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A review of the history of the public performance right in the U.S. Copyright Act is helpful in understanding why the scope of public performance protection differs for sound recordings and musical works. While musical works have enjoyed a full right of public performance for over 100 years, the Copyright Act did not offer any legal protection to sound recordings until 1971, when Congress enacted a law that granted exclusive rights to reproduction and distribution to sound recording copyright holders as a response to the increased amount of unauthorized duplication of records and tapes. However, at that time, Congress decided not to grant sound recording copyright holders the right to control public performance, partly due to opposition by television and radio broadcasters and jukebox operators who resisted any changes to the Copyright Act that would require any additional royalty payments beyond those already mandated for songwriters and music publishers, and also because Congress considered the rights to control reproduction and distribution to be sufficient enough to address the immediate problem of record piracy.
Copyright Act of 1976 Edit
In the most recent general revision of the Copyright Act in 1976, Congress directed the U.S. Copyright Office to submit a report by January 8, 1978, that would recommend whether Congress should grant a public performance right for sound recordings. In that report, the Register of Copyrights believed that a public performance right for sound recordings was warranted:
|“||Broadcasters and other users of recordings have performed them without permission or payment for generations. Users today look upon any requirement that they pay royalties as an unfair imposition in the nature of a “tax.” However, any economic burden on the users of recordings for public performance is heavily outweighed . . . by the commercial benefits accruing directly from the use of copyrighted sound recordings. . . . To leave the creators of sound recordings without any protection or compensation for their widespread commercial use can no longer be justified.||”|
However, at the time, Congress took no action in response to the advice of the Register. Technological advances in music transmission methods in the early 1990s helped persuade Congress to reexamine the issue of public performance rights for sound recording copyright holders. Record companies were concerned that consumers would use certain new technologies such as on-demand digital cable music services and other interactive services to listen to music and potentially record the digital audio transmissions, thereby eliminating their need to purchase physical sound recording media.
Digital Performance Right in Sound Recordings Act of 1995 Edit
In response, in 1995, Congress passed the Digital Performance Right in Sound Recordings Act of 1995, which for the first time ever granted copyright owners of sound recordings an exclusive right to perform their works publicly — although the right was limited only to digital audio transmission of their sound recordings. However, the law specifically exempted traditional over-the-air radio broadcasts from the newly created right to control digital public performances of sound recordings. The Senate report accompanying the Digital Performance Right in Sound Recordings Act of 1995 noted that:
|“||The Committee, in reviewing the record before it and the goals of this legislation, recognizes that the sale of many sound recordings and the careers of many performers have benefitted considerably from airplay and other promotional activities provided by both noncommercial and advertiser-supported, free over-the-air broadcasting. The Committee also recognizes that the radio industry has grown and prospered with the availability and use of prerecorded music. This legislation should do nothing to change or jeopardize the mutually beneficial economic relationship between the recording and traditional broadcasting industries.||”|
Digital Millennium Copyright Act Edit
In 1998, with the passage of the Digital Millennium Copyright Act, Congress clarified that the digital performance right also applied to sound recordings performed by non-interactive, non-subscription Internet radio broadcasters (webcasters). As a result of these two laws, webcasters, satellite radio broadcasters, and cable broadcasters are now required to pay royalties to sound recording copyright holders when they digitally transmit their sound recordings, in addition to the royalties that are due to the musical work copyright holders. Terrestrial radio stations that stream (simulcast) their programming on the Internet also are required to pay royalties to sound recording copyright holders because that activity involves a digital audio transmission. Radio stations that only broadcast copyrighted sound recordings over-the-air, however, are not subject to the digital performance right for sound recordings and thus need only compensate the musical work copyright holder for the public performance.
Proposed legislation Edit
The proposed Performance Rights Act would eliminate an exemption that currently allows analog, non-subscription AM and FM radio (broadcast radio stations) to broadcast a sound recording without acquiring permission from and paying a royalty to the copyright holder, performers, and musicians. The Act would amend the statutory license for non-subscription transmission services to include terrestrial broadcast stations. Under the amendments to the statutory license, a radio station would pay a royalty based on its revenue and its status as a commercial or noncommercial radio station. (See table 1.) Furthermore, the proposed Act exempts some uses of music, such as music in broadcasts of religious services and the incidental use of music by non-music stations.
Under the House bill (the proposed Act), revenues from the proposed statutory royalty would be divided among recipients as follows: 50% would be paid to the copyright holder, 45% would be paid to the featured performer or musician, 2.5% would be paid to background musicians, and 2.5% would be paid to background performers and vocalists. A designated third party would collect and distribute royalties directly to the featured performer or musician. Finally, existing royalties paid to publishers, songwriters, and composers are to be unaffected by the proposed royalty.
The proposed Performance Rights Act would result in both financial costs, in the form of royalty payments for the use of sound recordings, and administrative costs, in the form of potential reporting requirements. These financial and administrative costs may lead some radio stations to make adjustments, such as reducing staff levels, switching to a nonmusic format, and ceasing operation, according to broadcast industry stakeholders.
- ↑ Sound Recording Amendment, Pub. L. No. 92-140, 85 Stat. 391 (1971). By its terms, the law was effective on February 15, 1972, and applies to sound recordings made on or after that date.
- ↑ Internet Streaming of Radio Broadcasts: Balancing the Interests of Sound Recording Copyright Owners with Those of Broadcasters: Hearings Before the House Subcomm. on Courts, the Internet and Intellectual Property, 108th Cong., 2d Sess. (2004) (statement of David Carson, General Counsel, U.S. Copyright Office), at 3.
- ↑ U.S. Register of Copyrights, Report on Performance Rights in Sound Recordings, H.R. Doc. No. 15, 95th Cong., 2d Sess. 1063 (1978).
- ↑ William H. O’Dowd, "The Need for a Public Performance Right in Sound Recordings," 31 Harv. J. Legis. 249, 254-59 (1993).
- ↑ Pub. L. No. 104-39, 109 Stat. 336 (1995).
- ↑ Section 3 of Pub. L. No. 104-39.
- ↑ S. Rep. 104-128, at 4 (1995).
- ↑ Pub. L. No. 105-304 (1998).
- ↑ Section 405 of Pub. L. No. 105-304.
- ↑ H.R. 848, 111th Cong. (2009). The Senate's companion bill is S. 379, 111th Cong. (2009).
- ↑ The sound recording copyright holder is often the record company, but may also be the primary performer.
- ↑ Statutory royalties for background musicians would be paid to the American Federation of Musicians and distributed to its members according to their performance on sound recordings. Statutory royalties for background vocalists and performers would be paid to the American Federation of Television and Radio Artists.
- ↑ While the proposed statutory license requires direct payment to musicians and performers, agreements between record companies and artists could take into consideration this additional source of revenue. Record companies and others in the recording industry have signed a Memorandum of Understanding indicating that record companies will not attempt to recover any performance royalties from the musicians or performers.