Webcaster Settlement Act of 2009

Mr. Speaker, I move to suspend the rules and pass the bill (H.R. 2344) to amend section 114 of title 17, United States Code, to provide for agreements for the reproduction and performance of sound recordings by webcasters.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days to revise and extend their remarks and include extraneous material on this bill.

I yield myself such time as I may consume.

Mr. Speaker, the Webcaster Settlement Act of 2009 allows the recording industry and the providers of Internet radio, also known as Webcasters, to negotiate reasonable royalty rates for the streaming of sound recordings on the Internet.

While a relatively new technology, the audience for Internet radio is growing rapidly. Fifty to 70 million Americans listen to Internet radio each month, in part because of the diverse programming available to cater to many different musical tastes.

In 1995, Congress passed a digital performance right for sound recordings. In 1998, the Digital Millennium Copyright Act expanded the right to Internet radio services by granting them the privilege of using copyrighted music at an industry-negotiated rate, or in the event the industry could not negotiate a rate, at a government-mandated rate determined by the Copyright Royalty Board, or CRB.

At the request of Webcasters, in 2004 Congress enacted the Copyright Royalty and Distribution Reform Act, which authorized a CRB proceeding to set fair statutory rates for Internet radio. Accordingly, in 2007, the CRB announced new statutory royalty rates for sound recordings to be paid by Webcasters.

The CRB's decision, which sets rates on a minimum fee, per-song, per- listener formula, would require Webcasters to pay significantly higher royalties than they previously paid under a percentage-of-revenue model.

Because of concerns that the higher rates are likely to threaten the future of Internet radio, Congress enacted the Webcaster Settlement Act of 2008. Signed into law last October, it allowed for the implementation of royalty fee agreements reached on or before February 15, 2009, between the recording industry and Webcasters that would serve as an alternative to the payment scheme set forth in the CRB decision.

While some Webcasters were able to reach consensus with the recording industry, others have not yet reached an agreement. Enactment of the Webcasters Settlement Act of 2009 will give more parties an opportunity to reach a consensus by allowing them to negotiate alternative rates. This opportunity to reach consensus will protect the viability of technology enjoyed by millions of Americans every day.

This legislation has the full support of the relevant parties. I commend the Internet radio and recording industries for the substantial progress that has been made in negotiations in recent months, and I encourage them to resolve all outstanding issues promptly so that we may see a thriving Internet radio industry in the near future.

I commend my colleague, Jay Inslee of Washington, for his leadership on this legislation, as well as Intellectual Property Subcommittee Chairman Howard Berman for facilitating discussions between the parties.

I would like to also commend Judiciary ranking member, Mr. Lamar Smith, for his leadership in making this a truly bipartisan effort, and I urge my colleagues to support this important legislation.

Mr. Speaker, I reserve the balance of my time.

Mr. Speaker, at this time, I would yield to my colleague from the great State of Washington, the Honorable Jay Inslee, as much time as he may consume.

Mr. Speaker, I would join my colleague on the other side of the aisle in support of H.R. 848, which is the bill that you just mentioned, and the reason why is because it's just an issue of fairness. It's fairness to the artist as well as fairness to the platforms upon which we hear these sound recordings, Internet radio being one.

Cable, satellite, they have to pay performance royalties, which is really performers' royalties. They must pay that. But the broadcast industry, AM/FM radio, basically, is protected, if you will, or exempted from having to pay. This is anticompetitive, and it also results in great tragedy where these radio stations are able to play music repetitively that we all enjoy listening to, and then the artist who performs the music doesn't get a dime. And so many of them are forced to work what I call the ``Chitlin Circuit'' and, you

know, can't even purchase their prescription medication for diabetes, whatever infirmity that they may have. And then some even die indigent and there's no coverage for burial expenses.

And so it's really an issue of fairness. And unfortunately, the broadcast industry has done a despicable thing, and that is to play the race card. And they do it with the deceptive and false statement that H.R. 848 is an attempt to drive black broadcasters, black radio stations off, out of existence, and nothing could be further from the truth.

May I inquire though, Mr. Speaker, as to whether or not there are anymore speakers?

Mr. Speaker, I will yield back.

Mr. Speaker, I appreciate the gentleman from California yielding.

H.R. 2344, the Webcaster Settlement Act of 2009, grants limited statutory authority to SoundExchange, the government-designated entity that is responsible for disbursing Webcasting royalties to copyright owners.

The bill gives SoundExchange the legal authority to effect an agreement that has already been negotiated with certain ``pureplay'' Webcasters for the performance of sound recordings over the Internet.

Under the terms, the bill will provide a window of 30 days for other Webcasters to agree to be bound by this new agreement.

For those Webcasters who choose to take advantage, they will be able to substitute the rate and rate calculation methods provided in the agreement for those previously announced by the copyright royalty judges, CRJs, on April 30, 2007.

These new terms will run through the end of 2015, which means that this group of Webcasters and sound recording artists who are due royalties under the Webcasting licensing will benefit from the extended period of certainty in their economic relationship.

Mr. Speaker, I have a strong preference for voluntarily negotiating settlements, which allow each side to compromise, claim a measure of victory, and go home.

This is particularly true when the alternative is for parties to engage in lengthy and expensive adversarial legal and lobbying efforts such as those that have followed the CRJs' determination in the Webcasters proceedings in 2007.

When they issued their 117-page final order, the CRJs established the statutory rates and the terms for the performance of compulsorily licensed Internet streamed music for a 5-year period that is due to expire December 31, 2010.

The law provides this process because we have an obligation to ensure that copyright owners whose works are made available in a government- mandated license are fairly compensated by the private parties who seek to benefit from such use.

Indeed, the Judiciary Committee and the Congress established the CRJ process, in no small part, in response to Webcasters' concerns that the previous Copyright Arbitration Royalty Panel, or CARP, process effectively prohibited many small entities from participating.

Nevertheless, despite their advocacy for this process, some Webcasters have suggested from time to time that the CRJs acted unfairly in reaching their decision. But the record reveals that the decision came at the end of an 18-month proceeding that included 48 days of testimony, 192 exhibits, 475 pleadings, motions and orders, and a transcript that exceeded 13,000 pages.

Notwithstanding these facts, the Congress enacted the Webcasting Settlement Act of 2008 late last year to provide an additional period of time for parties to negotiate private agreements. That period expired February 15, 2009.

Several entities, including the National Association of Broadcasters, are to be commended for reaching an accord during this window, but it appears a number of others were either unable or unwilling to come to terms during the generous period of time that Congress provided.

Mr. Speaker, I urge my colleagues to support H.R. 2344, but in so doing, I note that it seems a bit like the tail wagging the dog for Congress to legislate and create exceptions to the due process and notice requirements in the existing statutory process each time one party or another calculates they could get a better deal by disregarding the deadline the law provides.

Mr. Speaker, it is my pleasure to yield such time as he may consume for our response to the gentleman from South Carolina (Mr. Brown).

Mr. Speaker, I now yield myself such time as I may consume.

Mr. Speaker, I strongly support this legislation and urge its passage, and I do so for a reason that I believe does tie fairly into another piece of legislation. This is a piece of bipartisan legislation with Chairman Conyers. Another piece tries to deal with a greater inequity than even this one.

While Internet broadcasters or podcasters or Webcasters pay as much as half of their revenues, half of their gross revenues if they play performances of music, and NAB was cited as being a participant, let me make something very clear, Mr. Speaker. The National Association of Broadcasters has chosen to have an absolute ``burn the bridge'' attitude toward terrestrial broadcasters paying even a cent.

I join with Chairman Conyers, Mr. Berman, myself, and many others, in urging that this pattern of lowering to what we believe is a more fair rate or helping lower to what we believe is a more fair rate, in fact, flies in the face of terrestrial broadcasters continuing to say that the only fair amount to pay in the way of royalties to the music producers, the actual performers, is zero.

The public today, Mr. Speaker, when they hear this, if they hear this, will be shocked to find out that when they listen to terrestrial radio, nothing is paid to the artist.

Well, if they listen to Internet radio, actually more than half in some cases of the gross revenues of these Internet broadcasters is paid to the performers.

As Mr. Inslee said, I do believe that perhaps it is too much; that there is, in fact, a point at which, when you tax something too much, even if it's taxed to pay the performance, you may get too little of it. To that extent, we need to find an amount that balances fairly compensation for the creative artist who brought us this fine music and those who would seek to make it available to the public.

I hope that this piece of legislation will help for those doing business on the Internet and that H.R. 2344 will be quickly adopted and that it will lead to more affordable rates for the Internet.

But I cannot, in good conscience, fail to mention that these companies trying to start and promote a new industry and a service in many places in which terrestrial broadcasts may be poor or not available at all find themselves hampered while they pay half of their revenues out in royalties, competing against terrestrial broadcasters who insist on continuing to pay not a penny.

So, Mr. Speaker, I will look for this legislation to become law. I look for the other legislation behind it to be brought to the floor, fairly considered, and voted on in order to bring performance fairness.

I reserve the balance of my time.

Mr. Speaker, I have no further speakers at this time and would close quickly when the gentleman is ready.

Mr. Speaker, I thank the gentleman from Georgia. I, again, reiterate my appreciation for his appropriate and wonderful statements on H.R. 848, a bill that would simply eliminate Congress' prohibition on the Copyright Royalty Board from reaching a fair and equitable royalty for performers.

I yield back the balance of my time.

Madam Speaker, I rise today to thank Chairman Conyers and my colleagues on the Judiciary Committee for reporting the Webcaster Settlement Act of 2009, a bill I introduced to clear the path for private negotiations to determine the royalty rates for the use of music over Internet radio.

The Copyright Royalty Board (CRB) is a government body tasked with determining royalty rates for the use of music over Internet radio. In 2004, the CRB was tasked with determining a rate structure at the direction of Congress, and released its decision in March of 2007. The rate structure determined by the CRB substantially increased royalty fees that webcasters would be forced to pay.

Since the CRB is authorized to set and establish a royalty rate structure, stakeholders need Congressional authority to forge an agreement that the government would adopt. H.R. 2344 provides that critical authority, and allows private groups 30 days from enactment to work out a settlement amongst themselves to replace the rate structure established by the government.

Webcasters and copyright holders, including those in Washington State, like Washington's 101, WebRadioPugetSound, WildMixRadio Network.com, and Hollow Earth Radio need this legislation so they have the freedom to negotiate and craft a fair royalty rate structure for all impacted parties. Currently, Internet radio pays 47% of its annual revenue in royalty fees, a rate that will eventually crush the industry.

An estimated 42 million people tune to Internet radio on a weekly basis. Internet radio offers consumers not only entertainment value, but it serves niche markets and allows access to independent labels and artists, diversifying programming. Webcasters in Washington State allow small, local, Northwest bands an opportunity to have their music heard across the country. This bill will allow small webcasters serving those markets to continue to compete and be an outlet for minority voices.

I urge my colleagues to consider this important bill, and to help keep the music playing online.

Mr. President, the Webcaster Settlement Act of 2009 will provide the recording industry and webcasters the additional time they need to reach a mutually beneficial agreement on webcasting rates. I am pleased that Congress has acted swiftly on this legislation.

I have long championed the development of new business models for transmitting music to the public. Webcasters are able to offer a range of music to consumers in a form that can compete with traditional broadcast radio and satellite radio. As webcasting and webcasters flourish, the performers whose music is attracting listeners deserve compensation.

In March 2007, the Copyright Royalty Board determined the rates applicable to webcasters through 2010. Webcasters large and small expressed serious concerns that the new rates would threaten their viability. I encouraged all parties at that time to negotiate and reach an agreement on rates that would compensate recording artists while allowing webcasters to prosper. The Copyright Royalty Board process is intended as a backstop when parties cannot reach agreements. All parties, and the listening public, benefit when private sector agreements are reached.

Last year, Congress passed an extension similar to the one we pass today. It paved the way for agreements between SoundExchange, on behalf of the recording industry, and the National Association of Broadcasters, the Corporation for Public Broadcasting, and a group of small webcasters.

I am pleased that both webcasters and the recording industry are promoting this legislation. I have said before that I would not sanction a legislative readjustment of rates because one party is dissatisfied with the results. By passing this extension today, Congress is returning the authority to set rates to the creators and distributors of the music we all enjoy.