Music and Multimedia:
The New Digital Performance Right in
Sound Recordings went "into the Act"
February 1, 1996

Copyright, 1996 Beverly Robin Green All Rights Reserved

[Beverly Robin Green is an entertainment attorney with over 18 years experience in the music recording industry. She is a partner in Green & Green. Beverly was a member of the faculty at San Francisco State University, where she taught The Legal Aspects of the Music/Recording Industry, and has served in the past as a member of the Board of Governors and Legal Counsel for SAN FRANCISCO/ NARAS (Grammys® ). This article is intended to be general only, and is not intended to provide any legal advice. It is recommended to consult an attorney for advice for any particular legal situation.]

The Copyright Act (17 United States Code, Section 101, et. seq.) is continually evolving by being amended to keep up with new technologies. For instance, with the 1909 Act, Congress gave music publishers the "mechanical" right to license piano roll reproductions of their music (and also created statutory "compulsory" licensing to limit monopolies). In 1972, federal copyright protection was finally extended to sound recordings. But even under the 1976 Act (effective since January 1, 1978), the performance right that applied to music was not extended to sound recordings. Now, to deal with the complex issues raised by the new cyberspace technologies, President Clinton signed into law an extremely complex new piece of legislation, the bulk of which became effective February 1, 1996, known as the "Digital Performance Right in Sound Recordings Act of 1995".

The Act really deals with two separate rights in the "bundle" of copyrights: 1) the digital performance of sound recordings, and 2) the digital phono record delivery or distribution of sound recordings. There has been a lot of discussion recently in the music and multimedia industries as to whether and when on line Internet or other digital transmissions of music (and recordings) constitute only performance or also distribution. (For further discussion of this topic, listen to the SAN FRANCISCO/NARAS Music & Multimedia 95 Conference Tape of the Panel on "Legal and Business Issues" for Multimedia Developers). Also, within the recording industry, there has always been the issue of whether and how the record companies (who usually own the sound recording copyrights) would share any performance royalties with recording artists. The new Act deals separately with the separate digital performance and distribution rights, and tries to address some of these and many other issues.

The new law is limited to "digital" or other non-analog format audio transmissions or deliveries. A "digital phono record delivery" goes further than performance, into the realm of distribution, as it "results in a specifically identifiable reproduction" of the sound recording. Digital performance exemptions include non subscription (no-charge) transmissions or radio broadcasts, other than as part of an interactive service. There are other exemptions, and voluntary and statutory "compulsory" licensing limitations and procedures that apply separately to these rights. Everyone involved in the recording industry, or providing audio transmission or interactive services, is urged to consult with their legal counsel to understand how the new law effects their rights and liabilities.

It is important for recording artists, producers, music publishers, and songwriters to understand that the new law has a direct bearing on the negotiation of their recording industry contracts. For example, the new law requires record companies to allocate statutory digital performance fees, on a per sound recording basis, 45% to the featured artist (or the persons conveying rights in the artist's performance in the sound recordings), and 5% to escrow funds divided equally between non featured musicians and non featured vocalists. For performance fees from voluntary licenses, however, the new law does not require any particular portion be paid to any artists. Instead the artists (and producers under either scenario) are left to those payments (if any) provided in their individual contracts! An example regarding digital phono record delivery, is that artist-songwriters will be stuck with their negotiated so-called "controlled composition" clauses, instead of getting the full benefit of the new compulsory license rates, for certain contracts entered into on or before June 22, 1995, and for contracts entered into after the song has been recorded, if the artist retains the right to act as their own music publisher.