[107th Congress Public Law 321]
[From the U.S. Government Printing Office]
[DOCID: f:publ321.107]
[[Page 2779]]
SMALL WEBCASTER SETTLEMENT ACT OF 2002
[[Page 116 STAT. 2780]]
Public Law 107-321
107th Congress
An Act
To amend title 17, United States Code, with respect to the statutory
license for webcasting, and for other purposes. <<NOTE: Dec. 4,
2002 - [H.R. 5469]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress <<NOTE: Small Webcaster Settlement
Act of 2002.>> assembled,
SECTION 1. SHORT TITLE. <<NOTE: 17 USC 101 note.>>
This Act may be cited as the ``Small Webcaster Settlement Act of
2002''.
SEC. 2. FINDINGS. <<NOTE: 17 USC 114 note.>>
Congress finds the following:
(1) Some small webcasters who did not participate in the
copyright arbitration royalty panel proceeding leading to the
July 8, 2002 order of the Librarian of Congress establishing
rates and terms for certain digital performances and ephemeral
reproductions of sound recordings, as provided in part 261 of
the Code of Federal Regulations (published in the Federal
Register on July 8, 2002) (referred to in this section as
``small webcasters''), have expressed reservations about the fee
structure set forth in such order, and have expressed their
desire for a fee based on a percentage of revenue.
(2) Congress has strongly encouraged representatives of
copyright owners of sound recordings and representatives of the
small webcasters to engage in negotiations to arrive at an
agreement that would include a fee based on a percentage of
revenue.
(3) The representatives have arrived at an agreement that
they can accept in the extraordinary and unique circumstances
here presented, specifically as to the small webcasters, their
belief in their inability to pay the fees due pursuant to the
July 8 order, and as to the copyright owners of sound recordings
and performers, the strong encouragement of Congress to reach an
accommodation with the small webcasters on an expedited basis.
(4) The representatives have indicated that they do not
believe the agreement provides for or in any way approximates
fair or reasonable royalty rates and terms, or rates and terms
that would have been negotiated in the marketplace between a
willing buyer and a willing seller.
(5) Congress has made no determination as to whether the
agreement provides for or in any way approximates fair or
reasonable fees and terms, or rates and terms that would have
been negotiated in the marketplace between a willing buyer and a
willing seller.
[[Page 116 STAT. 2781]]
(6) Congress likewise has made no determination as to
whether the July 8 order is reasonable or arbitrary, and nothing
in this Act shall be taken into account by the United States
Court of Appeals for the District of Columbia Circuit in its
review of such order.
(7) It is, nevertheless, in the public interest for the
parties to be able to enter into such an agreement without fear
of liability for deviating from the fees and terms of the July 8
order, if it is clear that the agreement will not be admissible
as evidence or otherwise taken into account in any government
proceeding involving the setting or adjustment of the royalties
payable to copyright owners of sound recordings for the public
performance or reproduction in ephemeral phonorecords or copies
of such works, the determination of terms or conditions related
thereto, or the establishment of notice or recordkeeping
requirements.
SEC. 3. SUSPENSION OF CERTAIN PAYMENTS. <<NOTE: 17 USC 114 note.>>
(a) Noncommercial Webcasters.--
(1) <<NOTE: Deadline.>> In general.--The payments to be
made by noncommercial webcasters for the digital performance of
sound recordings under section 114 of title 17, United States
Code, and the making of ephemeral phonorecords under section 112
of title 17, United States Code, during the period beginning on
October 28, 1998, and ending on May 31, 2003, which have not
already been paid, shall not be due until June 20, 2003.
(2) Definition.--In this subsection, the term
``noncommercial webcaster'' has the meaning given that term in
section 114(f)(5)(E)(i) of title 17, United States Code, as
added by section 4 of this Act.
(b) Small Commercial Webcasters.--
(1) <<NOTE: Expiration date.>> In general.--The receiving
agent may, in a writing signed by an authorized representative
thereof, delay the obligation of any 1 or more small commercial
webcasters to make payments pursuant to sections 112 and 114 of
title 17, United States Code, for a period determined by such
entity to allow negotiations as permitted in section 4 of this
Act, except that any such period shall end no later than
December 15, 2002. The duration and terms of any such delay
shall be as set forth in such writing.
(2) Definitions.--In this subsection--
(A) the term ``webcaster'' has the meaning given
that term in section 114(f)(5)(E)(iii) of title 17,
United States Code, as added by section 4 of this Act;
and
(B) the term ``receiving agent'' shall have the
meaning given that term in section 261.2 of title 37,
Code of Federal Regulations, as published in the Federal
Register on July 8, 2002.
SEC. 4. AUTHORIZATION FOR SETTLEMENTS.
Section 114(f) of title 17, United States Code, is amended by adding
after paragraph (4) the following:
``(5)(A) Notwithstanding section 112(e) and the other
provisions of this subsection, the receiving agent may enter
into agreements for the reproduction and performance of sound
recordings under section 112(e) and this section by any 1 or
more small commercial webcasters or noncommercial webcasters
during the period beginning on October 28, 1998,
[[Page 116 STAT. 2782]]
and ending on December 31, 2004, that, once published in the
Federal Register pursuant to subparagraph (B), shall be binding
on all copyright owners of sound recordings and other persons
entitled to payment under this section, in lieu of any
determination by a copyright arbitration royalty panel or
decision by the Librarian of Congress. Any such agreement for
small commercial webcasters shall include provisions for payment
of royalties on the basis of a percentage of revenue or
expenses, or both, and include a minimum fee. Any such agreement
may include other terms and conditions, including requirements
by which copyright owners may receive notice of the use of their
sound recordings and under which records of such use shall be
kept and made available by small commercial webcasters or
noncommercial webcasters. The receiving agent shall be under no
obligation to negotiate any such agreement. The receiving agent
shall have no obligation to any copyright owner of sound
recordings or any other person entitled to payment under this
section in negotiating any such agreement, and no liability to
any copyright owner of sound recordings or any other person
entitled to payment under this section for having entered into
such agreement.
``(B) <<NOTE: Federal Register, publication.>> The
Copyright Office shall cause to be published in the Federal
Register any agreement entered into pursuant to subparagraph
(A). Such publication shall include a statement containing the
substance of subparagraph (C). Such agreements shall not be
included in the Code of Federal Regulations. Thereafter, the
terms of such agreement shall be available, as an option, to any
small commercial webcaster or noncommercial webcaster meeting
the eligibility conditions of such agreement.
``(C) Neither subparagraph (A) nor any provisions of any
agreement entered into pursuant to subparagraph (A), including
any rate structure, fees, terms, conditions, or notice and
recordkeeping requirements set forth therein, shall be
admissible as evidence or otherwise taken into account in any
administrative, judicial, or other government proceeding
involving the setting or adjustment of the royalties payable for
the public performance or reproduction in ephemeral phonorecords
or copies of sound recordings, the determination of terms or
conditions related thereto, or the establishment of notice or
recordkeeping requirements by the Librarian of Congress under
paragraph (4) or section 112(e)(4). It is the intent of Congress
that any royalty rates, rate structure, definitions, terms,
conditions, or notice and recordkeeping requirements, included
in such agreements shall be considered as a compromise motivated
by the unique business, economic and political circumstances of
small webcasters, copyright owners, and performers rather than
as matters that would have been negotiated in the marketplace
between a willing buyer and a willing seller, or otherwise meet
the objectives set forth in section 801(b).
``(D) Nothing in the Small Webcaster Settlement Act of 2002
or any agreement entered into pursuant to subparagraph (A) shall
be taken into account by the United States Court of Appeals for
the District of Columbia Circuit in its review of the
determination by the Librarian of Congress of July 8, 2002, of
rates and terms for the digital performance of
[[Page 116 STAT. 2783]]
sound recordings and ephemeral recordings, pursuant to sections
112 and 114.
``(E) As used in this paragraph--
``(i) the term `noncommercial webcaster' means a
webcaster that--
``(I) is exempt from taxation under section
501 of the Internal Revenue Code of 1986 (26
U.S.C. 501);
``(II) has applied in good faith to the
Internal Revenue Service for exemption from
taxation under section 501 of the Internal Revenue
Code and has a commercially reasonable expectation
that such exemption shall be granted; or
``(III) is operated by a State or possession
or any governmental entity or subordinate thereof,
or by the United States or District of Columbia,
for exclusively public purposes;
``(ii) the term `receiving agent' shall have the
meaning given that term in section 261.2 of title 37,
Code of Federal Regulations, as published in the Federal
Register on July 8, 2002; and
``(iii) the term `webcaster' means a person or
entity that has obtained a compulsory license under
section 112 or 114 and the implementing regulations
therefor to make eligible nonsubscription transmissions
and ephemeral recordings.
``(F) <<NOTE: Expiration date.>> The authority to make
settlements pursuant to subparagraph (A) shall expire December
15, 2002, except with respect to noncommercial webcasters for
whom the authority shall expire May 31, 2003.''.
SEC. 5. DEDUCTIBILITY OF COSTS AND EXPENSES OF AGENTS AND DIRECT PAYMENT
TO ARTISTS OF ROYALTIES FOR DIGITAL PERFORMANCES OF SOUND
RECORDINGS.
(a) Findings.--Congress finds that-- <<NOTE: 17 USC 114 note.>>
(1) in the case of royalty payments from the licensing of
digital transmissions of sound recordings under subsection (f)
of section 114 of title 17, United States Code, the parties have
voluntarily negotiated arrangements under which payments shall
be made directly to featured recording artists and the
administrators of the accounts provided in subsection (g)(2) of
that section;
(2) such voluntarily negotiated payment arrangements have
been codified in regulations issued by the Librarian of
Congress, currently found in section 261.4 of title 37, Code of
Federal Regulations, as published in the Federal Register on
July 8, 2002;
(3) other regulations issued by the Librarian of Congress
were inconsistent with the voluntarily negotiated arrangements
by such parties concerning the deductibility of certain costs
incurred for licensing and arbitration, and Congress is
therefore restoring those terms as originally negotiated among
the parties; and
(4) in light of the special circumstances described in this
subsection, the uncertainty created by the regulations issued by
the Librarian of Congress, and the fact that all of the
interested parties have reached agreement, the voluntarily
[[Page 116 STAT. 2784]]
negotiated arrangements agreed to among the parties are being
codified.
(b) Deductibility.--Section 114(g) of title 17, United States Code,
is amended by adding after paragraph (2) the following:
``(3) A nonprofit agent designated to distribute receipts
from the licensing of transmissions in accordance with
subsection (f) may deduct from any of its receipts, prior to the
distribution of such receipts to any person or entity entitled
thereto other than copyright owners and performers who have
elected to receive royalties from another designated agent and
have notified such nonprofit agent in writing of such election,
the reasonable costs of such agent incurred after November 1,
1995, in--
``(A) the administration of the collection,
distribution, and calculation of the royalties;
``(B) the settlement of disputes relating to the
collection and calculation of the royalties; and
``(C) the licensing and enforcement of rights with
respect to the making of ephemeral recordings and
performances subject to licensing under section 112 and
this section, including those incurred in participating
in negotiations or arbitration proceedings under section
112 and this section, except that all costs incurred
relating to the section 112 ephemeral recordings right
may only be deducted from the royalties received
pursuant to section 112.
``(4) Notwithstanding paragraph (3), any designated agent
designated to distribute receipts from the licensing of
transmissions in accordance with subsection (f) may deduct from
any of its receipts, prior to the distribution of such receipts,
the reasonable costs identified in paragraph (3) of such agent
incurred after November 1, 1995, with respect to such copyright
owners and performers who have entered with such agent a
contractual relationship that specifies that such costs may be
deducted from such royalty receipts.''.
(c) Direct Payment to Artists.--Section 114(g)(2) of title 17,
United States Code, is amended to read as follows:
``(2) An agent designated to distribute receipts from the
licensing of transmissions in accordance with subsection (f)
shall distribute such receipts as follows:
``(A) 50 percent of the receipts shall be paid to
the copyright owner of the exclusive right under section
106(6) of this title to publicly perform a sound
recording by means of a digital audio transmission.
``(B) 2\1/2\ percent of the receipts shall be
deposited in an escrow account managed by an independent
administrator jointly appointed by copyright owners of
sound recordings and the American Federation of
Musicians (or any successor entity) to be distributed to
nonfeatured musicians (whether or not members of the
American Federation of Musicians) who have performed on
sound recordings.
``(C) 2\1/2\ percent of the receipts shall be
deposited in an escrow account managed by an independent
administrator jointly appointed by copyright owners of
sound recordings and the American Federation of
Television and Radio Artists (or any successor entity)
to be distributed to nonfeatured vocalists (whether or
not members of the
[[Page 116 STAT. 2785]]
American Federation of Television and Radio Artists) who
have performed on sound recordings.
``(D) 45 percent of the receipts shall be paid, on a
per sound recording basis, to the recording artist or
artists featured on such sound recording (or the persons
conveying rights in the artists' performance in the
sound recordings).''.
SEC. 6. <<NOTE: Deadline. 17 USC 114 note.>> REPORT TO CONGRESS.
By not later than June 1, 2004, the Comptroller General of the
United States, in consultation with the Register of Copyrights, shall
conduct and submit to the Committee on the Judiciary of the House of
Representatives and the Committee on the Judiciary of the Senate a study
concerning the economic arrangements among small commercial webcasters
covered by agreements entered into pursuant to section 114(f)(5)(A) of
title 17, United States Code, as added by section 4 of this Act, and
third parties, and the effect of those arrangements on royalty fees
payable on a percentage of revenue or expense basis.
Approved December 4, 2002.
LEGISLATIVE HISTORY--H.R. 5469:
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CONGRESSIONAL RECORD, Vol. 148 (2002):
Oct. 7, considered and passed House.
Nov. 14, considered and passed Senate, amended. House
concurred in Senate amendment.
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