[Federal Register: December 11, 2000 (Volume 65, Number 238)]
[Proposed Rules]
[Page 77330-77333]
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LIBRARY OF CONGRESS
Copyright Office
37 CFR Part 201
[Docket No. RM 2000-4B]
Public Performance of Sound Recordings: Definition of a Service
AGENCY: Copyright Office, Library of Congress.
ACTION: Petition for rulemaking, denial.
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SUMMARY: On April 17, 2000, the Digital Media Association (``DiMA'')
filed a petition with the Copyright Office, requesting that the Office
initiate a rulemaking proceeding to amend the rule that defines the
term ``Service'' for purposes of the statutory license governing the
public performance of sound recordings by means of digital audio
transmissions. DiMA sought an amendment that, if adopted, would expand
the current definition of the term ``Service'' to state that a service
is not interactive simply because it offers the consumer some degree of
influence over the programming offered by the webcaster. For the
reasons set forth in this notice, the Copyright Office is denying the
DiMA petition.
DATE: December 11, 2000.
FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or
Tanya M. Sandros, Senior Attorney, Copyright Arbitration Royalty Panel,
P.O. Box 70977, Southwest Station, Washington, DC 20024. Telephone:
(202) 707-8380. Telefax: (202) 252-3423.
SUPPLEMENTARY INFORMATION:
Background
Since the enactment of the Digital Performance Right in Sound
Recordings Act of 1995 (``DPRA''), Public Law 104-39, copyright owners
of sound recordings have enjoyed an exclusive right to perform their
copyrighted works publicly by means of a digital audio transmission,
subject to certain limitations and exemptions. Among the limitations on
the newly created digital performance right was the creation of a
statutory license for nonexempt, noninteractive, digital subscription
transmissions. 17 U.S.C. 114(d)(2), (3) and (f) (1995).
[[Page 77331]]
This license was amended in 1998 in response to the rapid growth of
digital communications networks, e.g., the Internet, and the confusion
surrounding the question of how the DPRA applied to certain
nonsubscription digital audio services. These changes, included in the
Digital Millennium Copyright Act of 1998 (``DMCA''), Public Law 105-
304, expanded the section 114 statutory license to expressly cover
nonexempt eligible nonsubscription transmissions and nonexempt
transmissions made by preexisting satellite digital audio radio
services. 17 U.S.C. 114(f) (1998).
For purposes of the DMCA, an ``eligible nonsubscription
transmission'' is defined as:
a non-interactive nonsubscription digital audio transmission not
exempt under subsection (d)(1) that is made as part of a service
that provides audio programming consisting, in whole or in part, of
performances of sound recordings, including retransmissions of
broadcast transmissions, if the primary purpose of the service is to
provide to the public such audio or other entertainment programming,
and the primary purpose of the service is not to sell, advertise, or
promote particular products or services other than sound recordings,
live concerts, or other music-related events.
17 U.S.C. 114(j)(6) (1998). A key element of the definition is the
requirement that the transmission must be ``non-interactive.'' Unless a
service meets this criterion, it is ineligible for the statutory
license and, instead, must negotiate a voluntary agreement with the
copyright owner(s) of the sound recordings before performing the works
by means of digital audio transmissions. 17 U.S.C. 114(d)(3) (1998).
The distinction between interactive and non-interactive
transmissions is central to determining whether a service that
transmits performances of sound recordings is eligible to operate under
the section 114 licensing scheme. Non-interactive services may make use
of the statutory license, but interactive services incur full copyright
liability under the digital performance right and, therefore, must
conduct arms-length negotiations with the copyright owners of the sound
recordings for a license before making a digital transmission of a
sound recording. Congress imposed full copyright liability on
interactive services because it believed ``interactive services [were]
most likely to have a significant impact on traditional record sales,
and therefore pose[d] the greatest threat to the livelihoods of those
whose income depends upon revenues derived from traditional record
sales.'' S. Rep. No. 104-128, at 16 (1995).
Congress first defined an ``interactive service'' in the DPRA as a
service that:
enables a member of the public to receive, on request, a
transmission of a particular sound recording chosen by or on behalf
of the recipient. The ability of individuals to request that
particular sound recordings be performed for reception by the public
at large does not make a service interactive. If an entity offers
both interactive and non-interactive services (either concurrently
or at different times), the non-interactive component shall not be
treated as part of an interactive service.
17 U.S.C. 114(j)(4) (1995). The second sentence was added to make clear
that ``the term ``interactive service'' is not intended to cover
traditional practices engaged in by, for example, radio broadcast
stations, through which individuals can ask the station to play a
particular sound recording as part of the service's general programming
available for reception by members of the public at large.'' S. Rep.
No. 104-128, at 33-34 (1995).
In the DMCA, Congress expanded this definition to include further
explanation of the type of activity that does not, in and of itself,
make a service interactive. Specifically, the DMCA refined the
definition of an ``interactive service'' as follows:
(7) An ``interactive service'' is one that enables a member of
the public to receive a transmission of a program specially created
for the recipient, or on request, a transmission of a particular
sound recording, whether or not as part of a program, which is
selected by or on behalf of the recipient. The ability of
individuals to request that particular sound recordings be performed
for reception by the public at large, or in the case of a
subscription service, by all subscribers of the service, does not
make a service interactive, if the programming on each channel of
the service does not substantially consist of sound recordings that
are performed within 1 hour of the request or at a time designated
by either the transmitting entity or the individual making such
request. If an entity offers both interactive and noninteractive
services (either concurrently or at different times), the
noninteractive component shall not be treated as part of an
interactive service.
17 U.S.C. 114(j)(7) (1998). In both cases, Congress sought to identify
a service as interactive according to the amount of influence a member
of the public would have on the selection and performance of a
particular sound recording. Neither definition, however, draws a bright
line delineating just how much input a member of the public may have
upon the basic programming of the service.
On April 17, 2000, the Digital Media Association (``DiMA'') filed a
petition with the Office, seeking clarification on this point and an
amendment to the regulation defining the term ``service.'' DiMA's
proposed rule would amend 37 C.F.R. 201.35(b)(2) as follows:
A Service making transmissions that otherwise meet the
requirements for the section 114(f) statutory license is not
rendered ``interactive,'' and thus ineligible for the statutory
license, simply because the consumer may express preferences to such
Service as to the musical genres, artists and sound recordings that
may be incorporated into the Service's music programming to the
public. Such a Service is not ``interactive'' under section
114(j)(7), as long as: (i) Its transmissions are made available to
the public generally; (ii) the features offered by the Service do
not enable the consumer to determine or learn in advance what sound
recordings will be transmitted over the Service at any particular
time; and (iii) its transmissions do not substantially consist of
sound recordings performed within one hour of a request or at a time
designated by the transmitting entity or the individual making the
request.
The effect of the amendment would be that a service would not be
considered interactive merely because it offers a consumer some degree
of influence over the streamed programming.
Shortly thereafter, the Copyright Office published a notice in the
Federal Register, seeking comment from interested parties on two
issues. First, the Office asked whether the petition articulated a
proper subject for a rulemaking proceeding; and second, assuming the
requested rule could be promulgated through a notice and comment
proceeding, whether sufficient information existed ``to promulgate a
regulation that could accurately distinguish between activities that
are interactive and those that are not.'' 65 FR 33266, 33267 (May 23,
2000).
For the reasons set forth herein, the Copyright Office denies
DiMA's petition.
Comments
Comments and reply comments were filed by the Recording Industry
Association of America, Inc. (``RIAA'') and the Digital Media
Association (``DiMA'').
Is a Rulemaking Proceeding Necessary or Appropriate?
DiMA seeks its proposed amendment to the definition of the term
``service'' based on its understanding that a consumer-influenced
webcast would not be prohibited from using the section 114 statutory
license. According to DiMA, this clarification is necessary in large
part because copyright holders of the sound recordings have taken the
untenable position that ``consumer-influenced webcasting of any nature
is not eligible for the DMCA statutory license.'' DiMA comment at 4;
DiMA reply at 9-11.
At the same time, DiMA states that it is impossible to discern all
possible
[[Page 77332]]
permutations of features and functionalities that may be offered by a
service which allows consumer input on programming selections. DiMA
comment at 5. Nevertheless, DiMA asserts that its proposed rule
establishes guidelines to be used to determine whether a specific
service is interactive after a fact-intensive analysis of its
activities. DiMA acknowledges, however, that the Office may determine
that application of the rule, especially the guidelines set forth in
the second half of the proposal, may involve evidentiary issues that
bar adoption of the entire proposal. If this is the case, DiMA asks the
Office to adopt, at a minimum, the first sentence of the proposed rule,
which reads as follows:
A Service making transmissions that otherwise meet the
requirements for the section 114(f) statutory license is not
rendered ``interactive,'' and thus ineligible for the statutory
license, simply because the consumer may express preferences to such
Service as to the musical genres, artists and sound recordings that
may be incorporated into the Service's music programming to the
public.
DiMA reply at 7. DiMA is expressly not asking the Copyright Office to
determine whether any particular service is non-interactive. Id.
DiMA also argues that the rulemaking is necessary in order to
``define the appropriate bounds'' of the Copyright Arbitration Royalty
Panel (``CARP'') ``proceeding which will determine the statutory rates
for sound recording performances (and certain reproductions) associated
with webcasting.'' DiMA Petition at 2; DiMA comment at 4; see also 64
FR 52107 (September 27, 1999).
RIAA opposes the DiMA petition. It asserts that DiMA's proposed
change will not clarify current law, but actually change it. RIAA
argues that clear standards for determining what constitutes an
``interactive service'' have already been set forth in section
114(j)(7). Specifically, section 114(j)(7) requires an ``interactive
service'' to either ``enable[] 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.'' 17 U.S.C. 114(j)(7).
RIAA also argues that the determination as to whether a particular
service is interactive requires a fact-intensive inquiry to determine
whether the service offers the type of prohibited activity
characterized in section 114(j)(7). Moreover, RIAA contends that the
DiMA proposal fails to define a class of service that embodies these
principles, offering instead, a rule meant to cover ``a myriad of
services with different personalization features,'' which defy
characterization into general categories. RIAA comment at 12. RIAA then
cites potential problems with the proffered regulatory language due to
the lack of precise definitions for concepts and terms such as
``preferences'' or ``incorporated into the Service's programming.'' Id.
at 6.
RIAA also takes exception to DiMA's assertions that RIAA believes
any amount of consumer influence automatically makes a service
interactive. In fact, RIAA acknowledges that all music programming
services are likely to be influenced by their consumers' tastes. RIAA
comment at 3. For this reason, RIAA purports to examine each service on
a case-by-case basis, asking the question ``whether the service offers
`programs specially created for the recipient' or whether it allows
listeners to request particular sound recordings.'' RIAA reply at 2-3.
Because it evaluates each service in this manner, RIAA maintains that
DiMA's argument in support of this rulemaking proceeding is groundless.
The Copyright Office has considered DiMA's request to initiate a
rulemaking to clarify that a service does not become interactive merely
because consumers may have some influence on the music programming
offered by the service and finds that this concept is not in dispute.
RIAA readily acknowledges that consumers may express preferences for
certain music genres, artists, or even sound recordings without the
service necessarily becoming interactive. RIAA comment at 8. The Office
agrees, and concurs with DiMA that certain passages from the DMCA
Conference Report quoted in its comments support this interpretation.
For example, the following passage in the DMCA Conference Report
distinguishes between certain activities that make a service
interactive and those that do not:
[A] service would be interactive if it allowed a small number of
individuals to request that sound recordings be performed in a
program specially created for that group and not available to any
individuals outside of that group. In contrast, a service would not
be interactive if it merely transmitted to a large number of
recipients of the service's transmissions a program consisting of
sound recordings requested by a small number of those listeners.
H.R. Conf. Rep. No. 105-797, at 87-88 (1998) (``DMCA Conference
Report'').
However, the fact that some degree of consumer influence on a
service's programming is permissible does not mean that a regulation to
clarify that fact is necessary or even desirable. In fact, because the
law and the accompanying legislative history make it clear that
consumers can have some influence on the offerings made by a service
without making the service interactive, there is no need to amend the
regulations to make this point.
What is not clear, however, is how much influence a consumer can
have on the programming offered by a transmitting entity before that
activity must be characterized as interactive. The examples cited in
the comments and gleaned from the legislative history are merely
illustrative and do not identify with specificity those characteristics
of a service that make it interactive.\1\ Such a determination must be
made on a case-by-case basis after the development of a full
evidentiary record in accordance with the standards and precepts
already set forth in the statute. DiMA appears to agree with this
approach in theory and, in fact, expressly states that it does not seek
a ruling on whether any particular service should be characterized as
an interactive service. DiMA reply at 7.
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\1\ RIAA and DiMA discussed the services offered by Launch
Media, Inc., through its LAUNCHcast service, and MTV, through its
Radio SonicNet service, to illustrate the type of offerings that are
in dispute. See RIAA comment at 6-7; DiMA reply at 18-21. From these
descriptions, there is considerable doubt whether either offering
would qualify as [a noninteractive service.]*
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Moreover, courts recognize that some principles must evolve over a
period of time before an agency will have gathered sufficient
information to formulate a general rule. See Securities and Exchange
Commission v. Chenery Corp., 332 U.S. 194, 202-203 (1947)
(acknowledging that ``the agency may not have sufficient experience
with a particular problem to warrant rigidifying its tentative judgment
into a hard and fast rule. Or the problem may be so specialized and
varying in nature as to be impossible to capture within the boundaries
of a general rule.''). See also, WWHT, Inc. v. Federal Communications
Commission, 656 F.2d 807, 817 (D.C. Cir. 1981) (supporting agency's
denial of rulemaking petition in case where rapid technological
development in area makes it difficult to formulate effective
regulations, or the state of development ``may be such that sufficient
data are not yet available on which to premise adequate
regulations.'').
In light of the rapidly changing business models emerging in
today's digital marketplace, no rule can accurately draw the line
demarcating the limits between an interactive service and a
noninteractive service. Nor can one readily classify an entity which
[[Page 77333]]
makes transmissions as exclusively interactive or noninteractive. The
statutory definition of an ``interactive service'' and the DMCA
Conference Report make it clear that a transmitting entity may offer
both types of service, either concurrently or at different times, and
that ``the noninteractive components are not to be treated as part of
an interactive service, and thus are eligible for statutory
licensing.'' See, DMCA Conference Report at 88 (1998). The proposed
amendment makes no mention of this nuance of the law.
Moreover, the Copyright Office is not persuaded that any new rules
are necessary to discern which parties should participate in the
current copyright arbitration royalty panel proceeding, the purpose of
which is only to set rates and terms for the public performance of
sound recordings made in accordance with the section 114 statutory
license. 17 U.S.C. 114(f)(2)(A). The panel's responsibility is to
establish the value of the performances and set appropriate rates, not
to discern whether a particular service meets the eligibility
requirements for using the license.
In short, the Office does not believe that DiMA has presented a
persuasive case that a rulemaking on this issue is necessary,
desirable, or feasible.
For these reasons, the Office denies DiMA's petition.
Dated: November 21, 2000.
Marybeth Peters,
Register of Copyrights.
[FR Doc. 00-31458 Filed 12-8-00; 8:45 am]
BILLING CODE 1410-31-P
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