Today in 1995: The Digital Performance Right in Sound Recordings Act is enacted

November 1, 2013

Today in Legal HistoryIn our Today in Legal History series, we’ve previously covered the enactment of the Digital Millennium Copyright Act (DMCA).

The DMCA is arguably one of the most significant copyright laws in U.S. history, and easily one of the (if not the) most important of the past two decades.  The latter is true because the act represents a comprehensive update to U.S. copyright law in light of the rapid technological updates affecting the legal area.

Three years earlier, though, another important copyright law was enacted – one that was also intended to update copyright law to account for changes in technology: the Digital Performance Right in Sound Recordings Act, which was signed into law by President Bill Clinton on November 1, 1995.

The 18 year old law amended the 1976 Copyright Act by adding the right “to perform the copyrighted work publicly by means of a digital audio transmission…in the case of sound recordings” to the list of “exclusive rights” held by copyright owners.

What this means is that the DPRA allowed American performers and record producers to collect a royalty whenever a song which they produced or performed “aired” in a digital format, such as through Internet streaming or satellite radio.

Previously, royalties could only be collected from traditional radio broadcasts.  With the advent of widespread public usage of the Internet in the 1990s, however, this was no longer sufficient to ensure that copyright holders were able to collect royalties whenever their music was played over a broadcast medium.  The DPRA effectively closed any possible “loophole” allowed by the streaming of music over the Internet.

In addition, the DPRA allowed, for the first time ever, for the collection of royalties by the recording industry (including performers) for a “public performance.”  Previously, only songwriters and composers could collect royalties, and only for radio broadcasts for the copyrighted works.  Currently, the recording industry still cannot collect royalties for radio broadcasts (the reason for this exemption was originally for the establishment of a mutually-beneficially arrangement in which radio broadcasters would play the songs at a cheaper cost in exchange for enticing listeners to purchase the full album from retail stores, thus financially benefiting the recording industry).

But what happens if a radio broadcast station transmits its signal over the Internet (as many radio stations today do)?  Are radio broadcast stations still exempt from paying royalties to the recording industry?

According to the 2003 ruling by the Third Circuit Court of Appeals Bonneville Intern. Corp. v. Peters, they do.  The court found that the exemption from these royalties only applied to radio broadcasts themselves, rather than the legal entity that is primarily engaged in making the broadcasts.

However, the recording industry still cannot collect royalties for radio broadcasts – something that is a bit of a sore point for the industry (particularly as retail sales have declined in recent years).  As such, there have been several legislative attempts in the past six years to allow such collections, but all of have been unsuccessful so far.

Many observers believe that it is only a matter of time until the recording industry is successful in its lobbying efforts; then again, the amount of music content streamed over the Internet is increasing everyday – and the DPRA already allows the industry to collect royalties from songs streamed thereon.

Thus, even if the industry is unsuccessful in being able to collect radio broadcast royalties, the amount of royalties collectable from digital sources increases every day.

And it’s all thanks to the DPRA.