeding, the Copyright Royalty Judges announced that the
mechanical license is available not only for physical music products (such as CDs and records) 54
and DPDs (such as from iTunes or Amazon.com), but also for ringtones. The decision to include
ringtones came after the Register of Copyright had issued a memorandum opinion to the Judges 55
declaring that ringtones qualify as DPDs. The Register cautioned, however,
[W]hether a particular ringtone falls within the scope of the statutory license will depend
primarily upon whether what is performed is simply the original musical work (or a portion
47 17 U.S.C. § 115(a)(1).
48 17 U.S.C. § 115(d).
49 17 U.S.C. §§ 115(c)(3)(C), (D).
50 17 U.S.C. § 115(d).
51 This settlement agreement was published in the Federal Register, Copyright Royalty Board, Library of Congress,
Mechanical and Digital Phonorecord Delivery Rate Determination Proceeding, 73 Fed. Reg. 57,033 (Oct. 1, 2008).
52 DiMA, Major Music Industry Groups Announce Breakthrough Agreement, available on Jan. 16, 2009, at
http://www.digmedia.org/content/release.cfm?id=7243&content=pr; see also Andrew Noyes, Royalty Agreement Might th
Smooth Talks In 111 Congress, CONGRESSDAILYAM, Sept. 24, 2008.
53 Copyright Royalty Board, Library of Congress, In the Matter of Mechanical and Digital Phonorecord Delivery Rate
Determination Proceeding: Final Determination of Rates and Terms, available on Jan. 16, 2009, at
54 In this proceeding, the Copyright Royalty Board left unchanged the Section 115 rate of the larger of 9.1 cents or 1.75
cents per minute of playing time for both physical music products and digital downloads, but established a new royalty
rate of 24 cents for each ringtone subject to a Section 115 license. Id.
55 Copyright Office, Library of Congress, Memorandum Opinion, In the Matter of Mechanical and Digital
Phonorecord Delivery Rate Adjustment Proceeding, 71 Fed. Reg. 64,303 (Nov. 1, 2006).
thereof), or a derivative work (i.e., a musical work based on the original musical work but
which is recast, transformed, or adapted in such a way that it becomes an original work of 56
authorship and would be entitled to copyright protection as a derivative work).
Although the § 115 mechanical license applies to DPDs for musical work copyright holders, the
license does not authorize the reproduction or distribution of a sound recording because that right 57
belongs to another holder—the sound recorder. The sound recording copyright holder’s
authorization acts as a condition for the mechanical licensing of a DPD.
Engaging in an authorized DPD requires payment to the musical work copyright holder (pursuant
to the mechanical license) and the sound recording copyright holder (through a voluntary license) 58
for the distribution or reproduction of the DPD. However, if the DPD constitutes a performance,
permission must separately be obtained from the musical work copyright holder (a royalty paid to
a PRO) and the sound recording copyright holder (through a compulsory or voluntary license).
In addition to amendments made to § 115, the DPRSRA grants sound recording copyright holders 59
a limited public performance right in digital transmissions. Among the limitations on a sound
recording owner’s exclusive right to digital public performance under 106(6) are
• a non-subscription broadcast transmission (i.e., traditional over-the-air radio and 60
television broadcasts and qualified retransmission) and
• internal transmissions by a business on or around its premises, including “on-61
hold music” transmissions via telephone to a caller waiting for a response.
These services are exempt from the sound recording digital performance right and thus the
transmitting entity need not obtain a license or pay royalties for digital transmissions that fall
within the two categories above.
For licensed uses, the performance right for sound recorders is laid out in a three-tier system,
pursuant to 17 U.S.C. § 114:
• Statutorily exempt performances of sound recordings by means of digital audio.
56 Id. at 1.
57 17 U.S.C. §§ 115(c)(3)(H)(i)(I).
58 17 U.S.C. §§ 115(d), 115(c)(3)(A), and 115(c)(3)(K). For a discussion of how performances are classified digitally,
59 17 U.S.C. § 106(6).
60 17 U.S.C. §§ 114(1)(A), (B).
61 17 U.S.C. §§ 114(d)(1)(C)(ii), (iv). Usages included within this exception are background music played in offices,
retail stores, and restaurants; this activity is sometimes called “storecasting.” 2 NIMMER ON COPYRIGHT § 8.22[B]. As
the Senate Report reveals, the drafters of the DPRSRA were aware of the Copyright Act’s § 110(5) performance right
limitations, which relate to circumstances under which certain businesses may be eligible for publicly performing
music without obtaining permission from copyright holders. The new § 106(6) right provided to sound recorders was
not intended by the law’s drafters to alter the performance right limitations in § 110(5); thus, establishments desiring to
storecast music to their patrons may qualify for the § 110(5) exemption, regardless of whether the music is performed thst
by digital or non-digital means. S.Rept. 104-128, 104 Congress, 1 Sess. 22-23 (1995).
• Compulsory licensed performances of sound recordings by means of digital
• Voluntarily licensed performances of sound recordings by means of digital audio
transmissions within the confines of statutory limits on such licenses.
Generally, these digital transmissions are classified according to whether they are interactive,
non-interactive, or subscription services:
• Interactive services62 transmit digital sound recordings at a user’s request. These
services are within the voluntary licensing tier; they do not qualify for the § 114
• Non-interactive, subscription services63 transmit digital sound recordings through
streaming the audio, but for a fee. These non-interactive, subscription 64
transmissions are subject to a statutory (compulsory) licensing fee. A complex
system of statutory rates for new subscription services and eligible non-
subscription, non-interactive services are set by the Copyright Royalty Board of 65
the Library of Congress.
• Non-interactive, non-subscription services are audio transmissions often
delivered via streaming that are free to the consumer recipient and the 66
transmitting entity. Like non-digital broadcast services (AM and FM radio),
these services are exempt from a licensing fee for using the sound recording.
The royalties from statutory and voluntarily negotiated licenses under the DPRSRA and the 67
Digital Millennium Copyright Act (DMCA) to make digital transmissions of sound recordings 68
are administered on behalf of sound recording copyright holders by SoundExchange.
SoundExchange is a nonprofit entity created by the Recording Industry Association of America 69
(RIAA) that collects and makes distributions to sound recording copyright holders, artists, the
62 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 his or her request, a transmission of a particular sound recording, whether or not as part
of a program, that is selected by or on behalf of the recipient. The ability of individuals to request that a particular
sound recording 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 one 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 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)(7).
63 Among the requirements for a subscription service’s statutory license is adherence to the “sound recording
performance complement,” pursuant to § 114(d)(2)(B)(i). The sound recording performance complement is a complex
protocol, adapted from traditional radio broadcast practice, which limits the number of selections a subscription service
can play from any one phonorecord by the same featured artist. The goal of the protocol is to prevent a pre-announced
play schedule that facilitates copying of albums, or the work of individual performers, in their entirety.
64 See Library of Congress, Copyright Royalty Board, Digital Performance Right in Sound Recordings and Ephemeral
Recordings, 72 Fed. Reg. 24084 (May 1, 2007).
65 For more information regarding the Copyright Royalty Board, see CRS Report RS21512, The Copyright Royalty and
Distribution Reform Act of 2004, by Robin Jeweler.
66 Pursuant to § 115, these non-subscription services are not DPDs.
67 The DMCA will be discussed infra.
68 SoundExchange can be found at http://www.soundexchange.com.
69 See http://www.riaa.com.
American Federation of Musicians (non-featured musicians),70 and the American Federation of 71
Television and Radio Artists (non-featured vocalists). The payments are based on actual
performance data furnished by subscription service providers, webcasters, and other licensees.
In 1998, Congress enacted the Digital Millennium Copyright Act (DMCA) as a comprehensive 72
addition to copyright law to accommodate the growth of digital technologies. Among several
other changes to copyright law, the DMCA contains provisions designed to codify licensing for 73
certain performances conveyed via digital media, including satellite radio and Internet radio. It
renamed the subscription services covered in the DPRSRA as “pre-existing subscription services”
and created three additional categories of service that could operate under a statutory license:
• Pre-existing satellite digital radio services.
• New subscription services.
• Eligible non-subscription services.74
The DMCA also clarified the parameters of “ephemeral recordings”—copies made for the
specific purpose of making licensed transmissions—and created a statutory license for multiple 75
The DMCA’s addition of the three new categories of services removed some transmitting entities 76
from the benefit of the licensing exemptions created by the DPRSRA. Under the DMCA, non-
interactive, non-subscription service providers now must meet statutory eligibility requirements 77
to avoid paying a license fee for the public performance of digital sound recordings. One
affected group was small webcasters, who argued that their non-subscription, non-interactive
services should qualify as eligible non-subscription transmissions and not be considered to fall
within the scope of a statutory (compulsory) license, because such license payments would be too
burdensome to pay and administer.
70 See http://www.afm.org.
71 See http://www.aftra.org.
72 P.L. 105-304.
73 For a detailed discussion of music licensing and satellite radio, see CRS Report RL33538, Satellite Digital Audio
Radio Services and Copyright Law Issues, by Brian T. Yeh.
74 P.L. 105-304, Section 405. See Kimberly L. Craft, The Webcasting Music Revolution is Ready to Begin, as Soon as
We Figure Out the Copyright Law: The Story of the Music Industry at War with Itself, 24 HASTINGS COMM. & ENT. L.J.
1, at 9-19 (2001).
75 Ephemeral recordings are addressed in 17 U.S.C. § 112 and will be discussed infra.
76 Under the DPRSRA, non-interactive, non-subscription services have statutory exemption from licensing of public
77 17 U.S.C. § 114(j)(6) defines an “eligible nonsubscription transmission” as:
a non-interactive non-subscription 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.
In attempting to resolve this dispute, in December 2002, President Bush signed into law the Small 78
Webcaster Settlement Act (SWSA). The Act set no specific royalty rates or fees, but instead
granted both small webcasters and copyright holders the right to enter into voluntary licensing
agreements and permitted SoundExchange, the receiving agent designated in the earlier 79
legislation, to negotiate on behalf of the sound recording copyright holders. Negotiations
between these parties permitted qualifying small webcasters to elect to pay royalties based on a
percentage of revenue or expenses rather than on a per-song, per-listener basis. However, by
SWSA’s own terms, its provisions were not to be considered in subsequent ratemaking 80
proceedings by the Copyright Royalty Board.
As required by law, on May 1, 2007, the Copyright Royalty Board announced new royalty rates 81
for nonsubscription, noninteractive transmissions of sound recordings by webcasters. The
royalty rates apply for the period that commences (retroactively) from January 1, 2006, through 82
December 31, 2010. The new rate structure did not make special provision for small webcasters, 83th
however, and was also criticized for being set too high. Legislation was introduced in the 110
Congress that would have nullified the Board’s decision and substituted lower rates, but these 84th
bills did not pass. Instead, the 110 Congress passed the Webcaster Settlement Act of 2008 in
September 2008, which became P.L. 110-435 on October 16, 2008. The purpose of the Webcaster
Settlement Act of 2008, like the similar law in 2002, is to authorize SoundExchange to negotiate
and enter into alternative royalty fee agreements with webcasters that would replace the rates
established under the CRB’s decision. The act terminates SoundExchange’s authority to make
settlements on February 15, 2009. The act also permits any agreement to be precedential in future
CRB ratemaking proceedings, if the parties to the agreement so agreed.
To build on the prior examples, Online Music Store (OMS) has decided to sell some of Frank
Sinatra’s sound recordings through its music download service. One of the recordings is “I’ve Got
You Under My Skin.” Because a delivery of a phonorecord by OMS via digital transmission
results in a specifically identifiable reproduction, “I’ve Got You Under My Skin” would be
considered a DPD under § 115.
78 P.L. 107-321.
79 For more information on the SWSA, see CRS Report RL31626, Copyright Law: Statutory Royalty Rates for
Webcasters, by Robin Jeweler.
80 P.L. 107-321, § 4(c): “It is the intent of Congress that any royalty rates, rate structure, definitions, terms, conditions,
or notice and recordkeeping requirements, included in such agreements shall be considered as a compromise motivated
by the unique business, economic and political circumstances of small webcasters, copyright owners, and performers
rather than as matters that would have been negotiated in the marketplace between a willing buyer and a willing seller,
or otherwise meet the objectives set forth in section 801(b).” Congressional findings in § 2(5)-(6) also emphasize that
Congress makes no determination that the agreements reached between small webcasters and copyright owners are fair
and reasonable or represent terms that would be negotiated by a willing buyer and a willing seller.
81 17 U.S.C. § 804(b)(3).
82 Library of Congress, Copyright Royalty Board, Digital Performance Right in Sound Recordings and Ephemeral
Recordings, 72 Fed. Reg. 24084 (May 1, 2007).
83 For more detailed information about the Copyright Royalty Board’s establishment of new webcaster royalty rates for
the period 2006-2010, see CRS Report RL34020, Statutory Royalty Rates for Digital Performance of Sound
Recordings: Decision of the Copyright Royalty Board, by Brian T. Yeh.
84 S. 1353, H.R. 2060, 110th Cong., 1st Sess. (2007), the “Internet Radio Equality Act.”
Before OMS could place Sinatra’s version online for distribution and reproduction, permission is
to be obtained from the music copyright holders. For the musical work copyright holder
(Warner/Chappell), OMS would pay a mechanical license fee to obtain permission to reproduce
and distribute the DPD. For the sound recording copyright holder (Reprise Records), OMS would
have to negotiate a voluntary license to obtain permission.
In addition to offering music downloads for purchase or rental, OMS maintains a subscription
digital radio service that streams over the Internet. To be able to stream Sinatra’s “I’ve Got You
Under My Skin,” OMS is to obtain permission for the public performance. OMS would have to
negotiate a voluntary license with the musical work copyright holder (Warner/Chappell).
However, assuming that OMS maintains a non-interactive subscription service, OMS would have
the benefit of a compulsory license under § 114 and thus need not seek the permission of the
sound recording copyright holder (Reprise Records).
Ephemeral recordings are reproductions of a work produced solely for the purpose of its
transmission by an entity legally entitled to publicly perform the work. Section 112 authorizes a
compulsory license to enable those who webcast a sound recording to make a temporary or
“ephemeral” reproduction or copy of the recording, which is generally stored in the hard drive of
computers (i.e., servers that facilitate the performance). Section 114 is concerned with the public
performance right for digitally transmitted sound recordings. Thus, a statutory license under § 114
applies to a public performance, whereas the statutory license under § 112(e) applies to a
reproduction. The latter covers only those ephemeral recordings of phonorecords used for 85
transmissions in connection with a statutory license under § 114(d) or (f).
Although the DPRSRA concentrates on establishing a licensing system for the delivery of DPDs,
the Audio Home Recording Act (AHRA) concentrates on establishing a licensing system for the
manufacture of equipment that facilitates the copying or selling of digital recordings. The AHRA 86
amends the Copyright Act by adding chapter 10, “Digital Audio Recording Devices and Media.”
The introduction of the Digital Audio Tape (DAT) by Sony and Philips in the mid-1980s 87
prompted passage of the Audio Home Recording Act (AHRA) in 1992. A DAT recorder can
record CD-quality sound onto a specialized digital cassette tape. The DAT is the tape counterpart
to a CD that is smaller than the traditional cassette tape and permits double the programming time
(two hours) of a normal CD. Unlike a CD, the DAT is susceptible to deterioration over time.
However, the DAT has the capacity to record CD quality sound onto a cassette with ease.
Through the RIAA, sound recording copyright holders turned to Congress for legislation in
85 “In any particular case, acts implicating the reproduction or performances rights must be considered separately under
sections 112[e] or 114, as applicable, and any other relevant provisions under the Copyright Act.” H. Comm. on the th
Judiciary, 105 Cong., SECTION-BY-SECTION ANALYSIS OF H.R. 2281 AS PASSED BY THE UNITED STATES HOUSE OF
REPRESENTATIVES ON AUG. 4, 1998, 52 (Comm. Print 1998).
86 17 U.S.C. § 1001.
87 P.L. 102-563 (1992).
response to this technology, fearing that a consumer’s ability to make perfect digital copies of 88
music would displace sales of sound recordings in the marketplace.
The AHRA requires manufacturers of certain types of digital audio recording devices to
incorporate into each device copyright protection technology—a form of digital rights
management scheme called the Serial Copying Management System, or SCMS, which allows the
copying of an original digital work but prevents the practice of “serial copying”—making a copy
from a copy. In exchange, the AHRA exempts consumers from copyright infringement liability
for private, noncommercial home recordings of music. Manufacturers of audio equipment, sellers
of digital recording devices, and marketers of blank recordable media are also protected from 89
infringement liability upon payment of the statutory royalty fee. The appointing and distributing
agent for fees paid pursuant to the AHRA is the Alliance of Artists and Recording Companies 90
In Recording Industry Assoc. of America v. Diamond Multimedia Systems, the U.S. Court of
Appeals for the Ninth Circuit held that the Rio, a hand-held portable audio device capable of
storing and re-playing digital audio files (e.g., MP3s) stored on the hard drive of a personal 91
computer, was not a “digital audio recording device” within the meaning of the AHRA.
Therefore, manufacturers of computers with recordable compact disc drives are exempt from
having to pay the royalties under the AHRA and are not required to implement the SCMS copy
protection technology, but consumers who use their computers to reproduce copyrighted music
without prior authorization of the copyright holder may potentially be held liable for their
Although most uses of copyrighted materials require permission from the copyright holder (or
compliance with “compulsory license”), the Copyright Act provides several exceptions for the
use of copyrighted material, regardless of the holder’s permission. There are five particular 9293
exceptions that could apply to certain uses of musical works and sound recordings: fair use,
88 H.Rept. 102-873, at 18-19 (1992).
89 The fee takes the form of a surcharge, collected much like a tax.
90 For more information on the AARC, visit http://www.aarcroyalties.com/new/aarc_news.html.
91 180 F.3d 1072, 1076 (9th Cir. 1999) (“[T]o be a digital audio recording device, the Rio must be able to reproduce,
either ‘directly’ or ‘from a transmission,’ a ‘digital music recording.’ ... The typical computer hard drive from which a
Rio directly records is, of course, a material object. However, hard drives ordinarily contain much more than ‘only
sounds, and material, statements, or instructions incidental to those fixed sounds.’ Indeed, almost all hard drives
contain numerous programs (e.g., for word processing, scheduling appointments, etc.) and databases that are not
incidental to any sound files that may be stored on the hard drive. Thus, the Rio appears not to make copies from digital
music recordings, and thus would not be a digital audio recording device under the Act’s basic definition ... ”) (citations
92 This list is not exclusive. There are numerous other narrow exceptions to a copyright holder’s exclusive rights. Other
notable exemptions to the copyright holder’s public performance right include, among others, 17 U.S.C. § 110(3)
(performance of works done in the course of religious assembly); § 110(6) (performances at agricultural or horticultural
exhibitions); § 110(7) (performance of a work done by a vending establishment for the purposes of selling a
phonorecord or work); and § 110(10) (performances done in the course of social functions of applicable organizations,
such as veterans’ organizations).
93 17 U.S.C. § 107. Fair use applies in both non-digital and digital music contexts.
teaching exemptions,94 public performances without commercial advantage,95 public reception of 9697
a transmission using a home receiving apparatus, and eligible establishment transmissions.
The doctrine of “fair use” recognizes the right of the public to make reasonable use of
copyrighted material, in special instances, without the copyright holder’s consent. For many years
prior to the Copyright Act of 1976, fair use was a judicially created exception to the exclusive
rights of a copyright holder to print, publish, copy, and sell a copyrighted work. The 1976 Act
first codified the doctrine consistent with the treatment under case law prior to the Act.
Because the language of the fair use statute is illustrative, determinations of fair use are often
difficult to make in advance. However, the statute recognizes fair use “for purposes such as 98
criticism, comment, news reporting, teaching, scholarship, or research.” A determination of fair
use considers four factors:
• The purpose and character of the use, including whether such use is of a
commercial nature or is for nonprofit educational purposes.
• The nature of the copyrighted work.
• The amount and substantiality of the portion used in relation to the copyrighted
work as a whole.
• The effect of the use upon the potential market for or value of the copyrighted 99
The U.S. Supreme Court has previously explained that this four-factor test cannot be simplified 100
by “bright-line rules,” but rather that the doctrine of fair use calls for “case-by-case” analysis.
In the context of digital music downloads and transmissions, some alleged copyright infringers 101
have attempted to use the doctrine of fair use to avoid liability for activities such as sampling, 102103
“space shifting,” and peer-to-peer file sharing. These attempts have not been very successful:
94 17 U.S.C. §§ 110(1)-(2). Sections 110(1) and 110(2) apply to both non-digital and digital music.
95 17 U.S.C. § 110(4). Section 110(4) applies to both non-digital and digital music.
96 17 U.S.C. § 110(5)(A). Section 110(5)(A) applies only to non-digital music. While the text of the statute does not
explicitly exempt only non-digital music, a commonly used apparatus would likely be a traditional home stereo, which
receives an analog signal.
97 17 U.S.C. § 110(5)(B). Section 110(5)(B) applies only to non-digital music. The text of the statute exempts those
transmissions by entities licensed by the FCC, thus including terrestrial radio and implicitly excluding satellite and
98 17 U.S.C. § 107.
99 17 U.S.C. §§ 107(1)-(4).
100 Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569, 577 (1994).
101 Sampling of this type does not refer to the dubbing of portions of previously recorded music into a new recording. In
the digital music context, “sampling” is a term that refers to the supposed ability of user to make copies of copyrighted
materials prior to purchase. See A&M Records, Inc. v. Napster, Inc., 114 F.Supp. 896 (N.D. Cal. 2000), aff’d in th
relevant part, 239 F.3d at 1018 (9 Cir. 2001).
102 Id. Space shifting is the process in which users access CD sound recordings for personal computer use.
103 For more information on legal decisions regarding file sharing and peer-to-peer networks, see CRS Report
several federal appellate courts have ruled against the applicability of the fair use doctrine for 104
these purposes. The difficulty behind any fair use determination, however, is the irresolute
nature of the exception—one court’s determination of fair use may be another’s determination of
infringement. Even to the extent of home audio recording of a broadcast or phonorecord, no
litigation has settled the propriety of the issue as a fair use. However, where there is doubt
regarding the applicability of the exception, the most prudent choice is always the application of a
license from the copyright holder. (The fair use exception may strengthen the bargaining power of
Under the Copyright Act, teachers are exempt from infringement for performing copyrighted
works in certain contexts. Performance of a work done in the course of face-to-face instruction in
a classroom (or a similar place devoted to instruction), or performances done as part of 105
instructional activities of a nonprofit institution, may not be an infringement of copyright.
Another teaching exemption removes particular works from infringement of the performance 106
right in the context of distance education.
Although fair use provides a statutory exception to any of a copyright holder’s exclusive rights, § 107
exception in the Copyright Act allows public performances to take place without payment so long 108
as the performance is done without the intent of making commercial gain. In addition, the
performers, promoters, and organizers must not be compensated beyond expenses. The statute
does not require the performance to be free if the proceeds are used exclusively for educational,
religious, or charitable purposes. If none of these purposes are available, the performance must be
free for the audience. Examples of these public performances include eligible benefit concerts,
school performances, and religious festivities.
Another performance licensing exception is the communication to the public of a transmission
embodying a performance using a “single receiving apparatus of a kind commonly used in private
RL31998, File-Sharing Software and Copyright Infringement: Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd, by
Brian T. Yeh and Robin Jeweler.
104 See, e.g., A&M Records, Inc. v. Napster, Inc., 114 F.Supp.2d 896 (N.D. Cal. 2000), aff’d, 239 F.3d 1004 (9th Cir.
2001); In re: Aimster Copyright Litigation, 334 F.3d 643 (7th Cir. 2003), cert. denied, 540 U.S. 1107 (2004).
105 17 U.S.C. § 110(1).
106 17 U.S.C. § 110(2). This provision is known as the Technology, Education, and Copyright Harmonization Act
(TEACH Act). For more information, see CRS Report RL33516, Copyright Exemptions for Distance Education: 17
U.S.C., Section 110(2), the Technology, Education, and Copyright Harmonization Act of 2002, by Brian T. Yeh and
107 17 U.S.C. § 110(4).
homes.”109 This is known as the “home-style” radio exception to performance licensing
requirements. The single apparatus exception is subject to two statutory conditions that (1) there
be no charge to hear the transmission and (2) the transmission is not further performed to the 110
In 1998, Congress passed the Fairness in Music Licensing Act (FMLA) to clarify the performance 111
right exemptions for eligible establishments. The scope of the exemption is limited to
performances “intended to be received by the general public, originated by a radio or television
broadcast station licensed as such by the Federal Communications Commission, or, if an 112
audiovisual transmission, by a cable system or satellite carrier.” The Act covers transmissions
embodying performances by food and drink establishments and by non-food and drink
To be eligible for a performance exemption under the FMLA, three criteria must be satisfied. The
first two criteria mirror those under the home receiving apparatus exemption: there must be no
direct charge to hear the transmission, and the transmission must not be further transmitted 113
beyond the establishment where it is received. The third criterion states that the transmission 114
must be “licensed by the copyright owner of the work so publicly performed or displayed.” The
latter criterion thus potentially creates liability if the transmitting entity (the radio station) itself
broadcasts infringing content. In such a scenario, the music copyright holder would likely bring 115
suit against the infringing radio station, rather than the establishment that played the radio.
After the prior three criteria, however, the FMLA provides even further specifications for the
types and sizes of establishments that are eligible for the performance right exemption. Table 1
illustrates the specific qualifications.
Table 1. Eligibility for Performance Exemptions Pursuant to 17 U.S.C. § 110(5)(B)
Type of Establishment Size of Establishment
Food Service/Drinking If less than 3,750 square feet (excluding
“[A] restaurant, inn, bar, tavern, or any other similar place of parking), the exemption applies.
business in which the public or patrons assemble for the primary If more than 3,750 square feet (excluding
purpose of being served food or drink, in which the majority of the parking), the exemption applies only if there
gross square feet of space that is nonresidential is used for that are no more than six loudspeakers, of which
109 17 U.S.C. § 110(5)(A). A small radio, stereo receiver, or portable boom box may fit within this definition. It is
uncertain, however, whether a satellite radio would gain the benefit of this exception.
110 17 U.S.C. §§ 110(5)(A)(i-ii).
111 P.L. 105-298.
112 17 U.S.C. § 110(5)(B). This statute does not cover webcasters, satellite radio, or other digital music services that fall
outside the scope of FCC regulation. Because television programming can include musical works (e.g., movie
soundtracks), an establishment may publicly perform the music on a soundtrack accompanying a motion picture that is
broadcast by an FCC-licensed television station, without concern for copyright infringement liability.
113 17 U.S.C. §§ 110(5)(B)(iii)-(iv).
114 17 U.S.C. § 110(5)(B)(v).
115 2 MELVILLE B. NIMMER & DAVID NIMMER, NIMMER ON COPYRIGHT § 8.18[C][b][iv] (2006).
Type of Establishment Size of Establishment
purpose, and in which nondramatic musical works are performed not more than four are located in any one
publicly.”116 room or adjoining outdoor space.118
Other If less than 2,000 square feet (excluding parking), the exemption applies.120
“[A] store, shop, or any similar place of business open to the If more than 2,000 square feet (excluding
general public for the primary purpose of selling goods or services parking), the exemption only applies if there
in which the majority of the gross square feet of space that is are no more than six loudspeakers, of which
nonresidential is used for that purpose, and in which nondramatic 119 not more than four are located in any one
musical works are performed publicly.” room or adjoining outdoor space.121
116 17 U.S.C. § 101.
117 17 U.S.C. § 110(5)(B)(ii).
120 17 U.S.C. § 110(5)(B)(I).
Non-Digital Music Digital Music
Music License for License for License for
Copyright Reproduction and Public Reproduction and License for Public
Holder Distribution Performance Distribution Performance
Musical work Mechanical Voluntary Mechanical Voluntary
holder (compulsory) (compulsory)
Sound Voluntary No performance Voluntary For interactive services,
recording right voluntary licenses apply.
holder For non-interactive
compulsory licenses apply.
For eligible non-interactive,
compulsory licenses apply.
For non-subscription, non-
statutory exemptions apply.
Note: This glossary uses definitions supplied in 17 U.S.C. §§ 101, 114, 115.
A broadcast transmission is a transmission made by a terrestrial broadcast station licensed as
such by the Federal Communications Commission.
Copies are material objects, other than phonorecords, in which a work is fixed by any method
now known or later developed, and from which the work can be perceived, reproduced, or
otherwise communicated, either directly or with the aid of a machine or device. The term
“copies” includes the material object, other than a phonorecord, in which the work is first fixed.
A digital audio transmission is a digital transmission as defined in section 101 that embodies the
transmission of a sound recording. This term does not include the transmission of any audiovisual
A digital phonorecord delivery (DPD) is each individual delivery of a phonorecord by digital
transmission of a sound recording that results in a specifically identifiable reproduction by or for
any transmission recipient of a phonorecord of that sound recording, regardless of whether the
digital transmission is also a public performance of the sound recording or any non-dramatic
musical work embodied therein. A digital phonorecord delivery does not result from a real-time,
non-interactive subscription transmission of a sound recording where no reproduction of the
sound recording or the musical work embodied therein is made from the inception of the
transmission through to its receipt by the transmission recipient in order to make the sound
To display a work means to show a copy of it, either directly or by means of a film, slide,
television image, or any other device or process or, in the case of a motion picture or other
audiovisual work, to show individual images consequentially.
An eligible non-subscription transmission is a non-interactive, non-subscription digital audio
transmission not exempt under subsection 114(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 retransmission 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.
An establishment is a store, shop, or any similar place of business open to the general public for
the primary purpose of selling goods or services in which the majority of the gross square feet of
space that is nonresidential is used for that purpose, and in which non-dramatic musical works are
A work is fixed in a tangible medium of expression when its embodiment in a copy or
phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit
it to be perceived, reproduced, or otherwise communicated for a period of more than transitory
duration. A work consisting of sounds, images, or both being transmitted is “fixed” for purposes
of this title if a fixation of the work is being made simultaneously with its transmission.
A food service or drinking establishment is a restaurant, inn, bar, tavern, or any other similar
place of business in which the public or patrons assemble for the primary purpose of being served
food or drink, in which the majority of the gross square feet of space that is nonresidential is used
for that purpose, and in which non-dramatic musical works are performed publicly.
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 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 one 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 non-interactive services (either concurrently or at different
times), the non-interactive component shall not be treated as part of an interactive service.
To perform a work means to recite, render, play, dance, or act it, either directly or by means of
any device or process or, in the case of a motion picture or other audiovisual work, to show its
images in any sequence or to make the sounds accompanying it audible.
A performing rights society is an association, corporation, or other entity that licenses the public
performance of non-dramatic musical works on behalf of copyright owners of such works, such
as the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc.
(BAI), and SEASICK, Inc.
Phonorecords are material objects in which sounds, other than those accompanying a motion
picture or other audiovisual work, are fixed by any method now known or later developed, and
from which the sounds can be perceived, reproduced, or otherwise communicated, either directly
or with the aid of a machine or device. The term “phonorecords” includes the material object in
which the sounds are first fixed.
To perform or display a work publicly means—
(1) to perform or display it at a place open to the public or at any place where a substantial
number of persons outside of a normal circle of a family and its social acquaintances is gathered;
(2) to transmit or otherwise communicate a performance or display of the work to a place
specified by clause (1) or to the public, by means of any device or process, whether the members
of the public capable of receiving the performance or display receive it in the same place or in
separate places and at the same time or at different times.
A retransmission is a further transmission of an initial transmission, and includes any further
retransmission of the same transmission. Except as provided in this section, a transmission
qualifies as a “retransmission” only if it is simultaneous with the initial transmission. Nothing in
this definition shall be construed to exempt a transmission that fails to satisfy a separate element
required to qualify for an exemption under section 114(d)(1).
Sound recordings are works that result from the fixation of a series of musical, spoken, or other
sounds, but not including the sounds accompanying a motion picture or other audiovisual work,
regardless of the nature of the material objects, such as disks, tapes, or other phonorecords, in
which they are embodied.
A subscription transmission is a transmission that is controlled and limited to particular
recipients, and for which consideration is required to be paid or otherwise given by or on behalf
of the recipient to receive the transmission or a package of transmissions including the
A transmission is either an initial transmission or a retransmission.
To transmit a performance or display is to communicate it by any device or process whereby
images or sounds are received beyond the place from which they are sent.
Brian T. Yeh