98-31657. Digital Performance Right in Sound Recordings and Ephemeral Recordings  

  • [Federal Register Volume 63, Number 228 (Friday, November 27, 1998)]
    [Rules and Regulations]
    [Pages 65555-65557]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 98-31657]
    
    
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    LIBRARY OF CONGRESS
    
    Copyright Office
    
    37 CFR Part 251
    
    [Docket No. RM 98-4 CARP]
    
    
    Digital Performance Right in Sound Recordings and Ephemeral 
    Recordings
    
    AGENCY: Copyright Office, Library of Congress.
    
    ACTION: Final rule and initiation of voluntary negotiation period.
    
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    SUMMARY: The Copyright Office is initiating the six-month voluntary 
    negotiation periods, as required by the Digital Millennium Copyright 
    Act of 1998, for negotiating terms and rates for two compulsory 
    licenses, which in one case, allows public performances of sound 
    recordings by means of eligible nonsubscription transmissions and by 
    new subscription services, and in the second instance, allows the 
    making of an ephemeral phonorecord of a sound recording in furtherance 
    of making a permitted public performance of the sound recording. In 
    addition, the Office is adopting procedural regulations to implement 
    the Digital Millennium Copyright Act of 1998.
    
    EFFECTIVE DATES: The effective date of the regulation is December 28, 
    1998. The effective date of the initiation of the six-month voluntary 
    negotiation periods is November 27, 1998.
    
    ADDRESSES: Copies of voluntary license agreements and petitions, if 
    sent by mail, should be addressed to: Copyright Arbitration Royalty 
    Panel (CARP), P.O. Box 70977, Southwest Station, Washington, DC 20024. 
    If hand delivered, they should be brought to: Office of the General 
    Counsel, James Madison Memorial Building, Room LM-403, First and 
    Independence Avenue, SE, Washington, DC 20559-6000.
    
    FOR FURTHER INFORMATION: David O. Carson, General Counsel, or Tanya M. 
    Sandros, Attorney Advisor, Copyright Arbitration Royalty Panel, P.O. 
    Box 70977, Southwest Station, Washington, D.C. 20024. Telephone (202) 
    707-8380 or Telefax (202) 707-8366.
    
    SUPPLEMENTARY INFORMATION: On October 28, 1998, the President signed 
    into law the ``Digital Millennium Copyright Act of 1998'' (``DMCA'' or 
    ``Act''). Public Law 105-304. Among other things, the DMCA amends 
    sections 112 and 114 of the Copyright Act, title 17 of the United 
    States Code, to create a new license, governing the making of an 
    ephemeral recording of a sound recording, and to expand another to 
    facilitate the public performance of sound recordings by means of 
    certain audio transmissions. See 17 U.S.C. 112(e)(1) and 114(d)(2). In 
    amending these sections, Congress sought to ``first, further a stated 
    objective of Congress when it passed the Digital Performance Right in 
    Sound Recordings Act of 1995 (DPRA) to ensure that recording artists 
    and record companies will be protected as new technologies affect the 
    ways in which their creative works are used; and second, to create fair 
    and efficient licensing mechanisms that address the complex issues 
    facing copyright owners and copyright users as a result of the rapid 
    growth of digital audio services.'' H.R. Conf. Rep. No. 105-796, at 79-
    80 (1998).
        In enacting the Digital Performance Right in Sound Recordings Act 
    of 1995 (DPRA), Pub. L. 104-39, Congress created an exclusive right for 
    copyright owners of sound recordings, subject to certain limitations, 
    to perform publicly the sound recordings by means of certain digital 
    audio transmissions. Among the limitations on the performance was the 
    creation of a new compulsory license for nonexempt, noninteractive, 
    digital subscription transmissions. The DMCA expands this license to 
    allow a nonexempt eligible nonsubscription transmission and a nonexempt 
    transmission by a preexisting satellite digital audio radio service to 
    perform publicly a sound recording in accordance with the terms and 
    rates of the statutory license. 17 U.S.C. 114(a).
        An ``eligible nonsubscription transmission'' is a noninteractive, 
    digital audio transmission which, as the name implies, does not require 
    a subscription for receiving the transmission. The transmission must 
    also be made as part of a service that provides audio programming 
    consisting in whole or in part of performances of sound recordings 
    which purpose is to provide audio or entertainment programming, but not 
    to sell, advertise, or promote particular goods or services. A 
    ``preexisting satellite digital audio radio service'' is a subscription 
    digital audio radio service that received a satellite digital audio 
    radio service license issued by the Federal Communications Commission 
    on or before July 31, 1998. See 17 U.S.C. 114(j)(6) and (10). Only two 
    known entities, CD Radio and American Mobile Radio Corporation, qualify 
    under the statutory definition as preexisting satellite digital audio 
    radio services.
        In addition to expanding the current 114 license, the DMCA creates 
    a new statutory license for the making of an ``ephemeral recording'' of 
    a sound recording by certain transmitting organizations. The new 
    statutory license allows entities that transmit performances of sound 
    recordings to business establishments, pursuant to the limitations set 
    forth in section 114(d)(1)(C)(iv), to make an ephemeral recording of a 
    sound recording for purposes of a later transmission. The new license 
    also provides a means by which a transmitting entity with a statutory 
    license under section 114(f) can make more than the one phonorecord 
    specified in section 112(a). 17 U.S.C. 112(e).
    
    Determination of Reasonable Terms and Rates
    
        The statutory scheme for establishing reasonable terms and rates is 
    the same for both licenses. The terms and rates for the two new 
    statutory licenses may be determined by voluntary agreement among the 
    affected parties, or if necessary, through compulsory arbitration 
    conducted pursuant to Chapter 8 of the Copyright Act. Because the DMCA 
    does not establish reasonable rates and terms for either the new 
    section 112 or the expanded section 114 license, the statute requires 
    the Librarian of Congress to initiate a
    
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    voluntary negotiation period, the first phase in the rate setting 
    process, within 30 days of enactment for the purpose of determining 
    reasonable terms and rates for each license. See 17 U.S.C. 112(e)(4) 
    and 114(f)(2)(A).
        If the affected parties are able to negotiate an industry-wide 
    agreement, then it will not be necessary for the parties to participate 
    in an arbitration proceeding. In such cases, the Librarian of Congress 
    will follow current rate regulation procedures and notify the public of 
    the proposed agreement in a notice and comment proceeding. If no party 
    with a substantial interest and an intent to participate in an 
    arbitration proceeding files a comment opposing the negotiated rates 
    and terms, the Librarian will adopt the proposed terms and rates 
    without convening a copyright arbitration royalty panel. 37 CFR 
    251.63(b). If, however, no industry-wide agreement is reached, or only 
    certain parties negotiate license agreements, then those copyright 
    owners and users relying upon one or both of the statutory licenses 
    shall be bound by the terms and rates established through the 
    arbitration process.
        Arbitration proceedings are initiated upon the filing of a petition 
    for ratemaking with the Librarian of Congress during the 60 days 
    immediately following the six month negotiation period. Arbitration 
    cannot take place, however, unless a party files a petition even if the 
    parties fail to negotiate a voluntary license agreement. 17 U.S.C. 
    112(e)(5) and 114(f)(1)(B).
        The rates and terms established shall be effective during the 
    period beginning on the effective date of the enactment of the DMCA and 
    ending on December 31, 2000, or upon agreement by the affected parties, 
    another mutually acceptable date. 17 U.S.C. 112(e)(5) and 114(f)(2)(A).
    
    Initiation of Voluntary Negotiations
    
        Pursuant to sections 112(e)(4) and 114(f)(2)(A), the Copyright 
    Office of the Library of Congress is initiating the six-month voluntary 
    negotiation periods for determining reasonable rates and terms for the 
    statutory licenses permitting the public performance of a sound 
    recording by means of certain digital transmissions and the making of a 
    phonorecord in furtherance of these public performances. The 
    negotiation period shall run from November 27, 1998, to May 27, 1999. 
    Parties who negotiate a voluntary license agreement during this period 
    are encouraged to submit two copies of the agreement to the Copyright 
    Office at the above-listed address within 30 days of its execution.
    
    Petitions
    
        In the absence of a license agreement negotiated under 17 U.S.C. 
    112(e)(4) or 114(f)(2)(A), those copyright owners of sound recordings 
    and entities availing themselves of the statutory licenses are subject 
    to arbitration upon the filing of a petition by a party with a 
    significant interest in establishing reasonable terms and rates for the 
    statutory licenses. Petitions must be filed in accordance with 17 
    U.S.C. 803(a)(1) and may be filed anytime during the sixty-day period 
    beginning six months after the publication of this document in the 
    Federal Register. See also 37 CFR 251.61. Parties should submit 
    petitions to the Copyright Office at the address listed in this notice. 
    The petitioner must deliver an original and five copies to the Office.
    
    Amendment of CARP Rules To Reflect Passage of the Digital 
    Millennium Copyright Act of 1998
    
        The DMCA creates two new compulsory licenses governing the public 
    performance of certain audio transmissions and the making of ephemeral 
    recordings to facilitate the transmission of certain public 
    performances. In both instances, the reasonable rates and terms for the 
    statutory license may be determined by a CARP, when voluntary 
    negotiations prove unsuccessful. Therefore, the Copyright Office is 
    amending its regulations to reflect the additional rate setting 
    responsibilities of the Office and the CARP.
        Section 553(b)(3)(A) of the Administrative Procedure Act, 5 U.S.C., 
    states that general notice of proposed rulemaking is not required for 
    rules of agency organization or practice. Since the Office finds that 
    the following final regulations are rules of agency organization, 
    procedure, or practice, no notice of proposed rulemaking is required.
    
    List of Subjects in 37 CFR Part 251
    
        Administrative practice and procedures, Hearing and appeal 
    procedures.
    
        For the reasons set forth in the preamble, the Copyright Office and 
    the Library of Congress amend 37 CFR part 251 as follows:
    
    PART 251--COPYRIGHT ARBITRATION ROYALTY PANEL RULES OF PROCEDURE
    
        1. The authority citation for part 251 continues to read as 
    follows:
    
        Authority: 17 U.S.C. 801-803.
    
        2. In Sec. 251.2, redesignate paragraphs (b) through (g) as (c) 
    through (h), respectively, and add new paragraph (b) and revise newly 
    redesignated paragraph (c) to read as follows:
    
    
    Sec. 251.2  Purpose of Copyright Arbitration Royalty Panels
    
    * * * * *
        (b) To make determinations concerning royalty rates and terms for 
    making ephemeral recordings, 17 U.S.C. 112(e);
        (c) To make determinations concerning royalty rates and terms for 
    the public performance of sound recordings by certain digital audio 
    transmissions, 17 U.S.C. 114;
    * * * * *
    
    
    Sec. 251.58  [Amended]
    
        3. In Sec. 251.58, paragraph (c) is amended by adding the number 
    ``112,'' after the number ``111,''.
    
    
    Sec. 251.60  [Amended]
    
        4. Section 251.60 is amended by removing the word ``subscription'' 
    and adding in its place the phrase ``the making of ephemeral recordings 
    (17 U.S.C. 112), certain'' after the term ``(17 U.S.C. 111),''.
        5. In Sec. 251.61, paragraph (a) is revised to read as follows:
    
    
    Sec. 251.61  Commencement of adjustment proceedings
    
        (a) In the case of cable, ephemeral recordings, certain digital 
    audio transmissions, phonorecords, digital phonorecord deliveries, and 
    coin-operated phonorecord players (jukeboxes), rate adjustment 
    proceedings shall commence with the filing of a petition by an 
    interested party according to the following schedule:
        (1) Cable: During 1995, and each subsequent fifth calendar year.
        (2) Ephemeral Recordings: During a 60-day period prescribed by the 
    Librarian in 1999, 2000, and at 2-year intervals thereafter, or as 
    otherwise agreed to by the parties.
        (3) Digital Audio Transmissions: For preexisting digital 
    subscription transmission services and preexisting satellite digital 
    audio radio services:
        (i) During a 60-day period commencing on July 1, 2001 and at 5-year 
    intervals thereafter, or
        (ii) During a 60-day period prescribed by the Librarian in a 
    proceeding to set reasonable terms and rates for a new type of 
    subscription digital audio transmission service; and for an eligible 
    nonsubscription service or a new subscription service:
        (A) During a 60-day period prescribed by the Librarian in 1999,
        (B) During a 60-day period commencing on July 1, 2000, and at 2-
    year intervals thereafter,
    
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        (C) During a 60-day period prescribed by the Librarian in a 
    proceeding to set reasonable terms and rates for a new type of eligible 
    nonsubscription service or new subscription service, or
        (D) As otherwise agreed to by the parties.
        (4) Phonorecords: During 1997 and each subsequent tenth calendar 
    year.
        (5) Digital Phonorecord Deliveries: During 1997 and each subsequent 
    fifth calendar year, or as otherwise agreed to by the parties.
        (6) Coin-operated phonorecord players (jukeboxes): Within one year 
    of the expiration or termination of a negotiated license authorized by 
    17 U.S.C. 116.
    * * * * *
    
    
    Sec. 251.62  [Amended]
    
        6. In Sec. 251.62, paragraph (a) is amended by removing the word 
    ``subscription'' and adding in its place the phrase ``ephemeral 
    recordings, certain'' after the word ``cable,''.
    
        Dated: November 18, 1998.
    Marybeth Peters,
    Register of Copyrights.
        Approved by:
    James H. Billington,
    The Librarian of Congress.
    [FR Doc. 98-31657 Filed 11-25-98; 8:45 am]
    BILLING CODE 1410-33-U
    
    
    

Document Information

Effective Date:
12/28/1998
Published:
11/27/1998
Department:
U.S. Copyright Office, Library of Congress
Entry Type:
Rule
Action:
Final rule and initiation of voluntary negotiation period.
Document Number:
98-31657
Dates:
The effective date of the regulation is December 28, 1998. The effective date of the initiation of the six-month voluntary negotiation periods is November 27, 1998.
Pages:
65555-65557 (3 pages)
Docket Numbers:
Docket No. RM 98-4 CARP
PDF File:
98-31657.pdf
CFR: (5)
37 CFR 251.2
37 CFR 251.58
37 CFR 251.60
37 CFR 251.61
37 CFR 251.62