Cyberspace Copyright Proposal Draws Praise : Technology: The Administration’s draft would extend protection to on-line services and digital broadcasting.

Endorsing a first, tentative step toward modernizing the nation’s intellectual property laws, the entertainment and information industries today welcomed a draft recommendation from the Clinton Administration on extending copyright law to cover on-line services and other corners of cyberspace.

Record companies, film studios and book publishers have been increasingly concerned about illegal copies of musical recordings and texts being exchanged over electronic networks. And the broader question of how to protect intellectual property amid a sea of technology that makes copying easy and cheap has become a critical issue for both creative artists and their corporate masters.

The amendments proposed by a Commerce Department task force would limit unauthorized copying of software and other intellectual property, making it clear that existing copyright protections applied to the electronic realm.

The task force also recommended outlawing the manufacture and importation of devices used to crack anti-copying encryption codes. And in a proposal that brought a swift rebuke from the broadcasting industry, it said copyright owners should be given a “performance right,” which would enable musicians and other performers to collect fees for digital broadcasts of their work.

Congress has done little with the nation’s copyright laws in nearly 20 years, but the Administration plans to unveil legislation based on the task force recommendations later this year, after the Commerce Department holds a series of public hearings on the piracy problem. The hearings are to be held in Washington, Chicago and Los Angeles this fall.

Copyright laws already make clear that music, writing, software and other forms of creative expression can be legally protected, giving the owner an exclusive permit to reproduce and distribute the work. But when material such as books and recordings are posted on on-line services such as Prodigy or CompuServe--where any computer user can gain access--the law is murky.

Industry groups applauded the Administration’s proposals but warned against widespread controls on data transmission.

“While some fine-tuning of current copyright law may be desirable, overall the Administration has made it clear that the laws governing the use, redistribution and manipulation of data should not be tampered with,” Kenneth B. Allen, president of the Information Industry Assn., a Washington trade group, said in a statement. “Without our industry’s products and services, the information superhighway will be an expressway to nowhere.”

The Recording Industry Assn. of America, which represents Sony, PolyGram, MCA and other companies, said extending current copyright laws to cyberspace will prevent digital broadcasting firms from offering performances over cable television wires without compensating the artists.

“The report finally puts intellectual property protection four square” into the Administration’s blueprint for a National Information Infrastructure, said Hilary Rosen, president of the recording industry group. Industry analysts have observed Internet users distributing snippets of Aerosmith and Nirvana songs without permission, she said.

On-line services have said that responsibility for enforcing copyrights lies with the owner of a work, not the bulletin board on which it is posted. Some, like America Online, based in Mclean, Va., ask subscribers to agree not to redistribute copyrighted material and not to post such work on public forums, a spokeswoman said.

The proposed amendments could eventually force on-line services and computer users to pay fees each time they download or transfer text, graphics or other material.

If industry leaders are fearful of unauthorized copying and distribution, they will be less inclined to make their works available, said Bruce A. Lehman, who chaired the Commerce Department task force.

The proposal to ban anti-encryption equipment is likely to draw opposition from electronics manufacturers, who fought a long battle with the recording industry over new digital taping formats. The equipment vendors eventually agreed to a modest royalty on blank digital tapes and disks, as well as taping equipment.

The Home Recording Rights Coalition, an anti-royalty lobbying group led by electronics manufacturers, said in a statement that it is “reserving judgment” on the recommendations and will examine how they might “affect consumer access to and enjoyment of new electronics, information and entertainment products and services.”