A New Layer of Complexity: The Internet

In anticipation of digital and Internet-based music performance, Congress amended the Copyright law in 1998 with The Digital Millennium Copyright Act (DMCA). Among other things, the DMCA provided for a new royalty to record labels for “nonsubscription digital transmissions” on the Web.

It is worth noting that radio stations have always been, and still are, exempt from paying the record labels for over-the-air broadcasts.

Litigation over sound recording license terms began early in 2001. The NRBMLC actively litigated in this proceeding in which radio has been defending itself from the record industry’s extraordinarily high fee demands.

Up until the 1990’s the primary music performance copyright issue for radio stations was the right of a musical work – that is, the underlying composition and lyrics in a song.  Radio stations have always been exempt from paying sound recording public performance royalties.  Congress has repeatedly rejected efforts by the recording industry to impose on AM/FM radio a royalty for the public performance of sound recordings; however, in 1995 Congress passed the Digital Performance Rights in Sound Recordings Act (the “DPRA”) to address specific, narrow, record company concerns that certain types of digital transmissions could hurt record sales.  Three years later, the Digital Millennium Copyright Act of 1998 (the “DMCA”) provided even more copyright protection for performers and record companies.  This legislation would bring radio stations that simulcast their signals on the Internet a sound recording royalty obligation.  Payable to SoundExchange, the recording industry collective, this royalty is distributed to the copyright owners — generally the recording artists and record labels.  Musical work public performance royalties –  separate from those on the simulcasting radio station — are also paid to the P.R.O.s by broadcasters for their Internet simulcasts.