[Federal Register: March 16, 2000 (Volume 65, Number 52)]

[Proposed Rules]               

[Page 14227-14229]



Copyright Office

37 CFR Part 201

[Docket No. RM 2000-3]


Public Performance of Sound Recordings: Definition of a Service

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of proposed rulemaking.


SUMMARY: The Copyright Office is seeking comment on whether to amend 

its regulation that defines a ``Service'' for purposes of the statutory 

license governing the public performance of sound recordings by means 

of digital audio transmissions, in order to clarify that transmissions 

of a broadcast signal over a digital communications network, such as 

the Internet, are not exempt from copyright liability under section 

114(d)(1)(A) of the Copyright Act.

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

May 1, 2000.

ADDRESSES: If sent by mail, an original and ten copies of comments and 

reply comments should be addressed to: Copyright Arbitration Royalty 

Panel (CARP), P.O. Box 70977, Southwest Station, Washington, D.C. 

20024. If hand delivered, they should be brought to: Office of the 

General Counsel, James Madison Memorial Building, Room LM-403, First 

and Independence Avenue, S.E., Washington, D.C. 20559-6000.

FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or 

Tanya M. Sandros, Senior Attorney, Copyright Arbitration Royalty Panel, 

P.O. Box 70977, Southwest Station, Washington, D.C. 20024. Telephone: 

(202) 707-8380. Telefax: (202) 252-3423.



    In 1995, Congress enacted the Digital Performance Right in Sound 

Recordings Act of 1995 (``DPRA''), Public Law 104-39, which created an 

exclusive right for copyright owners of sound recordings, subject to 

certain limitations, to perform publicly sound recordings by means of 

certain digital audio transmissions. Among the limitations on the 

performance was the creation of a new compulsory license for nonexempt, 

noninteractive, digital subscription transmissions, 17 U.S.C. 114(f), 

and an exemption for certain nonsubscription transmissions, 17 U.S.C. 

114(d)(1)(A)(i)-(iii) (1995).

    The scope of the exemption, however, has been debated since the 

passage of the DPRA. Broadcasters have taken the position that any 

broadcast, whether made over the air or over the Internet, falls within 

the scope of the section 114(d)(1)(A) exemptions. See Reply Comments of 

National Association of Broadcasters at 9-12 (dated June 20, 1997), 

submitted in Docket No. RM 97-1. On the other hand, copyright owners of 

the sound recordings have interpreted the scope of the exemption more 

narrowly. The Recording Industry Association of America (``RIAA''), on 

behalf of these copyright owners, has argued that transmissions over 

the Internet, generally known as webcasts, do not fall within the scope 

of the statutory exemptions and, instead, are subject to the copyright 

owners' exclusive rights under section 106(6). See, e.g., RIAA Petition 

and Comments of RIAA at 9-12 (dated April 28, 1997), submitted in 

Docket No. RM 97-1.

    Congress, however, did not consider this question when it first 

addressed the problems associated with the emergence of digital audio 

technology and its effects on the music industry because, at the time, 

it had insufficient information on which to act. It did not understand 

how nonsubscription services were utilizing the Internet to bring music 

to the public or how to license such enterprises. Therefore, it focused 

the initial legislation on the digital subscription services and the 

interactive services that were in operation at the time.

    The result was the DPRA, a law which created a licensing scheme for 

the subscription services and the interactive digital audio services. 

17 U.S.C. 114(d)(3) and (f) (1995). It soon became apparent, however, 

that with the rapid proliferation of the use of the Internet as a 

transmission medium and the confusion surrounding the question of how 

the DPRA applied to some nonsubscription digital audio services, 

further legislation was needed to achieve the dual purposes of the 

DPRA.\1\ Staff of the House of Representatives Comm. on the Judiciary, 

105th Cong., 2d Sess., Section-by-Section Analysis of H.R. 2281 as 

Passed by the United States House of Representatives on August 4, 1998 

at 50-51 (Comm. Print, Serial No. 6, 1998).


    \1\ Congress had a two-fold purpose for enacting the DPRA: 

``first, * * * to ensure that recording artists and record companies 

will be protected as new technologies affect the ways in which their 

creative works are used; and second, to create fair and efficient 

licensing mechanisms that address the complex issues facing 

copyright owners and copyright users as a result of the rapid growth 

of digital audio services.'' Staff of the House of Representatives 

Comm. on the Judiciary, 105th Cong., 2d Sess., Section-by-Section 

Analysis of H.R. 2281 as passed by the United States House of 

Representatives on August 4, 1998 at 49 (Comm. Print, Serial No. 6, 



    These changes were part of the Digital Millennium Copyright Act of 

1998 (``DMCA''), Public Law 105-304, which, among other things, amended 

sections 112 and 114 of the Copyright Act to clarify that ``the digital 

sound recording performance right applies to nonsubscription digital 

audio services such as webcasting'' and to address the licensing issues 

raised by the webcasters. Id. at 50. Specifically, Congress amended 

section 114 by creating a new statutory license for nonexempt eligible 


[[Page 14228]]

transmissions (e.g., webcasting) and nonexempt transmissions by 

preexisting satellite digital audio radio services to perform publicly 

sound recordings in accordance with the terms and rates of the 

statutory license. 17 U.S.C. 114(f). The DMCA also amended section 

114(d)(1)(A) to ``delete two exemptions that were either the cause of 

confusion as to the application of the DPRA to certain nonsubscription 

services (especially webcasters) or which overlapped with other 

exemptions.'' H.R. Rep. No. 105-796, at 80 (1998).

    On March 1, 2000, RIAA filed a petition for a rulemaking with the 

Copyright Office asking that the Office determine the scope of the 

section 114(d)(1)(A) exemptions. Specifically, RIAA has requested that 

the Office adopt a rule ``clarifying that a broadcaster's transmissions 

of its AM or FM radio station over the Internet * * * is not exempt 

from copyright liability under section 114(d)(1)(A) of the Copyright 

Act.'' RIAA petition at 1 (filed March 1, 2000). RIAA states in its 

petition that it has attempted to negotiate voluntary agreements with 

broadcasters who stream their over-the-air AM or FM radio broadcast via 

the Internet or who have authorized a third party ``aggregator'' to 

retransmit an over-the-air radio broadcast via the Internet. It asserts 

that these discussions have not progressed beyond the initial stages 

because the parties cannot agree whether transmission of a broadcast 

over the Internet is subject to the digital performance right. 

Consequently, it has asked the Office to interpret section 114(d)(1)(A) 

and determine whether a broadcast transmission made via the Internet is 

exempt from copyright liability.

    The Office agrees with RIAA that the resolution of this question 

has implications for both the section 112 \2\ and the section 114 

statutory licenses. For example, if it is ultimately decided that a 

broadcast transmission over the Internet falls outside the safe harbor 

carved out by the section 114(d)(1) exemptions, the webcaster must 

decide whether to make use of the statutory license under section 

114(f) or whether to negotiate a private license with the copyright 

owners of the sound recordings. Alternatively, if the Office decides 

that a broadcast transmission which is streamed over the Internet is 

exempt under section 114(d)(1)(A), parties can avoid further 

negotiations over rates and terms for use of the sound recordings in 

those situations.


    \2\ A transmitting organization that makes transmissions under 

the section 114(f) license may also make an ephemeral recording, 

under a separate statutory license, for the purpose of making the 

digital audio transmissions. 17 U.S.C. 112(e).


RIAA's Initial Arguments in Support of Its Petition

    RIAA argues that the amendments to sections 112 and 114 support its 

view that broadcasters who engage in transmissions over the Internet 

are not exempt from copyright liability for these transmissions. First, 

RIAA notes that Congress had no intention of creating any new 

exemptions when it amended section 114(d)(1)(A), but merely sought to 

remove those exemptions that were the source of the confusion, either 

because it was unclear how the exemption applied to nonsubscription 

services or because the exemption was redundant. These changes were in 

no way intended to affect the provision that exempts nonsubscription 

broadcast transmissions. H.R. Rep. No. 105-796, at 80 (1998).

    While RIAA does not dispute that there is a recognized exemption 

for over-the-air broadcast transmissions, it continues its analysis by 

noting that the definition of an ``eligible nonsubscription 

service,''--the entity which, by statute, may make use of the statutory 

license--specifically includes retransmissions of broadcast 

transmissions. Consequently, it argues that Congress never intended 

that broadcasts over the Internet be exempt under the provisions of 

section 114(d)(1)(B). Instead, Congress carved out specific exemptions 

for retransmissions of a nonsubscription broadcast transmission, and 

none of these directly address a retransmission over the Internet. 17 

U.S.C. 114(d)(1)(B)(i)-(iv). Therefore, a retransmission of a 

nonsubscription broadcast transmission over the Internet would have to 

meet the requirements set forth in subsection (B) of section 114(d)(1) 

or be subject to the section 106(6) right of public performance.

    In further support of its interpretation of the statutory license, 

RIAA observes that a webcaster who utilizes the section 114(d)(2) 

license is also eligible for a statutory license pursuant to section 

112(e)(1)--a license which allows transmitting organizations to make 

one or more ephemeral recordings, depending upon the terms of the 

license. The section 112 license, however, allows only two different 

types of transmitting organizations to make use of the license: (1) A 

transmitting organization entitled to make a transmission of a sound 

recording under the section 114(f) license; or (2) A transmitting 

organization that makes use of the exemption specified in section 

114(d)(1)(C)(iv). These limitations on the section 112 license thus 

appear to present a dilemma for the broadcasters. Namely, how do they 

make the necessary ephemeral recordings incident to streaming 

nonsubscription broadcast transmissions over the Internet if they 

cannot take advantage of the statutory license in section 112? For this 

reason, RIAA suggests that Congress did not intend to exempt 

nonsubscription broadcast transmissions that are retransmitted over the 

Internet under the general exemption for broadcast transmissions set 

forth in section 114(d)(1)(A). Otherwise, Congress would have made 

provisions for the making of the necessary ephemeral recordings used in 

these transmissions.

Proposed Rule and Comments

    The foregoing discussion has been presented solely for the purpose 

of stating the arguments that have been made to the Office in support 

of the request to conduct this rulemaking. While the Office has made no 

determination on the merits of the arguments put forth by RIAA in its 

petition, the Office acknowledges that there appears to be a need to 

resolve the questions surrounding the applicability of the section 

114(d)(1)(A) exemption to the activities of a broadcaster when it makes 

a public performance of a sound recording by means of a digital audio 


    The Copyright Office does not foresee any need to amend its current 

rule defining the term ``Service,'' 37 CFR 201.35(b)(2), in the event 

that a broadcast transmission is found to fall within the scope of the 

section 114(d)(1) exemptions. On the other hand, if the Office decides 

that transmissions of broadcast signals over a digital communications 

network, such as the Internet, are not exempt from copyright liability 

under section 114(d)(1)(A) of the Copyright Act, then it proposes 

amending the rule as set forth in this notice.

    All interested parties are requested to file comments and replies 

with the Copyright Office in accordance with the information set forth 

in this document. Comments are invited, first, on whether the Office 

should address this issue in a rulemaking and, second, on whether the 

Office should adopt the regulatory language set forth in the notice or 

some other regulatory language in its place. The Copyright Office has 

posted the RIAA petition to its website (http://www.copyright.gov/

CARP/RIAApetition.pdf) in order to facilitate the dissemination of the 

information presented by RIAA in its petition.

[[Page 14229]]

Statutory Authority

    The Copyright Office initiates this proceeding under its authority 

to establish regulations for the administration of its functions and 

duties under title 17. 17 U.S.C. 702. The Office exercises its 

authority under section 702 when it is necessary ``to interpret the 

statute in accordance with Congress' intentions and framework and, 

where Congress is silent, to provide reasonable and permissible 

interpretations of the statute.'' 57 FR 3284, 3292 (January 29, 1992); 

see also 63 FR 3685, 3686 (January 26, 1998) (invoking section 702 

authority to determine whether a local over-the-air broadcast signal 

may be retransmitted into the local market area under the provisions of 

the section 119 statutory license).

List of Subjects in 37 CFR Part 201


    In consideration of the foregoing, it is proposed that part 201 of 

37 CFR be amended as follows:


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


    Authority: 17 U.S.C. 702.

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

Sec. 201.35  Initial Notice of Digital Transmission of Sound Recordings 

under Statutory License.

* * * * *

    (b) * * *

    (1) * * *

    (2) A Service is an entity engaged in the digital transmission of 

sound recordings, pursuant to section 114(f) of title 17 of the United 

States Code, including, but not limited to, any entity that transmits 

an AM/FM broadcast signal over a digital communications network such as 

the Internet, regardless of whether the transmission is made by the 

broadcaster that originates the AM/FM signal or by a third party, and 

provided that such transmission meets the applicable requirements of 

the statutory license set forth in 17 U.S.C. 114(d)(2).

* * * * *

    Dated: March 10, 2000.

David O. Carson,

General Counsel.