As Music 2.0 is continually creating debates between businesses and artists over how to compensate artists for their work, understanding of basic copyright law is must. Whether you’re looking at the Performance Rights Act or online gaming, the issue of music play being classified as a “public performance” under the Copyright Act is determinative factor for American artists seeking royalty payments. So, for all of you non-copyright gurus, below is a brief history of public performance rights.
Copyright Act of 1909
Before 1909, performance compensation to musicians tied into the sale of the copies of the musical composition. Even then, music publishers and composers did not receive compensation from public “talking machine” performances. Eventually a dispute erupted over protecting musical compositions from reproduction, leading to the creation of compulsory licenses in the Copyright Act of 1909. This allowed composers to collect money from the manufacture and sale of their works. Despite the implementation of the compulsory licenses, Congress decided at the last minute to exempt the public performance of a recorded work played on jukeboxes. The Copyright Office recommended, unsuccessfully, that the exemption either be replaced by requiring jukebox operator pay a license fee or have the exemption repealed.
In 1914, ASCAP formed. ASCAP offered to sell business a yearly license at a flat fee to play the works of ASCAP members, otherwise ASCAP threatened to sue. Most businesses did not buy licenses, so ASCAP sued and won. When broadcast radio arrived, broadcasters played musical compensations without asking permission. Large radio broadcasters bought licenses from ASCAP, but broadcasters and other business establishments attempted to get rid of ASCAP to no avail. Broadcasters and some business found a loop-hole around ASCAP via the jukebox exemption, which provided free promotion.
The Fall of the Jukebox Exemption
By the late 1920s, jukeboxes evolved, becoming commercial sound systems, not the un-amplified, one-play novelty machines they once were. The evolved jukeboxes still fit under the exemption, whose language applied to the “rendition of a musical composition by or upon coin-operated machines.” With the development of jukeboxes, composers and music publishers unsuccessfully fought to amend the exemption. Lobbyist insisted that the public performance right be defined as broadly as possible, which Congress finally gave in on. In the Copyright Act of 1976, an $8 per jukebox annual license fee replaced the jukebox exemption.  The exemption was eventually repealed in 1989 in order for the US to comply with the Berne Convention.
The Digital Performance Right in Sound Recordings Act of 1995
In 1995, Congress granted public performance rights, via the Digital Performance Right in Sound Recordings Act of 1995 (DPRA). This granted sound recording’s copyright owners a limited public performance right. DPRA allowed the copyright owners to perform their works publicly, with some exceptions, via digital audio transmissions. DPRA included a statutory license for “nonexempt, non-interactive subscription digital audio transmission services” to use the recordings via digital audio transmission.
Sound Recordings Act of 1971
After several cases arising over the unauthorized duplication of sound recordings, Congress included sound recordings as “writings” under the Copyright Act, giving them protection. This grant of protection was still absent public performance rights. Congress was also motivated to implement the Sound Recordings Act in order to ease help the US enter into the Geneva Convention. Of course the Sound Recordings Act did nothing to ease tension between broadcasters and artists over public performance rights.
Copyright Act of 1976
The adoption of the 1976 Act did little to expand public performance rights. Section 114 provided that copyright owners of musical compensations are the only parties to receive compensation for the use of musical works.
Digital Millennium Copyright Act
Congress enacted the DMCA in 1998, which amended section 114 of the 1976 Act. The amendment renamed the subscription services covered by the DPRA as “preexisting subscription Services,” and expanded the statutory license to include new digital services. The DMCA also amended section 112 of the 1976 Act to create a new license that allows digital audio services to make “ephemeral recordings of a sound recording to facilitate the transmission permitted under Section 114.” Congress also set up SoundExchange to collect performance royalties for digital performances under DPRA and the DMCA.
Small Webcasters Settlement Act of 2002
In 2002, Congress enacted the Small Webcasters Settlement Act of 2002 (SWSA), which gives small webcasters more options as to how to calculate the compulsory license royalty rate. A year later, terrestrial radio stations unsuccessfully argued for an exemption from the public performance license if they transmitted simultaneously via terrestrial radio and digitally.
Copyright Royalty and Distribution Reform Act of 2004
In 2004, Congress enacted the Copyright Royalty and Distribution Reform Act which replaced the Copyright Arbitration Royalty Panel with the Copyright Royalty Board (CRB) composed of three standing Copyright Royalty Judges. Royalty rates under the SWSA had remain in effect until 2005, thereafter the CRB determined rates from January 1, 2006 to December 31, 2010. The new rate provisions abolished the special small webcaster provisions, sighting that the CRB lacked statutory authority to do so.
Arista v. Launch
On August 21, 2009, the Second Circuit Court of Appeals ruled that webcasting services, like Pandora, who allow listeners to create taste based radio stations are exempt from paying individual, per-song licensing fees to sound recording copyright holders. This case distinguishes between interactive services and predictive radio stations. Thus, the non-interactive digital radio station statutory definition now includes predictive radio stations, only having to pay the public performance royalty as determined by the CRB. 
 Jessica Litman, War Stories, http://www-personal.umich.edu/~jdlitman/papers/warstories.pdf.
 Id. (talking machines included the Victrola disk player and the Edison rotating cylinder) .
 Digital Law Online: History, digital-law-online.info/lpdi1.0/treatise4.html. see also, Copyright Act of 1909, §1(e).
 Litman, supra, note 1 (compositions were then sold on piano rolls, phonograph cylinders, Victrola disks, etc.).
 Digital Law Online: History, digital-law-online.info/lpdi1.0/treatise4.html (at this time, jukeboxes were novelty items that were not very evolved as we have come to know them). See also, Copyright Act of 1909, §1(e). See also, Register’s Report on the General Revision of the U.S. Copyright Law (saying “The 1961 Report of the Register notes that it was placed in the law in 1909 “at the last minute with virtually no discussion.”).
 PUBLIC PERFORMANCE BY MEANS OF COIN-OPERATED PHONORECORD PLAYERS.
 Litman, supra, note 1.
 Id. (jukeboxes now were multiple play machines with amplified speakers).
 Id. (The 1976 Act defined performance much more broadly: broadcasting is still performing; turning on your television is also performing; operating the satellite that transmits the signal from the network to the local broadcaster is performing).
 This allowed the copyright owners to collect performance royalties.
 Digital Performing Rights in Sound Recordings: The U.S. Experience, http://www2.gtlaw.com/pub/articles/2002/jacobsonm02b.asp.
 Digital Performing Rights in Sound Recordings: The U.S. Experience, supra, note 20
 Id. (the new services include : (1) preexisting satellite digital audio radio Services, (2) new subscription Services and (3) eligible non-subscription transmission Services.).
 Statutory Royalty Rates for Digital Performance of Sound Recordings: Decision of the Copyright Royalty Board, fpc.state.gov/documents/organization/86274.pdf(for example, small webcasters could either pay royalties based on a percentage of revenue or expenses rather than on a per-song per-listener basis).
 Id. See also, I, 347 F.3d 485 (3d Cir. 2003).
 Id.See also, I, 347 F.3d 485 (3d Cir. 2003).
 Court Rules Individual License Fees not Required for Webcasts, http://futureofmusic.org/blog/2009/08/24/court-rules-individual-license-fees-not-required-webcasts.
 Id. (interactive services allow users choose what song is streamed and predictive radio stations allow users to create taste based stations).