Copyright Law: Statutory Royalty Rates for Webcasters

Publication Date: November 2003

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Law and ethics

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Abstract:

This report surveys the procedures for and the results of the Copyright Arbitration Royalty Panel's (CARP's) February 20, 2002 Report making recommendations for statutory royalty rates for eligible nonsubscription webcasters. The Panel was implementing compulsory license rates for public performances by digital transmissions, 17 U.S.C. § 114, and ephemeral copies to facilitate transmission, 17 U.S.C. § 112. Among various classes of potential licensees, the CARP recommended a public performance fee of 0.14¢ per performance and an ephemeral license fee of 9% of performance fees due for Internet transmissions by qualifying webcasters. On May 21, 2002, the Librarian of Congress, upon the recommendation of the Register of Copyrights, rejected the CARP's proposed rates. On June 20, 2002, the Librarian issued a Final Regulation that sets royalty rates for Internet transmissions at 0.07¢ per performance and ephemeral licensing at 8.8% of performance fees due. Parties affected by the ruling announced their intention to appeal the Librarian's decision.

Members of Congress have reacted to the controversy surrounding royalty rates for webcasters. Several bills were introduced. H.R. 5285 entitled the "Internet Radio Fairness Act" was introduced in the House on July 26, 2002, This bill, which was not enacted, would have set aside the Librarian's decision and established new ratemaking standards for small businesses and eliminate certain licensing fees for ephemeral recordings.

On September 26, 2002, H.R. 5469, the "Small Webcasters Amendments Act of 2002" was introduced. As introduced, the bill would have suspended the Librarian's royalty rates for six months. After its introduction, however, affected parties entered into negotiations and came to an agreement over acceptable royalty rates. The terms of the agreement were passed by the House as a managersamendment to H.R. 5469 on October 7, 2002. The Senate did not take up the bill before recess.

During the short legislative session between recess and adjournment sine die of the 107th Congress, an amended version of H.R. 5469 was passed. Signed by President Bush on December 4, 2002, P.L. 107-321 is entitled the "Small Webcaster Settlement Act of 2002." Rather than codify the terms of the settlement described above, the Small Webcaster Settlement Act extends the due date for royalty payments and permits more broadly negotiated agreements that deviate from the Librarian's order. The agreements, however, are to include provisions for payment of royalties on the basis of a percentage of revenue or expenses, or both, and include a minimum fee.