S. 326 — American Music Fairness Act

This section establishes the short title of the Act as the “American Music Fairness Act” and sets forth the table of contents.

This section revises the public performance right for sound recordings under 17 U.S.C. §106(6) to authorize public performance by means of an audio transmission (previously, by means of a digital audio transmission only). It adds a definition of “audio transmission” in 17 U.S.C. §101 to mean a transmission of a sound recording in digital, analog, or other format (excluding transmissions of audiovisual works). It further amends 17 U.S.C. §114(d)(1)—which provides exemptions from the performance right and eligibility for statutory licenses—(1) by replacing “a digital” with “an” in the introductory matter; (2) by striking subparagraph (A); (3) by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively; and (4) in newly redesignated subparagraph (A), by replacing “nonsubscription” with “licensed nonsubscription”. (Thus, terrestrial broadcasts are included in the performance right and statutory licensing framework previously limited to digital transmissions.) The section makes conforming amendments throughout Title 17, including in §§112, 114, and 1401, to replace references to “digital audio transmission” (or similar terms) with “audio transmission” and to remove or adjust related “digital” and “nonsubscription” qualifiers.

This section directs the Copyright Royalty Judges to commence a proceeding as soon as practicable after enactment to determine royalty rates and terms for nonsubscription broadcast transmissions (i.e., non-interactive digital performances of sound recordings by services such as internet radio stations), effective from the date of enactment through December 31, 2028, with subsequent proceedings every fifth calendar year thereafter. It further defers any payments due under section 114(f)(1)(D) until the due date of the first such royalty payments determined after enactment.

This section establishes special flat annual royalty rates under 17 U.S.C. §114(f)(1) for nonsubscription broadcast transmissions of sound recordings (i.e., statutory license for public performance of sound recordings by terrestrial digital radio broadcasters) by eligible individual FCC-licensed terrestrial broadcast stations with preceding-year revenue under $1.5 million (and owner/operator/affiliate aggregate revenue under $10 million), as follows: (1) $10 for stations with revenue under $100,000; (2) $100 for public broadcasting entities (as defined in 17 U.S.C. §118(f)) with revenue of $100,000 or more but under $1.5 million; and (3) $500 for non-public stations with revenue of $100,000 or more but under $1.5 million. (Thus, qualifying stations pay these flat fees upon annual certification rather than standard percentage-of-revenue royalties; such rates are inadmissible in rate-setting proceedings under 17 U.S.C. chapter 8.) This section also makes a technical correction in 17 U.S.C. §118 to specify cross-references to "section 397 of the Communications Act of 1934 (47 U.S.C. 397)."

This section establishes a royalty distribution requirement in 17 U.S.C. §114(g)(5) for direct licenses granted by sound recording copyright owners to transmitting entities eligible for the statutory license for noninteractive digital audio transmissions under §114(d)(2) (i.e., certain webcasters and similar services). Such entities must pay 50% of total royalties due under the direct license for transmissions otherwise eligible for the statutory license under §114(f) to the collective designated to distribute §114(f) statutory royalties; that collective distributes the payment proportionally according to §114(g)(2)(B)–(D) (i.e., to featured artists [45%], nonfeatured artists [5% total], excluding the sound recording copyright owner [50%]), which constitutes the sole payments to which featured and nonfeatured artists are entitled for those transmissions under the direct license.

This section provides that nothing in this Act or the amendments made by this Act adversely affects the public performance rights of or royalties payable to songwriters or copyright owners of musical works.

This section directs the Copyright Royalty Judges, pursuant to 17 U.S.C. §114(f)(1)(B), to base rates and terms for terrestrial broadcast radio stations on economic, competitive, and programming information presented by the parties, including whether a station’s service substitutes for or promotes phonorecord sales or interferes with or enhances sound recording copyright owners’ other revenue streams.