In response to the Register of Copyrights’ Feb. 19 2009 decision requiring that Section 112 and
114 royalties be disaggregated, the new rates also state that the royalty for Section 112(e)
constitutes 5% of the total royalty payments under this agreement.^3235 Finally, the recordkeeping
provisions of this agreement do not require licensees to report their performances.^3236
- The Digital Performance Right – What Constitutes an “Interactive”
Service
The Section 114 statutory license does not apply to an “interactive service.” Section
114(j)(7) defines an “interactive service” as a service “that enables a member of the public to
receive a transmission of a program specially created for the recipient, or on request, a
transmission of a particular sound recording, whether or not as part of a program, which is
selected by or on behalf of the recipient.” Section 114(j)(7) further provides that the “ability of
individuals to request that particular sound recordings be performed for reception by the public at
large, or in the case of a subscription service, by all subscribers of the service, does not make a
service interactive, if the programming on each channel of the service does not substantially
consist of sound recordings that are performed within 1 hour of the request or at a time
designated by either the transmitting entity or the individual making such request. If an entity
offers both interactive and noninteractive services (either concurrently or at different times), the
noninteractive component shall not be treated as part of an interactive service.”
As might be expected, considerable controversy has arisen over the application of the
definition of “interactive service.” A number of lawsuits have been filed involving the issue:
- On May 24, 2001, ten recording companies sued Launch Media, Inc. for copyright
infringement, alleging that Launch’s LAUNCHcast service created an interactive radio station by
providing users with the ability to select specific artists, to rate artists and recordings, to select
certain music that the user had or had not previously rated, to permanently block particular
recordings, to skip the current recording and move on to the next one, and to pause the current
recording and resume from the same point later.^3237 This lawsuit eventually led to a decision by
the Second Circuit on the meaning of an “interactive” service, discussed in subsection (a) below. - On June 1, 2001, Launch and other online webcasters, acting through the Digital
Media Association (DiMA), filed a declaratory judgment action against the RIAA, seeking a
declaration that their webcasting services were eligible for the statutory license because the
songs played “ultimately are generated by a computer in a manner designed to ensure
compliance with the DMCA’s statutory license provision”; users “do not determine the particular
sound recordings or the particular artists which become the basis of the transmission; and [they]
have no ability to select or obtain advance knowledge as to the particular songs that are streamed
on the stations”; “[a]rtist identification on the services is representative only”; the “skip”
(^3235) Id.
(^3236) Id. at 14076.
(^3237) Hillel Parness, “Internet Radio: As RIAA and DiMA Prepare to Do Battle over ‘Interactivity,’ Questions
Resurface About ISP Liability,” Cyberspace Lawyer, July/August 2001, at 2, 4.