House To Re-Examine DMCA Digital Royalty Issue

A House copyright panel will soon announce an oversight hearing to review a section of the 1998 Digital Millennium Copyright Act (DMCA) that deals with the performance right for digital sound recordin

WASHINGTON, D.C. -- A House copyright panel will soon announce an oversight hearing to review a section of the 1998 Digital Millennium Copyright Act (DMCA) that deals with the performance right for digital sound recordings.

Section 104 of the DMCA amends Section 114 of U.S. copyright law to upgrade protection and licensing in the digital age.

It may be a dry-sounding topic, but it is one that hides a long history of rancor and resentment on the part of one of radio broadcasters.

The radio industry, despite recent court defeats, holds to a belief that stations should not have to pay a digital performance royalty to copyright holders for streamed digital simulcasts of on-the-air programming.

Historically, radio station owners have not had to pay performance royalties to labels for over-the-air broadcasts, and have long balked at having to pay songwriter royalties to the performing rights organizations.

In the '90s, the Recording Industry Assn. of America (RIAA) was able to secure a performance right for digital transmissions. The National Assn. of Broadcasters (NAB) misjudged the future of the new service and didn't oppose the change put forward by the RIAA. This proved a huge tactical error.

Broadcasters reluctant to pay digital royalties sued the Copyright Office, which had ruled in 2001 that they must do so under law. The broadcasters lost the case before a U.S. District Court that same year.

NAB and the radio giants -- Clear Channel Communications, Emmis Broadcasting, Susquehanna Broadcasting, Bonneville International, Cox Radio and Entercom Communications -- appealed the case to the Third Circuit Court of Appeals in Philadelphia.

The groups said that the Copyright Office and the District Court misinterpreted the law when both rejected entreaties from broadcasters to give them a digital royalty exemption for streamed simulcasts.

"Congress did not intend to impose sound-recording public-performance copyright liability upon terrestrial broadcasters that simultaneously stream their radio programming to listeners via the Internet," said the petitioners.

The broadcasters contended that Congress intended the law to apply only to "interactive" services that would enable users to select and download songs -- not to stream online radio-style broadcasts.

The Copyright Office found that it was the intent of Congress that simulcasters be required to pay royalties under both the DMCA and the Digital Performance Right Act of 1995.

In October 2003, the appeals court sided with the Copyright Office.

Both courts decided that since the royalties apply to Web-only broadcasters, an exemption for radio stations would give them an unfair market advantage.

Thrice defeated, the broadcasters are now taking their case to the Hill.

Webcasters, on the other hand, believe that all media -- broadcast, cable, satellite and Internet radio --should be treated alike. The Digital Media Assn., which represents large Webcasters, believes that a traditional "fair market value" standard for determining digital royalties is more balanced than the "willing buyer-willing seller" standard used just for Webcasters by the discredited Copyright Arbitration Royalty Panel.

Webcasters also chafe at the views of the Harry Fox Agency and performing rights organizations that they must pay an additional performance royalty for so-called computer "buffer copies," maintaining that such copies have no independent economic value of their own.

The upcoming hearing was called for by Rep. Lamar Smith, R-Texas, chairman of the Subcommittee on Courts, the Internet and Intellectual Property, as part of a systematic review of the DMCA.

Announcement of the hearing could come this week.