[Federal Register Volume 69, Number 48 (Thursday, March 11, 2004)]
[Rules and Regulations]
[Pages 11515-11531]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-5404]


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LIBRARY OF CONGRESS

Copyright Office

37 CFR Parts 201 and 270

[Docket No. RM 2002-1E]


Notice and Recordkeeping for Use of Sound Recordings Under 
Statutory License

AGENCY: Copyright Office, Library of Congress.

ACTION: Interim regulations.

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SUMMARY: The Copyright Office of the Library of Congress is announcing 
interim regulations specifying notice and recordkeeping requirements 
for use of sound recordings under two statutory licenses under the 
Copyright Act. Electronic data format and delivery requirements for 
records of use as well as regulations governing prior records of use 
shall be announced in future Federal Register documents.

EFFECTIVE DATE: The interim notice and recordkeeping regulations shall 
be effective beginning April 12, 2004. Updated notices of intent to use 
the statutory licenses under sections 112 and 114 are due July 1, 2004.

FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or 
William J. Roberts, Jr., Senior Attorney, Copyright Arbitration Royalty 
Panel, P.O. Box 70977, Southwest Station, Washington, DC 20024-0977. 
Telephone: (202) 707-8380. Telefax: (202) 252-3423.

SUPPLEMENTARY INFORMATION: 

I. Overview

    Digital audio services provide copyrighted sound recordings of 
music for the listening enjoyment of the users of those services. In 
order to provide these sound recordings, however, a digital audio 
service must license the copyrights to each musical work, as well

[[Page 11516]]

as the sound recording of the musical work.\1\ With respect to the 
copyright in the sound recording, the digital audio service may seek to 
obtain a licensing agreement directly with the copyright owner, or, if 
it is an eligible service,\2\ may choose to license the sound recording 
through statutory licenses set forth in the Copyright Act, title 17 of 
the United States Code. There are two such licenses that enable an 
eligible digital audio service to transmit performances of copyrighted 
sound recordings to its listeners: section 114 and section 112 of the 
Copyright Act. Section 114 permits an eligible digital audio service to 
perform copyrighted sound recordings publicly by means of digital audio 
transmissions to its listeners, provided that the terms and conditions 
set forth in section 114 are met including the payment of a royalty 
fee. Section 112 permits an eligible digital audio service to make the 
digital copies of a sound recording that are necessary to transmit a 
performance of a sound recording to listeners,\3\ provided again that 
the terms and conditions set forth in section 112 are met including the 
payment of a royalty fee.
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    \1\ Recorded music typically involves two separate copyrights. 
There is a copyright for the song itself--the music and the lyrics, 
if any--and there is a separate copyright for the sound recording of 
that music. The copyright to the musical work often belongs to the 
songwriter and/or his or her music publisher, and the copyright to 
the sound recording is generally owned by a record company that 
released the recording.
    \2\ These services are defined as preexisting subscription 
services, preexisting satellite digital audio radio services, 
business establishment services, nonsubscription services and new 
subscription services. These services are further discussed, infra.
    \3\ These copies are referred to as ``ephemeral copies,'' 
although they sometimes exist for a period of time that is far from 
the ordinary meaning of ``ephemeral.''
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    The royalty fees collected under the two statutory licenses are 
paid to a central source known as a Receiving Agent.\4\ See 37 CFR 
261.2. Before the Receiving Agent, or any other agent designated to 
receive royalties from the Receiving Agent, can make a royalty payment 
to an individual copyright owner, they must know how many times the 
eligible digital audio service made use of the sound recording and how 
many listeners received it. To obtain this information, both section 
112 and section 114 direct the Librarian of Congress to prescribe 
regulations that identify the use of copyrighted sound recordings (the 
``recordkeeping'' provisions), as well as provide copyright owners with 
notice that a particular eligible digital audio service is making use 
of the section 112 and/or 114 license (the ``notice'' provisions). See 
17 U.S.C. 112(e)(4) and 114(f)(4)(A). Today's interim regulations are 
the first step in complying with these requirements.
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    \4\ Currently, the Receiving Agent is SoundExchange, Inc. See 37 
CFR 261.4(c).
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    As discussed more fully infra, today's interim regulations set 
forth the requirements for an eligible digital audio service to file 
notification that it is using one or both of the statutory licenses, as 
well as the types and details of information that an eligible digital 
audio service must maintain in creating a record of use for each 
copyrighted sound recording it provides its listeners. There are two 
remaining issues. First, today's interim regulations only apply to the 
use of sound recordings from the effective date of the interim 
regulations and prospectively. There remains the issue of what types of 
information must be reported for uses of sound recordings prior to the 
effective date of this regulation and back to October 28, 1998. Second, 
there remains the issue of the character of the format in which records 
of use must be maintained, and what are the acceptable means of 
delivering the information contained in records of use to copyright 
owners of sound recordings.

II. Background

    On February 7, 2002, the Copyright Office of the Library of 
Congress issued a Notice of Proposed Rulemaking (``NPRM'') on the 
requirements for giving copyright owners reasonable notice of the use 
of their sound recordings under the section 114 and 112 statutory 
licenses and for how records of such use shall be kept and made 
available to copyright owners. 67 FR 5761 (February 7, 2002). The 
proposed regulations set forth in the NPRM were taken, with some 
modifications, from the notice and recordkeeping regulations the Office 
had previously adopted for eligible preexisting subscription services 
making use of the section 114(f)(1)(A) statutory license. See 63 FR 
34289 (June 24, 1998); 37 CFR 201.35-201.37.\5\ The Office stated that 
although the existing regulations only applied to preexisting 
subscription services, it was the desire of the Office to adopt a 
single set of notice and recordkeeping regulations that would apply to 
any service claiming use of any of the statutory licenses set forth in 
section 114, as well as the section 112 statutory license for ephemeral 
recordings. 67 FR at 5762.
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    \5\ These interim regulations place all notice and recordkeeping 
regulations pertaining to the statutory licenses under sections 112 
and 114 into a new part 270. Accordingly, the notice and 
recordkeeping regulations currently located in Sec. Sec.  201.35-
201.37 have been moved to part 270.
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    With respect to the notice provisions proposed in the NPRM, 
copyright owners and users voiced little disagreement. The details of 
the notice requirements being adopted by the Library are discussed 
below. With respect to what records of use of sound recordings should 
be kept, how they should be kept and in what manner they should be 
delivered to copyright owners, there was virtually no agreement between 
copyright owners and users. On May 10, 2002, the Office held a public 
meeting to facilitate discussion as to the required records of use, the 
frequency of the recordkeeping, and the manner and format for delivery 
to copyright owners. Persons representing copyright owners, users, and 
performers appeared and offered their opinions and criticisms of the 
NPRM and offered suggestions as to the amount of information necessary 
to distribute royalties collected under the section 112 and 114 
licenses. The May 10 meeting revealed persistent differences as to the 
scope of the regulations, as well as the details for creating and 
delivering databases of records of use.
    Subsequent to the May 10 meeting, the Office posted a notice on its 
website announcing the impending release of these interim regulations 
and describing in general the categories of information that will be 
required to be reported for performances of sound recordings governed 
by the section 112 and 114 licenses. These transitional requirements 
were memorialized in a September 23, 2002, Federal Register document. 
See 67 FR 59573 (September 23, 2002).
    The need for announcing these transitional requirements was made 
evident during the course of discussions at the May 10 roundtable 
meeting. Although services making use of the statutory licenses in 
section 114 (other than the preexisting subscription service license) 
and section 112 have been doing so since the passage of the Digital 
Millennium Copyright Act in 1998, it became clear that many have not 
kept any records of the sound recordings which they have performed or 
the ephemeral copies they have made. This is unacceptable. The law 
requires a reporting of use of sound recordings sufficient to permit 
payment of royalties, and each day that passes results in the loss of 
records of performances that may never be accurately identified and 
reported. Furthermore, eligible nonsubscription digital transmission 
services have been required to make royalty payments

[[Page 11517]]

under the section 112 and 114 licenses for eligible nonsubscription 
digital transmission services since October 20, 2002, meaning that a 
considerable amount of royalties (over five years' worth) should now be 
ready for distribution. Royalties cannot be allocated to owners, 
artists and performers until meaningful information regarding the 
instances of performances of specific sound recordings of musical works 
is provided by the services making use of the works. Publication of 
these interim regulations \6\ will preserve the identification and 
reporting of as many performances under the section 112 and 114 
licenses as possible.\7\
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    \6\ As discussed below, these interim regulations make some 
modifications to the requirements announced in the September 23, 
2002, Federal Register document.
    \7\ The Office has also had discussions with copyright owners 
and users regarding the format in which records of use should be 
preserved, including a public meeting on October 8, 2002. See 67 FR 
59547 (September 23, 2002). These discussions further underscored 
the difficulty of prescribing detailed electronic format and 
delivery requirements and have prevented including them in today's 
interim regulations. These requirements will be announced in a 
future Federal Register document.
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III. Prior Records of Use

    The interim regulations announced today apply on a prospective 
basis, meaning that they apply to uses of sound recordings under the 
section 112 and 114 licenses occurring on and after the effective date 
announced above. There remains, however, the question of what records 
of use must be reported for uses of sound recordings from October 28, 
1998, until the present. It was apparent from the discussions of the 
May 10, 2002, roundtable and subsequent filings that many services have 
maintained few or, in many instances, no records of prior uses. 
Incomplete and nonexistent records create serious difficulties for the 
fashioning of regulations that apply to prior uses of sound recordings. 
The Copyright Office has sought comment on the matter of prior records, 
see 68 FR 58054 (October 8, 2003), and will publish regulations in the 
future. In the meantime, both copyright owners of sound recordings and 
users of the section 112 and 114 licenses are strongly encouraged to 
resolve the matter in a way that will permit SoundExchange to 
distribute royalties for uses of sound recordings that took place prior 
to the effective date of these regulations. The Office would be pleased 
to consider any negotiated resolution as it determines the terms of the 
regulations to govern reporting on past uses of sound recordings.

IV. Format Requirements

    Due to the highly technical nature of delivery of data in an 
electronic format and the widespread disagreement among SoundExchange 
and the users of the statutory licenses over formatting, the Copyright 
Office is unable to adopt data format and delivery regulations at this 
time. However, we will be publishing soon a Notice of Proposed 
Rulemaking in the Federal Register proposing electronic data format and 
delivery rules and will be seeking public comment. In the meantime, we 
strongly urge SoundExchange and services that will be making reports of 
use to negotiate acceptable means of data formatting and delivery. The 
negotiation process is better suited to targeting and resolving 
technical difficulties than an agency rulemaking process. Also, the 
more agreements that are reached, the greater the body of industry 
experience and practice that the Office can draw from in shaping final 
regulations.

V. The Small Webcaster Settlement Act of 2002

    On December 4, 2002, the President signed into law the Small 
Webcaster Settlement Act of 2002, Public Law 107-321, 116 Stat. 2780, 
which permitted SoundExchange to enter into agreements on behalf of all 
copyright owners and performers to set rates, terms, and conditions for 
noncommercial and small commercial webcasters operating under the 
section 112 and 114 statutory licenses. The Act directs the Copyright 
Office to publish such agreements in the Federal Register and specifies 
that they may not be taken into account by the Office in formulating 
notice and recordkeeping provisions under the statutory licenses.
    On December 24, 2002, the Copyright Office published the agreement 
for small commercial webcasters. 67 FR 78510 (December 24, 2002). That 
agreement specifies the types of data that must be reported by small 
commercial webcasters for the years 2003 and 2004. The agreement 
further provides, however, that

[f]or calendar years 2003 and 2004, details of the means by which 
copyright owners may receive notice of the use of their sound 
recordings, and details of the requirements under which reports of 
use concerning the matters identified in Section 6(a) \8\ shall be 
made available, shall be as provided in regulations issued by the 
Librarian of Congress under 17 U.S.C. 114(f)(4)(A).
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    \8\ Section 6(a) of the agreement contains the details of the 
records of use that must be kept.

Id. at 78512. Consequently, entities which are signatories to the 
agreement published on December 24, 2002, while not bound by the 
records of use provisions of these interim regulations, are bound by 
the interim notice regulations adopted herein.
    On June 11, 2003, the Office published the agreement for 
noncommercial webcasters. 68 FR 35008 (June 11, 2003). That agreement 
provides that for 2003 and 2004, noncommercial webcasters are not 
required to provide any reports of use of sound recordings ``even if 
the Librarian of Congress issues regulations otherwise requiring such 
reports by Noncommercial Webcasters.'' Id. at 35011. Consequently, 
those entities that are signatories to the agreement published on June 
11 are not bound by the records of use regulations announced in this 
notice for the years 2003-2004. These entities are still bound, 
however, by the notice provisions adopted today.

VI. Parties Affected

    The Copyright Office announced in the NPRM that it intended to 
adopt a single set of notice and recordkeeping regulations for all four 
categories of services: Preexisting subscription services, preexisting 
satellite digital audio radio services, nonsubscription services, and 
new subscription services. 67 FR 5761, 5762 (February 7, 2002). The 
Office has been requested, however, to exclude preexisting subscription 
services and preexisting satellite digital audio radio services from 
this proceeding.
    With respect to preexisting subscription services, the Recording 
Industry Association of America (``RIAA'') recommended in its petition 
that opened this rulemaking that preexisting subscription services be 
allowed to continue to operate under the rules set forth in former 37 
CFR 201.36. RIAA petition at 1-2. Support for the proposal was echoed 
by the preexisting subscription services. Comments of Music Choice at 6 
(submitted April 5, 2002); Comments of Music Choice at 1-2 (submitted 
September 30, 2002). Because copyright owners and preexisting 
subscription services appear content to operate under the existing 
recordkeeping provisions contained in former Sec.  201.36 at this 
time,\9\ the recordkeeping interim

[[Page 11518]]

regulations announced today will not apply to preexisting subscription 
services. Likewise, the notice provisions of Sec.  270.1 (former Sec.  
201.35) announced today do not apply to preexisting subscription 
services.
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    \9\ On March 14, 2003, the Copyright Office received a joint 
petition from copyright owners and performers and preexisting 
subscription services to conduct an expedited rulemaking to modify 
the provisions of former Sec.  201.36. The sought-after 
modifications, negotiated during the statutorily prescribed 
negotiation period for adjustment of rates and terms, would 
supercede the existing recordkeeping provisions in former Sec.  
201.36. The petition will be addressed in a separate Federal 
Register document.
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    On April 11, 2003, the Office received a petition from 
SoundExchange, XM Satellite Radio, Inc., Sirius Satellite Radio Inc., 
the American Federation of Radio and Television Artists, and the 
American Federation of Musicians stating that these entities had 
reached an agreement regarding notice and recordkeeping requirements 
for the period through December 31, 2006, and requesting that the 
Office defer adopting notice and recordkeeping regulations for 
preexisting satellite digital audio radio services at this time. The 
Office responded by letter dated May 8, 2003, denying the petition 
because ``it is the Library's responsibility, and the Library's 
responsibility alone, to promulgate rules establishing notice and 
record-keeping requirements.'' Copyright Office letter at 1 (May 8, 
2003). We concluded that it is ``our duty to include provisions 
governing preexisting satellite digital audio radio services in the 
section 114 and section 112 notice and recordkeeping regulations that 
we are preparing for publication.'' Id. at 2. Although the parties to 
the agreement relating to preexisting satellite digital audio radio 
services could have requested that the Office adopt the notice and 
recordkeeping requirements they had negotiated, they did not do so. 
Indeed, the Office has no knowledge of the details of those negotiated 
requirements. Consequently, the interim regulations announced today 
apply to preexisting satellite digital audio radio services, as well as 
nonsubscription services, business establishment services and new 
subscription services. Presumably, however, no copyright owner who is a 
party to the negotiated agreement would be in a position to complain of 
the failure, by a service that is also a party to the agreement, to 
comply with the regulations announced today.

VII. Scope of the Reporting Requirements

    In announcing today's required records of use on a prospective 
basis, it must be emphasized that they represent the minimum 
requirements. The Office recognizes that adopting detailed, 
comprehensive reporting requirements at this time could place a 
considerable burden on those services which have not yet developed 
methods for maintaining records of sound recording use. The prudent 
course therefore is to set forth minimum requirements for records that 
must be maintained, as well as the frequency with which they must be 
kept. It is highly likely that additional requirements will be set 
forth after the Office has determined the effectiveness of these 
interim rules.

VIII. The Proposals of the Commenters

A. Proposal of the Recording Industry Association of America

    The Recording Industry Association of America (``RIAA'') \10\ 
recommended that the Copyright Office require that services report to 
SoundExchange a comprehensive amount of data which it asserted was 
necessary for proper distribution of royalties under the section 112 
and 114 statutory licenses. These requirements were set forth in the 
NPRM and are discussed there. See 67 FR 5761 (February 7, 2002). 
Subsequent to the NPRM, and due at least in part to concerns expressed 
by users of the statutory licenses regarding the privacy of user 
information in a listener log, RIAA revised its proposal and dropped 
its request that the requirements include a separate play list and 
listener log. Comments of RIAA at 33 (submitted April 5, 2002). RIAA 
submits that all the data elements it has requested for records of use 
are essential to the accurate and prompt identification of the 
ownership of each sound recording performed and to the efficient 
distribution of royalties. The more data that services using the 
statutory licenses submit, the more ``pieces to the puzzle'' there are 
for a correct royalty distribution. Id. at 39.
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    \10\ RIAA's comments also include the views of SoundExchange 
which, at the time of submission of the initial comments, was an 
unincorporated division of RIAA. Comments of RIAA at 1 (submitted 
April 5, 2002).
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    RIAA's proposed records of use are divided into three principal 
parts: (1) Information identifying the licensee as well as the type of 
service and programming offered by the licensee; (2) information 
regarding the digital audio transmissions of sound recordings; and (3) 
information regarding the specific sound recordings transmitted to the 
public.
    1. Data Identifying Service, Type of Service and Programming 
Offered. RIAA proposes adoption of six different data fields for this 
category: (1) Service Name; (2) Transmission Category; (3) Channel or 
Program Name; (4) Type of Program; (5) Influence Indicator; and (6) 
Genre.
    a. Service Name. The Service Name identifies the service reporting 
the use of a particular sound recording.
    b. Transmission Category. The Transmission Category identifies the 
royalty structure for sections 112 and 114 that a service uses to 
calculate its royalty obligation. Because there are essentially many 
licenses within section 112 and section 114 (e.g., a section 114 
license for preexisting subscription services with one royalty rate, a 
section 114 license for nonsubscription services with different royalty 
rates), the Transmission Category is necessary to determine the royalty 
fee that is being paid for the particular use of a sound recording. 
RIAA offers ten category codes that identify each type of service using 
the section 112 and 114 licenses. Id. at 48-49.
    c. Channel or Program Name. RIAA asserts that the Channel or 
Program Name is necessary to verify compliance with the sound recording 
performance complement set forth in 17 U.S.C. 114(j)(13). Id. at 49. 
SoundExchange also requests identification of the Channel or Program 
Name, but for purposes of royalty distribution. SoundExchange 
acknowledges that certain services lack the capacity to identify the 
number of performances (i.e., the number of listeners) of a particular 
sound recording and recommends that those services report the number of 
Aggregate Tuning Hours (``ATH'') to a particular channel. However, in 
order for ATH to provide SoundExchange with meaningful distribution 
data, the service must report the Channel or Program Name to avoid 
under-valuing or over-valuing specific sound recordings. For example, 
if a service has two channels of programming that perform two different 
genres of music (one that has many listeners and one that does not), 
yet reports the same ATH for the two channels, the sound recordings on 
both channels will be valued equally even though the one channel 
received more listenership. However, if separate ATH are reported for 
each channel, the higher ATH for the more popular channel will be 
reflected and the sound recordings on that channel will receive a more 
accurate royalty distribution. Comments of SoundExchange at 17 n.6 
(submitted September 30, 2002); Letter from SoundExchange to Copyright 
Office explaining footnote 6 (submitted October 28, 2002).
    RIAA asserts that the Channel Name for an AM or FM radio station 
should be the Federal Communications Commission (``FCC'') facility 
identification number of the broadcast

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station that is transmitted and the frequency band designation (ex.
WABC-AM). The Channel Name for all other transmissions should be the 
service's name for such channel (ex. ``American Top 40,'' ``80's 
Rock'') ``provided that if a program is generated as a random list of 
sound recordings from a predetermined list, the channel or program must 
be a unique identifier differentiating each user's randomized playlist 
from all other users' randomized playlists.'' Comments of RIAA at 49-50 
(submitted April 5, 2002) quoting the NPRM, 67 FR at 5766.
    d. Type of Program. Identification of the Program Type ``is needed 
to ensure compliance with certain statutory provisions that establish 
duration requirements for particular programming.'' Id. at 50. RIAA 
proposes four categories for Type of Program: archived programs, looped 
programs, prescheduled programs and a category for all other programs. 
Id.
    e. Influence Indicator. RIAA asserts that:

The Influence Indicator field is needed because certain services 
provide the user with an ability to skip forward through a play list 
at the user's sole discretion. Although RIAA believes that the use 
of a ``skip'' feature may render certain services interactive and, 
therefore, ineligible for the statutory license, a limited skip 
feature may eventually be determined to be eligible for the 
statutory license. If such services are determined to be eligible 
for the statutory license subject to certain conditions, then 
copyright owners will need to know which services offer a skip 
feature and whether those required conditions are satisfied.

Id. at 51. RIAA proposes two categories for the Influence Indicator: 
non-user influenced and user influenced.
    f. Genre. The Genre field provides assistance in distinguishing 
among sound recording copyright owners with the same name that own 
different repertoire. The Genre field would apply to the designation 
that a service gives to a particular channel (ex. Rock, Classical) not 
to a particular sound recording. Id. at 51-52.
    2. Data Regarding the Transmissions of Sound Recordings. RIAA 
proposes two categories of information regarding the transmissions of 
sound recordings: (1) Start Date and Time of the Sound Recording's 
Transmission; and (2) Total Number of Performances.
    a. Start Date and Time of the Sound Recording's Transmission. RIAA 
asserts that this information is necessary to assure that services are 
complying with the sound recording performance complement. It also 
asserts that the information is necessary because members of 
SoundExchange may ``decide to weight performances based upon the time 
of day that the transmission is made, with performances during the day 
being weighted more heavily than overnight performances.'' Id. at 52.
    b. Total Number of Performances. RIAA asserts that Total Number of 
Performances is critical to distributing royalties collected under the 
section 114 license. Since the royalties paid by services under the 
license are on a per performance basis, see 67 FR 45240, 45272 (July 8, 
2002), the services already have this information; and it is essential 
to the distribution mechanism mandated by the Librarian for non-
SoundExchange members. See 37 CFR 261.4.
    3. Data for Identifying Each Sound Recording. RIAA proposes ten 
categories of information for the identification of each sound 
recording: (1) Artist Name; (2) Sound Recording Title; (3) Album Title; 
(4) International Standard Recording Code (``ISRC''); (5) Track Label 
(P) Line; (6) Duration of Sound Recording; (7) Marketing Label; (8) 
Catalog Number; (9) Universal Product Code; and (10) Release Year.
    a. Artist Name and b. Sound Recording Title
    RIAA asserts that these two elements are the most basic information 
necessary to identify a sound recording and must be reported in all 
instances. Comments of RIAA at 55 (submitted April 5, 2002).
    c. Album Title. RIAA asserts that Album Title is necessary to 
assist in differentiating a song by a particular artist that appears on 
more than one record album where the copyright owners of the album are 
different. For example, the Alice Cooper sound recording ``I'm 18'' 
appears on both the ``Classicks'' and ``Love it to Death'' record 
albums. Epic Records is the owner of the ``Classicks'' album, while 
Warner Bros. is the owner of the ``Love it to Death'' album. If the 
Designated Agents distributing royalties do not know from which album 
the service performed ``I'm 18,'' they cannot properly distribute 
royalties. Reply comments of RIAA at 57-58 (submitted April 26, 2002).
    d. International Standard Recording Code (``ISRC''). The 
International Standard Recording Code (``ISRC'') is a unique code that 
is embedded in many sound recordings released in recent years and is 
capable of being read with the proper computer software. Because ISRC 
is unique to each sound recording that possesses it, it is extremely 
useful in specifically identifying a particular sound recording. 
Comments of RIAA at 56-57.
    e. Track Label (P) Line. The Track Label (P) Line is the copyright 
owner information for an individual sound recording. According to RIAA, 
a Track Label (P) Line can be found on the backside of the label 
packaging after the (P) Line symbol. If the album is a compilation, the 
Track Label (P) Line information can be found inside the label package 
insert following the listing of each sound recording. Id. at 57. The 
copyright owner listed in the Track Label (P) Line is generally the 
entity entitled to royalties for the public performance of the sound 
recording, but is not the complete information necessary to distribute 
royalties under the section 112 and 114 licenses. Id.; Reply comments 
of RIAA at 63-64.
    f. Duration of Sound Recording. Duration of the Sound Recording is 
the total recorded time of that sound recording as identified on the 
label packaging for that version of the musical work, regardless of the 
time that it takes the service to transmit the sound recording. RIAA 
asserts that this information is necessary to help distinguish among 
remixes of the same sound recording by the same artist. Comments of 
RIAA at 57-58 (submitted April 5, 2002).
    g. Marketing Label. The Marketing Label is the name of the company 
that markets the album on which a particular sound recording may be 
found. RIAA states that often, but not always, the company name on the 
Track Label (P) Line will be the same as the Marketing Label; hence 
both data fields must be provided. Id. at 58.
    h. Catalog Number. The Catalog Number is the unique number assigned 
by a particular record label to an album, as opposed to the particular 
sound recording on the album, for purposes of ordering and inventory 
management. RIAA asserts that services should provide this information 
because it is required in the Copyright Office regulations for 
preexisting subscription services. See 63 FR 34289, 34297 (June 24, 
1998).
    i. Universal Product Code (``UPC''). The Universal Product Code 
(``UPC'') is a 12-digit numeric identification code that is placed on 
products intended for retail sale and is read by automated scanning 
devices (i.e. the ``bar code'' number). Unlike an ISRC, which is unique 
to a sound recording, a UPC is unique to a particular product (i.e. CD, 
cassette, LP). RIAA asserts that the UPC is necessary to assist in 
correctly identifying the origin of a sound recording. Comments of RIAA 
at 58-59 (submitted April 5, 2002).
    j. Release Year. The Release Year is the year the album was first 
released

[[Page 11520]]

commercially for public distribution as identified on the backside of 
the label packaging after the (P) Line symbol. Again, RIAA asserts that 
Release Year is necessary to correctly identify the origin of a sound 
recording. Id. at 59.

B. Proposal of the American Federation of Musicians and the American 
Federation of Televison and Radio Artists

    The American Federation of Musicians (``AFM'') and the American 
Federation of Television and Radio Artists (``AFTRA'') endorse the 
proposal of RIAA for records of use data

because those rules appear to require records of use that are 
adequate to fulfill the important Congressional objective of 
compensating each featured recording artist for use of his or her 
unique sound recordings, and * * * will further assist in fulfilling 
the equally important Congressional purpose of also compensating 
non-featured recording artists who have performed on sound 
recordings used by the services.

Joint comments of AFM/AFTRA at 2 (submitted April 5, 2002). However, 
AFM/AFTRA urge that the Copyright Office require an additional data 
field that requires services to enter the names of all non-featured 
singers and musicians on each sound recording when the services are in 
possession of that information. They assert that this information is 
essential to distribute the modest amount of royalties allocated to 
non-featured singers and musicians under the section 114 license. If 
the burden to obtain this information is placed upon the administrator 
of these royalties, the costs associated with obtaining it will exceed 
the royalties. Id. at 16-20.

C. The Services' Proposals

    Not surprisingly, the services using the section 112 and 114 
statutory licenses vehemently object to the amount and character of 
information sought by RIAA and SoundExchange. Some assert that much of 
the information sought is not generally available and that the cost of 
providing it will drive certain services out of business. There is no 
unanimity among the services as to what information can be provided, 
although they certainly all prefer to provide less rather than more.
    1. Proposals of Broadcasters. Bonneville International Corporation, 
Clear Channel Communications, Cox Radio, Inc., National Association of 
Broadcasters, Susquehanna Radio Corporation, National Religious 
Broadcasters Music License Committee and Salem Communications 
Corporation (collectively ``Radio Broadcasters'') argue that RIAA and 
SoundExchange have the burden of proving why each element of requested 
data is necessary for the collection and distribution of royalties, a 
burden which they assert that RIAA and SoundExchange have failed to 
meet. Comments of Radio Broadcasters at 2 (submitted April 5, 2002). 
They also submit that the Copyright Office should only require 
information necessary to identify a sound recording for purposes of 
royalty distribution and should not require information that enables 
RIAA to monitor the sound recording complement requirements of section 
114. Id. at 17-21. Smaller broadcasters charge that RIAA and 
SoundExchange are seeking data that they know smaller broadcasters 
cannot possibly supply. Comments of Collegiate Broadcasters at 2-3 
(submitted April 5, 2002); Comments of National Federation of Community 
Broadcasters at 3 (submitted April 5, 2002); Comments of Harvard Radio 
Broadcasting Company at 8 (submitted April 5, 2002).
    Indeed, smaller broadcasters--in particular noncommercial 
broadcasters--request that the Copyright Office exempt them from any 
record of use reporting requirements. Comments of College Broadcasters 
at 1-2 (submitted April 5, 2002); Comments of Collegiate Broadcasters 
at 3-4 (submitted April 5, 2002); Comments of Harvard Radio 
Broadcasting Company at 2 (submitted April 5, 2002); Comments of 
Intercollegiate Broadcasting System at 1 (submitted April 5, 2002); 
Comments of Mayflower Hill Broadcasting Company at 2 (submitted April 
5, 2002); Comments of National Federation of Community Broadcasters at 
3 (submitted April 5, 2002); Comments of WOBC at 2 (submitted April 5, 
2002); Comments of Adventist Radio Broadcasters Association at 4 
(submitted April 5, 2002). These commenters note that they possess 
neither the manpower nor the financial resources to assemble and enter 
the data requested by RIAA. Many of these stations depend upon 
volunteer help that cannot be required to undertake the task of 
preparing such detailed reports of use. Their general recommendation is 
that radio stations with ten or fewer paid employees be fully exempted 
from reporting records of use. See, e.g. Comments of National 
Federation of Community Broadcasters at 5 (submitted April 5, 2002); 
Reply Comments of Radio Broadcasters at 35 (submitted April 26, 2002); 
Comments of College Broadcasters at 22 (submitted April 5, 2002).
    Radio Broadcasters submit that only five data fields should be 
required for records of use: (1) Name of the service; (2) sound 
recording title; (3) name of artist; (4) call sign of the station or 
channel; and (5) date of transmission. Comments of Radio Broadcasters 
at 41 (submitted April 5, 2002). They contend that while this 
information may not enable SoundExchange to identify every entity 
entitled to a distribution royalty every time, such perfection is not 
required because the law requires only ``reasonable'' notification of 
use. Id. Radio Broadcasters, as well as other services, contend that 
they cannot supply the additional fields of data requested by RIAA 
because, in many instances, they are not supplied with the information 
from the record label. This is particularly the case with new releases 
where the service receives a promotional sound recording which has yet 
to be placed on an album, receive an ISRC, UPC, catalog number, Track 
Label (P) Line, etc. Even if this information is received at a later 
date or can be later determined, it is unreasonably burdensome to 
require services to seek it out and report it. Comments of Radio 
Broadcasters at 44-54 (submitted April 5, 2002); Comments of 
beethoven.com at passim (submitted April 5, 2002).
    Radio Broadcasters also indicate that there are special reporting 
difficulties associated with musical programming obtained from third-
party syndicators. These syndicators provide little if any information 
regarding the sound recordings that they perform. Requiring the 
broadcaster of this programming to track down the information would be 
unduly burdensome. Comments of Radio Broadcasters at 31-33 (submitted 
April 5, 2002). A similar problem also exists for programming which is 
broadcast live or in a ``free flow'' fashion. Comments of Harvard Radio 
Broadcasting Company at 7 (submitted April 5, 2002).
    2. Proposals of Non-broadcaster Services. Non-broadcaster services 
(i.e., webcasters) are generally prepared to provide more data than 
broadcasters although certainly well short of RIAA's requests. For 
example, David Landis, founder of Ultimate 80's, states that he has 
``spoken with many of my fellow webcasters'' and can provide the 
following data: (1) The name of the service; (2) the channel of the 
program; (3) the type of the program (archived, looped or live); (4) 
the date of the transmission; (5) the time of the transmission; (6) the 
time zone of the origination of the transmission; (7) the duration of 
the transmission (to the nearest second); (8) the sound recording 
title; (9) the featured recording artist; and (10) the musical genre of 
the channel or program (i.e. the station format). Comments of Ultimate 
80's at 4 (submitted April 5, 2002).

[[Page 11521]]

Beethoven.com proposes the same requirements, with the exception of 
providing data on the duration of the transmission of a sound 
recording. Comments of Beethoven.com at 5 (submitted April 5, 2002).
    Websound, Inc. recommends an even more extensive list of 
requirements. It states that it can supply: (1) The name of the 
service; (2) the channel or program, or in the case of transmission of 
an AM or FM signal, the station identifier including the band 
designation and the FCC facility identification number; (3) the type of 
program (archived, looped or live); (4) the date of transmission 
(except for archived programs); (5) the time of transmission (except 
for archived programs); (6) the time zone from which the transmission 
originated; (7) for archived programs, the numeric designation of the 
pace of the sound recording within the order of the program; (8) the 
duration of the transmission (to the nearest second); (9) the sound 
recording title; (10) the ISRC, where available; (11) the release year 
identified in the copyright notice on the album and, in the case of 
compilation albums created for commercial purposes, the release year 
identified in the copyright notice for the individual track; (12) the 
featured recording artist; (13) the 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; (14) the marketing label; (15) the UPC; (16) the catalog 
number; (17) the Track Label (P) Line; (18) the musical genre of the 
channel or program, or in the case of the transmission of an AM or FM 
station, the broadcast station format. Comments of Websound, Inc. at 1-
2 (submitted April 5, 2002).
    Yahoo, Inc. submits that the Copyright Office should adopt only 
minimal reporting requirements for webcasting and broadcast 
retransmissions that would include the call letters of the AM or FM 
station, the format of the station or program (music or talk), the 
genre of the station or program and the cumulative number of listening 
hours to each station during the reporting period. Reply comments of 
Yahoo at 4, 10 (submitted April 26, 2002).
    The Digital Media Association (``DiMA'') argues that much of the 
information sought by RIAA and SoundExchange is redundant and should 
not be required. It suggests that services should be able to choose the 
data fields that they supply provided that the information is 
sufficient to identify the sound recording used. For example, DiMA 
asserts that any one of the following groups of information is, by 
itself, sufficient to identify a sound recording:

(1) Sound recording title, featured recording artist, group, or 
orchestra, the retail album title, and the Track Label (P) Line;
(2) Sound recording title, UPC and the Track Label (P) Line;
(3) ISRC and the Track Label (P) Line.

Comments of DiMA at 4 (submitted April 5, 2002).
    Like Radio Broadcasters, DiMA argues that information sought by 
RIAA to monitor the sound recording complement of section 114 should be 
outside the scope of records of use requirements. Id. at 5; see, also 
Reply comments of Yahoo, Inc. at 2 (submitted April 26, 2002). And with 
regards to reporting requirements for programming provided by third 
parties, DiMA submits that existing third-party contracts should be 
grandfathered from reporting. Id. at 7.

IX. Required Records of Use

A. Consideration of the Comments

    Deciding which data fields should be required for a record of use 
under the section 114 license presents a difficult challenge for the 
Copyright Office. There are many interests which must be considered and 
balanced. On the one hand, there must be sufficient information 
reported so as to accurately identify the sound recordings performed. 
This is necessary so that royalties may be paid to the proper parties 
and to avoid not compensating a large number of performances simply 
because there was insufficient information. On the other hand, the 
burdens associated with reporting information cannot be so high as to 
be unreasonable or to create a situation where many services cannot 
comply.
    It has been asserted by some services throughout this docket that 
for some services any reporting of information regarding performances 
will be too great a burden. While this assertion, if true, might result 
in certain services ceasing operation under the statutory licenses, it 
is not a valid reason to eliminate reporting altogether. The law states 
that the Librarian of Congress must adopt regulations under the section 
114 license to provide copyright owners of sound recordings with 
``reasonable notice'' of the use of their sound recordings. 17 U.S.C. 
114(f)(4)(A).\11\ No provision is made for not adopting regulations in 
certain circumstances, or for exempting certain services from any 
reporting information. As discussed above, certain services--in 
particular noncommercial broadcasters--seek a complete exemption from 
reporting any data. Others are willing to report data for the sound 
recordings they perform themselves, but seek an exemption for sound 
recordings they receive from third-party syndicators. We find no 
authority in the statute to create such exemptions, nor do we find such 
exemptions as constituting ``reasonable notice'' of the performance of 
sound recordings.\12\ In order to avail oneself of the statutory 
licenses, one must report some information. The question is how 
extensive that information should be.
---------------------------------------------------------------------------

    \11\ A similar provision exists for use of the section 112 
license. See 17 U.S.C. 112(e)(4).
    \12\ One could argue that reporting the use of sound recordings 
is not ``reasonable'' if a service cannot under any circumstances 
provide information about the sound recordings. Even if the Office 
were persuaded that some services cannot report any data--which we 
are not--the argument would be unpersuasive. Transmitting a sound 
recording to the public is not something that accidentally or 
unknowingly happens. It takes a significant amount of decision 
making and action to select and compile sound recordings, and a 
significant amount of technical expertise to make the transmissions. 
It is not unreasonable to require those engaged in such a 
sophisticated activity to collect and report a limited amount of 
data regarding others' property which they are using for their 
benefit. While making and reporting a record of use is undoubtedly 
an additional cost of transmitting sound recordings to the public, 
it is not an unreasonable one.
---------------------------------------------------------------------------

    In principle, one might imagine that recordkeeping for many 
webcasters could be a simple matter. Webcasting necessarily requires 
use of computers for storage and transmission of the performances of 
sound recordings. Thus, webcasters might be expected to have the 
requisite resources and sophistication to maintain and transmit 
detailed reports identifying each and every sound recording they 
transmit, as well as the number of performances transmitted.
    If webcasters have the sophistication and equipment to facilitate 
the recordation and reporting of information, the webcasting statutory 
license could offer an opportunity to ensure that each copyright owner 
of each sound recording performed by webcasters will be compensated for 
exactly his or her share of the royalties generated by the statutory 
license. Because SoundExchange could, in theory, obtain perfect 
information about the number of performances of each sound recording, 
it could divide the total royalty pool by the total number of 
performances of all sound recordings, and then allocate to each sound 
recording the corresponding share based on the number of times it is 
performed.
    However, many webcasters assert that the burden of keeping 
comprehensive

[[Page 11522]]

records would drive them out of business. See, e.g., Reply Comments of 
a United Group of Webcasters at 3; Comments of Mayflower Hill 
Broadcasting Corp. at 1-2; Comments of Collegiate Broadcasters, Inc. at 
2-3; Reply Comment of Harvard Radio Broadcasting Company at 6-7. We 
recognize that there will be some burden involved in reporting 
information on each sound recording performed, and as more information 
is required for each sound recording, the burden becomes greater. 
Although the ultimate goal is to require comprehensive reporting on 
each performance a webcaster makes, that goal is not achievable at this 
time. Therefore, the regulations announced today will not require year-
round reporting, but only reporting for certain periods during the 
year, and the information that webcasters must provide will be less 
comprehensive than copyright owners desire.
    In selecting the data fields described below, the Copyright Office 
was guided by several principles. First, we have not adopted any data 
fields proposed by RIAA which are not for the purpose of making royalty 
distributions under the section 112 and 114 licenses. RIAA has 
requested data for purposes of monitoring the sound recording 
performance complement in 17 U.S.C. 114(j)(13) (Start Date and Time of 
the Sound Recording's Transmission),\13\ for monitoring requirements 
regarding the duration of programming 17 U.S.C. 114(d)(2)(C)(iii) (Type 
of Program), and to assist in determining whether a service is 
interactive (Influence Indicator). RIAA points to the Copyright 
Office's decision in the preexisting subscription service rulemaking to 
adopt reporting requirements designed to permit monitoring of the sound 
recording performance complement, 63 FR 34289 (June 24, 1998), and 
argues that the decision must be applied in this docket. Reply Comments 
of RIAA at 15 (submitted April 26, 2002). In that rulemaking proceeding 
we said:
---------------------------------------------------------------------------

    \13\ RIAA also states that it may use data regarding the Start 
Date and Time of the Sound Recording's Transmission for distribution 
purposes when audience size is not reported. Comments of RIAA at 52 
(submitted April 5, 2002). Reporting of the number of performances 
of a sound recording is discussed infra, and data regarding the 
Start Date and Time of the Sound Recording's Transmission is not 
necessary.

    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. 
Devel. Corp. 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 ``willfully intended'' to avoid the numerical 
limitations, a pattern of conduct might provide evidence of the 
---------------------------------------------------------------------------
requisite intent.

63 FR at 34294.
    The reasoning for requiring performance complement data in the 
preexisting subscription service rulemaking does not necessarily apply 
with the same force to these interim regulations. While there is 
evidence of legislative intent for services to report performance 
complement data, as well as other data related to compliance with the 
terms of the license, such data is not useful when it is limited to 
only two weeks per calendar quarter. See discussion of reporting 
periods, infra. Given that reporting of such limited data will not 
serve the purpose of monitoring statutory compliance and given the 
burden upon services for reporting the data, we are not requiring it at 
this time. The matter may be further addressed in the final regulations 
in this docket.
    The second principle guiding our selection of data fields is a 
cost/benefit analysis. The Office has chosen to adopt interim 
regulations at this time to afford services an ample period of time to 
adjust to the process of reporting. It is evident from the statements 
made by certain services at the meetings held by the Office in this 
docket that in many cases up to now little or no gathering of data has 
taken place. Given this notable lack of activity, imposition of 
extensive and detailed reporting requirements at this time could 
increase the instances of noncompliance by services unprepared to 
report data and could substantially raise the reporting error rates for 
services that do fully comply. Consequently, the Office has chosen to 
require a minimal level of reporting at this time that will permit the 
distribution of royalties (albeit imperfectly). These baseline 
requirements will be revisited in the final regulations after the 
Copyright Office has had sufficient time to assess their effectiveness 
and consider ways in which data reporting may be improved.\14\
---------------------------------------------------------------------------

    \14\ While the data fields required by these interim regulations 
are the baseline requirements, there is no prohibition on services 
reporting additional data. As discussed above, webcaster services 
appear capable of providing more data than broadcaster services. 
Delivery of additional data is encouraged, and services wishing to 
do so should contact SoundExchange to make arrangements for 
providing the additional information.
---------------------------------------------------------------------------

    By applying these principles to the 18 data fields requested by 
RIAA and the fields requested by AFM and AFTRA, the Copyright Office 
has settled upon the fields which must be reported by services using 
the section 112 and 114 statutory licenses. With respect to RIAA's 
requests, we are not requiring Start Date and Time of the Sound 
Recording's Transmission, Type of Program and Influence Indicator 
because these data fields are for purposes of monitoring compliance 
with the limitations of the section 114 license. As discussed above, 
requiring these fields would be unnecessarily burdensome especially in 
light of the fact that the two-week-per-calendar-quarter reporting 
requirement renders the information collected from these fields of 
little or no value in enforcing the requirements of the section 114 
license.
    The Office also has not chosen to require reporting of the Track 
Label (P) Line, the Duration of the Sound Recording, the Catalog 
Number, the UPC and the Release Year, the reporting of which would be 
unduly burdensome at this time. As Radio Broadcasters stated in their 
comments, these pieces of information are frequently not provided to 
services until well after the initial transmissions of the sound 
recordings. While the information is discoverable at a later date, 
researching it and revising prior records of use would involve 
significant costs.
    Finally, we are not adopting the proposal of AFM and AFTRA to 
report data regarding nonfeatured vocalists and musicians. Many sound 
recordings have numerous nonfeatured musicians and vocalists which 
would require large amounts of data entry into a report of use. 
Entering lists of names of performers into a report of use would be a 
prohibitively costly undertaking for services that would raise the 
likelihood of noncompliance and error rates in reporting. Furthermore, 
we are focused upon identifying and reporting the use of sound 
recordings, not performers associated with the sound recordings. AFM 
and AFTRA's proposal is not consistent with the goal of this interim

[[Page 11523]]

regulation to establish merely baseline reporting requirements and 
cannot be adopted at this time.

B. The Record of Use Reporting Regime

    In this section the Copyright Office sets forth the reporting 
regime for the use of sound recordings under the section 112 and 114 
statutory licenses.\15\ In the interest of regulatory flexibility and 
providing services with the opportunity to reduce their reporting 
burden, we are prescribing a reporting regime that, in two instances, 
permits the entry of a single amount of data in lieu of additional 
separate categories of data identifying the sound recording and its 
use. The reporting regime is as follows:

    \15\ As discussed, infra, the required data fields for a record 
of use under the section 114 license are the same for a record of 
use under the section 112 license. Services using both licenses only 
need report the required data fields once for each sound recording.
---------------------------------------------------------------------------

1. Name of Service
2. Transmission Category
3. Featured Artist
4. Sound Recording Title
5. Sound Recording Identification
    Album Title
    Marketing Label
     OR
    International Standard Recording Code (ISRC)
6. Total Performances
    Aggregate Tuning Hours
    Channel or Program Name
    Play Frequency
     OR
    Actual Total Performances
    Under this reporting regime, a service may report as few as six 
items of data per sound recording or as many as eight depending upon 
the amount of reporting data available to each service. A service that 
has ISRC data and Actual Total Performances data for a sound recording 
need only report its Name, the Transmission Category, the Featured 
Artist, the Sound Recording Title, ISRC, and Actual Total Performances 
for the sound recording.\16\ A service which has the ISRC but not the 
Actual Total Performances data, may report the ISRC and in addition 
must report its Name, Transmission Category, Featured Artist, Sound 
Recording Title, Aggregate Tuning Hours, Channel or Program Name, and 
Play Frequency. Likewise, a service which has Actual Total Performances 
data but not ISRC may report Actual Total Performances and then must 
report its Name, Transmission Category, Featured Artist, Sound 
Recording Title, Album Title, and Marketing Label. And a service which 
has neither ISRC nor Actual Total Performances data for a sound 
recording must report its Name, Transmission Category, the Featured 
Artist, Sound Recording Title, Album Title, Marketing Label, Aggregate 
Tuning Hours, Channel or Program Name, and Play Frequency.
---------------------------------------------------------------------------

    \16\ Simply because a service has the ISRC and/or Actual Total 
Performances for a sound recording does not mean the service must 
report this data in lieu of the alternative categories. The purpose 
of reporting ISRC and/or Actual Total Performances is to reduce the 
categories of data that a service must report for each sound 
recording. If, for example, a service possesses the ISRC for a sound 
recording but prefers instead to report the Sound Recording Title, 
Album Title and Marketing Label instead, it is free to do so.
---------------------------------------------------------------------------

C. Details of the Data Fields for a Record of Use

    1. Name of Service. The Name of Service is a mandatory reporting 
category. The Name of Service is the full legal name of the service 
making the transmissions.
    2. Transmission Category. The Transmission Category is a mandatory 
reporting category. Because the various statutory licenses contained in 
section 114 have differing royalty structures, and because many 
services frequently operate under more than one license, it is 
necessary to identify the category under which the performance of a 
sound recording is made. Services shall use the following category 
codes to identify each sound recording performed:
---------------------------------------------------------------------------

    \17\ Transmissions covered by these provisions include 
simultaneous Internet retransmissions by non-Corporation for Public 
Broadcasting noncommercial broadcasters of over-the-air AM or FM 
broadcasts by the same radio station and other Internet 
transmissions of non-Corporation for Public Broadcasting 
noncommercial broadcasters, including up to two side channels of 
programming consistent with the mission of the station, and are 
subject to a section 114 royalty of 0.02 cents per performance.
    \18\ Transmissions covered by this provision include Internet 
transmissions on other side channels of programming by non-
Corporation for Public Broadcasting noncommercial broadcasters and 
are subject to a section 114 royalty of 0.07 cents per performance.

------------------------------------------------------------------------
            Category code                         Description
------------------------------------------------------------------------
A....................................  Eligible nonsubscription
                                        transmission other than
                                        broadcast simulcasts and
                                        transmissions of non-music
                                        programming.
B....................................  Eligible nonsubscription
                                        transmission of broadcast
                                        simulcast programming not
                                        reasonably classified as news,
                                        talk, sports or business
                                        programming.
C....................................  Eligible nonsubscription
                                        transmission of non-music
                                        programming reasonably
                                        classified as news, talk, sports
                                        or business programming.
D....................................  Eligible nonsubscription
                                        transmission by a non-
                                        Corporation for Public
                                        Broadcasting noncommercial
                                        broadcaster making transmissions
                                        covered by 37 CFR 261.3(a)(2)(i)
                                        and (ii).\17\
E....................................  Eligible nonsubscription
                                        transmission by a non-
                                        Corporation for Public
                                        Broadcasting noncommercial
                                        broadcaster making transmissions
                                        covered by 37 CFR
                                        261.3(a)(2)(iii).\18\
F....................................  Eligible nonsubscription
                                        transmission by a small
                                        webcaster operating under an
                                        agreement published in the
                                        Federal Register pursuant to the
                                        Small Webcaster Settlement Act.
G....................................  Eligible nonsubscription
                                        transmission by a noncommercial
                                        broadcaster operating under an
                                        agreement published in the
                                        Federal Register pursuant to the
                                        Small Webcaster Settlement Act.
H....................................  Transmission other than broadcast
                                        simulcasts and transmissions of
                                        non-music programming made by an
                                        eligible new subscription
                                        service.
I....................................  Transmission of broadcast
                                        simulcast programming not
                                        reasonably classified as news,
                                        talk, sports or business
                                        programming made by an eligible
                                        new subscription service.
J....................................  Transmission of non-music
                                        programming reasonably
                                        classified as news, talk, sports
                                        or business programming made by
                                        an eligible new subscription
                                        service.
K....................................  Eligible transmission by a
                                        business establishment service
                                        making ephemeral recordings.
------------------------------------------------------------------------

    3. Featured Artist. The Featured Artist category is a mandatory 
reporting category for each sound recording. Each service must provide 
the name of the featured artist for each sound recording it transmits 
during the relevant reporting period. If the featured artist is an 
individual or an entity such as a band, the full name must be reported. 
In those instances where the songwriter and the featured artist are 
different, care must be taken in reporting only the featured artist. 
For example, if the sound recording is a performance of the Boston 
Philharmonic Orchestra of a

[[Page 11524]]

work by Mozart, the featured artist should be reported as the Boston 
Philharmonic Orchestra, not Mozart. Likewise, where the sound recording 
performed is taken from an album that contains various featured artists 
(i.e., a compilation), it is not acceptable to report the artist as 
``Various.'' The featured artist of the particular sound recording 
track performed must be reported.
    4. Sound Recording Title. As with the featured artist, care must be 
taken in accurately reporting the title of the sound recording (i.e., 
the song title). It is not acceptable to report the name of the album 
from which the sound recording is taken.
    5. Sound Recording Identification:
    a. International Standard Recording Code (ISRC). The International 
Standard Recording Code (``ISRC'') is the unique identifier that 
identifies each version of a sound recording. It is imbedded in 
promotional and commercially released sound recordings and can be read 
by currently available software. A service may report the ISRC of a 
sound recording in lieu of the Sound Recording Title, Album Title and 
Marketing Label. However, identification of the Featured Artist is 
still required. The purpose of this requirement is to permit 
verification of the correct ISRC by allowing SoundExchange to identify 
and correct reports where the Featured Artist does not match the 
information associated with the ISRC.
    b. For those services that do not report the ISRC for a sound 
recording, the Album Title and Marketing Label must be reported.
    (i) Album Title. According to the comments and the May 10, 2002, 
public meeting, the title of an album on which a particular sound 
recording appears may not be determined at the time the sound recording 
is released to broadcasters and webcasters for performance; or the 
album title information may not be supplied by the recording label. 
Consequently, services need only report the album title for a 
particular sound recording when they have that information in their 
possession, or it has been supplied by the recording label, at or 
before the time of performance of the sound recording.
    Those services which copy sound recordings into databases for 
subsequent transmission to their users and do not enter the album title 
into that database are nonetheless responsible for providing the album 
title if that information was in their possession, or been supplied to 
them, at or before the time the sound recording was performed.
    (ii) Marketing Label. The Marketing Label is the name of the 
company that markets the album which contains the sound recording. As 
with album titles, it is sometimes the case that services do not 
possess, or are not supplied with, the name of the marketing label for 
the sound recording. Services need only report the marketing label if 
that information was in their possession, or was supplied to them by 
the marketing label, at or before the time the performance of the sound 
recording is made. Discarding marketing label information, or not 
including it in the database into which the sound recording is copied, 
does not relieve the service of the obligation to report the 
information.
    6. Total Performances. Services must provide the total number of 
performances of each sound recording during the relevant reporting 
period. Section 261.2, 37 CFR, defines a ``performance'' as:

    [E]ach instance in which any portion of a sound recording is 
publicly performed to a Listener by means of a digital audio 
transmission or retransmission (e.g. the delivery of any portion of 
a single track from a compact disc to one Listener) but excluding 
the following:
    (1) A performance of a sound recording that does not require a 
license (e.g. the sound recording is not copyrighted);
    (2) A performance of a sound recording for which the service has 
previously obtained a license from the Copyright Owner of such sound 
recording; and
    (3) An incidental performance that both: (i) Makes no more than 
incidental use of sound recordings, including, but not limited to, 
brief musical transitions in and out of commercials or program 
segments, brief performances during news, talk and sports 
programming, brief background performances during disk jockey 
announcements, brief performances during commercials of sixty 
seconds or less in duration, or brief performances during sporting 
or other public events; and
    (ii) Other than ambient music that is background at a public 
event, does not contain an entire sound recording and does not 
feature a particular sound recording of more than thirty seconds (as 
in the case of a sound recording used as a theme song).

See, 69 FR 5693 (February 6, 2004).
    Certain services argue that it is not possible, in many 
circumstances, to keep track of the number of performances of a sound 
recording. See, e.g. Comments of Harvard Broadcasting Radio Company at 
2 (submitted September 30, 2002); Comments of NRBMLC and Salem 
Communications Corp. at 4 (submitted September 30, 2002); Comments of 
Collegiate Broadcasters, Inc. at 6-7 (submitted September 30, 2002). 
Obviously, repeated failures by multiple services to report the number 
of performances of a sound recording will subvert the purpose of the 
recordkeeping requirement in that many sound recordings will be under-
compensated or not compensated at all from the section 114 and 112 
royalties. The Copyright Office is therefore permitting services to 
identify the total number of performances of a sound recording during 
the reporting period in one of two ways: Actual Total Performances or 
Aggregate Tuning Hours, Channel or Program Name, and Play Frequency.
    a. Actual Total Performances. For those services that possess the 
technological ability to identify accurately the number of times that a 
sound recording is performed (such as those that generate intended play 
lists), the number of performances must be reported in the performance 
data field. The data reported in this field may be for each time the 
sound recording is transmitted or ``played'' during the reporting 
period, or for all Actual Total Performances of the sound recording 
during the relevant reporting period.\19\
---------------------------------------------------------------------------

    \19\ If a service chooses to enter the Actual Total Performance 
data for each time the sound recording is transmitted or ``played,'' 
it will be required to repeat the full data for the sound recording 
to account for all transmissions or ``playings'' of the sound 
recording during the relevant accounting period.
---------------------------------------------------------------------------

    b. For those services that lack the technological ability to report 
the actual number of performances, or choose not to report such 
information, the Aggregate Tuning Hours, Channel or Program Name, and 
Play Frequency information must be reported for each sound recording.
    (i) Aggregate Tuning Hours. Aggregate Tuning Hours (``ATH'') are a 
standard measure of listenership that can be used to estimate the 
Actual Total Performances of sound recordings. Aggregate Tuning Hours 
measure the total number of listener hours by all who have accessed the 
service during a given period of time. According to certain 
broadcasters, ATH for AM/FM radio stations are readily calculable by a 
service. See Joint Reply Comments of Radio Broadcasters at 26 
(submitted April 26, 2002).
    Aggregate Tuning Hours do not, by themselves, provide sufficient 
information on which to estimate the Total Performances of a sound 
recording. However, when combined with information regarding the 
Channel or Program Name on which the sound recording appeared and the 
Play Frequency, Aggregate Tuning Hours will permit SoundExchange to 
estimate the Total Performances for a sound recording during the 
reporting period.

[[Page 11525]]

See Comments of SoundExchange, Inc. at 17 n.6 (submitted September 30, 
2002). Services electing to report Aggregate Tuning Hours for a sound 
recording in lieu of the Actual Total Performances must report the 
Aggregate Tuning Hours for the two-week reporting period selected by 
the service for the channel or program on which the sound recording was 
performed. If the same sound recording was performed on more than one 
channel or program, a complete separate record of use must be reported 
for each channel or program. Under no circumstances may a service fail 
to report any data in the performance data field when submitting a 
record of use of a sound recording.
    (ii) Channel or Program Name. The Channel Name for an AM or FM 
radio station should be the FCC facility identification number (e.g., 
WABC-FM). For all other transmissions, the Channel or Program Name 
should be the name assigned by the service (e.g., ``Oldies Hits,'' 
``70's Rock''), ``provided that if a program is generated as a random 
list of sound recordings from a predetermined list, the channel or 
program must be a unique identifier differentiating each user's 
randomized playlist from all other users' randomized playlists.'' 67 FR 
5761, 5766 (February 7, 2002).
    (iii) Play Frequency. Aggregate Tuning Hours and Channel or Program 
Name are not sufficient, by themselves, to permit an equitable 
distribution of royalties collected under the section 112 and 114 
licenses. A sound recording which is played 100 times during the two-
week reporting period is of greater value and should receive a larger 
distribution of royalties than a sound recording played only once 
during that same period. Consequently, it is necessary for services 
that elect not to report Actual Total Performances to report the number 
of times each sound recording is played during the two week reporting 
period.
    Play Frequency is different than performance data. According to the 
definition of ``performance'' in 37 CFR 262.2, a sound recording is 
performed each time a listener receives at least some portion of the 
sound recording. A sound recording that is received in some part by 10 
listeners constitutes 10 performances of that sound recording. In 
contrast, ``played'' simply means the overall number of times a sound 
recording is offered, regardless of the number of listeners receiving 
the sound recording. If a particular sound recording is offered to 
listeners on a particular channel or program only once during the two-
week reporting period, then it is only ``played'' once and the Play 
Frequency is one. Likewise, if the sound recording is offered 10 times 
during the two-week reporting period, then it is ``played'' ten times 
and the Play Frequency is 10.

D. Required Data Fields for a Record of Use Under the Section 112 
License

    Section 112 of the Copyright Act contains a statutory license that 
permits services making digital audio transmissions to make ephemeral 
copies of sound recordings necessary to the transmission process. Some 
services operate under both section 114 and section 112 in transmitting 
sound recordings, while some do not make use of the section 114 
licenses because their performances of sound recordings are exempted by 
the Copyright Act. See 17 U.S.C. 114(1)(C)(iv). These business 
establishment services, however, make ephemeral copies under the 
section 112 statutory license.
    Section 112(e)(4) requires the Copyright Office to establish 
requirements by which copyright owners receive notice and records of 
use of the ephemeral copies of their sound recordings. The RIAA and 
SoundExchange, Inc. have requested that the Office require detailed 
records of each ephemeral copy of a sound recording made during the 
transmission of the performance. Comments of RIAA at 61-62 (submitted 
April 5, 2002); Comments of SoundExchange at Tab A, p. 11 (submitted 
September 30, 2002). Broadcasters counter that detailed reporting of 
the number of ephemeral copies made is unnecessary because of the 
direct link between the royalty fees paid by nonsubscription services 
for the section 114 license and the section 112 license; the ephemeral 
royalty rate for nonsubscription services is a percentage of the 
section 114 fee for performances. The number of ephemeral copies made 
is irrelevant because the value of those copies is tied to the value of 
the performance of the sound recording. Joint comments of Radio 
Broadcasters at 57-58 (submitted April 5, 2002). Furthermore, 
broadcasters assert that tracking the number of ephemeral copies made 
of a sound recording to facilitate its performance is a virtually 
impossible task and will result in a high error rate if reporting is 
required. Id. at 58.
    It is reasonable to conclude that the value of a license to make 
ephemeral copies of a sound recording for the purpose of facilitating a 
transmission that results in a performance will depend upon the value 
of the performances of that sound recording. The Copyright Office is 
persuaded that records of performances of sound recordings are a sound 
proxy for the value of ephemeral copies made under the section 112 
license. Our decision is bolstered by two factors. First, in the recent 
nonsubscription service CARP proceeding, RIAA advocated that the 
royalty fee for section 112 be a percentage of the section 114 fee, 
apparently recognizing the difficulty of assessing the independent 
value of ephemeral copies. RIAA's Proposed Findings of Fact and 
Conclusions of Law at ]244 (submitted December 3, 2001). Second, while 
RIAA submits that SoundExchange may choose to distribute section 112 
royalties on the basis of the number of copies, it may not do so. See 
37 CFR 261.4(a) and (h).
    For services that make transmissions under one or more of the 
section 114 licenses, there is no need to keep separate records for 
ephemeral copies made under section 112. Those services are required to 
submit only the single data file for performances of sound recordings 
and need not submit a second data file for ephemeral copies. However, 
even though the service is not required to report a separate data file, 
it must identify to the receiving and designated agents during each 
reporting period that it has made use of the section 112 license and 
that the data file it is submitting applies to both licenses.
    For business establishment services that do not make use of the 
section 114 license but do make use of the section 112 license, 
performance data shall serve as the records of use for section 112. All 
the requirements prescribed by this regulation for the section 114 
license records of use (data fields, formatting, delivery, etc.) apply 
to submission of section 112 records of use. Such services must 
identify to the receiving and designated agents for each reporting 
period that the data they are submitting is for the use of the section 
112 license and not the section 114 license.

E. Sound Recordings Not Licensed Under Section 112/114

    Many services, particularly those performing older works, transmit 
sound recordings that are not under federal copyright protection or 
whose term has expired. Also, many services may perform works that are 
in the public domain, or for which no copyright is claimed, or may 
directly license certain sound recordings from their owners. Services 
performing these works may report records of their usage but are not 
required to do so. Services are cautioned, however, that failure to 
report a sound recording which is under copyright protection may 
preclude reliance upon the section 114 and section 112 statutory 
licenses for the

[[Page 11526]]

performance and/or making of ephemeral copies of the work.

X. The Reporting Periods

    As discussed above, the reporting requirements announced today are 
adopted on an interim basis while the Copyright Office continues the 
rulemaking process to produce final regulations. The interim 
regulations apply to performances on a prospective basis. It is 
anticipated that the Office will address the status of performances 
made prior to the effective date of these interim regulations at a 
later time. In the meantime, services should preserve those records of 
performances in their possession dating back to the effective date of 
the section 112 and 114 statutory licenses.
    For the same reasons that the Office considers it advisable to 
phase in the reporting process, we have determined that, at this stage, 
it is best to require periodic reporting of sound recording 
performances rather than year-round census reporting. Once final 
regulations are implemented, year-round census reporting is likely to 
be the standard measure rather than the periodic reporting that will 
now be permitted on an interim basis.
    For the period beginning with the effective date of this interim 
regulation until superseded by further regulations, services making use 
of the section 114 license (other than preexisting subscription 
services governed by 37 CFR 270.1, 270.2, and 270.4) and the section 
112 license shall maintain records, as provided above, for each sound 
recording performed for a period of no less than two weeks (two periods 
of seven consecutive days) for each quarter of the calendar year.
    The two weeks reported need not be consecutive, although a service 
may choose that option. Likewise, each week period need not begin on a 
Sunday, but may begin on any day of the week and then run for a total 
of seven consecutive days. The two weeks chosen for reporting should 
reflect as much as possible the programming typically offered by the 
service during the calendar quarter. Services that wish to report 
records of use for periods beyond the two weeks of each calendar 
quarter are encouraged to consult with SoundExchange on the feasibility 
of doing so and, if SoundExchange concurs, to report for longer periods 
of time.
    The first reporting period shall begin on April 1, 2004,\20\ which 
will mark the first period under these regulations that reports of use 
must be made. Reports of use thereafter will be due for each calendar 
quarter as described above until this interim regulation is superceded 
by final regulations.
---------------------------------------------------------------------------

    \20\ This does not mean that services will be required to keep 
records commencing April 1. Rather, April 1 is the beginning of the 
first three-month calendar quarter during which services must keep 
records for two weeks.
---------------------------------------------------------------------------

    A separate report of use is required for each calendar quarter for 
each statutory license used by the service.

XI. Notification of Use of the Statutory Licenses

    The Copyright Office proposed in the NPRM certain amendments to the 
regulations contained in former 37 CFR 201.35 governing notice of use 
of statutory licenses. Unlike records of use, there is agreement on 
some of the proposed changes offered in the NPRM. Commenters agree that 
the Office should prescribe a single standard form for both the section 
112 and 114 licenses and generally agree to the prototype form 
currently posted on the Copyright Office Web site at: http://www.loc.gov/copyright/forms/form112-114nou.pdf. See, e.g. Comments RIAA 
at 17-19 (submitted April 5, 2002); Joint Reply of Radio Broadcasters 
at 32-34 (submitted April 26, 2002). With respect to the form, RIAA 
requests that the services be identified in the exact manner in which 
they appear in the statute (e.g. ``Eligible non-subscription 
transmission service'' as opposed to ``Non-subscription transmission 
service''), whereas broadcasters request ``plain English'' descriptions 
of the various services identified in the form. Joint Reply of Radio 
Broadcasters at 33 (submitted April 26, 2002); Comments of Collegiate 
Broadcasters at 5-6 (submitted April 5, 2002). We are accepting RIAA's 
suggestion to conform the definitions. While broadcasters' suggestion 
for ``plain English'' sounds reasonable in theory, it is a considerable 
challenge to craft definitions that are sufficiently colloquial to 
satisfy the goal of ``plain English,'' yet remain technically accurate. 
Unfortunately, broadcasters did not provide any language for the Office 
to consider, and we therefore are not adopting their suggestion.
    Commenters also agree that new notices of intent to use the 
licenses should be filed to update information from previously 
submitted notices and that notices should be maintained in a public 
file at the Copyright Office. Broadcasters, however, request that if 
new notices are required to be filed, the $20 filing fee be waived for 
those who have previously submitted notices and paid the fee. Joint 
Reply of Radio Broadcasters at 32 (submitted April 26, 2002); Comments 
of Collegiate Broadcasters at 7 (submitted April 5, 2002). The 
Copyright Office must recoup its costs for administering the section 
112 and 114 statutory licenses; therefore it cannot waive the fee. 
Moreover, the $20 fee is not unreasonable or unduly burdensome. Part of 
the cost associated with the licenses is maintaining the public files 
for the notices and the Office shall continue that practice. 
Unfortunately, the Office is not prepared at this time to accept the 
submission of notices and fees electronically, and for the time being 
we will continue our practice of accepting only hard copies of notices 
and payment. It is anticipated that this may change in the future, and 
services using the section 112 and 114 licenses are encouraged to check 
the Office Web site for updates on this matter.
    The Office stated in the NPRM that it was considering discontinuing 
its practice of posting copies of all notices on its Web site and 
requiring that notices be filed jointly with, or in the alternative 
only with, the collectives designated through the CARP process to 
receive and distribute royalties under the section 112 and 114 
licenses. RIAA opposes elimination of the practice of posting notices 
on the Office Web site, arguing that the notices should be available to 
all copyright owners and not just those in the Washington, DC, area. 
Comments of RIAA at 20-21 (submitted April 5, 2002). The Office will 
post a list of names of those persons and entities that have filed a 
notice, but we will not continue to post the notices themselves. 
Scanning and posting the full notices is extremely costly and 
burdensome. When we institute our electronic filing system, we will 
revisit the issue. In the meantime, persons interested in viewing the 
notices must contact the Copyright Office.
    None of the commenters favor submission of notices to the royalty 
collectives designated by the CARP process, either solely or jointly. 
See, e.g. Comments of the RIAA at 22-23 (submitted April 5, 2002); 
Joint Reply of Radio Broadcasters at 33 (submitted April 26, 2002). 
Consequently, the Office will not adopt such a requirement.
    Updated notices, along with the $20 filing fee specified in Sec.  
201.3(e) of title 37 of the Code of Federal Regulations, shall be filed 
with the Licensing Division of the Copyright Office no later than July 
1, 2004. The Office stated in the NPRM that it was considering 
requiring periodic updating of notices, perhaps on an annual basis. We 
are declining at this time to adopt a regular

[[Page 11527]]

specified time period, preferring to gain experience in determining 
whether mandatory periodic updates by all services are necessary. The 
matter will be further addressed in the final regulations.
    Notices of intent to use the section 112 and/or 114 licenses by new 
subscription services will still be required to be filed prior to the 
date of first transmission or the making of an ephemeral recording, and 
services will continue to be required to update the notice within 45 
days of change in the information reported. Notices for new 
subscription services must be submitted to the Licensing Division of 
the Copyright Office accompanied by the filing fee specified in 37 CFR 
201.3(e).

List of Subjects in 37 CFR Parts 201 and 270

    Copyright, Sound recordings.

Interim Regulation

0
In consideration of the foregoing, the Copyright Office amends part 201 
of 37 CFR and adds part 270 to 37 CFR to read as follows:
0
1. The authority citation for part 201 continues to read as follows:

    Authority: 17 U.S.C. 702.

PART 201--GENERAL PROVISIONS


Sec. Sec.  201.35 through 201.37  [Removed and Reserved]

0
2. Remove and reserve Sec. Sec.  201.35 through 201.37.

0
3. Add part 270 to 37 CFR Chapter II, subchapter B, to read as follows:

PART 270--NOTICE AND RECORDKEEPING REQUIREMENTS FOR STATUTORY 
LICENSES

Sec.
270.1 Notice of use of sound recordings under statutory license.
270.2 Reports of use of sound recordings under statutory license for 
preexisting subscription services.
270.3 Reports of use of sound recordings under statutory license for 
nonsubscription transmission services, preexisting satellite digital 
audio radio services, new subscription services and business 
establishment services.
270.4 Designated collection and distribution organizations for 
records of use of sound recordings under statutory license.

    Authority: 17 U.S.C. 702.


Sec.  270.1  Notice of use of sound recordings under statutory license.

    (a) General. This section prescribes rules under which copyright 
owners shall receive notice of use of their sound recordings when used 
under either section 112(e) or 114(d)(2) of title 17, United States 
Code, or both.
    (b) Definitions. (1) A Notice of Use of Sound Recordings under 
Statutory License is a written notice to sound recording copyright 
owners of the use of their works under section 112(e) or 114(d)(2) of 
title 17, United States Code, or both, and is required under this 
section to be filed by a Service in the Copyright Office.
    (2) A Service is an entity engaged in either the digital 
transmission of sound recordings pursuant to section 114(d)(2) of title 
17 of the United States Code or making ephemeral phonorecords of sound 
recordings pursuant to section 112(e) of title 17 of the United States 
Code or both. For purposes of this section, the definition of a Service 
includes an entity that transmits an AM/FM broadcast signal over a 
digital communications network such as the Internet, regardless of 
whether the transmission is made by the broadcaster that originates the 
AM/FM signal or by a third party, provided that such transmission meets 
the applicable requirements of the statutory license set forth in 17 
U.S.C. 114(d)(2). A Service may be further characterized as either a 
preexisting subscription service, preexisting satellite digital audio 
radio service, nonsubscription transmission service, new subscription 
service, business establishment service or a combination of those:
    (i) A preexisting subscription service is a service that performs 
sound recordings by means of noninteractive audio-only subscription 
digital audio transmissions, and was in existence and making such 
transmissions to the public for a fee on or before July 31, 1998, and 
may include a limited number of sample channels representative of the 
subscription service that are made available on a nonsubscription basis 
in order to promote the subscription service.
    (ii) A preexisting satellite digital audio radio service is a 
subscription satellite digital audio radio service provided pursuant to 
a satellite digital audio radio service license issued by the Federal 
Communications Commission on or before July 31, 1998, and any renewal 
of such license to the extent of the scope of the original license, and 
may include a limited number of sample channels representative of the 
subscription service that are made available on a nonsubscription basis 
in order to promote the subscription service.
    (iii) A nonsubscription transmission service is a service that 
makes noninteractive nonsubscription digital audio transmissions that 
are not exempt under section 114(d)(1) of title 17 of the United States 
Code and are made as part of a service that provides audio programming 
consisting, in whole or in part, of performances of sound recordings, 
including transmissions of broadcast transmissions, if the primary 
purpose of the service is to provide to the public such audio or other 
entertainment programming, and the primary purpose of the service is 
not to sell, advertise, or promote particular products or services 
other than sound recordings, live concerts, or other music-related 
events.
    (iv) A new subscription service is a service that performs sound 
recordings by means of noninteractive subscription digital audio 
transmissions and that is not a preexisting subscription service or a 
preexisting satellite digital audio radio service.
    (v) A business establishment service is a service that makes 
ephemeral phonorecords of sound recordings pursuant to section 112(e) 
of title 17 of the United States Code and is exempt under section 
114(d)(1)(C)(iv) of title 17 of the United States Code.
    (c) Forms and content. A Notice of Use of Sound Recordings Under 
Statutory License shall be prepared on a form that may be obtained from 
the Copyright Office website or from the Licensing Division, and shall 
include the following information:
    (1) The full legal name of the Service that is either commencing 
digital transmissions of sound recordings or making ephemeral 
phonorecords of sound recordings under statutory license or doing both.
    (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.
    (4) Information on how to gain access to the online website or 
homepage of the Service, or where information may be posted under this 
section concerning the use of sound recordings under statutory license.
    (5) Identification of each license under which the Service intends 
to operate, including identification of each of the following 
categories under which the Service will be making digital transmissions 
of sound recordings: preexisting subscription service, preexisting 
satellite digital audio radio service, nonsubscription transmission 
service, new subscription service or business establishment service.

[[Page 11528]]

    (6) The date or expected date of the initial digital transmission 
of a sound recording to be made under the section 114 statutory license 
and/or the date or the expected date of the initial use of the section 
112(e) license for the purpose of making ephemeral phonorecords of the 
sound recordings.
    (7) Identification of any amendments required by paragraph (f) of 
this section.
    (d) Signature. The Notice shall include the signature of the 
appropriate officer or representative of the Service that is either 
transmitting the sound recordings or making ephemeral phonorecords of 
sound recordings under statutory license or doing both. The signature 
shall be accompanied by the printed or typewritten name and the title 
of the person signing the Notice and by the date of the signature.
    (e) Filing notices; fees. The original and three copies shall be 
filed with the Licensing Division of the Copyright Office and shall be 
accompanied by the filing fee set forth in Sec.  201.3(c) of this 
chapter. Notices shall be placed in the public records of the Licensing 
Division. The address of the Licensing Division is: Library of 
Congress, Copyright Office, Licensing Division, 101 Independence 
Avenue, SE, Washington, DC 20557-6400.
    (1) A Service that, prior to April 12, 2004, has already commenced 
making digital transmissions of sound recordings pursuant to section 
114(d)(2) of title 17 of the United States Code or making ephemeral 
phonorecords of sound recordings pursuant to section 112(e) of title 17 
of the United States Code, or both, and that has already filed an 
Initial Notice of Digital Transmission of Sound Recordings Under 
Statutory License, and that intends to continue to make digital 
transmissions or ephemeral phonorecords following July 1, 2004, shall 
file a Notice of Use of Sound Recordings under Statutory License with 
the Licensing Division of the Copyright Office no later than July 1, 
2004.
    (2) A Service that, on or after July 1, 2004, commences making 
digital transmissions and ephemeral phonorecords of sound recordings 
under statutory license shall file a Notice of Use of Sound Recordings 
under Statutory License with the Licensing Division of the Copyright 
Office prior to the making of the first ephemeral phonorecord of the 
sound recording and prior to the first igital transmission of the sound 
recording.
    (3) A Service that, on or after July 1, 2004, commences making only 
ephemeral phonorecords of sound recordings, shall file a Notice of Use 
of Sound Recordings under Statutory License with the Licensing Division 
of the Copyright Office prior to the making of the first ephemeral 
phonorecord of a sound recording under the statutory license.
    (f) Amendment. A Service shall file a new Notice of Use of Sound 
Recordings under Statutory License within 45 days after any of the 
information contained in the Notice on file has changed, and shall 
indicate in the space provided by the Copyright Office that the Notice 
is an amended filing. The Licensing Division shall retain copies of all 
prior Notices filed by the Service.


Sec.  270.2  Reports of use of sound recordings under statutory license 
for preexisting subscription services.

    (a) General. This section prescribes rules under which preexisting 
subscription 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)(A) or section 
114(f)(1)(C)(i) of title 17 of the United States Code and adopted 
pursuant to 37 CFR 251.63(b), or by decision of a Copyright Arbitration 
Royalty Panel (CARP) under section 114(f)(1)(B) or section 
114(f)(1)(C)(ii), 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 part to be provided by the preexisting 
subscription service transmitting sound recordings under statutory 
license.
    (3) A Preexisting Subscription 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)(A) or 
section 114(f)(1)(C)(i) and adopted pursuant to 37 CFR 251.63(b), or by 
decision of a Copyright Arbitration Royalty Panel (CARP) under section 
114(f)(1)(B) or section 114(f)(1)(C)(ii), 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 preexisting subscription service and Collective, on or 
before the twentieth day after the close of each month.
    (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 preexisting subscription 
service transmitting sound recordings under statutory license shall 
post and make available online its Reports of Use. Preexisting 
subscription 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. Preexisting subscription 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. 
Preexisting subscription 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 preexisting 
subscription 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 preexisting subscription 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 preexisting subscription service or entity;
    (ii) The channel;
    (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 preexisting subscription 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

[[Page 11529]]

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 preexisting 
subscription service attesting, under penalty of perjury, that the 
information contained in the Report is believed to be accurate and is 
maintained by the preexisting subscription 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 
preexisting subscription 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 preexisting 
subscription 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.  270.3  Reports of use of sound recordings under statutory license 
for nonsubscription transmission services, preexisting satellite 
digital audio radio services, new subscription services and business 
establishment services.

    (a) General. This section prescribes rules under which 
nonsubscription transmission services, preexisting satellite digital 
audio radio services, new subscription services, and business 
establishment services shall maintain reports of use of their sound 
recordings under section 112(e) or section 114(d)(2) of title 17 of the 
United States Code, or both.
    (b) Definitions. (1) Aggregate Tuning Hours are the total hours of 
programming that a nonsubscription transmission service, preexisting 
satellite digital audio radio service, new subscription service or 
business establishment service has transmitted during the reporting 
period identified in paragraph (c)(3) of this section to all listeners 
within the United States over the relevant channels or stations, and 
from any archived programs, that provide audio programming consisting, 
in whole or in part, of eligible nonsubscription service, preexisting 
satellite digital audio radio service, new subscription service or 
business establishment service transmissions, less the actual running 
time of any sound recordings for which the service has obtained direct 
licenses apart from 17 U.S.C. 114(d)(2) or which do not require a 
license under United States copyright law. For example, if a 
nonsubscription transmission service transmitted one hour of 
programming to 10 simultaneous listeners, the nonsubscription 
transmission service's Aggregate Tuning Hours would equal 10. If 3 
minutes of that hour consisted of transmission of a directly licensed 
recording, the nonsubscription transmission service's Aggregate Tuning 
Hours would equal 9 hours and 30 minutes. If one listener listened to 
the transmission of a nonsubscription transmission service for 10 hours 
(and none of the recordings transmitted during that time was directly 
licensed), the nonsubscription transmission service's Aggregate Tuning 
Hours would equal 10.
    (2) An AM/FM Webcast is a transmission made by an entity that 
transmits an AM/FM broadcast signal over a digital communications 
network such as the Internet, regardless of whether the transmission is 
made by the broadcaster that originates the AM/FM signal or by a third 
party, provided that such transmission meets the applicable 
requirements of the statutory license set forth in 17 U.S.C. 114(d)(2).
    (3) A Collective is a collection and distribution organization that 
is designated under one or both of the statutory licenses, either by 
settlement agreement reached under section 112(e)(3), section 
112(e)(6), section 114(f)(1)(A), section 114(f)(1)(C)(i), section 
114(f)(2)(A), or section 114(f)(2)(C)(i) and adopted pursuant to Sec.  
251.63(b) of this chapter, or by a decision of a Copyright Arbitration 
Royalty Panel under section 112(e)(4), section 112(e)(6), section 
114(f)(1)(B), section (f)(1)(C)(ii), section 114(f)(2)(B), or section 
114(f)(2)(C)(ii) or by order of the Librarian of Congress pursuant to 
17 U.S.C. 802(f).
    (4) A new subscription service is defined in Sec.  270.1(b)(2)(iv).
    (5) A nonsubscription transmission service is defined in Sec.  
270.1(b)(2)(iii).
    (6) A preexisting satellite digital audio radio service is defined 
in Sec.  270.1(b)(2)(ii).
    (7) A business establishment service is defined in Sec.  
270.1(b)(2)(v).
    (8) A performance is each instance in which any portion of a sound 
recording is publicly performed to a Listener by means of a digital 
audio transmission or retransmission (e.g., the delivery of any portion 
of a single track from a compact disc to one Listener) but excluding 
the following:
    (i) A performance of a sound recording that does not require a 
license (e.g., the sound recording is not copyrighted);
    (ii) A performance of a sound recording for which the service has 
previously obtained a license from the Copyright Owner of such sound 
recording; and
    (iii) An incidental performance that both:
    (A) Makes no more than incidental use of sound recordings 
including, but not limited to, brief musical transitions in and out of 
commercials or program segments, brief performances during news, talk 
and sports programming, brief background performances during disk 
jockey announcements, brief performances during commercials of sixty 
seconds or less in duration, or brief performances during sporting or 
other public events and
    (B) Other than ambient music that is background at a public event, 
does not contain an entire sound recording and does not feature a 
particular sound recording of more than thirty seconds (as in the case 
of a sound recording used as a theme song).
    (9) Play frequency is the number of times a sound recording is 
publicly performed by a Service during the relevant period, without 
respect to the number of listeners receiving the sound

[[Page 11530]]

recording. If a particular sound recording is transmitted to listeners 
on a particular channel or program only once during the two-week 
reporting period, then the play frequency is one. If the sound 
recording is transmitted 10 times during the two-week reporting period, 
then the play frequency is 10.
    (10) A Report of Use is a report required under this section to be 
provided by a nonsubscription transmission service and new subscription 
service that is transmitting sound recordings pursuant to the statutory 
license set forth in section 114(d)(2) of title 17 of the United States 
Code or making ephemeral phonorecords of sound recordings pursuant to 
the statutory license set forth in section 112(e) of title 17 of the 
United States Code, or both.
    (c) Report of Use. (1) Separate reports not required. A 
nonsubscription transmission service, preexisting satellite digital 
audio radio service or a new subscription service that transmits sound 
recordings pursuant to the statutory license set forth in section 
114(d)(2) of title 17 of the United States Code and makes ephemeral 
phonorecords of sound recordings pursuant to the statutory license set 
forth in section 112(e) of title 17 of the United States Code need not 
maintain a separate Report of Use for each statutory license during the 
relevant reporting periods.
    (2) Content. For a nonsubscription transmission service, 
preexisting satellite digital audio radio service, new subscription 
service or business establishment service that transmits sound 
recordings pursuant to the statutory license set forth in section 
114(d)(2) of title 17 of the United States Code, or the statutory 
license set forth in section 112(e) of title 17 of the United States 
Code, or both, each Report of Use shall contain the following 
information, in the following order, for each sound recording 
transmitted during the reporting periods identified in paragraph (c)(3) 
of this section:
    (i) The name of the nonsubscription transmission service, 
preexisting satellite digital audio radio service, new subscription 
service or business establishment service making the transmissions, 
including the name of the entity filing the Report of Use, if 
different;
    (ii) The category transmission code for the category of 
transmission operated by the nonsubscription transmission service, 
preexisting satellite digital audio radio service, new subscription 
service or business establishment service:
    (A) For eligible nonsubscription transmissions other than broadcast 
simulcasts and transmissions of non-music programming;
    (B) For eligible nonsubscription transmissions of broadcast 
simulcast programming not reasonably classified as news, talk, sports 
or business programming;
    (C) For eligible nonsubscription transmissions of non-music 
programming reasonably classified as news, talk, sports or business 
programming;
    (D) For eligible nonsubscription transmissions by a non-Corporation 
for Public Broadcasting noncommercial broadcaster making transmissions 
covered by Sec. Sec.  261.3(a)(2)(i) and (ii) of this chapter;
    (E) For eligible nonsubscription transmissions by a non-Corporation 
for Public Broadcasting noncommercial broadcaster making transmissions 
covered by Sec.  261.3(a)(2)(iii) of this chapter;
    (F) For eligible nonsubscription transmissions by a small webcaster 
operating under an agreement published in the Federal Register pursuant 
to the Small Webcaster Settlement Act;
    (G) For eligible nonsubscription transmissions by a noncommercial 
broadcaster operating under an agreement published in the Federal 
Register pursuant to the Small Webcaster Settlement Act;
    (H) For transmissions other than broadcast simulcasts and 
transmissions of non-music programming made by an eligible new 
subscription service;
    (I) For transmissions of broadcast simulcast programming not 
reasonably classified as news, talk, sports or business programming 
made by an eligible new subscription service;
    (J) For transmissions of non-music programming reasonably 
classified as news, talk, sports or business programming made by an 
eligible new subscription service; and
    (K) For eligible transmissions by a business establishment service 
making ephemeral recordings;
    (iii) The featured artist;
    (iv) The sound recording title;
    (v) The International Standard Recording Code (ISRC) or, 
alternatively to the ISRC, the
    (A) Album title; and
    (B) Marketing label;
    (vi) The actual total performances of the sound recording during 
the reporting period or, alternatively, the
    (A) Aggregate Tuning Hours;
    (B) Channel or program name; and
    (C) Play frequency.
    (3) Reporting period. A Report of Use shall be prepared for a two-
week period (two periods of 7 consecutive days) for each calendar 
quarter of the year. The two weeks need not be consecutive, but both 
weeks must be completely within the calendar quarter.
    (4) 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 the title of the person signing the 
Report, and by the date of the signature.
    (5) 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, without consent of the service 
providing the Report of Use.
    (6) Documentation. A Service shall, for a period of at least three 
years from the date of service or posting of a Report of Use, keep and 
retain a copy of the Report of Use.


Sec.  270.4  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, 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)(A) or section 
114(f)(1)(C)(i) and adopted pursuant to 37 CFR 251.63(b), or by 
decision of a Copyright Arbitration Royalty Panel (CARP) under section 
114(f)(1)(B) or section 114(f)(1)(C)(ii), 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:

[[Page 11531]]

    (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 this part 
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, SE., Washington, 
DC 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: February 26, 2004.
Marybeth Peters,
Register of Copyrights.
James H. Billington,
The Librarian of Congress.
[FR Doc. 04-5404 Filed 3-10-04; 8:45 am]
BILLING CODE 1410-33-U