[Federal Register Volume 64, Number 138 (Tuesday, July 20, 1999)]
[Proposed Rules]
[Pages 38861-38862]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-18489]


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LIBRARY OF CONGRESS

Copyright Office

37 CFR Part 255

[Docket No. 99-4 CARP DPRA]


Digital Phonorecord Delivery Rate Adjustment Proceeding

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of initiation of negotiation period.

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SUMMARY: The Copyright Office of the Library of Congress is announcing 
the initiation of the negotiation period for determining reasonable 
rates and terms for digital transmissions that constitute a digital 
phonorecord delivery for the period commencing January 1, 2001. This 
negotiation period is intended to promote an industry-wide agreement as 
to the rates and terms for digital phonorecord deliveries.

DATES: The negotiation period begins on July 20, 1999, and ends on 
December 31, 1999. Petitions for an arbitration for rate adjustment 
must be filed during the year 2000.

ADDRESSES: If sent by mail, an original and five copies of the petition 
should be addressed to: Copyright Arbitration Royalty Panel (CARP), 
P.O. Box 70977, Southwest Station, Washington, DC 20024. If hand 
delivered, an original and five copies of the petition should be 
brought to: Office of the Copyright General Counsel, James Madison 
Memorial Building, Room LM-403, First and Independence Avenue, SE, 
Washington, DC 20559-6000.

FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or 
Tanya M. Sandros, Attorney Advisor, Copyright Arbitration Royalty Panel 
(CARP), P.O. Box 70977, Southwest Station, Washington, DC 20024. 
Telephone: (202) 707-8380 or Telefax: (202) 252-3423.

SUPPLEMENTARY INFORMATION: On November 1, 1995, Congress passed the 
Digital Performance Right in Sound Recordings Act of 1995 (``Digital 
Performance Right Act''), Pub. L. 104-39, 109 Stat. 336. Among other 
things, it confirms and clarifies that the scope of the statutory 
license to make and distribute phonorecords of nondramatic musical 
compositions, 17 U.S.C. 115, includes the right to distribute or 
authorize distribution by means of a digital transmission which 
constitutes a ``digital phonorecord delivery.'' 17 U.S.C. 115(c)(3)(A). 
A ``digital phonorecord delivery'' is defined as ``each individual 
delivery of a phonorecord by digital transmission of a sound recording 
which results in a specifically identifiable reproduction by or for any 
transmission recipient of a phonorecord of that sound recording * * * 
.'' 17 U.S.C. 115(d).
    The Digital Performance Right Act established that the rate for all 
digital phonorecord deliveries (``DPDs'') made or authorized under a 
compulsory license on or before December 31, 1997, was the same as the 
rate in effect for the making and distribution of physical phonorecords 
for that period. 17 U.S.C. 115(c)(3)(A)(i). For digital phonorecord 
deliveries made or authorized after December 31, 1997, the Digital 
Performance Act established a two-step process for determining the 
terms and rates: either the copyright owners of nondramatic musical 
works and those persons entitled to obtain a license may negotiate the 
rates and terms for the statutory license, or they may participate in a 
Copyright Arbitration Royalty Panel (``CARP'') proceeding. 17 U.S.C. 
115(c)(3)(A)-(D). Such rates and terms, whether negotiated by the 
parties or determined by a CARP, are to distinguish between ``digital 
phonorecord deliveries where the reproduction or distribution of a 
phonorecord is incidental to the transmission which constitutes the 
digital phonorecord delivery, and (ii) digital phonorecord deliveries 
in general.'' 17 U.S.C. 115(c)(2)(C)-(D). This two-step process is to 
be repeated ``in each fifth calendar year after 1997,'' 17 U.S.C. 
115(c)(3)(F), unless the parties agree to different years for the 
repeating

[[Page 38862]]

and concluding of such proceedings. 17 U.S.C. 115(c)(3)(B)-(F).
    The first proceeding to adjust the royalty rates for the delivery 
of digital phonorecords concluded earlier this year. In that 
proceeding, the parties reached an industry-wide agreement setting the 
rate for the delivery of digital phonorecords and deferring until the 
next scheduled rate adjustment proceeding the determination of the rate 
for the delivery of a digital phonorecord where the reproduction or 
distribution is incidental to the transmission which constitutes a 
digital phonorecord delivery. In accordance with Sec. 251.63(b), the 
Librarian published a notice in the Federal Register requesting public 
comment on the proposed rates and terms. 63 FR 71249 (December 24, 
1998). Upon receiving no comments opposing the rates and terms for the 
delivery of digital phonorecords set forth in the December 24, 1998, 
notice, the Librarian adopted the proposed rates and amended part 255 
of the Copyright Office's rules accordingly. 64 FR 6221 (February 9, 
1999). The newly adopted regulation requires that the two-step process 
for adjusting the royalty rates be repeated in 1999 in order ``to 
determine the applicable rates and terms * * * during the period 
beginning January 1, 2001.'' 37 CFR 255.7.

Initiation of Voluntary Negotiations

    Pursuant to sections 115(c)(3)(B)-(F) and Sec. 255.7, the Copyright 
Office of the Library of Congress is initiating the voluntary 
negotiation period for the determination of reasonable rates and terms 
for the delivery of digital phonorecords and the delivery of a digital 
phonorecord where the reproduction or distribution is incidental to the 
transmission which constitutes a digital phonorecord delivery for the 
two-year period commencing January 1, 2001. The negotiation period 
shall run from the date of publication of this notice in the Federal 
Register and end on December 31, 1999. Such terms and rates shall 
distinguish between (a) digital phonorecord deliveries where the 
reproduction or distribution of a phonorecord is incidental to the 
transmission which constitutes the digital phonorecord delivery, and 
(b) digital phonorecord deliveries in general.

Petitions

    In the absence of a license agreement negotiated under 17 U.S.C. 
115(c)(3)(B)-(C), a party with a significant interest in establishing 
reasonable rates and terms for this compulsory license may file a 
petition to convene a CARP with the Copyright Office. Accordingly, the 
petition shall detail petitioner's interest in the royalty rate 
sufficiently to permit the Librarian of Congress to determine whether 
the petitioner has a ``significant interest'' in the rate. The petition 
must also identify the extent to which the petitioner's interest is 
shared by other owners and users; owners and users with similar 
interests may file a joint petition. 37 CFR 251.62. Petitions should be 
filed with the Copyright Office during the year 2000.

    Dated: July 15, 1999.
David O. Carson,
General Counsel.
[FR Doc. 99-18489 Filed 7-19-99; 8:45 am]
BILLING CODE 1410-31-P