Screaming Penguin - Source Does Matter

The Season of Bad Laws, Part 3: Banning MP3 Streaming
April 26, 2006

The Washington Post reports that Senators Feinstein (D-Cal.) and Graham (R-S.C.) have introduced S. 2644, dubbed the PERFORM Act, that is aimed at punishing satellite radio for offering its subscribers devices capable of recording off the air.

Buried in the bill, however, is a provision that would effectively require music webcasters to use DRM-laden streaming formats, rather than the MP3 streaming format used by Live365, Shoutcast, and many smaller webcasters (like Santa Monica's KCRW and Seattle's KEXP). The streaming radio stations included in iTunes also rely on MP3 streams (since Apple isn't about to license the Real or Microsoft streaming codecs).

Today, webcasters that want to transmit major label music are entitled to do so under a statutory license (administered by SoundExchange) set out in section 114(d) of the Copyright Act. So long as they follow the rules and pay a royalty, webcasters can play whatever music they like, using whatever streaming format they like.

Under the current law, webcasters are forbidden from helping their listeners record the webcasts, and are required to use DRM only if the format includes DRM. The statutory license applies so long as:

[114(d)(2)(C)(vi)] the transmitting entity takes no affirmative steps to cause or induce the making of a phonorecord by the transmission recipient, and if the technology used by the transmitting entity enables the transmitting entity to limit the making by the transmission recipient of phonorecords of the transmission directly in a digital format, the transmitting entity sets such technology to limit such making of phonorecords to the extent permitted by such technology.

The PERFORM Act would change that, requiring webcasters to use DRM that restricts the recording of webcasts. That means no more MP3 streams if you rely on the statutory license.