Congress established these limitations and restrictions when it passed legislation in 1995 and 1998 that created the first digital performance rights laws in the United States.
The legislation was a careful balancing act, with Congress attempting to weigh the rights of content creators—recording artists, record labels, songwriters, and music publishers—against those of an emerging category of content users: “webcasters” and satellite radio services. Included were new services, like Pandora, that sought to stream music across cable wires, from satellites, and over the Internet.
For years, broadcast radio has streamed music to the public from radio towers without having to pay recording artists or record labels for the right to play their music. But radio stations did have to pay songwriters and music publishers through the three main licensing organizations that represent them: ASCAP, BMI, and SESAC.
After passage of this historic legislation, services such as Sirius and XM satellite radio (now merged as SiriusXM), Yahoo! and AOL Internet radio, and later Pandora and other Internet radio stations, had to pay a royalty to the recording artist as well as the songwriter.
In the early 1990s, recording artists and their record labels lobbied Congress to pass a comprehensive performance rights bill that included traditional broadcast radio, known in the industry as terrestrial radio. But the terrestrial broadcast lobby was too strong, and so a compromise was reached: the old-guard terrestrial broadcasters would continue with their so-called “free pass,” but new services over cable, Internet, or satellite would have to pay. Thus, although singer Aretha Franklin would still receive no payment from AM/FM broadcasters when they played “Natural Woman,” she would now receive payment from when it was played by Internet, satellite, and cable streaming services. As the songwriters, Carole King and Gerry Goffin would continue to receive payments from both the AM/FM broadcasters and these new services.
The first issue that Congress had to address had nothing to do with the content users. It was a dispute between recording artists and record labels on the one hand and music publishers and song- writers on the other.
The music publishers and songwriters were concerned that if this new law passed, one of two things might happen:
Congress settled the second concern rather easily: the new right for record companies and recording artists was subject to a compulsory license. They had to license their recordings— they had no choice. That’s why Pandora and other services licensed under this congressionally mandated system can play any recording ever commercially released, while services such as Spotify, which aren’t under this system, may be constrained from playing certain content.
ENTER THE ’NET
Having settled the main bone of contention between the music publishers and songwriters and the recording artists and labels, Congress carved out a new compulsory license for webstreaming.
Long before Napster and P2P services sprang up, the artists and labels wanted to ensure that their music wasn’t stolen over these new digital outlets. Restrictions were made part of the license.
Even though a new online radio service could play any recording ever released, it could only play four songs in a three-hour period by the same artist, thus preventing the creation of “all-artist channels.” Online, there was enough available bandwidth to have as many channels as a service wanted to provide. If there were an all-Madonna channel or an all-Daft Punk channel, a listener could tune in to that channel any time they wanted to hear that artist, lessening the impulse to purchase that artist’s music (or so the logic went).
So when you hear an all-artist channel, like Siriusly Frank or E Street Radio (both on SiriusXM), you know that the artist specially licenses it. In addition, the “playlist restriction” limited the playing of any more than two songs in a row by a particular artist (unless it was from a box set, in which case you could play three songs).
John Lennon could only imagine how much time the lobbyists representing the content-owner side spent creating the language that became known as the “performance complement” in Section 114 of the US Copyright Act, which governs these playlist restrictions.
But their work was not without complications. I’m sure they simply weren’t thinking about classical music when they created the playlist restrictions and the definitions in the statute. By those definitions, it was impossible for a classical Internet radio service to play four movements in a row from the same symphony because each movement was deemed a separate track. Imagine if you had to play the first two movements from one version of Beethoven’s Fifth and then additional movements from a different version! Classical stations cried foul and needed help to resolve the issue.
Section 114 of the Copyright Act does not specifically mention skips. Why, then, can a listener skip only six recordings in an hour? In the early days of Internet radio, the Recording Industry Association of America (RIAA), acting on behalf of content owners, took the position that any skips made a service “interactive” and thus ineligible for the congressional license. If they were interactive, like Spotify or Deezer, they’d need to get licenses from thousands of content owners and not simply take the statutory license given to them by Congress.
But the RIAA entered into an agreement with a fledgling Internet radio service, and for a premium price allowed that service to offer their listeners the ability to skip up to six recordings per hour. Eventually, this became the de facto standard: six skips per hour were allowable within a non- interactive service.
We don’t often think that congressional regulations and statutes actually have an impact on the music we hear, or the method by which we hear it, but that is certainly the case today for listeners of Sirius/XM, Pandora, and other non-interactive Internet broadcasters.