2010-6451. Digital Performance Right in Sound Recordings and Ephemeral Recordings for a New Subscription Service

AGENCY:

Copyright Royalty Board, Library of Congress.

ACTION:

Final rule.

SUMMARY:

The Copyright Royalty Judges are publishing final regulations setting the rates and terms for the use of sound recordings in transmissions made by new subscription services and for the making of ephemeral recordings necessary for the facilitation of such transmissions for the period commencing January 1, 2011, and ending on December 31, 2015.

DATES:

These regulations become effective on January 1, 2011.

FOR FURTHER INFORMATION CONTACT:

Richard Strasser, Senior Attorney, or Gina Giuffreda, Attorney Advisor, by telephone at [phone] or by e-mail at [e-mail].

SUPPLEMENTARY INFORMATION:

Section 114(f)(2)(C) of the Copyright Act, title 17 of the United States Code, allows a new type of eligible nonsubscription service or a new subscription service on which sound recordings are performed that is or is about to become operational to file a petition with the Copyright Royalty Judges (“Judges”) for the purpose of determining reasonable terms and rates. 17 U.S.C. 114(f)(2)(C). Section 112(e) allows the making of ephemeral reproductions for the purpose of facilitating certain digital audio transmissions, including those made by new subscription services. 17 U.S.C. 112(e). Upon receipt of a petition filed pursuant to section 114(f)(2)(C), the Judges are required to commence a proceeding to determine said reasonable terms and rates. 17 U.S.C. 804(b)(3)(C)(ii). The Judges have conducted one proceeding pursuant to these provisions. See 70 FR 72471, 72472 (December 5, 2005) (after receipt of petition, commencing proceeding to determine rates and terms for a new type of subscription service that “performs sound recordings on digital audio channels programmed by the licensee for transmission by a satellite television distribution service to its residential customers, where the audio channels are bundled with television channels as part of a `basic' package of service and not for a separate fee”). The parties to that proceeding ultimately reached an agreement on the rates and terms for the new subscription service at issue; and the Judges, after public comment, adopted the settlement as final regulations.^[1] See 72 FR 72253 (December 20, 2007). The current rates expire on December 31, 2010.

Pursuant to section 803(b)(1)(A)(i)(III) of the Copyright Act, the Judges published in the Federal Register a notice commencing the rate determination proceeding for the license period 2011-2015 for the new subscription service defined in 37 CFR 383.2(h) and requesting interested parties to submit their petitions to participate. See 74 FR 319 (January 5, 2009). Petitions to Participate in this proceeding were received from SoundExchange, Inc.; Royalty Logic, LLC (“RLI”); and Sirius XM Radio, Inc. (Sirius XM”).

The Judges set the timetable for the three-month negotiation period, see 17 U.S.C. 803(b)(3), and directed the participants to submit their written direct statements no later than September 29, 2009. On September 22, 2009, the Judges received a joint motion from all parties to stay the filing of the written direct statements in light of the parties reaching a settlement which they intended to submit to the Judges for adoption. On September 23, 2009, the Judges issued an order extending the deadline for the filing of written direct statements to October 29, 2009.^[2]

Section 801(b)(7)(A) allows for the adoption of rates and terms negotiated by “some or all of the participants in a proceeding at any time during the proceeding” provided they are submitted to the Copyright Royalty Judges for approval. This section provides that in such event:

(i) The Copyright Royalty Judges shall provide to those that would be bound by the terms, rates, or other determination set by any agreement in a proceeding to determine royalty rates an opportunity to comment on the agreement and shall provide to participants in the proceeding under section 803(b)(2) that would be bound by the terms, rates, or other determination set by the agreement an opportunity to comment on the agreement and object to its adoption as a basis for statutory terms and rates; and

(ii) The Copyright Royalty Judges may decline to adopt the agreement as a basis for statutory terms and rates for participants that are not parties to the agreement, if any participant described in clause (i) objects to the agreement and the Copyright Royalty Judges conclude, based on the record before them if one exists, that the agreement does not provide a reasonable basis for setting statutory terms or rates.

17 U.S.C. 801(b)(7)(A). Accordingly, on January 22, 2010, the Judges published a notice seeking comment on the proposed rates and terms submitted to the Judges. 75 FR 3666. Comments were due by February 22, 2010. Having received no comments or objections to the proposed rates and terms, the Judges, by this notice, are adopting as final regulations the rates and terms for the use of sound recordings in transmissions made by new subscription services as defined in 37 CFR 383.2(h) and the making of ephemeral recordings necessary for the facilitation of such transmissions for the license period of 2011-2015 as published on January 22, 2010.

List of Subjects in 37 CFR 383

• Copyright
• Digital audio transmissions
• Performance right
• Sound recordings

Final Regulation

For the reasons set forth in the preamble, the Copyright Royalty Judges are amending 37 CFR part 383 as follows:

PART 383—RATES AND TERMS FOR SUBSCRIPTION TRANSMISSIONS AND THE REPRODUCTION OF EPHEMERAL RECORDINGS BY NEW SUBSCRIPTION SERVICES

1. The authority citation for part 383 continues to read as follows:

Authority: 17 U.S.C. 112(e), 114, and 801(b)(1).

§ 383.1

[Amended]

2. Amend § 383.1 as follows:

a. In paragraph (a), by removing “2010” and adding in its place “2015”; and

b. In paragraph (b), by removing “112” and adding in its place “112(e)”.

§ 383.2

[Amended]

3. Amend § 383.2 as follows:

a. In paragraph (d), by removing “2010” and adding in its place “2015”; and

b. In paragraph (e), by removing “112” and adding in its place “112(e)”.

4. Amend § 383.3 as follows:

a. In paragraph (a) introductory text, by removing “112” and adding in its place “112(e)” and by adding “during the License Period,” after “such transmissions,”;

b. In paragraph (a)(1)(ii)(E), by removing “and”;

c. By adding new paragraphs (a)(1)(ii)(F) through (J);

d. By adding new paragraphs (a)(2)(ii)(F) through (J);

e. In paragraph (b), by removing “112” and adding in its place “112(e)”; and

f. By adding a new paragraph (c).

The additions to § 383.3 read as follows:

§ 383.3

Royalty fees for public performances of sound recordings and the making of ephemeral recordings.

(a) * * *

(1) * * *

(ii) * * *

(F) 2011: $0.0155

(G) 2012: $0.0159

(H) 2013: $0.0164

(I) 2014: $0.0169

(J) 2015: $0.0174 and

(2) * * *

(ii) * * *

(F) 2011: $0.0258

(G) 2012: $0.0265

(H) 2013: $0.0273

(I) 2014: $0.0281

(J) 2015: $0.0290

* * * * *

(c) Ephemeral recordings. The royalty payable under 17 U.S.C. 112(e) for the making of phonorecords used by the Licensee solely to facilitate transmissions during the License Period for which it pays royalties as and when provided in this part shall be included within, and constitute 5% of, such royalty payments.

5. Revise § 383.4 to read as follows:

§ 383.4

Terms for making payment of royalty fees.

(a) Terms in general. Subject to the provisions of this section, terms governing timing and due dates of royalty payments to the Collective, late fees, statements of account, audit and verification of royalty payments and distributions, cost of audit and verification, record retention requirements, treatment of Licensees' confidential information, distribution of royalties by the Collective, unclaimed funds, designation of the Collective, and any definitions for applicable terms not defined herein and not otherwise inapplicable shall be those adopted by the Copyright Royalty Judges for subscription transmissions and the reproduction of ephemeral recordings by preexisting satellite digital audio radio services in 37 CFR part 382, subpart B of this chapter, for the license period 2007-2012. For purposes of this section, the term “Collective” refers to the collection and distribution organization that is designated by the Copyright Royalty Judges. For the License Period through 2015, the sole Collective is SoundExchange, Inc.

(b) Reporting of performances. Without prejudice to any applicable notice and recordkeeping provisions, statements of account shall not require reports of performances.

(c) Applicable regulations. To the extent not inconsistent with this part, all applicable regulations, including part 370 of this chapter, shall apply to activities subject to this part.

Dated: March 19, 2010.

James Scott Sledge,

Chief U.S. Copyright Royalty Judge.

Footnotes

1.  The new subscription service is defined at 37 CFR 383.2(h).

2.  SoundExchange and Sirius XM also moved that the Judges stay further proceedings until the settlement process under 17 U.S.C. 801(b)(7)(A) has been completed. They noted that RLI, the only other participant to the proceeding but not a signatory to the settlement, joined the request for stay. The Judges granted the motion. See Order on Joint Motion to Stay, Docket No. 2009-2 CRB New Subscription II (October 28, 2009).