A recent ruling by Judge John S. Martin in the Southern District of New York raises the issue of whether a person or entity engaged only in “streaming” may even avail themselves of a compulsory license under Section 115. See Rodgers and Hammerstein Org. v. UMG Recordings, Inc., 2001 U.S. Dist. LEXIS 16111 (Sept. 25, 2001). In dicta, Judge Martin states that compulsory licenses under Section 115 are only available to potential licensees who engage in the distribution of phonorecords to the public for private use. In Judge Martin’s opinion, a “stream” is not a “distribution” because the defendants who engaged in the “streaming” did not “sell copies of the records to their users.” The implications of this view, i.e., that there must be a sale of a copy in order for there to be a distribution of the copy, reach beyond the subject matter of this article.
Also, the Copyright Office has taken the position that, although the creation of a “buffer” copy in a computer’s RAM is a reproduction, the copy is subject to the fair use defense against a claim of infringement. See U.S. COPYRIGHT OFFICE, DMCA SECTION 104 REPORT 133–41 (2001), available at http://www.loc.gov/copyright/reports/studies/dmca/dmca_study.html.
The issue of whether a streamed "promotional excerpt" (i.e., the streaming of a composition for 30 seconds or less) gives rise to a mechanical royalty appears to have been tabled, at least until October 4, 2003, with respect to Internet subscription services and Internet services that provide for limited downloads (i.e., downloads that expire after a certain number of plays or period of time). On October 9, 2001, The National Music Publishers' Association and The Harry Fox Agency, Inc., on the one hand, and the Recording Industry Association of America, on the other, announced an agreement pending the
determination of royalty rates for such services, either through negotiation or a CARP. In that agreement, "promotional excerpts" do not give rise to a mechanical royalty so long as the owner of the sound recording also allows the music publishers to stream a promotional excerpt of the sound recording "on-demand" without payment of a royalty to the owner of the sound recording. See Press Release, National Music Publishers Association, Songwriters and Music Publishers Reach Landmark Accord with Record Industry To License Music Subscription Services On the Internet (Oct. 9, 2001), available at http://www.nmpa.org/pr/subscription_10_09_01.html