[Federal Register Volume 63, Number 121 (Wednesday, June 24, 1998)]
[Rules and Regulations]
[Pages 34289-34297]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16779]
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LIBRARY OF CONGRESS
Copyright Office
37 CFR Part 201
[Docket No. RM 96-3B]
Notice and Recordkeeping for Digital Subscription Transmissions
AGENCY: Copyright Office, Library of Congress.
ACTION: Interim regulations.
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SUMMARY: The Copyright Office of the Library of Congress is issuing
interim regulations on the requirements by which copyright owners shall
receive reasonable notice of the use of their works from digital
subscription transmission services, and how records of such use shall
be kept and made available to copyright owners. The Digital Performance
Right in Sound Recordings Act of 1995 requires the Office to adopt the
regulations.
EFFECTIVE DATE: The interim regulations are effective July 20, 1998.
FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or
Jennifer L. Hall, Senior Attorney, Copyright GC/I&R, P.O. Box 70400,
Southwest Station, Washington, D.C. 20024. Telephone: (202) 707-8380.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Interim Rule in
Docket No. RM 96-3B, adopted June 15, 1998. The full text of the
Interim Rule is available for inspection and copying during normal
business hours in the Public Information Office of the Copyright
Office, Room LM-401, and in the Public Records Office of the
[[Page 34290]]
Licensing Division of the Copyright Office, Room LM-458, James Madison
Memorial Building, First and Independence Avenue, S.E., Washington,
D.C. 20559-6000. The full Interim Rule is also available via the
Copyright Office homepage at http://www.loc.gov/copyright.
The regulations are issued on an interim basis due to the
developing nature of the digital transmission service industry and of
the technology which will be employed in accommodating the reporting
requirements. In two years, the Office will provide another opportunity
for comment before issuing final regulations.
Background
On November 1, 1995, Congress enacted the Digital Performance Right
in Sound Recordings Act of 1995 (``the Act''). Public Law No. 104-39,
109 Stat. 336 (1995). The Act gave to sound recording copyright owners
an exclusive right to perform their works publicly by means of a
digital audio transmission. 17 U.S.C. 106(6). Certain digital
transmissions were exempted from the scope of the right, 17 U.S.C.
114(d)(1), while nonexempt digital subscription services were given the
opportunity to qualify for a statutory license. 17 U.S.C. 114(d)(2).
Congress directed the Librarian of Congress to establish regulations
under which copyright owners may receive reasonable notice of the use
of their sound recordings under the statutory license, and under which
entities performing the sound recordings shall keep and make available
records of such use. 17 U.S.C. 114(f)(2).
The Sec. 114 License for Nonexempt Subscription Transmissions
A nonexempt digital subscription service transmission is subject to
statutory licensing in accordance with 17 U.S.C. 114(f) if the
transmission is not part of an interactive service, does not exceed the
``sound recording performance complement,'' does not give an advance
program schedule or prior announcement of titles to be performed, does
not automatically cause the receiving device to switch from one program
channel to another, and includes information encoded by authority of
the copyright owner identifying the title, the featured artist, and
related information. 17 U.S.C. 114(d)(2). The ``sound recording
performance complement'' is a limit on the number of selections that
can be played from one phonorecord, boxed set, or featured artist
within a three-hour period. See 17 U.S.C. 114(j)(7).
Digital subscription transmission services that qualify for the
statutory license may reach a voluntary agreement as to rates and terms
with sound recording copyright owners, or may petition the Librarian of
Congress to convene a copyright arbitration royalty panel (CARP) to set
rates and terms for those entities that have not reached voluntary
agreement. 17 U.S.C. 114(f)(1)-(2), and (4). On June 4, 1996, no
voluntary agreement having been reached, the parties petitioned the
Librarian to convene such a CARP.1 Rates and terms set by
the CARP will apply to all copyright owners and subscription services
not subject to voluntary agreement. 17 U.S.C. 114(f)(2)-(3). However,
Congress also directed the Librarian of Congress to establish
regulations by which copyright owners may receive reasonable notice of
the use of their sound recordings under statutory license, and under
which records of such use shall be kept and made available by the
entities performing the sound recordings. 17 U.S.C. 114(f)(2). Anyone
performing a sound recording publicly by means of a nonexempt
subscription transmission under section 114(f) may do so without
infringing the exclusive right of the sound recording copyright owner
by complying with the notice requirements that the Librarian prescribes
by regulation and by paying royalty fees in accordance with the law. 17
U.S.C. 114(f)(5).
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\1\ On November 28, 1997, the CARP convened by the Librarian
issued its report determining rates and terms for the license for
the period from the effective date of the Act. Report of the
Copyright Arbitration Royalty Panel, In re: Determination of
Statutory License Terms and Rates for Certain Digital Subscription
Transmission of Sound Recordings, No. 96-5 (Nov. 28, 1997). The
Librarian issued an order accepting in part the CARP Report, and
establishing additional terms. See discussion infra, The 1997 CARP
Proceeding Under Section 114.
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Rulemaking on Notice and Recordkeeping
On May 13, 1996, the Copyright Office published a Notice of
Proposed Rulemaking in the Federal Register requesting comments on the
requirements by which copyright owners should receive reasonable notice
of the use of their works from subscription digital transmission
services and how records of such use should be kept and made available
to copyright owners. The Office asked commentators to consider both the
adequacy of notice to sound recording copyright owners and the
administrative burdens placed on digital transmission services in
providing notice and maintaining records of use. 61 FR 22004 (May 13,
1996).
Initial Comments and Reply Comments
The Office received a total of four comments and three reply
comments, as well as one surreply and one comment to the surreply.
Comments were submitted by the Recording Industry Association of
America (RIAA) (representing member companies who manufacture or
distribute more than 90 percent of legitimate sound recordings sold in
the United States), and three digital music subscription services
operating in the United States: DMX, Inc. (DMX); Muzak, Inc. (Muzak);
and Digital Cable Radio Associates/Music Choice (DCR) (``commenting
parties''). The Initial and Reply Comments are fully summarized in the
text of this Interim Rule and Order, and were also discussed in a
second Notice of Proposed Rulemaking (NPRM), published on June 24,
1997. See 62 FR 34035 (June 24, 1997). The comments addressed a wide
range of proposals for notice and records of use, including: an initial
notice filed with the Copyright Office to indicate commencement of
transmission under statutory license; quarterly reports of use
including data to indicate which sound recordings were performed and
the number of times (summary frequency data); whether reports should be
served on a single collective rights organization (``Collective'') such
as RIAA's, rather than on individual copyright owners; data fields to
identify sound recordings; and maintenance of records. The comments
also addressed matters not prescribed in the Act, such as
confidentiality, auditing, and statements of account.
Meetings To Facilitate Agreement on Notice and Recordkeeping
Requirements; and Issues Identified in Discussions Among the
Parties
On November 14, 1996, the Copyright Office met with the parties to
facilitate agreement on notice and recordkeeping requirements under
section 114, and to discuss the proper regulatory and recordkeeping
role for the Office. In attendance were 15 individuals representing
RIAA, DMX, Muzak, DCR, and the Copyright Office. The Office distributed
at the meeting a list of principles it accepted: for example, Services
would file with the Office an initial notice indicating transmission of
sound recordings under statutory license. Following the meeting, the
Office circulated a draft meeting summary, and received additional
written comments in response. A
[[Page 34291]]
second meeting with the parties took place on January 23,
1997.2
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\2\ The comments, meeting summaries, and meeting handouts are
available in the Public Information Office of the Copyright Office,
Room LM-401, James Madison Memorial Building, Washington, D.C.
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In the comments and meeting discussions, the parties considered how
reports of use would be kept or made available for sound recording
copyright owners who were not members of a Collective, who could not be
located, or who refused delivery. While Services believed the Office
should designate a Collective and not permit individual copyright
owners not to join, RIAA expressed concern about its Collective
administering rights for non-member copyright owners, due to
contractual and fiduciary duties to its members. The commenting parties
addressed whether Services should provide playlist samples or error
logs to verify compliance with the sound recording performance
complement, and whether the Act requires Services to affirmatively
report compliance with the complement. Following the meetings, however,
a Service proposal to produce each quarter the entire intended
playlist, instead of summary frequency data or error logs, was deemed
generally acceptable, provided an agreeable definition for ``intended
playlist'' were reached. The commenting parties also continued to
discuss data fields to identify sound recordings performed.
The Second NPRM and Request for Further Comments
On June 24, 1997, the Copyright Office published a second Notice of
Proposed Rulemaking (NPRM), presenting certain preliminary decisions
and asking the parties for further comments. See Notice of Proposed
Rulemaking, 62 FR 34035 (June 24, 1997). For example, the Office
announced that it would accept an optional initial notice from
Services; concluded that Services should keep and make available
records to permit monitoring of the performance complement; asked how
Services would make records of use available to unaffiliated sound
recording copyright owners; concluded that copyright owners whose
identity and location is known should be served directly with reports
of use; inquired whether Services planned to serve quarterly intended
playlists on small and individual copyright owners, or if there were an
alternative reporting mechanism; inquired whether copyright owners
should be permitted to waive complement information in favor of summary
frequency data for their recording only; sought comment on estimated
costs for providing intended playlists to different parties; stated a
requirement that Services maintain records of use for three years; and
announced that it would issue no regulation on audits. The Office
provided a 60-day comment period.
The Further Comments
In response to the request for Further Comments in the June 24,
1997, NPRM, the Office received comments from: RIAA; DMX; DCR; the
National Music Publishers' Association, Inc. (NMPA); and Creative
Engineering Concepts, Inc. (CECI). CECI is the developer of an
automated signal recognition technology employed nationwide and
internationally by Broadcast Data Systems, LP, to identify sound
recordings and advertisements using features and characteristics of the
audio patterns.
1. Initial Notice
RIAA argued that the single-page initial notice filed by Services
with the Copyright Office should be mandatory, not optional, so that
copyright owners can identify prospectively entities that will transmit
under statutory license.
2. Reports of Use
The commenting parties agreed that Services should provide
quarterly reports of use consisting of their ``intended playlists'' for
the quarter.
a. Definition of intended playlist. All commenting parties agreed
that the intended playlist should report every sound recording
``scheduled'' to be transmitted; in addition, RIAA recommended that the
intended playlist report every sound recording ``actually''
transmitted. RIAA also recommended that the intended playlist be
defined to include a detailed report of any Service system failures
resulting in transmission of unscheduled sound recordings. DMX
suggested that the definition prescribe data fields and sound recording
identifiers to be included in the playlist.
b. Reporting system failures resulting in deviations from the
intended playlist. RIAA said Services should report system failures,
including time and duration, and titles of substitute sound recordings
transmitted in place of those scheduled. DMX said it does not
automatically generate error logs in event of system failure, and that
errors causing deviations from intended playlists are rare. DMX noted
that logs were proposed to evaluate summary frequency data and playlist
samples; providing complete intended playlists vitiates their
necessity.
c. Certification of reports. RIAA said reports of use should
contain a certification signed by a Service representative attesting
under notary or penalty of perjury to accuracy. DMX said at most the
regulation should require a statement that the report reflects
information believed to be accurate and maintained in ordinary course
of business.
d. Reporting compliance with the performance complement. DCR
reasserted that the Act does not impose an obligation on Services
affirmatively to report compliance with the performance complement.
e. Data fields and sound recording identifiers. RIAA, DCR and DMX
generally agreed that the intended playlist reports should include the
following eight data fields: channel, sound recording title, featured
artist, album title, record label, catalog number, transmission date,
and transmission time. In addition, RIAA sought four other identifiers:
the CD track number, the Service name, the International Sound
Recording Code (ISRC), and the ``sound recording identifier'' used by
Selector (the software program Services employ to generate their
intended playlists). However, CECI also described its technology to
automatically identify sound recordings ``using features and
characteristics of the audio patterns,'' and to monitor sound recording
usage. CECI already administers a network of remote monitoring systems
collecting channel number and other data; the technology is used by
record companies, broadcasters and others, to verify airplay, generate
statistics, control distribution and determine royalty payments. This
could be adapted within about six months to automatically document use
of sound recordings and other copyrighted works by Services, verify
compliance with the performance complement, and generate reports of
use.
f. Compilation albums and non-music and foreign programming. RIAA
said the standard reporting requirements would clearly apply to retail
compilation albums, such as movie soundtracks, and should also apply to
non-retail but commercial compilation albums, such as disc jockey
compilation albums, because in such cases Services possess and make
available to their subscribers information regarding the retail album.
RIAA said the regulations should not distinguish between foreign and
domestic programming. In earlier comments, Services sought to limit
regulation of non-stereo, retransmitted foreign-originated programming,
or retransmitted programming consisting
[[Page 34292]]
of less than one-half music, such as sports or talk radio, but in their
Further Comments professed no plans for such programming.
3. Central Collective
The Further Comments urged the Office to designate a central
Collective and not impose a requirement of direct service to small,
independent copyright owners. Services argued severe costs and
administrative burdens associated with the reporting scheme in the NPRM
would cripple them, and that direct service would force them to
mainstream programming. DMX said use of collectives is common practice
internationally with respect to collection and distribution of
royalties for performance of sound recordings.
a. Alternative reporting mechanism. Services did not wish to
identify individual copyright owners and provide separate reports that
would also permit complement monitoring. DCR said no alternative to the
intended playlist would provide comparable information, and the only
alternative was to designate an independent second Collective for
copyright owners not wishing to join RIAA. CECI volunteered to be an
alternative Collective for small independent copyright owners. DMX
urged the Office to mandate a single Collective, but, recognizing
burden and expense of providing independent copyright owners with
either intended playlists or individually tailored summary reports, DMX
suggested three alternative reporting methods, and five ``safeguards''
it sought if direct service were required. DMX said Services should be
able to choose among the methods and vary them by agreement or
according to recipient, and that unserved copyright owners should make
their identity and location known to Services by registered letter.
b. RIAA Collective as central repository. In Further Comments, RIAA
said it now agreed to become the central repository for all copyright
owners, including non-RIAA members. RIAA said it would now agree to
receive all reports of use and royalties from Services. Because it now
sought to be the central Collective, it said many questions in the
second NPRM were moot; for example, there is no need for an alternative
to the intended playlist, and no need for separation of reports.
Because the Collective now planned to identify and locate copyright
owners of all sound recordings performed under the license and to
distribute to all entitled copyright owners, there was no need to
define copyright owners ``whose identity and location is known'' to
trigger a direct service requirement. RIAA said it required complete
and uniform data to operate a royalty distribution system. It rejected
summary frequency data because it lacks complement information and said
all copyright owners are entitled to the same notice of use. RIAA said
it would deduct costs from royalties to cover administrative expenses.
Royalties that could not be distributed for unlocated copyright owners
would, after three years of escrow, be used to offset costs of locating
non-members.
4. Details Relating to Records of Use
The Further Comments addressed a number of details relating to
records of use, including formats of reports, access and
confidentiality, audits, maintenance of records, costs of maintaining
and providing records, and retroactivity of recordkeeping requirements.
a. Reporting and maintaining records of use; format. RIAA and DCR
agreed that reports of use should be provided within 30 days of the
close of each quarter; DMX preferred no later than 45 days following
the end of the quarter. The commenting parties agreed that Services
should be required to retain reports of use for three years, and that
reports should be provided on a common machine-readable medium. DMX
generally accepted the file format suggested by RIAA.
b. Confidentiality. The commenting Services agreed that provision
of intended playlists may raise confidentiality concerns. One said
Services should be able to elect to provide intended playlists, summary
frequency data, or Internet-posted past playlists (in either a
password-protected or publicly available area). RIAA said playlists are
available to anyone willing to monitor programming, but suggested that
instead of requiring a confidentiality agreement, the regulation should
limit the information's dissemination and utilization.
c. Access and audits. While announcing that it would not promulgate
audit regulations, the Office in the June 24, 1997, NPRM inquired
whether some regulation on access were needed and how Services would
make records available to copyright owners who had not been served. DMX
suggested that audits of Services be limited to once a year, and that
copyright owners be able to view information held by a Collective,
subject to fees. NMPA urged the Office to expressly establish audit
requirements in its forthcoming regulations on notice and recordkeeping
under section 115.
d. Costs. RIAA said it would deduct costs from royalties to cover
administrative expenses, while royalties that could not be distributed
to unlocated copyright owners would be escrowed for three years before
reverting to the general royalty account for distribution, or being
used to offset costs to Collective members of trying to locate non-
members. RIAA said costs of serving the Collective or copyright owners,
and of retaining reports for three years, should be borne by Services.
DMX said Services should bear costs of maintaining intended playlists,
but the cost of preparing and delivering reports of use to a Collective
or record company, including reasonable labor and computer time, should
be deducted from royalty payments.
e. Effective date and transition period. DCR and DMX said reports
of use should not be required from the license's creation on February
1, 1996, through adoption of regulations. DCR said retroactive
recordkeeping would require millions of records. DCR and DMX said the
Office should recognize a transition period of two years before full
compliance with notice and recordkeeping rules is required. RIAA sought
use data for periods preceding issuance of regulations, and said the
regulation should not recognize a formal transition period.
The 1997 CARP Proceeding Under Section 114
As noted, following a period of voluntary negotiation concerning
rates and terms for the section 114 statutory license, the parties
petitioned the Librarian of Congress on June 4, 1996, to convene a
copyright arbitration royalty panel (CARP). See 17 U.S.C. 114(f)(1)-
(2); Initiation of Voluntary Negotiation Period, 60 FR 61655 (Dec, 1,
1995); Initiation of Arbitration, 62 FR 29742 (June 2, 1997). On
November 28, 1997, the CARP convened by the Librarian issued its report
determining rates and terms for the license for the period from the
effective date of the Act. Report of the Copyright Arbitration Royalty
Panel, In re: Determination of Statutory License Terms and Rates for
Certain Digital Subscription Transmission of Sound Recordings, No. 96-5
(Nov. 28, 1997) (Report). The Report established, inter alia, the
following terms:
(1) Collective: The CARP determined that ``any notices and payments
required by the CARP `should be submitted to a single private entity or
government agency that will distribute the funds to sound recording
copyright owners.' '' Because RIAA requested that it be designated as
the single entity and because Services did not object, the
[[Page 34293]]
Panel determined ``that the RIAA Collective shall serve as that single
private entity.'' Report para. 184. See also para. 205.
(2) Maintenance of certain records: The CARP said Services shall
maintain accurate records on matters directly related to the payment of
license fees for a period of three years. Report Paras. 192, 209.
(3) Audits: Interested parties may conduct a single audit of a
Service during any given year. Report Paras. 193, 210.
(4) Confidentiality: RIAA must establish safeguards to avoid
disclosure of confidential financial and business information.
Paras. 191, 208.
On January 27, 1998, the Librarian concluded on the recommendation
of the Register that he could not adopt the Report to the extent that
certain of the findings and conclusions were arbitrary and contrary to
law. Notice and Order, Docket No. 96-5 CARP DSTRA (Jan. 27, 1998). See
17 U.S.C. 802(f). Setting aside the Panel's final determination in
part, to reject the Panel's rate and certain of the terms, the
Librarian issued an Order published in the Federal Register, accepting
each of the terms set forth above. See Determination of Reasonable
Rates and Terms for the Digital Performance of Sound Recordings, 63 FR
25394 (May 8, 1998). The Librarian's Order also established the
following additional terms.
(5) Audits: Interested parties may conduct one audit of the RIAA
Collective during any given year. 37 CFR 260.6.
(6) Costs: The RIAA Collective may deduct, from royalties it
distributes, reasonable costs incurred in administration of the
distribution of royalties, so long as the reasonable costs do not
exceed actual costs incurred by the collecting entity. 37 CFR 260.3(d).
The Collective also may use unclaimed funds to offset the cost of
administering collection and distribution of royalties. 37 CFR 260.7.
The CARP proceeding and Librarian's final determination upon review
of the CARP Report therefore resolved until at least the year 2001 some
of the issues that were the subject of comment in the present
rulemaking, including the establishment of a single Collective,
auditing, confidentiality, and deduction of costs.
Discussion and Conclusions
The Act directs the Librarian to establish regulations under which
copyright owners may receive reasonable notice of use of their sound
recordings under the license, and under which entities performing sound
recordings shall keep and make available records of use. 17 U.S.C.
114(d)(2). Congress meant to inhibit neither the arrival of new
technologies nor the operation of existing digital audio services. S.
Rep. No. 128, 104th Cong., 1st Sess. 15 (1995); Cong. Rec. S950 (daily
ed. Jan. 13, 1995) (statement of Sen. Feinstein). The Office has
considered both adequacy of notice to copyright owners and
administrative burden for Services providing notice and records. See 61
FR 22004 (May 13, 1996).
1. Initial Notice
Digital subscription services transmitting sound recordings under
the statutory license will file an initial notice with the Copyright
Office consisting of Service name, address, telephone number, and
information on how to gain access to the online website or home page of
the Service or entity, where information may be posted under these
regulations concerning the use of sound recordings under statutory
license. The notice will be placed in Copyright Office records where
copyright owners may access the information concerning use of sound
recordings under the license. The filing will be required to assist
copyright owners and Collectives locate entities transmitting under the
license. Services will file the initial notice any time prior to
commencement of transmission under the license or within 45 days of the
regulation's effective date, and update the filing within 45 days of a
change in the information reported. The notices shall be accompanied by
a filing fee.
2. Designation of a Single Collective
Digital subscription services will also be required to provide
detailed reports of their use of sound recordings under the license,
but will not be required to serve copyright owners individually.
Although the Office suggested in its second NPRM that it did not have
authority to designate a single Collective to serve as a central
repository and might have to require Services to serve reports of use
directly on copyright owners or their agents, the Services urged the
Office to designate a single Collective. Services argued that the costs
of direct service upon owners of the 10 million songs performed by each
Service annually would cripple them and cause them to eliminate all but
``mainstream'' programming in order to limit the number of copyright
owners served. One Service observed that use of collective
administration for performance of sound recordings is common practice
internationally.
The Office recognizes that collective administration may be
preferable where a large number of works are used, no single use is of
great value, and owners cannot be easily located. In such cases, a
central clearinghouse creates efficiencies of scale. The Office
continues to question whether it would be appropriate, as part of an
isolated rulemaking on notice and recordkeeping pursuant to 17 U.S.C.
114(f)(2), to require that notice of use of sound recordings be served
on a single Collective rather than on all sound recording copyright
owners. However, a single Collective (the RIAA Collective) has now been
designated by a CARP and confirmed by an Order of the Librarian for
purposes of receiving royalty payments and statements of account. In
this notice and recordkeeping proceeding, RIAA said that its Collective
would serve as central repository for reports for all sound recording
copyright owners, regardless of membership in RIAA; commenting Services
accepted the RIAA Collective as suitable for this role. The purpose of
the CARP proceeding was to determine reasonable terms and rates under
the statutory license. See 17 U.S.C. 114(f). The CARP's designation of
a single Collective to receive royalty payments and statements of
account as a term of the license simplifies the Office's task in this
notice and recordkeeping proceeding. Rates and terms determined in the
CARP proceeding are binding on all Services and sound recording
copyright owners. 17 U.S.C. 114(f)(2). Because Services will send
royalty payments and statements of account to a single Collective
rather than to individual copyright owners, records of use should be
sent to the Collective, which will distribute royalties to copyright
owners based on the information in the records of use.3 As
one Service noted, reports of use determine royalty payments and should
logically accompany them.
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\3\ While most copyright owners are likely to utilize the
designated Collective, a copyright owner and Service may reach
separate arrangements in place of requirements imposed by the CARP
or Copyright Office for royalties and records of use. Section
114(f)(3) provides:
License agreements voluntarily negotiated at any time between
one or more copyright owners of sound recordings and one or more
entities performing sound recordings shall be given effect in lieu
of any determination by a copyright arbitration royalty panel or
decision by the Librarian of Congress. 17 U.S.C 114(f)(3).
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The Librarian's Order of May 8, 1998, establishes rates and terms
for the statutory license through December 31, 2000. See 17 U.S.C.
114(f)(1). The RIAA Collective will serve as the collective
administration organization through
[[Page 34294]]
that date. Negotiations on rates and terms for years 2001 through 2005
will commence in January 2000. 17 U.S.C. 114(f)(4)(B).4
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\4\ Because future negotiations or CARP proceedings may result
in designation of more than one Collective, the regulations
anticipate the possibility that there may be multiple Collectives.
Of course, it is also possible that future negotiations or CARP
proceedings result in some payment mechanism other than a
Collective.
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In summary, the regulation directs Services to serve records of use
upon the Collective or Collectives identified in Copyright Office
records as having been designated through the CARP process or by
settlement agreement. Because Services will serve records of use for
all sound recording copyright owners upon the designated Collective[s],
there is no need for a definition of sound recording copyright owners
whose identity and location is known, or other regulations concerning a
direct service requirement. As discussed below, in the event that no
Collective is designated, or if all designated Collectives terminate
collection and distribution operations, Services will be required to
post records of use online, with appropriate safeguards to protect
confidentiality. Interested parties will have an opportunity to comment
on these issues before final regulations are issued in late 2000.
In order to effectuate the statutory mandate that ``copyright
owners'' may receive reasonable notice of the use of their sound
recordings under this section, 17 U.S.C. 114(f)(2), the Collective
should make certain information publicly available. In order to receive
records of use, designated collectives will file with the Copyright
Office and post and make available online a notice containing the
following information: the Collective name, address, and telephone
number; a statement that the Collective has been designated for
collection and distribution of performance royalties under statutory
license for digital transmission of sound recordings; and information
on how to gain access to the Collective's online website or home page,
where information may be posted under these regulations concerning the
use of sound recordings under statutory license. The address of the
Collective website will be made available on the Copyright Office
website. In addition, the Collective will post and make available
online, for the duration of one year, an annual report on how the
Collective operates, how royalties are collected and distributed, and
what the Collective spent that fiscal year on administrative expenses.
3. Reports of Use
Reports of use will be monthly, and shall consist primarily of the
Service's Intended Playlists for each channel and each day of the
month. Reports of use shall be due on the twentieth day after the end
of each month, commencing with the month succeeding the month in which
these regulations become effective. The commenting parties agreed that
reports of use should consist of the Intended Playlists. Not all
Services can produce an actual playlist or error log, and the proposal
to provide samples to test playlist reports was not found acceptable.
The Intended Playlists accomplish all of copyright owners' reporting
objectives, including provision of information with which copyright
owners can generally monitor compliance with the sound recording
performance complement in section 114(j)(7).
The Office considered arguments of DCR and other Services that the
Act imposes no obligation to affirmatively report compliance with the
complement, but reaffirms its earlier judgment. The Office notes that
conforming to the performance complement is a condition of the
statutory license, and a Service that complies with the regulatory
notice requirements and pays the statutory royalties thereby avoids
infringing the copyright owners' exclusive rights. 17 U.S.C. 114(d)(2),
(f)(5). The Office determines, therefore, that it is within its
rulemaking authority under section 114(f)(2) to require reporting of
complement information. See Cablevision Sys. Dev. v. Motion Picture
Ass'n, 836 F.2d 599 (D.C. Cir. 1988)(Copyright Office had authority to
issue regulations interpreting statute). The Office believes that the
presence and specificity of the performance complement indicates
Congress' intent that records of use include data to test compliance.
While section 114(j)(7) provides that transmissions from multiple
phonorecords exceeding the performance complement's numerical
limitations will nonetheless conform to the complement if the
programming of multiple phonorecords was not ``wilfully intended'' to
avoid the numerical limitations, a pattern of regular conduct might
provide evidence of the requisite intent.
The Intended Playlists shall consist of a consecutive listing of
every sound recording scheduled to be performed, for each of the
Service's channels and each day during the reported month. This
definition reflects the true nature of the Intended Playlist, as a
listing of sound recordings scheduled to be played. The regulation
requires that the Intended Playlist include every recording scheduled
to be transmitted, rather than those scheduled and actually
transmitted, because the comments and facilitated discussions
established that Services are not able to provide an actual playlist,
and that Intended Playlists already include overscheduled recordings
(about an extra song per hour) to assure continuity, and are therefore
highly reflective of recordings actually transmitted. Services shall
report system failures causing deviations from the Intended Playlists,
including the date, time and duration of any such system failure, but
during the interim regulatory period, will not be required to also
report the titles of sound recordings transmitted in place of those
scheduled on the intended playlist. The facilitated discussions
indicated that not all Services can provide an error log, and that
system failures causing deviations from the playlist are rare events
occurring on a single channel for limited periods. Efforts during such
events are likely focused more on repairing the malfunction than on
recordkeeping of titles. However, if system failures appear to increase
in frequency or duration, or become opportunities for wholesale
complement violations, then the Office will reconsider its position.
The Reports of Use shall include the following data fields and
sound recording identifiers that all commenting parties agreed to:
channel, sound recording title, featured artist, album title, record
label catalog number, transmission date, and transmission time.
Although one Service argued that the Act creates no duty to report date
and time, the Office believes that Congress intended Services to report
complement information; moreover, given that Service's argument that
only ``willfully intended'' transgressions will violate the complement,
the Intended Playlists' scheduled dates and times would presumably help
establish Service's intentions in this regard. In addition to the eight
data fields, the Reports of Use will also include: Service name,
because the source of the report should be clear independent of mailing
labels or informal labeling of computer files; and, where feasible, the
International Sound Recording Code (ISRC), because this identifier,
when embedded in sound recordings, facilitates automatic identification
and royalty administration worldwide. The required data fields will not
include the Selector sound recording identifier, or any other
identifiers relating to
[[Page 34295]]
particular private monitoring systems, because the Office does not wish
to incorporate proprietary standards of a particular company while the
transmission, reporting, and copyright management technologies are
rapidly developing. There are no separate requirements for compilation
albums, except that in the case of compilation albums created for
commercial purposes, Services should report the name of the retail
album identified by the Service for the sound recording. During the
interim period, there are no separate requirements for non-music or
retransmitted, foreign-originated programming, because the Services
reported no current plans to transmit such programming. The Reports of
Use should be provided on a common machine-readable medium, such as
diskette, optical disc, or magneto-optical disc, in the ASCII delimited
format set forth in the regulation, with all data for one record on a
single line. Reports of Use must be accompanied by a statement by a
Service representative, signed under penalty of perjury, that the
Intended Playlist report reflects information believed to be accurate
and maintained by the Service in its ordinary course of business.
4. Availability of Records
If no Collective is designated, or all designated Collectives have
terminated collection and distribution operations, Services will be
required to post their reports of use online on the 20th day after the
end of each month and make them available to all sound recording
copyright owners for a period of 90 days. The Office inquired whether
Services consider their playlists to be confidential or trade secrets,
and has given the matter considerable thought. The Office cannot state
conclusively that there is no confidential trade secret interest in the
programming details incorporated in an Intended Playlist but notes that
past Intended Playlists are publicly performed and are historical fact.
Realistically, the Office has had to weigh any confidentiality interest
against the Services' own competing interests in minimizing
administrative burdens and costs, as well as copyright owners' interest
in receiving information concerning use of their works. The regulation
requires Collectives and copyright owners not to disseminate
information in the reports to persons not entitled to it, or to utilize
it for any purpose other than those the Act permits, including royalty
collection, distribution, and determining compliance with statutory
license requirements, without express consent of the Service. Services
may require use of passwords for access to electronically posted
reports, and may predicate provision of a password upon information
relating to identity, location and status as a sound recording
copyright owner, and upon a ``click-wrap'' agreement not to use the
reported information without the Service's consent for any purpose
other than those contemplated under the Act; however, Services must
make passwords available free of charge or of other restrictions. In
the event that no Collective is designated, and in the absence of
direct service to notify them of use of their copyrighted works, all
sound recording copyright owners should be able to gain access online
to records of use of their sound recordings under the statutory
license. Services will be required to provide the Copyright Office with
information on how to gain access to Services' online reports of use.
That information will be made available on the Copyright Office
website.
Because section 114(f)(2) mandates requirements by which
``copyright owners'' may receive reasonable notice of the use of their
sound recordings, provision must be made for individual copyright
owners to have access to the Reports of Use, even where there are
designated Collectives. Accordingly, Collectives receiving the Reports
of Use must make copies of the reports available for inspection by any
sound recording copyright owner, without charge, during normal office
hours upon reasonable notice. Any copyright owner exercising the right
to inspect the Reports of Use must agree in writing to certain
confidentiality restrictions.
Because rates and terms of payment are to be addressed through
industry-wide settlement or a CARP, this notice and recordkeeping
regulation will not address how copyright owners will contact Services
to demand payment based on records of use in the event that all
designated Collectives have terminated operations or in the event that,
in a future settlement or CARP proceeding, no Collective is designated.
Similarly, the regulation will not include requirements for statements
of account, which are properly addressed as a license term through
negotiation or a CARP. Services will be required to maintain their
reports of use for three years, the statutory period of limitations for
copyright infringement actions. The regulation will not address the
proposal for a yearly audit of records underlying the Reports of Use,
which the Office generally sees as a matter of business and legal
practice to be addressed through negotiation or a CARP.
The Office inquired about the costs of providing copyright owners
with records of use. RIAA said that its Collective would deduct
reasonable administrative costs as a percentage of royalties. The
matter of costs is a question for resolution through negotiation or a
CARP. See Determination of Reasonable Rates and Terms for the Digital
Performance of Sound Recordings, 63 FR 25394 (May 8, 1998). However,
collectives typically deduct administrative expenses. See
Recommendations of the Intergovernmental Committee of the Rome
Convention, 1979 Copyright 103, 109.5
---------------------------------------------------------------------------
\5\ Arguably, the RIAA Collective's expenses would be lower than
typical collectives' because it will not be negotiating licenses but
will simply collect and distribute royalties.
---------------------------------------------------------------------------
5. Effective Dates
These regulations will be adopted on an interim basis for a period
of two years, and will become effective on July 20, 1998. The
regulations will recognize a transition period through August 31, 1998,
before Services are required to comply fully with the recordkeeping
rules. For the period February 1, 1996, through August 31, 1998,
Services must make available records of use, but will have the option
of producing either summary frequency data or full Intended Playlists.
6. Regulatory Flexibility Act
Although the Copyright Office, as a department of the Library of
Congress and part of the legislative branch, is not an ``agency''
subject to the Regulatory Flexibility Act, 5 U.S.C. 601-612, the
Register of Copyrights has considered the effect of these interim
regulations on small businesses. The Register has determined that the
interim regulations would not have a significant economic impact on a
substantial number of small entities that would require provision of
special relief for small entities in the regulations, and that the
interim regulations are, to the extent consistent with the stated
objectives of applicable statutes, designed to minimize any significant
economic impact on small entities.
List of Subjects in 37 CFR Part 201
Copyright.
Interim Regulations
For the reasons set forth in the preamble, Part 201 of Title 37 of
the Code of Federal Regulations is amended as follows:
[[Page 34296]]
PART 201--GENERAL PROVISIONS
1. The authority citation for Part 201 continues to read as
follows:
Authority: 17 U.S.C. 702.
2. Sections 201.35 through 201.37 are added to read as follows:
Sec. 201.35 Initial Notice of Digital Transmission of Sound Recordings
under Statutory License.
(a) General. This section prescribes rules under which copyright
owners shall receive initial notice of use of their sound recordings
under statutory license under section 114(f) of title 17 of the United
States Code, as amended by Public Law 104-39, 109, Stat. 336.
(b) Definitions. (1) An Initial Notice of Digital Transmission of
Sound Recordings under Statutory License is a notice to sound recording
copyright owners of the use of their works under section 114(f), and
required under this regulation to be filed by a Service in the
Copyright Office.
(2) A Service is an entity engaged in the digital transmission of
sound recordings, pursuant to section 114(f) of title 17 of the United
States Code.
(c) Forms. The Copyright Office does not provide printed forms for
the filing of Initial Notices.
(d) Content. An ``Initial Notice of Digital Transmission of Sound
Recordings under Statutory License'' shall be identified as such by
prominent caption or heading, and shall include the following:
(1) The full legal name of the Service commencing digital
transmission of sound recordings under statutory license;
(2) The full address, including a specific number and street name
or rural route, of the place of business of the Service. A post office
box or similar designation will not be sufficient except where it is
the only address that can be used in that geographic location;
(3) The telephone number and facsimile number of the Service; and
(4) Information on how to gain access to the online website or home
page of the Service, or where information may be posted under these
regulations concerning the use of sound recordings under statutory
license.
(e) Signature. The Initial Notice shall include the signature of
the appropriate officer or representative of the Service transmitting
sound recordings under statutory license. The signature shall be
accompanied by the printed or typewritten name and title of the person
signing the Notice, and by the date of signature.
(f) Filing. A Service shall file the Initial Notice with the
Licensing Division of the Copyright Office prior to the first
transmission of sound recordings under the license, or within 45 days
of the effective date of this regulation. Each Notice shall be
accompanied by a filing fee of $20. Initial Notices and amendments will
be placed in the public records of the Licensing Division of the
Copyright Office, and posted online where they will be accessible
through the Copyright Office website. The address of the Licensing
Division is: Library of Congress, Copyright Office, Licensing Division,
101 Independence Avenue, S.E., Washington, D.C. 20557-6400.
(g) Amendments. A Service shall file with the Licensing Division of
the Copyright Office an amendment reporting a change in the information
reported in the Initial Notice within 45 days of the change. An
amendment shall be accompanied by a fee of $20, and shall:
(1) Be clearly and prominently identified as ``An Amendment to an
Initial Notice of Digital Transmission of Sound Recordings under
Statutory License'';
(2) Identify the specific Initial Notice intended to be amended, by
Service name and filing date, so that it may be readily located in the
records of the Copyright Office;
(3) Clearly specify the nature of the amendment to be made; and
(4) Be signed and dated in accordance with this section.
Sec. 201.36 Reports of Use of Sound Recordings under Statutory
License.
(a) General. This section prescribes rules under which Services
shall serve copyright owners with notice of use of their sound
recordings, what the content of that notice should be, and under which
records of such use shall be kept and made available.
(b) Definitions. (1) A Collective is a collection and distribution
organization that is designated under the statutory license, either by
settlement agreement reached under section 114(f)(1) or section
114(f)(4)(A) and adopted pursuant to 37 CFR 251.63(b), or by decision
of a Copyright Arbitration Royalty Panel (CARP) under section 114(f)(2)
or section 114(f)(4)(B), or by an order of the Librarian pursuant to 17
U.S.C. 802(f).
(2) A Report of Use of Sound Recordings under Statutory License is
a report required under this regulation to be provided by the Service
transmitting sound recordings under statutory license.
(3) A Service is an entity engaged in the digital transmission of
sound recordings pursuant to section 114(f) of title 17 of the United
States Code.
(c) Service. Reports of Use shall be served upon Collectives that
are identified in the records of the Licensing Division of the
Copyright Office as having been designated under the statutory license,
either by settlement agreement reached under section 114(f)(1) or
section 114(f)(4)(A) and adopted pursuant to 37 CFR 251.63(b), or by
decision of a Copyright Arbitration Royalty Panel (CARP) under section
114(f)(2) or section 114(f)(4)(B), or by an order of the Librarian
pursuant to 17 U.S.C. 802(f). Reports of use shall be served, by
certified or registered mail, or by other means if agreed upon by the
respective Service and Collective, on or before the twentieth day after
the close of each month, commencing with the month succeeding the month
in which these regulations become effective.
(d) Posting. In the event that no Collective is designated under
the statutory license, or if all designated Collectives have terminated
collection and distribution operations, a Service transmitting sound
recordings under statutory license shall post and make available online
its Reports of Use. Services shall post their Reports of Use online on
or before the 20th day after the close of each month, and make them
available to all sound recording copyright owners for a period of 90
days. Services may require use of passwords for access to posted
Reports of Use, but must make passwords available in a timely manner
and free of charge or other restrictions. Services may predicate
provision of a password upon:
(1) Information relating to identity, location and status as a
sound recording copyright owner; and
(2) A ``click-wrap'' agreement not to use information in the Report
of Use for purposes other than royalty collection, royalty
distribution, and determining compliance with statutory license
requirements, without the express consent of the Service providing the
Report of Use.
(e) Content. A ``Report of Use of Sound Recordings under Statutory
License'' shall be identified as such by prominent caption or heading,
and shall include a Service's ``Intended Playlists'' for each channel
and each day of the reported month.
(1) The ``Intended Playlists'' shall include a consecutive listing
of every recording scheduled to be transmitted, and shall contain the
following information in the following order:
(i) The name of the service or entity;
(ii) The channel;
[[Page 34297]]
(iii) The sound recording title;
(iv) The featured recording artist, group, or orchestra;
(v) The retail album title (or, in the case of compilation albums
created for commercial purposes, the name of the retail album
identified by the Service for purchase of the sound recording);
(vi) The recording label;
(vii) The catalog number;
(viii) The International Standard Recording Code (ISRC) embedded in
the sound recording, where available and feasible;
(ix) The date of transmission; and
(x) The time of transmission.
(2) The Report of Use shall include a report of any system failure
resulting in a deviation from the Intended Playlists of scheduled sound
recordings. Such report shall include the date, time and duration of
any such system failure.
(f) Signature. Reports of use shall include a signed statement by
the appropriate officer or representative of the Service attesting,
under penalty of perjury, that the information contained in the Report
is believed to be accurate and is maintained by the Service in its
ordinary course of business. The signature shall be accompanied by the
printed or typewritten name and title of the person signing the Report,
and by the date of signature.
(g) Format. Reports of use should be provided on a standard
machine-readable medium, such as diskette, optical disc, or magneto-
optical disc, and should conform as closely as possible to the
following specifications:
(1) ASCII delimited format, using pipe characters as delimiter,
with no headers or footers;
(2) Carats should surround strings;
(3) No carats should surround dates and numbers;
(4) Dates should be indicated by: MM/DD/YYYY;
(5) Times should be based on a 24-hour clock: HH:MM:SS;
(6) A carriage return should be at the end of each line; and
(7) All data for one record should be on a single line.
(h) Confidentiality. Copyright owners, their agents and Collectives
shall not disseminate information in the Reports of Use to any persons
not entitled to it, nor utilize the information for purposes other than
royalty collection and distribution, and determining compliance with
statutory license requirements, without express consent of the Service
providing the Report of Use.
(i) Documentation. All compulsory licensees shall, for a period of
at least three years from the date of service or posting of the Report
of Use, keep and retain a copy of the Report of Use. For reporting
periods from February 1, 1996, through August 31, 1998, the Service
shall serve upon all designated Collectives and retain for a period of
three years from the date of transmission records of use indicating
which sound recordings were performed and the number of times each
recording was performed, but is not required to produce full Reports of
Use or Intended Playlists for those periods.
Sec. 201.37 Designated Collection and Distribution Organizations for
Records of Use of Sound Recordings under Statutory License.
(a) General. This section prescribes rules under which records of
use shall be collected and distributed under section 114(f) of title 17
of the United States Code, as amended by Public Law 104-39, 109 Stat.
336, and under which records of such use shall be kept and made
available.
(b) Definition. (1) A Collective is a collection and distribution
organization that is designated under the statutory license, either by
settlement agreement reached under section 114(f)(1) or section
114(f)(4)(A) and adopted pursuant to 37 CFR 251.63(b), or by decision
of a Copyright Arbitration Royalty Panel (CARP) under section 114(f)(2)
or section 114(f)(4)(B), or by an order of the Librarian pursuant to 17
U.S.C. 802(f).
(2) A Service is an entity engaged in the digital transmission of
sound recordings pursuant to section 114(f) of title 17 of the United
States Code.
(c) Notice of Designation as Collective under Statutory License. A
Collective shall file with the Licensing Division of the Copyright
Office and post and make available online a ``Notice of Designation as
Collective under Statutory License,'' which shall be identified as such
by prominent caption or heading, and shall contain the following
information:
(1) The Collective name, address, telephone number and facsimile
number;
(2) A statement that the Collective has been designated for
collection and distribution of performance royalties under statutory
license for digital transmission of sound recordings; and
(3) Information on how to gain access to the online website or home
page of the Collective, where information may be posted under these
regulations concerning the use of sound recordings under statutory
license. The address of the Licensing Division is: Library of Congress,
Copyright Office, Licensing Division, 101 Independence Avenue, S.E.,
Washington, D.C. 20557-6400.
(d) Annual Report. The Collective will post and make available
online, for the duration of one year, an Annual Report on how the
Collective operates, how royalties are collected and distributed, and
what the Collective spent that fiscal year on administrative expenses.
(e) Inspection of Reports of Use by Copyright Owners. The
Collective shall make copies of the Reports of Use for the preceding
three years available for inspection by any sound recording copyright
owner, without charge, during normal office hours upon reasonable
notice. The Collective shall predicate inspection of Reports of Use
upon information relating to identity, location and status as a sound
recording copyright owner, and the copyright owner's written agreement
not to utilize the information for purposes other than royalty
collection and distribution, and determining compliance with statutory
license requirements, without express consent of the Service providing
the Report of Use. The Collective shall render its best efforts to
locate copyright owners in order to make available records of use, and
such efforts shall include searches in Copyright Office public records
and published directories of sound recording copyright owners.
(f) Confidentiality. Copyright owners, their agents, and
Collectives shall not disseminate information in the Reports of Use to
any persons not entitled to it, nor utilize the information for
purposes other than royalty collection and distribution, and
determining compliance with statutory license requirements, without
express consent of the Service providing the Report of Use.
(g) Termination and dissolution. If a Collective terminates its
collection and distribution operations prior to the close of its term
of designation, the Collective shall notify the Copyright Office, and
all Services transmitting sound recordings under statutory license, by
certified or registered mail. The dissolving Collective shall provide
each such Service with information identifying the copyright owners it
has served.
Dated: June 15, 1998.
Marybeth Peters,
Register of Copyrights.
Approved:
James H. Billington,
The Librarian of Congress.
[FR Doc. 98-16779 Filed 6-22-98; 8:45 am]
BILLING CODE 1410-30-P