Additional Provisions of the Small Webcaster Settlement Act of 20021
Section 1 · Short title.
This Act may be cited as the “Small Webcaster Settlement
Act of 2002”.
Sec. 2 · Findings.
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.
(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.
(a) Noncommercial Webcasters.
(1) 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
(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) 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. 5 · Deductibility of Costs and Expenses of Agents
and Direct Payment to Artists of Royalties for Digital Performances of Sound
(a) Findings. —
Congress finds that —
(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 negotiated arrangements agreed to among
the parties are being codified.
* * * * * * *
Sec. 6 · 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
1Appendix IX contains
additional provisions from the Small Webcaster Settlement Act of 2002 that
do not amend title 17 of the United States Code. Pub. L. No. 107-321,
116 Stat. 2780.