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
104^th Congress, 1^st Session

June 28, 1995

Digital Performance Right in Sound Recordings Act of 1995 (H.R. 1506)

Chairman Moorhead joined by Chairman Hyde and Representatives Conyers and Gekas introduced H.R. 1506 on April 7, 1995; legislation to provide a sound recording public performance right has also been introduced in the Senate. The Copyright Office has supported the principle behind H.R. 1506 for many years.

As Congressman Moorhead aptly noted when H.R. 2576 was introduced in the 103rd Congress:

My statement begins with a discussion of efforts to adopt a performance right prior to H.R. 1506 and a brief analysis of salient features of H.R. 1506, indicating where the Office has questions or comments. It also contains a summary of the history behind this bill and the reasons the United States should recognize performance rights in sound recordings. Originally my statement contained a more detailed analysis of this bill. The parties, however, have continued to meet and a consensus which in some respects is significantly different from the language before us is in sight.

I. The Digital Performance Right in Sound Recordings Act

A. Activity during the 103^rd Congress

1. Legislation Introduced in the House and Senate

Representatives Hughes and Berman introduced H.R. 2576 on July 1, 1993; this bill provided for “an exclusive right to perform sound recordings publicly by means of digital transmissions.” On August 6, 1993, Senators Hatch and Feinstein introduced S.1421. This bill, like H.R. 2576 broadened the scope of exclusive rights in sound recordings¹ by amending 17 U.S.C. 106 (exclusive rights in copyrighted works) to include sound recordings performed publicly by means of a digital transmission, including radio and television broadcasts, cable television, and satellite transmissions.

The Senate bill addressed some concerns² raised by existing rights holders by adding a section that stated licensing fees payable for the public performance of sound recordings under section 106 “shall not be taken into account in any administrative, judicial or other governmental proceeding to set or adjust the royalties payable to copyright owners of musical works for the public performance of their works.”³ In her floor statement, Senator Feinstein noted that this provision was added to let governmental and judicial agencies know that the legislation was not intended to reduce existing royalties and that in the course of hearings there would be a determination whether “additional statutory protection for current rights holders” would be required.⁴ Congressman Moor head recognized in his remarks that H.R. 2576 would “undergo some change as it works its way through the legislative process” and I encourage the affected parties to work with the subcommittee and each other to reach a solution."⁵ Pursuant to that advice, the parties held many negotiations.

2. Consensus Agreement

Although there was a great deal of debate on the two bills, neither the Senate nor the House held hearings.⁶ However, in an effort to forge some consensus between interested parties, Chairman Hughes hosted “round table” discussions and the parties continued to meet on their own to resolve their differences. Last spring music industry organizations representing songwriter, performers, unions, performing rights societies, music publishers, and record companies announced they had reached an agreement on legislation that would create a digital public performance right in sound recordings. The May 11, 1994, agreement known as the Consensus Agreement was endorsed by the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), the American Federation of Musicians (AFM), the American Federation of Television and Recording Artists (AFTRA), the National Music Publishers Association (NMPA), and the Recording Industry Association of America (RIAA). Conspicuously missing, but not surprisingly so, was the endorsement of the National Association of Broadcasters (NAB).

The Consensus Agreement did not provide as broad a public performance right for sound recordings as S. 1421 and H.R. 2576. Instead, it focused generally on creating a compensation system for performance of sound recordings that are distributed by commercial subscription audio services. An exemption was included for services such as Muzak. The May 11 Consensus Agreement also included a so-called window of exclusivity. This window consisted of an exclusive right to authorize digital performance by subscription services three months from the first public performance or four months from the first sale of a recording, whichever came first. This provision was aimed at giving sound recording owners lead time to authorize or prohibit subscription transmission on new recordings.⁷ The May 11 agreement provided a statutory license for digital subscription transmissions complying with the sound recording performance complement provision. This complement restricted subscription transmission to two consecutive selections from the same phonorecord, and three consecutive selections by the same featured artist or from the same set of works marketed together as a unit.

The Consensus Agreement also addressed and revised the application of the mechanical reproduction compulsory license of 115 of the Copyright Act, and gave the Librarian of Congress substantial responsibility in that area. Mechanical reproduction rights of writers and publishers would apply when phonorecords were delivered to consumers by way of digital transmissions. The mechanical royalty rates would vary depending on whether or not it was possible to identify the particular work being copied. The two categories of works were “trackable,” i.e., identifiable deliveries, for which information would be available as to which works were being copied, and “non trackable” deliveries, those deliveries for which copying can reasonably be expected but identification of the works copied would be impossible or difficult. The Consensus Agreement rates for identifiable deliveries would be the mechanical compulsory license rate. The rates for non trackable deliveries, where the making of phonorecords was facilitated without making an effort to determine which works were being copied, were to be set by voluntary negotiations. If negotiations were unsuccessful, rates would be subject to the binding determination of copyright arbitration royalty panels, convened by the Librarian of Congress.

3. Amendment Based on the May 11. 1994, Consensus Agreement

Following that agreement, Chairman Hughes circulated several draft substitute amendments to H.R. 2576 and scheduled a markup on a draft substitute bill on June 28, 1994.⁸ That draft legislation proposed a digital public performance right in sound recordings that exempted over-the-air broadcasters engaging in digital transmissions. Digital delivery was defined as occurring if “the person entitled to the compulsory license has authorized a digital transmission of a sound recording that results in the identifiable making by the transmission recipient of a phonorecord of that sound recording.”⁹ The performance right would apply to broadcasters who offered subscription services. The draft provided either a statutory license or a voluntary agreement. Royalty rates for statutory licenses would either be negotiated between copyright owners of sound recordings and entities transmitting sound recordings, or would be defined through arbitration. The statutory licensing fees would be paid to copyright owners, as well as featured recording artists, and non featured musicians and vocalists, according to percentages prescribed in the bill.

The Librarian of Congress was charged with responsibilities similar to those presently existing under the Copyright Royalty Tribunal Reform Act. If negotiating parties could not reach agreement on licensing rates and terms, the Librarian would convene a Copyright Arbitration Royalty Panel (CARP) to determine rates and terms. Results would be binding on all parties that had not entered into a voluntary licensing agreement. CARP proceedings would occur every five years, or whenever a copyright owner of a sound recording filed a petition identifying a new type of digital transmission service. Fees paid to copyright owners of musical works for public performances of their works were not to be adversely affected.

Sometime after the circulation of this proposed House substitute amendment, some of the parties began to back away from the legislation being circulated. Moreover, Chairman Hughes was not interested in a bill that totally excluded broadcasters. Others were concerned about the issuance of the Green Paper¹⁰ which called for a performance right for sound recordings but raised again the question of whether all digital transmissions were public performances.

4. S. 227 in the 104th Congress

Senators Hatch and Feinstein introduced S. 227 on January 13, 1995. Although S. 227 creates a public performance right for digital transmissions of sound recordings, it is much more limited in scope than their earlier bill, S. 1421. Only subscription services come under this bill; broadcasters are completely exempt. The bill subjects certain transmissions to a statutory license, the rates and terms of which will be decided by either voluntary agreements or compulsory arbitration before a CARP.

While S. 227 reflects some of the points reached in the May 11 Consensus Agreement, it is not identical. Nor does the bill contain everything that was in the draft amendment circulated by Chairman Hughes; it does not contain an exclusivity window, and its compulsory license restrictions create a broader exclusive right.

As introduced S. 227 creates a compulsory license for a “subscription transmission,” but does not apply to interactive services or where the subscription transmission exceeds the “performance complement.” Under this bill, the “performance complement” is the transmission of no more than two selections each day of sound recordings embodied in any one phonorecord distributed in the United States or three selections each day featuring the same recording artist or embodied in a set or compilation sold as one unit. It also contains savings clause language that states that S. 227 does not eliminate or limit any music copyright owner's existing rights or remedies. Finally, S. 227 calls for licensing of independent subscription services on equal terms with those owned, controlled or managed by sound recording rights holders.

5. Ongoing Negotiations

The parties have now reached a new consensus, and are continuing to refine their agreement. They have agreed on several points, including a provision that would grant a record producer a one year exclusive right to license its works for use on interactive services. If the record producer is a small company, holding the copyright to 1,000 or fewer sound recordings, the exclusive license could last for two years. These grants could not be renewed for a period of thirteen months after the expiration of the original license. In order to forestall concerns that a large record company might become a “gatekeeper” over the use of the music, the new compromise sets minimum standards for the licensing of sound recordings which should promote widespread dissemination of the recordings. In addition, the interactive services can only receive an exclusive license if the music being transmitted is licensed for use by the various performing rights societies. Finally, to address the concerns of subscription services, the compromise sets a new sound recording performance complement that also allows for accidental transmission in excess of the complement number. The Consensus Agreement will be reflected in the markup of S. 227 scheduled for June 29.

B. Analysis of H.R. 1506, The Digital Performance Right in Sound Recordings Act of 1995

Chairman Moorhead, joined by Chairman Hyde and Representatives Conyers and Gekas,¹¹ introduced H.R. 1506, the Digital Performance Right in Sound Recordings Act of 1995, on April 7, 1995. Like S. 227, introduced by Senator Hatch on January 13, 1995, this bill creates a new public performance right in digital transmissions of sound recordings. The Moor head bill, however, is not simply a companion to the Hatch bill; instead, it basically introduces the terms of the “consensus,” the result of an earlier agreement the parties struck, that is referred to as the May 11 Consensus Agreement.

H.R. 1506, in essence, gives the Consensus Agreement its “day in Congress.” As noted by Chairman Moor head, H.R. 1506 differs from S. 227 in a number of respects. Where parties differ, H.R. 1506 uses the consensus language in order to provide a mechanism for resolution.

H.R. 1506 has narrowed the debate to a few unresolved issues. First is the matter of the scope of the performance right. The Senate bill resulted in a near-exclusive public performance right for a non-broadcast, subscription digital transmission of a sound recording by employing very restrictive requirements for the statutory license. It would be difficult for non interactive subscription services to qualify for a statutory license. Interactive subscription services would be subject to an exclusive right. The House bill broadens the statutory license.

Copyright owners of nondramatic music recorded on phonorecords favor H.R. 1506's broadening of the statutory license limitations because they fear sound recording rights holders will become “gatekeepers” over the performance of the underlying music. Music copyright owners assert that sound recording rights holders may use their exclusive right to limit the performance of their music.

The second issue is also between sound recording copyright owners and music copyright owners; it concerns mechanical royalties on phonorecords reproduced from digital transmissions. S. 227 would only authorize royalties for specifically identified reproductions, while H.R. 1506 provides a compulsory license to avoid discouraging the transmitter from providing copyright management information and technological measures for identifying when reproductions are made.

As the Subcommittee on Courts and Intellectual Property continues to seek an acceptable consensus among interested parties and effectuate good copyright policy, the Copyright Office offers the following brief summary and comment on the provisions of H.R. 1506.

1. Summary and Overview

As do other sound recording performance rights bills—H.R. 2576, S. 1421, the consensus bill, and S. 227—H.R. 1506 establishes a public performance right for sound recordings by adding a new paragraph 6 to 106 (exclusive rights in copyrighted works). This new section grants owners of sound recordings the right to perform their works publicly by means of a digital transmission.

2. Comment

At first glance, the performance right appears to be a broad one covering at least all digital transmissions to the public. However H.R. 1506, like earlier bills, establishes extensive limitations on the enjoyment of this right in later sections.

1. Summary

Section 3 adds a reference to 106(6), to 114 (exclusive rights in sound recordings), clarifies the extent of the reproduction rights, and deletes the reference after “copies” to “motion pictures and other audiovisual works” in subsection (b). This section also deletes the current subsection (d), of section 114 and replaces it with new subsections (d), (e), (f), (g), (h), (i), and (j).

The new subsection (d) contains three paragraphs. The first paragraph delineates exempt transmissions, those that create no liability despite the proposed changes in 17 U.S.C. 106; the second paragraph sets out limitations on subscription transmissions, and the third paragraph refers to rights that are not otherwise limited.

Subsection 114(d)(1) exempts from copyright liability certain digital transmissions that are not part of an interactive service. An interactive service is defined later in the bill as “one 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.” Subsection 114(d)(1)(A) exempts public performance of a sound recording by a non subscription transmission (such as a digital radio or television broadcast). Subsection (d)(l)(B) sets out further limitations or exemptions. Thus, H.R. 1506 like S. 227 creates certain classes of exempted activities.

Section 114(d)(2) creates a new statutory license for subscription services . In order to qualify for this statutory license, the digital performance must meet certain criteria. First, unless authorized by the copyright owner, three months must have expired since the first public performance by means of a digital transmission in the United States or four months from the first sale to the public in the United States of the digital recording, whichever comes first. Second, the purpose of the transmission must not be to enable the recipient to reproduce the sound recording. Third, the transmission must not exceed the specified sound recording performance complement. Fourth, except as provided in 1002(e), the transmission must be accompanied by any encoded information identifying the sound recording or underlying work.

Section 114(d)(3) asserts that this legislation does not limit or impair any existing rights. This is an attempt to preserve the status quo for existing right holders. The concerns are the exclusive right to perform a musical work under 106(4), the exclusive right to reproduce and distribute a sound recording of the musical work embodied therein under 106(1), and the exclusive right to distribute under 106(3), which includes by means of a digital phonorecord delivery as defined in the revised 115.

2. Comment

By restoring the exclusivity window and the requirement of consecutive performance found in the consensus bill, H.R. 1506 broadens the number of digital transmissions that could be subject to the statutory license. The music public performing right is (and must be) exercised non-exclusively. The writers and publishers of nondramatic musical works argue that giving an exclusive sound recording performance right places the sound recording rights holder in a position to become the gatekeeper of all performances, not only of a sound recording but also of the underlying music recorded on the phonorecord. They assert that this creates an unfair advantage for the sound recording rights holders. On the other hand, sound recording rights holders assert their basic need for an exclusive right for sound recording performances.

Since exclusivity questions were a key feature of the May 11 Consensus Agreement, the introduction of the two approaches to statutory licensing found in H.R. 1506 and S. 227 puts resolution of the matter squarely before Congress. The question before Congress is whether the scope of the statutory license should incorporate interactive services, a broad performance complement, and a three to four-month window of exclusivity or whether the performance rights should be made more exclusive by eliminating these features.

3. Subsection (f) Licenses for Subscription Transmissions

a. Summary

This subsection creates a statutory license for nonexempt digital subscription transmissions. It first sets up in (f)(1) the possibility of voluntary negotiation by requiring the Librarian of Congress no later than 30 days after enactment of the bill to publish a notice in the Federal Register initiating voluntary negotiation proceedings among parties to establish terms and rates of royalty payments for activities subject to the new statutory license for the period from January 1, 1996, until December 31, 2000.

If the parties have not reached a negotiated agreement by then, (f)(2) takes over and the procedures come under a copyright arbitration royalty panel (CARP). The Librarian must convene a CARP to determine and publish rates and terms. This proceeding will be under Chapter 8 and will be binding on any party not subject to a voluntary agreement.

Subsection (f)(2) directs the Librarian to establish requirements by which copyright owners receive reasonable notice of the use of their sound recordings that are subject to statutory licensing. This subsection also directs the Librarian to establish requirements under which entities performing sound recordings must keep records of their performances. Subsection (f)(3) directs that a voluntary license agreement shall take precedence over the determination of a CARP on the same matter.

Convocation of a CARP to set terms and rates is not a one-time occurrence. In subsection (f)(4), the bill directs the Librarian to adopt regulations which require convening a CARP:

(A) within a six-month period beginning on the date on which a petition is filed by any copyright owners of sound recordings or any entities performing sound recordings affected by this section indicating that a new type of digital transmission service on which sound recordings are performed is or is about to become operational, and

(B) between June 30 and December 31, 2000, and at five-year intervals thereafter.

Finally, (f)(5) states that a person may perform a sound recording by means of a subscription transmission that comes under this subsection without infringing the exclusive right of copyright owner of the sound recording if that person complies with the notice requirement set by the Register and pays the appropriate royalties.

b. Comment

Suggestions for governing standards would be helpful. We presume that the usage record requirements of this section could be fulfilled by a subscription transmitter from its normal business records rather than requiring additional, more detailed records. We envision a system where listings, cue sheets or “logs,” of transmitted performances, would be made available to copyright owners to enable them to compile performance information similar to that gathered on behalf of composers and authors under section 118. However, clarification on this point would be helpful.

4. Subsection (g) Proceeds from Licensing of Subscription Transmissions

a. Summary

Paragraph I of subsection (g) directs payments to performers from all sound recording performance licenses. A rights holder must allocate fees for nonstatutory licenses according to the terms of its contracts with performers.

Paragraph (2) of subsection (g) sets out a formula for statutory royalties to be divided equally between sound recording owners and recording artists. Non featured musicians and vocalists each receive ' 1/2 percent of receipts. In both cases, funds are deposited in escrow accounts managed by a jointly chosen independent administrator. In addition, featured artists receive 45% of receipts, allocated on a per sound recording basis.

The bill does not envision royalty distribution by a CARP; royalties are paid directly to the copyright owners of the performed sound recordings, who must then set aside a portion for artists featured on the recordings. The responsibilities of the Librarian of Congress are confined to adopting notice requirements, establishing a voluntary negotiation period, convening CARPS every five years to set “terms and rates,” and convening CARPS to address new types of digital transmission services.

b. Comment

Like the consensus bill, H.R. 1506 goes a step further than the Senate bill in delineating performers' rights to all sound recording performance royalties, whether statutory or nonstatutory. Under existing law and in the absence of the work made for hire doctrine, record companies owners and performers are joint authors of the sound recording. Recognition of the contribution of recording artists is important, and we are highly supportive of this addition.

Based on our experience with Chapter 10 which has a similar provision, we are concerned about non featured musicians and vocalists who are not members of the musicians' or vocalists' unions. How will they be identified and paid by the independent administrators? Do they file claims with the independent administrator? If not, then what alternative method of obtaining royalties do they have?

All parties are agreed on subsection (g)(2) and the allocation appears fair. Although no changes need to be made in the language of the bill, an explanation in the legislative history of how non-union members may claim royalties in the non featured administration fund would be helpful.

5. Subsection (h) Licensing to Affiliates

a. Summary

This subsection addresses the issue of vertical integration among companies involved in both the music and the subscription service business. It is designed to assure that products are available to similar types of subscription services at fair prices and terms.

Once a copyright owner licenses the right to publicly perform a sound recording through digital technology to an entity which it controls or manages, either directly or indirectly, the copyright owner must offer the licensed sound recording to other similarly situated entities that also want to transmit the sound recording digitally to the public. The license offered to the competitive entities, however, may differ in price, duration and terms to insure credit worthiness and to accommodate differences in geographic region, numbers of subscribers or other relevant factors.

b. Comment

Although we are pleased to see a nondiscrimination provision in H.R. 1506, we have some questions about its operation. What will be the effect of nonperformance of subsection (h)? What type of remedy is available? What type of action may be brought?

1. Summary

Section 4 of H.R. 1506 governs conditions under which mechanical royalties are to be paid when nondramatic music is reproduced via a “digital phonorecord delivery.” It amends 17 U.S.C. 115, as all other recent bills did; it addresses the rights of writers and publishers by expanding the compulsory license for making and distributing phonorecords to accommodate those delivered by digital transmission. Section 4 first amends the existing compulsory license to permit record producers to distribute phonorecords digitally by adding “digital phonorecord delivery” and other clarifying language. It then adds a new paragraph (3) to 115 to permit the record producer to authorize others to make and distribute digital phonorecords. Copyright owners of underlying music are compensated for digital phonorecord deliveries under the terms of this compulsory license. The recent bills agree in these three respects, but H.R. 1506's section 115(c)(3) and (4) follow and refine the approach of the consensus bill. S. 227 would compensate music copyright owners for only a “specifically identified reproduction.” H.R. 1506 operates on the premise that copyright owners of music delivered to consumers as reproductions will also receive mechanical royalties for those reproductions regardless of whether the sound recording that is transmitted as a delivery is identifiable. The Librarian of Congress is to describe the types of identifiable and non identifiable deliveries and to take into account efforts “to avoid or evade the reasonable use of available techniques to identify” such deliveries. Rates and terms are to be set by voluntary negotiations; if not, a CARP will make the decisions.

2. Comment

S. 227 mandates compensation only for a digital phonorecord delivery that is a “specifically identified reproduction by or for any transmission recipient.” The H.R. 1506 definition of digital phonorecord delivery is broader than the S. 227 definition, extending to both identifiable deliveries and those that are not identifiable but nevertheless calculated to result in a reproduction. H.R. 1506 provides for mechanical royalties to writers and publishers in circumstances where because of the nature or characteristics of the transmission service, copying will result. Unless there was a mandate for appropriate payments to writers and publishers in these cases, use of copyright management information and technological measures for monitoring and identifying when a reproduction has been made would be discouraged. Therefore, where a digital transmission service offers equipment that facilitates copying, the service provider and record company could make arrangements that would facilitate identification of the specific work being transmitted for reproduction. Without facilitating identification by those who have means to do so, writers and publishers are otherwise unable to identify the phonorecords delivered by transmission. Moreover, those who authorize copying by transmission have no inherent incentive to identify works on which they must pay royalties.

In this case, in exchange for a new right to authorize digital phonorecord delivery, compulsory licensees may appropriately be charged with safeguarding music owners' rights. If record producers must risk having sales of phonorecords displaced by digital delivery direct to the consumer's home from a “celestial jukebox,” those whose livelihoods depend on mechanical royalties on those phonorecords face the same risk. Writers and publishers believe that it is not sufficient to leave unsettled the matter of who is obliged to pass on copyright management information so that the appropriate royalty can be paid.

The Copyright Office supports Congress' taking definite steps in this area.

1. Summary

January 1, 1996 is the effective date of H.R. 1506, except for subsections 114(e) and (f), which take effect upon enactment. Subsection (d) also allows sound recording rights holders and subscription services to begin voluntary negotiations under 114 immediately or as soon as the Librarian publishes a notice in the Federal Register which he is directed to do no later than 30 days after enactment of the bill.

2. Comment

Since H.R. 1506 provides for a similar negotiating procedure in 115, we suggest that 115(c)(4)(A) and (B) should also be made effective on the date of enactment.

A. Constitutional Grant

The United States Constitution grants Congress the power “to promote the Progress of Science and the useful Arts by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."¹² The work of an author must be a “writing” in order to be eligible for copyright protection.

Section 4 of the 1909 Copyright Act stated that “all the writings of an author” were subject to copyright. But sound recordings were not treated as “writings” in the early part of this century, largely based on the decision in White-Smith Co. v. Apollo Co.¹³ The court's narrow reading of what constituted a “writing” underlay the approach legislators took toward bills proposed between 1909 and 1971 that might have defined recorded aural works as the writings of authors.¹⁴ Some courts noted that the contributions of performers rose to the level of a writing, but felt an amendment to the 1909 Copyright Act was necessary.¹⁵ In the 1970s there were a number of cases dealing with unauthorized duplication of pre-1972 sound recordings; these cases either assumed that the performers' contributions were protectable property, or simply stated the principle with little discussion.¹⁶

In 1971 Congress recognized sound recordings as “writings” deserving copyright protection. Copyright protection was granted, but owners of copyright in sound recordings were not granted the full array of exclusive rights afforded other authors; the controversial public performance right was withheld.¹⁷

B. Legislative History

Many copyright reform bills have been introduced to provide extension of a public performance right to copyright owners of sound recordings. Opponents argued that a performance royalty would be unconstitutional, and would represent a serious financial burden to users. Proponents felt that such a royalty would be constitutional, that users had the ability to pay, and that performers and record companies deserved compensation for the use of their creative efforts for the commercial benefit of others.

The legislative history of the 1971 Act shows that protection was mainly intended to prohibit unauthorized copying, known worldwide as piracy of phonograms.¹⁸ The Act was passed to create uniform federal protection against unauthorized duplication of sound recordings rather than continue to fight piracy in fifty state courts.¹⁹ Subsequent U.S. court decisions affirmed the constitutionality of the 1971 Act.²⁰ Passage of the Act also strengthened efforts to smooth U.S. entry into the Geneva Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms.

Passage of the Sound Recording Act did not quiet the controversy over the extent of protection that sound recordings deserve. The Recording Industry Association of America (RIAA) continued to lobby for increased rights, but others, including broadcasters represented by the National Association of Broadcasters (NAB), continued to oppose performance rights. Representatives of performers, manufacturers, publishers, jukebox interests, and motion picture-interests were also vocal. The concerned parties emphasized the adverse economic effects passage, or non passage, of further legislation might cause them.

Additional legislation was eventually overshadowed by concern about passage of a comprehensive copyright revision bill. Congress was troubled by unsuccessful attempts to reach compromises not only on the performance rights issue, but also difficult cable and photocopying issues.” The new copyright law, the 1976 Copyright Act, did not expand rights of copyright owners of sound recordings to include a public performance right. The House Report stated that:

[t]he Committee considered at length the arguments in favor of establishing [sic] a limited performance right, in the form of a compulsory license, for copyrighted sound recordings, but concluded that the problem requires further study. It therefore added a new subsection (d) to the bill requiring the Register of Copyright to submit to Congress, on January 3, 1978, a report²¹ setting forth recommendations as to whether this section should be amended to provide for performers and copyright owners...any performance rights in copyrighted sound recordings.²²

The study that Congress required the Copyright Office to undertake was issued in 1978. It placed the Copyright Office squarely in the corner of those advocating public performance rights for sound recordings. That recommendation was reiterated by the Office in a report it issued to Congress in October 1991 titled “Copyright Implications of Digital Audio Transmission Services.”

1. The Register's 1978 Report on Performance Rights in Sound Recordings

In the introduction to its thorough 1978 report, the Register of Copyrights stated:

Our investigation has involved legal and historical research, economic analysis, and also the amassing of a great deal of information through written comments, testimony at hearings, and face-to-face interviews. We identified, collected, studied, and analyzed material dealing with a variety of constitutional, legislative, judicial, and administrative issues, the views of a wide range of interested parties, the sharply contested arguments concerning economic issues, the legal and practical systems adopted in foreign countries, and international considerations, including the International Convention for the Protection of Performers, Producers of Phonograms, and Broadcasting Organizations (adopted at Rome in 1961).²³

The Copyright Office adhered to the philosophy it traditionally followed to interpret its constitutional mandate; that is, that copyright legislation must ensure the necessary balance between giving authors necessary monetary incentive without limiting access to an author's works.²⁴ After weighing the arguments of commentators participating in the proceeding and assessing the impact of the information presented to the Office in an independent economic analysis, the Register outlined the Office's conclusions.²⁵ In essence, the Office concluded that:

Sound recordings fully warrant a right of public performance. Such rights are entirely consonant with the basic principles of copyright law generally, and with those of the 1976 Copyright Act specifically. Recognition of these rights would eliminate a major gap in this recently enacted general revision legislation by bringing sound recordings into parity with other categories of copyrightable subject matter. A performance right would not only have a salutary effect on the symmetry of the law, but also would assure performing artists of at least some share of the return realized from the commercial exploitation of their recorded performances.²⁶

The 1978 Report's discussion of performance rights in sound recordings included a compensation scheme structured as a compulsory licensing system. The goal was to benefit “both performers (including employees for hire) and ...record producers as joint authors of sound recordings."²⁷ Although legislation was introduced following publication of the 1978 report, it was not enacted by Congress.

2. The Register's 1991 Report on Copyright Implications of Digital Audio Transmission Services

In October 1991 the Register delivered a report on the legal and policy implications of digital audio broadcasting technology. While the performance right issue was not the predominant topic in that report, it was the most controversial. Once again lines were clearly drawn between broadcasters and the recording interests.

After weighing all of the evidence, the Copyright Office again concluded that there were strong policy reasons to equate sound recordings with other works protected by copyright and to give owners of sound recordings a performance right. The Office stated that it:

[S]upports enactment of a public performance right for sound recordings. The Office concludes that sound recordings are valid works of authorship and should be accorded the same level of copyright protection as other creative works. In fact, as advanced technology permits more copying and performing of American music, the Office is convinced that a performance right...[is] even more essential to compensate American artists and performers fairly.²⁸

The question of whether there should be a public performance right in sound recordings has been debated for a long time, and the Copyright Office has always supported such a right.²⁹

Undoubtedly, U.S. performers and producers would benefit if Congress granted public performance rights in their sound recordings enabling these authors to claim their fair share of foreign royalties. Moreover, justice requires that performers and producers of sound recordings be accorded a public performance right. As a world leader in the creation of sound recordings, the United States, should no longer delay in giving its creators of sound recordings the minimum rights many countries give their performers and producers. Unlike many of those countries, the United States already protects sound recordings under copyright law, but it is time to take the next step and recognize a performance right in sound recordings. Finally, protection should be granted swiftly before technology erodes even further the rights that performers and producers of sound recordings should enjoy.

In the past a strong argument for recognition of a performance right in sound recordings was based on trade agreements. United States sound recordings have dominated the world market. Supporters of the right argued that we should strengthen the rights we give to creators and boost our gross national product; i.e., since the United States leads in production of copyrighted music, books, motion pictures, computer programs, and sound recordings, it should also provide a high level of copyright protection for those works both nationally and internationally. In the last few years, the United States has improved copyright protection for foreign authors by implementing both the NAFTA and TRIPS agreements.³⁰ Some might say that any trade arguments for creating a performance right in sound recordings are less forceful since the United States has already implemented both GATT and NAFTA, and a performance right was not part of the obligations set out in those treaties. In fact, the United States could not support such an obligation because its domestic law does not now accord this protection.³¹ Moreover there are still important international considerations that support the creation of such a right.

A. International Efforts to Improve Protection

The United States protects sound recordings as a category of copyrightable works. In 1989, the United States became a member of the Berne Convention for the Protection of Literary and Artistic Works which does not extend to sound recordings. The effort by the World Intellectual Property Organization (WIPO) to develop an international consensus on a so-called Model Copyright Law served as the triggering mechanism for full-scale debate on the classification of sound recordings as literary or artistic works. Many countries protect sound recordings under neighboring rights law rather than copyright law.

Discussions on how sound recordings should be protected are intensified by the global realization that digital technology may obliterate the traditional classification of rights. Some of these global concerns were addressed last year in a symposium organized by WIPO in cooperation with the Ministry of Culture and Francophonie of France. In that conference, Nicholas Gamete, Director General and Chief Executive of the International Federation of the Phonographic Industry, urged that the speed of commercial development gives “digital” copyright issues edge and urgency. They affect all rights holders in the intellectual property universe and whether or how we adjust the interests of any right holder can have radical implications for the entire cultural and informational market place. The task of the policy maker is to test the rules of copyright and neighboring rights against the demands of changing circumstance, in order to assure that the principles of copyright and related rights remain valid. It is not always easy.³²

Mr. Gamete also called for discussion “about fundamental interests, how they can be secured without damage to any part of the creative community and seek a set of balanced intellectual property rights that permits us to serve the public fully and fairly."³³

The United States would like to see a higher level of international protection for sound recordings and a way to bridge the copyright and neighboring rights systems. This attempt is now focused on the creation of a new instrument to be administered by the World Intellectual Property Organization. 34 Critical issues for discussion include: the scope of the national treatment obligations protection for pre-existing sound recordings (i.e., retroactivity), the scope of the rights and limitations on those rights, and whether audiovisual performers should be included.

The next session on the new instrument, as well as what is known as the Berne protocol, will be held in September of this year. The United States should be in a better position to support its position

in that meeting with a performance right for digital transmissions of sound recordings on Congress's legislative agenda.

B. Conclusion

At this point, there are no overt opponents to the principle of sound recording performance rights. All parties either want some kind of performance rights bill, or do not object to it. This in itself is unprecedented. Like S. 227, H. R. 1506 creates performance rights in sound recordings covering only certain digital transmission services. Because H.R. 1506 is narrower than the Senate bill, it is even less clear whether such a limited right will qualify U.S. authors for royalties on performances of their works -where payment is based on reciprocity. What is crystal clear, however is that there should be a performance right in sound recordings, and we have never come so close.

Despite some concerns about the limited nature of the bill, I applaud Chairman Moorhead and his cosponsors for introducing this important piece of legislation and moving the debate forward. The Chairman's commitment to a performance right in sound recordings has motivated the parties to continue to work out their differences. The Copyright Office supports closing the gap in existing copyright law by creating a pragmatic digital public performance right in sound recordings.

1 A sound recording typically embodies two copyrightable works, the musical work and a sound recording. Music copyright owners presently enjoy an exclusive public performance right, although this right must be exercised in a nonexclusive basis; music performances are licensed pursuant to consent decrees. Moreover, rates for licensing musical performances are subject to judicial review.

2 These concerns related to What is sometimes referred to as the “pie” theory: users might seek to reduce music performance fees to songwriter and publishers because a new category of right holders would be entitled to claim royalties from sound recording performance.

3 S. 1421 at SEC. 3.

4 139 Cong. Rec. S10900 (daily ed. Aug. 6, 1993) (statement of Sen. Feinstein).

5 Statement of Congressman Moor head, El731

6 Oversight hearings had been held in the House earlier concerning these rights, Performers and Performance Rights in Sound Recordings: Oversight Hearings before the Subcommittee on Intellectual Property and Judicial Administration of the House Committee on the Judiciary 103rd Congress, 1st Sess. (1993).

7 The significance of this provision is seen when the digital transmission represents a lost sale because interested consumers record a digital transmission rather than purchase it.

8 All references are to the draft amendment circulated on June 28, 1994.

9 sec. 4(2)(B), draft amendment, June 28, 1994.

10 Department of Commerce, Patent and Trademark Office, Working Group on Intellectual Property Rights of the White House Information Infrastructure Task Force. Preliminary Draft of the Report of the Working Group on Intellectual ProDem and the National Information infrastructure (1994)

11 Since its introduction, Representative Bono has become a cosponsor of H.R. 1506.

12 U.S. Const. art 1, 8, cl. 8.

13 209 U.S. I (1908). The Court held that since the perforations on a piano roll were not visually intelligible, the recording was not a copy of the underlying music, and the author of the composition had no control over the use of such a recording.

14 See, Ringer, “The Unauthorized Duplication of Sound Recordings,” Study No. 26 in Copyright Law Revision, Studies Prepared for the committee on Patents, Trademarks and Copyrights of the Comm. on the Judiciary, U S. Senate, 86th Cong., 2d Sess. (Comm. Print 1961).

Attempts to provide extended protection for sound recordings occurred frequently in the form of proposed legislation. see discussion of legislative history at 28 et seq. “Performance Rights in Sound Recordings,” Subcommittee on Courts, Civil Liberties, and the Administration of Justice, House Comm. on the Judiciary, 95th cong., 2d Sess. (1978). (comm. Print No. 15) [Hereinafter 1978 Performance Rights Report].

(See, e.g., in 1936 with H.R. 11420, and then again in 1937 with S.2440. Bills were also Submitted in 1939, 1943, 1947, 1951, 1967, 1976, 1979, and 1982.)

15 See, e.g., Waring v WDAS Broadcasting Station. lnc. 327 Pa. 433 (1937); RCA Manufacturing Co. v. White man, 114 F.2d 86 (2d Cir.), cert. denied, 311 US 712 (1940, and Capitol Records Inc. v Mercury Records Corp., 221 F 2d 657 (2d Cir. 1955)

16 See e.g., United Artists Records Inc.v. Eastern Tape Corp. 19 NC App. 207 (1973), and mercury Records Productions Inc v Economic Consultants. Inc. 64 Wis. 2d 163 (1974).

17 Sound Recordings Act, Pub. L. No. 140, 85 Stat. 39 (1971).

18 Legislative reports on the Act made clear that it was directed only at tape piracy and did not “encompass a performance right so that record companies and performing artists would be compensated when their records were performed for commercial purposes.” H.R. Rep. No. 487, 92nd Cong., 1st sess. 3 (1971). Piracy was addressed by the United States on an international scope by its ratification of the Geneva Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of their Phonograms in 1971.

19 H.R. Rep. No. 487, 92nd Cong., 1st Sess. 2 (1971).

20 See Shaab v. Kleindienst, 345 F.Supp. 589 (D.D.C. 1972)(sound recordings qualify as writings of an author that may be copyrighted); Goldstein v. California, 412 U.S. 546 (1973)(the term “writings can be broadly interpreted by Congress to include sound recordings).

21 See 1978 Performance Rights Report at Chapter IV. See also Olson, “The Iron Law of Consensus", 36 J. COP. SOC'Y 126-27 (1989); D'Onofrio, “In Support of Performance Rights in Sound Recordings", 29 UCLA L. REV. 169, 70 (1981).

22 H.R. Rep. No. 1476, 94th Cong., 2d Sess. 106 (1976).

23 1978 Performance Rights Report at 1.

24 In a narrow view, all of the author's exclusive rights translate into money: Whether he should be paid for a particular use or whether it should be free. But it would be a serious mistake to think of these issues solely in terms of who has to pay and how much. The basic legislative problem is to insure that the copyright law provides the necessary monetary incentive to write, produce, publish, and disseminate creative works while at the same time guarding against the danger that these works will not be disseminated and used as fully as they should because of copyright restrictions.

Copyright Law Revision. Part 6. Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law, 89th Cong., 1st Sess. House Comm. Print, at 13 (May 1965). Emphasis added. As quoted in 1978 Performance Rights Report at 174.

25 1978 Performance Rights Report 174-177.

26 1978 Performance Rights at 177. (Emphasis added).

27 43 Fed. Reg. 12,763 (1978) at 12,766.

28 U.S. Copyright Office, “Copyright Implications of Digital Audio Transmission Services” 160 (October 1991).

29 See, Performance Rights in Sound Recordings: Oversight Hearings before the Subcommittee on Intellectual Property and Judicial Administration of the House Committee on the Judiciary, 103rd Cong., 1st Sess. (1993)(statement of Ralph Oman, Register of Copyrights); and Digital Performance Rights in Sound Recordings Act of 1995: Hearings Before the Senate Committee on the Judiciary. 104th Cong., 1st Sess. (1995)(statement of Marybeth Peters, Register of Copyrights).

30 Uruguay Round Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809 (1994); North American Free Trade Agreement Act Implementation Act, Pub. L. No. 103-182, 107 Stat. 2057 (1993).

31 “Ironically, the United States, who has the most to gain, was recently forced to block an agreement in the GATT that would have created a new international obligation to extend public performance rights to sound recordings. This same foot shooting has occurred in drafting a model law in the World Intellectual Property Organization in the past.” (Oversight hearing, supra note 6, at 41, (statement of Jason S. Berman, President, Recording Industry Association of America)).

32 Nicholas Gamete, Recording industry. The First Cultural Industry Fully Exposed to the Impact of Digital Technology, WIPO Worldwide Symposium on the Future of Copyright and Neighboring Rights at 99 (1994).

33 Id. at 114.

34 There have been three committee of experts meetings in Geneva (June, 1993, November, 1993 and December, 1994).