Statement of Marybeth Peters
The Register of Copyrights
before the
Subcommittee on Courts and Intellectual Property
Committee on the Judiciary
United States House of Representatives
106th Congress, 2nd Session
June 15, 2000
Copyrighted Broadcast Programming on the Internet
Thank you, Mr. Chairman and members of the Subcommittee, for this opportunity
to appear and present the views of the Copyright Office with respect to copyrighted
broadcast programming on the Internet. Because of the nature of the issue
and because of the Copyright Office's role in administering the compulsory
licenses created by the copyright law, most of my testimony will focus on
the advisability of compulsory licensing of Internet retransmissions of television
broadcast signals. I will also discuss the existing compulsory license for
sound recordings on the Internet.
I will not be addressing other related issues that have received a lot of
attention over the past months, such as piracy and other unlawful copying and
distribution of motion pictures, sound recordings, and music on the Internet.
I understand that those subjects are beyond the scope of this hearing, which
focuses on the streaming of broadcast transmissions.
I. Internet Retransmissions of Television Broadcast Stations
Background
Section 106 of the Copyright Act grants certain exclusive rights to the
owner of a copyrighted work. 17 U.S.C. �106. Among these exclusive rights are
the right to make or authorize the making of copies of the work, to distribute
or authorize the distribution of the work and, in the case of television
broadcast programming and other audiovisual works, the right to publicly
perform or authorize the performance of the copyrighted work. As a result,
unless a compulsory license is available, anybody who wishes to retransmit
copyrighted broadcast programming--whether over the Internet or by more
established means of transmission such as cable or satellite--may do so only
by obtaining the consent of the copyright owners.
Compulsory licenses are abrogations of one or more of these exclusive
rights and permit certain parties to use the copyrighted work without the
consent of the copyright owner provided that the terms of the compulsory
license are satisfied. Most of the compulsory licenses in the Copyright Act
affect only the performance right. This is true of the cable (� 111) and
satellite (�� 119 and 122) compulsory licenses, which allow cable
operators and satellite carriers to retransmit (and consequently perform) the
programming contained on television broadcast stations. Cable operators and
satellite carriers are guaranteed access to broadcast programming; the
copyright owners of these television programs cannot say no, nor can they
bargain the price and terms of a license agreement.
The Copyright Office has written extensively on the enactment and operation
of the cable and satellite licenses, and I will not go into the details here. See
The Cable and Satellite Carrier Compulsory Licenses: An Overview and Analysis
(1992); A Review of Copyright Licensing Regimes Covering Retransmission of
Broadcast Signals (1997). The reasons offered for enactment of the cable
and satellite licenses, and compulsory licenses in general, are essentially
economic ones. For the cable license, Congress believed that the transaction
costs associated with a cable operator and copyright owners bargaining for
separate licenses to all television broadcast programs retransmitted by the
cable operator were too high to make the operation of the cable system
practical. Unlike a broadcast station which negotiates directly with the
copyright owners for the programs it transmits over-the-air, cable systems
carry multiple broadcast stations, raising substantially the number of
copyright owners the cable operator would have to bargain with for
retransmission rights. The transaction cost problem was exacerbated by the
cable industry's lack of market power in 1976.
Congress also determined that cable operators must have guaranteed access
to broadcast programming, which might not occur under a negotiation scenario.
A cable operator might successfully bargain with the copyright owners of most
of the programs contained on a broadcast signal, but be forced to pay
exorbitant fees (or denied access to the programming) by copyright owners of
certain categories of programming, or those copyright owners who realized that
a cable operator's retransmission of an entire broadcast signal hinged on its
ability to obtain a license from that program owner. A compulsory license for
the cable operator eliminates any holdouts among copyright owners by
guaranteeing access to the programming.
The concern over transaction costs that led to enactment of the cable
compulsory license in 1976 also led to the enactment of the satellite license
in 1988. Again, because the satellite business was a fledgling industry
without market power, it was believed unlikely that satellite carriers could
negotiate retransmission licenses with broadcast programming copyright owners.
In addition, it was believed that the satellite industry needed a compulsory
license in order to compete with the entrenched cable industry, which already
enjoyed the benefits of a compulsory license. Consequently, Congress passed
the Satellite Home Viewer Act of 1988 and created a compulsory license for
satellite carriers' retransmission of distant television stations. This
license was expanded in the Satellite Home Viewer Improvement Act of 1999 to
include retransmissions of local television stations by satellite carriers.
Although the cable and satellite licenses operate differently in terms of
their royalty calculation mechanisms, their purpose is the same: a limitation
on copyright owners' performance right by guaranteeing cable operators and
satellite carriers access to over-the-air television broadcast programming at
fixed terms and prices.
A Compulsory License for Internet Retransmissions of Broadcast Signals:
Our 1997 Report
In 1997, at the request of Senator Orrin Hatch, Chairman of the Senate
Judiciary Committee, the Copyright Office prepared an extensive report
analyzing compulsory licensing of television broadcast programming. See,
A Review of the Copyright Licensing Regimes Covering Retransmission of
Broadcast Signals (1997). Although the report focused principally on cable
and satellite retransmissions, we did consider the advisability of a statutory
licensing regime for Internet retransmissions of both radio and television
broadcast stations. We solicited comment from the public on the issue,
including public hearings at which copyright owners, broadcasters, and certain
webcasting pioneers testified.
We concluded, for several reasons, that a compulsory license specifically
designed for the Internet was not appropriate. First, we were concerned about
the Internet's ability to disseminate programming "instantaneously
worldwide" without any territorial restrictions, and the intention of
certain webcasters to retransmit to the widest audience possible. Unrestricted
retransmission of copyrighted works could seriously compromise both the value
and integrity of those works. 1997 Report at 99.
Second, the Office questioned whether retransmission of a broadcast signal
over the Internet involved solely the performance right, and in fact did not
implicate the reproduction right as well. Id. Unlike real-time
cable or
satellite retransmissions, Internet retransmissions require the making of
temporary copies within the computer systems delivering the retransmissions,
which allow the audio or video programming to appear to be played in real time
to the end user. A compulsory license for Internet retransmissions would,
consequently, require abrogation of not one but two exclusive rights granted
under section 106 of the Copyright Act: the performance right and the
reproduction right.
Finally, because Internet retransmissions were still in their infancy, the
Office determined that it was premature to consider a statutory licensing
regime for broadcast retransmissions. The Office cited the President's
Information Infrastructure Task Force's Working Group on Intellectual Property
Rights, which concluded that licensing of copyrighted works on the Internet
should be decided by the marketplace, rather than a government-imposed scheme.
Id. The Office also cited a Federal Communications Commission paper
advocating the same wait-and-see, anti-regulatory approach. See FCC
Office of Plans and Policy, OPP Working Paper No. 29: Digital
Tornado: The Internet and Communications Policy (March 1997).
Developments Since the 1997 Report
Following our 1997 Report, and as Congress worked on legislation to
reauthorize the satellite compulsory license, compulsory licensing for
Internet retransmissions received little attention. This changed dramatically,
however, during the Senate and House conference on the Satellite Home Viewer
Improvement Act of 1999.
Toward the end of the conference, an amendment was made to the satellite
license reauthorization bill to clarify that the section 111 cable compulsory
license did not apply to broadcast retransmissions via the Internet.(1)
The amendment appeared to us to be of little consequence, since we believed
that the cable compulsory license could not reasonably be interpreted to
include Internet retransmissions. Nonetheless, several Internet companies
challenged the amendment as taking away their ability to use the cable
compulsory license for new Internet retransmission activities they might soon
commence. When it became clear that these objections might halt passage of the
Satellite Home Viewer Improvement Act, I wrote a letter to you, Mr. Chairman,
and to Mr. Berman, expressing our view that the proposed amendment was indeed
a clarification, and not a change, of existing law. I stated:
It is my understanding that some services that wish to
retransmit television programming over the Internet have asserted that they
are entitled to do so pursuant to the compulsory license of section 111
of Title 17. I find this assertion to be without merit. The section 111
license, created 23 years ago in the Copyright Act of 1976, was tailored to a
heavily-regulated industry subject to requirements such as must-carry,
programming exclusivity, and signal quota rules--issues that have also arisen
in the context of the satellite compulsory license. Congress has properly
concluded that the Internet should be largely free of regulation, but the lack
of such regulation makes the Internet a poor candidate for a compulsory
license that depends so heavily on such restrictions. I believe that the
section 111 license does not and should not apply to Internet transmissions.
Letter of Marybeth Peters, Register of Copyrights, to the
Honorable Howard Coble, November 10, 1999.
Because of the inability to resolve this issue in the remaining days of the
last session of Congress, the amendment was removed before the legislation was
enacted. Our view on this matter has not changed: if there is to be a
compulsory license covering such retransmissions, it will have to come from
newly enacted legislation and not existing law.
Is There a Need for a Compulsory License for Internet Retransmissions of
Broadcast Signals?
The Copyright Office has long been a critic of compulsory licensing for
broadcast retransmissions. A compulsory license is not only a derogation of a
copyright owner's exclusive rights, but it also prevents the marketplace from
deciding the fair value of copyrighted works through government-set price
controls. In addition, we believe that a compulsory license for Internet
retransmissions of television broadcast signals is not warranted, and such
activity is not comparable to retransmissions via cable and satellite.
Opposition to the cable compulsory license, and calls for its repeal, began
not long after its enactment. In 1981, the Office recommended to this
Subcommittee that the cable license be abolished, stating:
The general principle of the copyright law is that copyright
owners are entitled to receive fair compensation for the public performance of
their works, especially in the case of performances for profit. Cable systems
perform copyrighted works for profit when they make secondary transmissions of
such works. Copyright owners will be more confidently assured of rightful
compensation if that compensation is determined by contract and the market
rather than by compulsory license.
In the last five years, the cable industry has progressed
from an infant industry to a vigorous, economically stable industry. Cable no
longer needs the protective support of the compulsory license.
A compulsory license mechanism is in derogation of the
rights of authors and copyright owners. It should be utilized only if
compelling reasons support its existence. Those reasons may have existed in
1976. They no longer do.
Copyright/Cable Television: Hearings on
H.R.
1805, H.R. 2007, H.R. 2108, H.R. 3528, H.R. 3530, H.R. 3560, H.R. 3940, H.R.
5870, and H.R. 5949 Before the Subcomm. On Courts, Civil Liberties, and the
Administration of Justice, 97th Cong., 959-960 (1981)(statement
of David Ladd, Register of Copyrights, Copyright Office).
In 1989, the Federal Communications Commission issued a report arguing that
the cable license undervalued broadcast programs and should be repealed in
favor of marketplace negotiations. Report and Order in Docket No. 87-25,
4 FCC Rcd. 6711 (1989). Nevertheless, shortly before issuance of that report,
Congress added to the stable of compulsory licenses by passing the Satellite
Home Viewer Act of 1988, creating the section 119 license for satellite
retransmission of broadcast signals.
With each renewal of the satellite license, in 1994 and 1999, the Office
has been asked by Congress to analyze the cable and satellite licenses, and
each time the Office has questioned whether they should continue to exist. The
Cable and Satellite Carrier Compulsory Licenses: An Overview and Analysis
at 81, (1992); A Review of Compulsory Licensing Regimes Covering
Retransmission of Broadcast Signals at 32-33 (1997). At the same time, we
recognized the economic and political considerations surrounding the retention
of the cable license and the extension of the satellite license. Although the
economic reasons for enacting the cable compulsory license have largely
disappeared, as the Register recognized in 1981, the permanence of that
license, and the expectations that it has created both for copyright owners
and users, makes elimination of the cable license difficult. The permanence of
the cable license directly affects the continued reauthorization of the
satellite license. Congressional concern for competition in the video
programming marketplace raises the likelihood that the satellite license will
continue to be renewed. Moreover, we recommended in our 1997 compulsory
license Report that the satellite license remain in existence for as long as
the cable license continues. 1997 Report at 33.
Although we still firmly believe that the cable and satellite licenses
ultimately should yield to a regime of exclusive rights and the free
marketplace, we see a fundamental difference between Internet retransmissions
and retransmissions via cable and satellite, a difference that I believe makes
compulsory licensing for the Internet inadvisable. That difference is in the
nature of the delivery platform for the retransmissions. Both cable and
satellite provide a means of delivering broadcast signals that copyright
owners cannot practicably do themselves. Copyright owners license broadcasters
to perform their works via over-the-air broadcasting, which has certain
important limitations. There are topographical limitations to over-the-air
broadcasting which limit certain viewers' ability to receive a signal. There
are also distance limitations to over-the-air broadcast signals that restrict
how far a signal will travel. Cable eliminates these limitations by being a
closed path transmission service--a wire--that not only allows clear receipt
of nearby broadcast stations, but also allows receipt of stations far beyond
the reach of any over-the-air signal. The same is true with satellite, which
can deliver broadcast programming to subscribers who are not capable of
receiving over-the-air broadcasting, and cannot receive a quality picture by
other means.
By building multi-billion dollar delivery systems, cable and satellite
deliver broadcast programming in ways that the copyright owners of those
programs and the broadcasters cannot. This is not true, however, for the
Internet. Parties that wish to make use of the Internet to retransmit
broadcast programming do not have to build the delivery platform; it already
exists. The technology is readily available and is not particularly expensive.
Copyright owners of broadcast programming do not need to turn to someone else
to place their content on the Internet; they can do it themselves. In fact,
certain television broadcasters have already begun to place portions of their
signals on the Internet, demonstrating that there is no need for a third-party
packager to do it for them. See, Hearings Before the Subcomm. on
Telecommunications, Trade & Consumer Protection of the House Commerce
Committee, 106th Cong. (2000)(statement of Paul Karpowicz). Or,
copyright owners can freely decide to license others to transmit their
programming over the Internet. But it should be their choice.
Additionally, although Internet transmissions of television broadcast
signals presumably would be "streamed" using technology intended to
prevent the making of copies of broadcast programs, apparently it is all too
easy for recipients of such transmissions to find ways to circumvent those
measures and download perfect digital copies, which then could be
redisseminated without limit online. The resulting harm to copyright owners in
a global market could be irreparable. Although this risk also exists when
copyright owners stream their own programming on the Internet, in such cases
they are voluntarily assuming that risk. Compulsory licensing permitting third
parties to stream television programming gives the copyright owner no choice
in the matter.
Because the Internet is available to copyright owners, unlike the delivery
platforms for cable and satellite, and because of the potential of a
devastating effect, we see no reason to create a compulsory license giving
third parties permission to retransmit broadcast signals. Copyright owners
should be allowed to determine when and under what circumstances they wish to
make broadcast programming available over the Internet without concern that a
third-party packager will make these decisions for them under the auspices of
a government-mandated compulsory license.
In sum, retransmission of broadcast signals over the Internet is very
different from retransmission by cable operators and satellite providers. The
free marketplace must be allowed to develop and operate. Copyright owners must
be able to decide when, and under what circumstances, broadcast programming
will be retransmitted via the Internet.
Should There Be a Compulsory License for Retransmission of Local Signals
on the Internet?
Last year, during the House and Senate conference on the Satellite Home
Viewer Improvement Act, the matter of delivery of local broadcast stations in
smaller, rural markets across the country received great attention. The issue
was raised when certain satellite carriers indicated that they would only
provide local-into-local retransmissions of broadcast stations for
approximately the top 70 television markets in the United States. This year,
both the House and the Senate passed loan guarantee legislation to enable
construction of delivery platforms to bring local retransmissions of broadcast
stations to all 210 television markets.
Some have suggested that rather than encourage the construction of new
delivery platforms for local broadcast signals, the government should
authorize retransmission of local signals on the Internet. We think that this
is not a good idea, for the following reasons.
Our principal concern is the extent to which Internet retransmissions of
broadcast signals can be controlled geographically. The Internet is a
worldwide system with the capability of transmitting, or retransmitting,
copyrighted works to hundreds of millions of viewers within seconds. If a
compulsory license were created for retransmission of local broadcast signals,
it is unclear how the retransmission of those signals could be limited to
their local markets. iCraveTV's feeble attempts to limit the retransmission of
Buffalo television stations to Canadian viewers by requiring entry into a
computer of a Canadian telephone area code and requiring the user to certify
that he is receiving the transmission from a computer terminal or display
device located within Canada, were ineffective. In response, copyright owners
brought a successful copyright infringement suit that blocked iCraveTV
retransmissions in the U.S. and, effectively, shut it down altogether. Some
firms are working on software and hardware that would restrict the
distribution of information, which could include broadcast retransmissions, to
specific Internet customers or to customers located in a specific geographic
area. But no one has yet rolled out a fail-proof system, and if experience has
taught anything with technological controls to copying, it is that it is not
long before they are hacked or circumvented.
Because of the ease with which copyrighted materials can move around the
world on the Internet, the defeat of a keylock system can spell instant
disaster for these works. Broadcast programming intended for limited
television markets within the U.S. could become available worldwide with no
control or compensation for the copyright owner. Further, even if protection
devices are in place to limit receipt of a broadcast signal from a source to a
specific geographic location, there may be no control over the receiver of
that signal that prevents him from further retransmitting the signal to
others. Again, technological solutions may be developed to address these
concerns, but until they are, and unless we can be confident of their
reliability and security, enactment of a compulsory license for local signals
would place broadcast programming in jeopardy.
Some have asserted that signal theft is signal theft, and that such
activities on the Internet would be no different than signal theft of cable or
satellite service. We disagree. Cable is a closed path retransmission service
with little customer interactivity. While a consumer can obtain an illegal
"black box" for cable, that consumer cannot use his or her equipment
to defeat the encryption system for cable signals, nor can that consumer
further retransmit the cable signals around the world. The same is true for
satellite. One can obtain an illegal smart card to make a digital satellite
box operate, but that equipment cannot make a satellite signal suddenly
available to anyone with a television set. These activities can occur,
however, on the Internet, which makes comparisons between retransmissions via
cable or satellite and the Internet inapposite.
International Considerations
In addition to the domestic policy implications raised by broadcasting on
the Internet, there are important international considerations as well. The
U.S. has obligations under the Berne Convention for the Protection of Literary
and Artistic Works (Berne), the WTO Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPs), and the recently ratified WIPO Copyright
Treaty (WCT) that relate to broadcasting and Internet transmissions. In
particular, to the extent that Congress considers the option of compulsory
licensing of broadcast television signals for retransmission on the Internet,
Berne imposes specific limitations on member countries' ability to impose such
licenses.
The Berne Convention
Among the obligations to which the U.S. is subject as a member of Berne is
the requirement that authors be granted the exclusive right of authorizing
"communication to the public by wire or by rebroadcasting of the
broadcast of the work, when this communication is made by an organization
other than the original one."(2) Under
Berne, the retransmission of television programming, whether by terrestrial
rebroadcasting, by cable, by satellite, or over the Internet, must be subject
to the author's exclusive rights.
These exclusive rights are not absolute. Berne permits countries to
"determine the conditions under which the rights . . . may be
exercised" by national legislation. This includes the imposition of
compulsory licensing in appropriate circumstances. The cable and satellite
licenses under sections 111, 119, and 122 of the Copyright Act are examples of
national laws that "determine the conditions under which the rights"
of copyright owners in the content of broadcast television signals "may
be exercised."
Berne establishes three express limitations on the conditions that a
country may impose by national legislation: the conditions "shall apply
only in the country where they have been prescribed; [t]hey shall not in any
circumstances be prejudicial to the moral rights of the author;" and they
must not prejudice the author's right to obtain equitable remuneration. The
first of these limitations is directly relevant to any compulsory license in
the Internet context.
This Berne limitation on compulsory licensing flows from the territorial
nature of copyright laws. National copyright laws govern conduct within their
respective territories. Authors and other copyright owners must look to the
national laws of the country in which protection is claimed to determine their
rights. A necessary corollary to this principle of territoriality is that the
national copyright law of one country cannot authorize the exercise of
exclusive rights in another country.
The limitation can be interpreted to be either a mere restatement of this
territorial principle or as a positive limitation on "conditions" on
the exercise of an author's retransmission right that a Berne member may
impose. Under the first interpretation, it would be permissible for a Berne
country to allow retransmission of works under a compulsory license in a
fashion that permits their receipt in another country, although that conduct
may violate the copyright laws of the recipient country and subject the
retransmitting entity to infringement liability. Under the second
interpretation, a Berne country may not, consistent with its Berne
obligations, permit retransmissions outside of its borders under a compulsory
license.
The view of the Copyright Office is that Berne requires member countries to
impose territorial limitations on retransmissions that are carried out under a
compulsory license. The alternative interpretation would require us to read
the limitation as surplus verbiage, since it would merely restate what the
principle of territoriality makes clear: the copyright law of one country does
not govern conduct in another. In addition, the territorial limitation is one
of three limitations on compulsory licensing, the other two of which--that a
compulsory licensing regime not prejudice an author's moral rights and right
of remuneration--are clearly positive limitations on the law of member
countries.
In order to comply with Berne's territorial limitation on compulsory
licenses, a compulsory license for retransmission of broadcast television
signals on the Internet could only permit such transmissions for reception
within the United States.
With cable television, confining the application of the compulsory license
provisions of the Copyright Act to the territory of the United States does not
pose a major technical challenge: the wire must stop at the water's edge.
Direct broadcast satellite poses a greater challenge, since the
"footprint" on the ground where the satellite signal can be received
often crosses national boundaries. However, since these signals are encrypted
and require a special decoder for viewing, territorial limitations can be
enforced by controlling the availability of the decoders.
Given the global reach of the Internet, the technical issue of whether a
signal can be confined to the United States becomes critical to determining
whether a Berne-compatible compulsory licensing regime is possible. It appears
that the answer depends largely on the business model adopted by an entity
that wishes to retransmit television signals on the Internet.
It is possible that certain signals transmitted on the Internet could be
treated like signals emanating from a satellite that has a footprint covering
the entire planet. In order to enforce territorial restrictions, this approach
would require that the signals be encrypted and that the decoders be made
available only within the United States. This approach requires, however, that
those engaged in Internet retransmissions adopt a subscription model. In
addition, extreme caution should be exercised not to overextend the analogy to
satellite transmissions. Certain implementations of this approach may not be
as technologically sound as existing systems for preventing unauthorized
reception of satellite signals and, unlike satellite decoders, personal
computers connected to the Internet are capable of retransmitting a signal
once decoded.
As the iCraveTV controversy demonstrated, limiting territorial distribution
of signals in an open model, where signals are not encrypted, presents a much
greater technical challenge. As far as we have been able to ascertain through
our discussions with the industry, there is no technology at the present time
that is one hundred percent effective at preventing reception of signals
outside the boundaries of a particular country.
Given the present state of the technology, it appears unlikely that we
could implement a Berne-compatible compulsory licensing regime that permits
unencrypted retransmissions of television signals over the Internet. A
compulsory licensing regime that required retransmissions to be encrypted, and
prohibited foreign distribution of the decoding technology, could satisfy the
territorial limitations of Berne, provided the technology was effective in
preventing reception of the retransmitted signals outside the United States.
The WTO TRIPs Agreement
All of the substantive obligations of Berne (apart from the provision
relating to moral rights) are incorporated by reference in the WTO TRIPs
agreement. If a compulsory license does not pass muster under Berne, it does
not pass muster under TRIPs either.
In addition, TRIPs includes a number of obligations that are independent of
Berne. None of these, however, appear to be applicable to transmission of
television broadcasts on the Internet.(3)
Although TRIPs does not add any relevant substantive obligations, it does
make the Berne obligations that are incorporated by reference subject to WTO
dispute resolution. Consequently, a WTO member that concludes that a provision
of our law is incompatible with Berne can request that a dispute resolution
panel be convened to hear a case against the United States.
WIPO Copyright Treaty (WCT)
The WCT supplements the Berne Convention in several important respects. As
this Subcommittee is well aware, several aspects of this agreement required
changes to U.S. law--notably those aspects of the agreement relating to
circumvention of technological protection measures and tampering with
copyright management information.(4) Another
provision of the WCT, which did not require any change in U.S. law, requires
parties to grant copyright owners an exclusive right of communication to the
public, including making a work available to the public on demand.(5)
The right of communication to the public under the WCT is general in nature
and not limited to a particular technology. It covers over-the-air broadcasts
as well as digital transmissions and retransmissions of works through cable
systems and over the Internet. The WCT communication right, however, is
"without prejudice" to the broadcasting and communication rights
under Berne. This indicates that those aspects of the broader communication
right in the WCT that are covered under the more specific rights in Berne are
covered by the provisions of the latter treaty. Since the retransmission of
television signals on the Internet is already covered under Berne, the
broadcast and communication rights under Berne, and not the communication
right under the WCT, would govern. The WCT, therefore, does not appear to add
any substantive obligation relevant to retransmissions of broadcast signals on
the Internet.
II. Internet Transmissions of Copyrighted Sound Recordings
Unlike the retransmission of television broadcast signals, audio transmission
of sound recordings via the Internet has been taking place for some time and
continues to grow. Recent figures show an increase in the number of radio
webcasters from a low of 56 stations in 1996 to well over 3,500 stations today.
See www.brsradio.com/press000410.html
(April 10, 2000). The Digital Millennium Copyright Act of 1998 amended portions
of section 112 and section 114 of the Copyright Act to address transmissions
of sound recordings over the Internet made by noninteractive, nonsubscription
services and transmissions made by preexisting satellite digital audio radio
services. The Copyright Office is currently engaged in several proceedings
concerning these provisions, which are addressed below.
Most audio transmissions over the Internet involve the performance of
music. Recorded music involves two distinct copyrights. First, there is a
copyright for the underlying music itself. This copyright typically belongs to
the songwriter. There is no compulsory license scheme in the Copyright Act for
the performance of a copyrighted song; the licensing of these performances is
typically done through one of the performing rights societies, ASCAP, BMI, or
SESAC.
Second, there is a copyright for the sound recording itself, separate from
the underlying music. As we discussed at another hearing three weeks ago, this
copyright typically belongs to a record company. The performance right granted
a copyright owner of a sound recording is more limited than that for the
underlying music, and certain performances of sound recordings are exempt from
copyright, while others are subject to compulsory licensing.
For a long time in American copyright law, sound recordings enjoyed all of
the exclusive rights granted by copyright, except for the performance right. A
variety of reasons existed for this exclusion, including the fact that sound
recordings did not even receive any copyright protection until 1972,
and radio broadcasters' unwillingness to pay two copyright fees each time a
music recording was played over-the-air. However, in 1995, Congress passed the
Digital Performance Right in Sound Recordings Act, which created a limited
performance right for sound recordings. Digital broadcasts of recorded music
remained exempt, but interactive services providing subscribers with digital
transmission of recorded music were subject to the performance right. In
addition, certain noninteractive digital subscription services (typically
music services delivered over cable and satellite television systems) were
subject to the performance right, but were granted a compulsory license for
their performances of sound recordings. To take advantage of this compulsory
license, found in section 114 of the Copyright Act, one must comply with a
number of limitations on the frequency and identification of the music
performed by the service. These limitations are designed to discourage
subscribers from engaging in home taping of the music performed in digital
format. See 17 U.S.C. 114(d)(2)(C) (1995).
With the proliferation of music on the Internet in the latter half of the
1990's, Congress reconsidered and adjusted the status of the performance right
in sound recordings. For reasons that I have already discussed, transmissions
of sound recordings over the Internet are technologically different from
similar transmissions via cable or satellite. In order to perform a
copyrighted song over a computer, copies of that work must be made along the
transmission path to deliver the work. These copies are typically ephemeral in
nature, but are necessary to enable the work to travel from the computer
server to the desktop computer. Use of a copyrighted sound recording in this
context consequently may require a license for both the performance right and
the reproduction right.
After comprehensive negotiations between representatives of webcasters on
the Internet and sound recording interests, Congress enacted the Digital
Millennium Copyright Act of 1998. The DMCA created a compulsory licensing
scheme for certain digital transmissions of sound recordings, again subject to
conditions designed to discourage and prevent home copying of recorded music.
Section 114 of the Copyright Act was amended by expanding the compulsory
license for the performance right to a sound recording to include
"eligible nonsubscription services" (i.e., webcasters), and
section 112 was amended to address the reproduction right. The statutory
royalty fees and terms of payment were not prescribed in either of these
licenses, but, as with the more limited section 114 compulsory license
established in 1995, instead were subject to the Copyright Arbitration Royalty
Panel (CARP) process at the Copyright Office.
The setting of rates and terms for the new section 112 and 114 licenses is
still pending at the Copyright Office. Procedural matters have delayed the
start of the CARP proceedings. In addition to procedural delays, both the
Recording Industry of America (RIAA) and the Digital Media Association (DiMA)
have asked the Office to conduct rulemakings addressing the meaning of certain
terms contained in section 114 of the Copyright Act. The RIAA petition seeks a
ruling from the Office as to whether a broadcaster's transmission of its
over-the-air signal on the Internet is exempt from copyright liability under
section 114, or is subject to the licensing provisions of that section. A
substantial number of the webcasters who have filed initial notices of digital
transmission of sound recordings under the compulsory license are radio
broadcasters or licensees of radio broadcasters who transmit radio broadcasts
not only on the air, but also on the Internet. The Office recently published a
Notice of Proposed Rulemaking (NPRM), seeking comment on the RIAA's proposal
that the Office amend its rules governing this compulsory license to clarify
that Internet transmissions of broadcasts are not exempt. 65 FR 14227
(March 16, 2000). We have received public comment on this NPRM and expect
to issue a decision in the near future.
There is another development related to our rulemaking proceeding on this
matter. The National Association of Broadcasters (NAB) have filed a lawsuit
against the RIAA in the federal district court for the Southern District of
New York, seeking a declaratory ruling that broadcaster transmissions of
over-the-air signals are exempt under section 114. RIAA has moved to dismiss
the suit on a jurisdictional basis. The motion was argued a couple of weeks
ago; and as of the date this testimony was submitted, it is our understanding
that the court has not yet ruled. NAB has suggested that we should defer to
the court rather than proceed with our rulemaking.
Additionally, DiMA seeks a ruling from the Office as to the meaning of the
term "interactive service" under section 114(j)(7) of the Copyright
Act. As noted above, an interactive service transmitting sound recordings over
the Internet is not subject to compulsory licensing, and is governed by
copyright owners' exclusive rights. DiMA asserts that webcasters who seek some
information from subscribers as to their musical preferences are not
interactive services and wants the Office to amend its rules to reflect this
interpretation. The Copyright Office has published a Federal Register notice
seeking public comment on DiMA's petition. 65 FR 33266 (May 23,
2000). The deadline for the first round of comments is a week from today.
It appears that the most pressing issues relating to this compulsory
license are currently before the Office in pending rulemakings and CARP
proceedings, so it would be inappropriate for me to express any views on them
at this time. However, I am certain that many of the witnesses in the third
panel today will have something to say about those issues.
International Considerations
By contrast with transmissions of television programming, transmissions of
sound recordings are not governed by the Berne Convention. The treaties to
which the United States is a party that govern the treatment of sound
recordings are the Geneva Phonograms Convention, the TRIPs Agreement and, once
it becomes effective, the WIPO Performances and Phonograms Treaty (WPPT).
The Geneva Phonograms Convention addresses only duplication and
dissemination of sound recordings, and contains no obligations with respect to
transmissions. Similarly, the TRIPs Agreement grants no rights to performers
or producers of phonograms with respect to transmissions of fixed
performances. Consequently, the compulsory licensing regime for webcasting of
sound recordings under U.S. law is unaffected by our Geneva and TRIPs
obligations.
The WPPT grants performers and producers of phonograms what is called a
"right of remuneration" for broadcasting or communication to the
public of sound recordings. Unlike an exclusive right, a right of remuneration
contemplates that the right holder may not have the right to prevent a given
activity, but will be entitled to a payment.
The provision of the WPPT concerning the right of remuneration for
broadcasting and communication to the public permits parties to make a
declaration that they will not grant the right, or that they will limit its
application. In its instrument of ratification of the WPPT, the U.S. made the
following declaration:
Pursuant to Article 15(3), the United States declares that
it will apply the provisions of Article 15(1) only in respect of certain acts
of broadcasting and communication to the public by digital means for which a
direct or indirect fee is charged for reception, and for other retransmissions
and digital phonorecord deliveries, as provided under United States law.
As a result of this declaration, the U.S. obligations concerning
broadcasting and communication to the public of sound recordings do not extend
to free transmissions of sound recordings on the Internet. Even if they did,
however, the compulsory licensing regime adopted for webcasting in the DMCA,
which provides for royalty payments to right holders, would qualify as a right
of remuneration under the WPPT.
Conclusion
Once again, we thank you for the opportunity to address the Subcommittee on
important issues relating to copyright law and policy. As always, we are
pleased to offer our assistance to the Subcommittee in any way that you find
to be helpful.
1. Actually, the first amendment on this point was to
the section 119 satellite license to clarify that it did not cover Internet
retransmissions of broadcast signals. The section 111 amendment came shortly
thereafter.
2. Berne, Art. 11bis(1)(ii). Article 11bis(1)(i)
grants authors an exclusive right of broadcasting or communication to the
public, but it is limited to wireless means.
3. The subject of broadcasting is covered in TRIPs Art.
14(3). The first sentence requires Members to grant broadcasting organizations
the right to prohibit certain activities with respect to their transmissions.
The second sentence provides that where countries do not provide such rights
to broadcasters they must provide copyright owners in the content of
broadcasts with such rights. The U.S. fulfills its obligation under Art. 14(3)
by means of the second sentence.
4. See the Digital Millennium Copyright Act of 1998,
Pub. L. No. 105-304, 112 Stat. 2860 (1998).
5. WCT, Art. 8.
