The Small Webcaster Settlement Act of 2002

The Small Webcaster Settlement Act of 2002 (SWSA) allows the recording industry and small webcasters to negotiate lower webcasting royalty fees. The SWSA empowers SoundExchange, which is the recording industry's royalty collection clearinghouse, to enter into royalty rate agreements with small commercial and all noncommercial webcasters. The SWSA does not specify rates but requires that any such agreements must base royalty payments on a percentage of revenue or expenses, or both, and include a minimum fee. Any resulting agreement is to be on terms available to all noncommercial and small commercial webcasters.


Congress enacted the Digital Performance Right in Sound Recording Act in 1995, which created an exclusive right for copyright owners of sound recordings to perform their sound recordings publicly by means of certain digital audio transmissions. Among the limitations on the performance right was the creation of a new compulsory license for nonexempt, noninteractive digital subscription transmissions. The passage of the Digital Millennium Copyright Act of 1998 expanded the scope of the license. In 2002, the SWSA further amended the law by addressing concerns that the licensing fees did not adequately address the concerns of small and noncommercial webcasters.

Applicable to Noncommercial Webcasters and to Small Commercial Webcasters

The SWSA applies to noncommercial webcasters and to small commercial webcasters and is intended to address Congressional concerns that noncommercial and small commercial webcasters were not adequately represented in the process that resulted in the Copyright Office's 2002 decision that established royalty rates for webcasting digital sound recordings. The SWSA authorizes SoundExchange to enter into new privately-negotiated royalty rate agreements with noncommercial webcasters, notwithstanding the royalty rates already established by the Copyright Office.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.

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