Summary of Federal Laws

 

Copyright Law

 

Small Webcaster Settlement Act of 2002

Public Law 107-321, 116 Stat. 2780; 68 Fed. Reg. 35008, June 11, 2003

 

Summary of the Small Webcaster Settlement Act courtesy of Shelley Steinbach, American Council on Education and Ken Salomon, Dow, Lohnes & Albertson, PLLC.

 

The SWSA applies to "Noncommercial Webcasters" and to "Small Commercial Webcasters" and is intended to address Congressional concerns that Noncommercial and Small Commercial Webcasters were not adequately represented in the process that resulted in the Copyright Office's July 8, 2002 decision establishing royalty rates for webcasting digital sound recordings. (See the July 8, 2002 final rule and order (67 Fed. Reg. 45239)  for the licensing fees adopted by the Librarian of Congress for the  performance of  sound recordings publicly by means of digital audio transmissions ("webcasting")).   The Copyright Act provides statutory licenses to webcast sound recordings and to make ephemeral copies of sound recordings and pursuant to the Digital Millennium Copyright Act, the Copyright Office's July royalty rates are based on a set fee for each digital sound recording performance per listener.  Payment of these fees, retroactive to October 28, 1998, was due on October 20, 2002.  In the SWSA, Congress recognized that for Noncommercial and Small Commercial Webcasters, the Copyright Office's statutory license fees may be overly burdensome, and would inevitably force most of them to cease their operations. 

 

A "Webcaster" under the SWSA is an on-line service that provides musical performances.  A "Noncommercial Webcaster" is (i)a Webcaster that holds or has applied for Section 501(c)(3) recognition or (iii) "is operated by a State or other possession or any governmental entity or subordinate thereof, or by the United States or District of Columbia, for exclusively public purposes."  Accordingly, a non-profit 501(c)(3) private college or university Webcaster, or other non-profit 501(c)(3) entity, would qualify as a Noncommercial Webcaster, as would a Webcaster that is operated by a state college or university.  As a result, their college radio stations that stream their broadcasts are Webcasters under the SWSA, and would be eligible to take advantage of the SWSA's provisions.  College stations that solely webcast, and do not stream over-the-air broadcasts over the Internet, are also Webcasters under the SWSA. 

 

The SWSA allows for a delay of the due date for  Noncommercial and Small Commercial Webcasters that have NOT YET made payments to make their past due and upcoming royalty payments.  The extra time is to be used to allow Noncommercial and Small Commercial Webcasters to negotiate new royalty rate agreements with SoundExchange, the royalty receiving agent designated by the recording industry, for royalty fees based on a percentage of revenue rather than on a per performance basis.

 

 The SWSA affects Noncommercial Webcasters in two important ways. First, it suspends all royalty payments until June 20, 2003.  Second, it authorizes SoundExchange to enter into new privately-negotiated royalty rate agreements with Noncommercial Webcasters, notwithstanding the royalty rates already established by the Copyright Office.  In suspending the royalty payment due date, the SWSA delays payments due for Noncommercial Webcasters for all of the digital performances webcast from October 28, 1998 through May 31, 2003. 

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New Royalty Rates for Webcasting Sound Recordings

Retroactive to Jan. 1, 2006, the new rate for non-commercial, non-interactive webcasting is a flat fee of $500 per station or per channel for the first 159,140 aggregate tuning hours (ATH) per month. (ATH equals one hour of programming transmitted to one listener). For webcasting of performances beyond the 159,140 ATH per month, commercial usage rates will apply (0.11 cent per listener per song in 2007, gradually increasing to 0.19 cent per listener per song in 2010). Payments are made to SoundExchange. 

 

Recordkeeping and Reporting: Non-Commerical webcasters electing these rates and terms shall not be required to provide reports of sound recordings played for 2003 and 2004. A task force is looking at future reporting.

 

History and Background

 

Background
In 1995, Congress enacted the Digital Performance Right in Sound Recordings Act (``DPRA''), Public Law 104-39, which created an exclusive right for copyright owners of sound recordings, subject to certain limitations, to perform publicly their sound recordings by means of certain digital audio transmissions. Among the limitations on the performance right was the creation of a new compulsory license for nonexempt, noninteractive, digital subscription transmissions. 17 U.S.C. 114(f).
 The scope of this license was expanded in 1998 upon passage of the Digital Millennium Copyright Act of 1998. The Small Webcaster Settlement Act further amended the law by addressing concerns that the licensing fees adopted by the Librarian of Congress did not adequately address the concerns of small and noncommerical webcasters.

 

 

May 2003: Agreement reached on royalty payments for noncommercial educational entities (NEEs)

 

A noncommercial webcasting station  directly operated by, or affiliated with and officially sanctioned by a domestically accredited primary or secondary school, college, university or other post-secondary degree granting educational institution that is not a "public broadcasting entity" under 17 USC 118(g) may pay reduced fees for webcasting, and is exempt from the record keeping requirements with respect to digital music played over the Internet. In order to qualify for the exemption, the webcasting  must be staffed substantially by students. For further terms and definitions, see Appendix A, Rates and Terms Available to Certain Noncommerical Webcasters, attached to the Notification of Agreement under the Small Webcaster Settlement Act which is posted on the webpage of Collegiate Broadcasters, Inc.

 

Fees for payments for streaming for the years 1998-2003 must be paid by Oct. 15, 2003 and the school must opt in to the reduced fee structure by using the form at www.soundexchange.com.

NEEs transmitting a single channel will pay a reduced fee of $250 for each of the years 2000-2003, $200 for the period beginning Oct. 28, 1998 and ending Dec. 31, 1999. The fee for 2004 will be $500 or $250 if the school has less than 10,000 enrolled students, with the caveat that if the station streams over 146,00 aggregate tuning hours per month, the station must pay .02 cents per song per listener above the limit. For more information see the June 3, 2003 Chronicle of Higher Education Article entitled College Radio Stations Reach Deal With Record Companies for Lower Webcasting Fees By Dan Carnevale. 

 

 

Resources:

Future of Music Coalition

 

New Page Aug. 22, 2003

Updated Jan. 26, 04 to add negotiation period notice
updated 4/26/07 to add new webcasting rates
links updated 6/26/08 rab