[Federal Register Volume 74, Number 136 (Friday, July 17, 2009)]
[Notices]
[Pages 34796-34802]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-17092]


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LIBRARY OF CONGRESS

Copyright Office


Notification of Agreements Under the Webcaster Settlement Act of 
2009

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice of agreement.

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SUMMARY: The Copyright Office is publishing an agreement which sets 
rates and terms for the reproduction and performance of sound 
recordings made by certain specified webcasters, under two statutory 
licenses. Webcasters who meet the eligibility requirements may choose 
to operate under the statutory licenses in accordance with the rates 
and terms set forth in the agreement published herein rather than the 
rates and terms of any determination by the Copyright Royalty Judges.

FOR FURTHER INFORMATION CONTACT: Stephen Ruwe, Attorney Advisor, or 
Tanya M. Sandros, Deputy General Counsel, Copyright Office, GC/I&R, 
P.O. Box 70400, Washington, DC 20024. Telephone: (202) 707-8380. 
Telefax: (202) 707-8366. See the final paragraph of the SUPPLEMENTARY 
INFORMATION for information on where to direct questions regarding the 
rates and terms set forth in the agreement.

SUPPLEMENTARY INFORMATION: On June 30, 2009, President Obama signed 
into law the Webcaster Settlement Act of 2009 (``WSA''), Pub. L. No. 
111-36, which amends section 114 of the Copyright Act, title 17 of the 
United States Code, as it relates to webcasters. Section 114(f)(5) as 
amended by the WSA allows SoundExchange, the Receiving Agent designated 
by the Librarian of Congress in his June 20, 2002, order for collecting 
royalty payments made by eligible nonsubscription transmission services 
under the section 112 and section 114 statutory licenses, see 67 FR 
45239 (July 8, 2002), to enter into agreements on behalf of all 
copyright owners and performers to set rates, terms and conditions for 
webcasters operating under the section 112 and section 114 statutory 
licenses for a period of not more than 11 years beginning on January 1, 
2005. The authority to enter into such settlement agreements shall 
expire at 11:59 p.m. Eastern time on the 30th day after the enactment 
of the WSA.
    Unless otherwise agreed to by the parties, the rates and terms set 
forth in the agreement apply only to the time periods specified in the 
agreement and have no precedential value in any proceeding concerned 
with the setting of rates and terms for the public performance or 
reproduction in ephemeral phonorecords. To make this point clear, 
Congress included language expressly addressing the precedential value 
of agreements made under the WSA. Specifically, section 114(f)(5)(C), 
states that: ``Neither subparagraph (A) nor any provisions of any 
agreement entered into pursuant to subparagraph (A), including any rate 
structure, fees, terms, conditions, or notice and recordkeeping 
requirements set forth therein, shall be admissible as evidence or 
otherwise taken into account in any administrative, judicial, or other 
government proceeding involving the setting or adjustment of the 
royalties payable for the public performance or reproduction in 
ephemeral recordings or copies of sound recordings, the determination 
of terms or conditions related thereto, or the establishment of notice 
and recordkeeping requirements by the Copyright Royalty Judges under 
paragraph (4) or section 112(e)(4). It is the intent of Congress that 
any royalty rates, rate structure, definitions, terms, conditions, or 
notice and recordkeeping requirements, included in such agreements 
shall be considered as a compromise motivated by the unique business, 
economic and political circumstances of webcasters, copyright owners, 
and performers rather than as matters that would have been negotiated 
in the marketplace between a willing buyer and a willing seller, or 
otherwise meet the objectives set forth in section 801(b). This 
subparagraph shall not apply to the extent that the receiving agent and 
a webcaster that are party to an agreement entered into pursuant to 
subparagraph (A) expressly authorize the submission of the agreement in 
a proceeding under this subsection.'' 17 U.S.C. 114(f)(5)(C) (2009).

[[Page 34797]]

    On July 7, 2009, SoundExchange notified the Copyright Office that 
it had negotiated an agreement for the reproduction and performance of 
sound recordings by ``Commercial Webcasters Including Small Pureplay 
Webcasters'' under the section 112 and section 114 statutory licenses. 
Therefore, in accordance with the requirement set forth in amended 
section 114(f)(5)(B), the Copyright Office is publishing the submitted 
agreement as Appendix A, thereby making the rates and terms in the 
agreement available to any webcasters meeting the respective 
eligibility conditions of the agreement as an alternative to the rates 
and terms of any determination by the Copyright Royalty Judges.
    The Copyright Office has no responsibility for administering the 
rates and terms of the agreement beyond the publication of this notice. 
For this reason, questions regarding the rates and terms set forth in 
the agreement should be directed to SoundExchange (for contact 
information, see http://www.soundexchange.com).

    Dated: July 13, 2009.
Marybeth Peters,
Register of Copyrights.
    Note: The following Appendix Will Not Be Codified in the Code of 
Federal Regulations.

APPENDIX A - AGREED RATES AND TERMS FOR COMMERCIAL WEBCASTERS INCLUDING 
SMALL PUREPLAY WEBCASTERS ARTICLE 1 - DEFINITIONS

    1.1 General. In general, words used in the rates and terms set 
forth herein (the ``Rates and Terms'') and defined in 17 U.S.C. Sec.  
112(e) or 114 or 37 C.F.R. Part 380 shall have the meanings specified 
in those provisions as in effect on the date hereof, with such 
exceptions or clarifications set forth in Section 1.2.
    1.2 Additional Definitions
    (a) ``Affiliate'' of a transmitting entity is a person or entity 
that directly, or indirectly through one or more intermediaries -
    (1) has securities or other ownership interests representing more 
than 50 percent of such person's or entity's voting interests 
beneficially owned by -

    (A) such transmitting entity; or
    (B) a person or entity beneficially owning securities or other 
ownership interests representing more than 50 percent of the voting 
interests of the transmitting entity;
    (2) beneficially owns securities or other ownership interests 
representing more than 50 percent of the voting interests of the 
transmitting entity; or
    (3) otherwise Controls, is Controlled by, or is under common 
Control with the transmitting entity.
    (b) ``Bundled Service'' means any package of services or products 
provided to end users by a Commercial Webcaster, Affiliate, or any 
third party with which a Commercial Webcaster has a Third Party 
Business Arrangement that meets each of the following requirements:
    (1) the package of products or services includes a digital music 
service through which Eligible Transmissions are made and at least one 
other product or service that does not consist only of the offering of 
Eligible Transmissions; and
    (2) the package of products or services that constitute any 
particular package is only offered to end users for a fee (whether one-
time, recurring or otherwise) that does not differentiate among the 
various components of the package. The fact that the package of 
products or services, or any component part(s) thereof, is offered to 
end users for a limited duration without a fee (i.e., on a promotional 
basis) shall not disqualify the package from treatment as a Bundled 
Service.
    (c) ``Commercial Webcaster'' shall mean a webcaster as defined in 
17 U.S.C. Sec.  114(f)(5)(E)(iii) that (i) has obtained a compulsory 
license under 17 U.S.C. Sec.  Sec.  112(e) and 114 and the implementing 
regulations therefor to make Eligible Transmissions and related 
ephemeral recordings; (ii) complies with all provisions of Sections 
112(e) and 114 and applicable regulations; (iii) is not a noncommercial 
webcaster as defined in 17 U.S.C. Sec.  114(f)(5)(E)(I).
    (d) ``Control'' means the possession, direct or indirect, of the 
power to direct or cause the direction of the management and policies 
of a person or entity, whether through the ownership of voting 
securities, by contract or otherwise.
    (e) ``Eligible Transmission'' shall mean an eligible 
nonsubscription transmission, or a transmission through a new 
subscription service, made by a Commercial Webcaster over the internet 
that is subject to the payment of royalties under 37 C.F.R. Part 380.
    (f) ``Expenses'' -
    (1) means all costs incurred (whether actually paid or not) by a 
Small Pureplay Webcaster, except that capital costs shall be treated as 
Expenses allocable to a period only to the extent of charges for 
amortization or depreciation of such costs during such period as are 
properly allocated to such period in accordance with U.S. Generally 
Accepted Accounting Principles (``GAAP'');
    (2) includes the fair market value of all goods, services, or other 
non-cash consideration (including real, personal, tangible, and 
intangible property) provided by a Small Pureplay Webcaster to any 
third party in lieu of a cash payment and the fair market value of any 
goods or services purchased for or provided to a Small Pureplay 
Webcaster by an Affiliate of such webcaster; and
    (3) shall not include -
    (A) the imputed value of personal services rendered by up to 5 
natural persons who are, directly or indirectly, owners of the Small 
Pureplay Webcaster, and for which no compensation has been paid;
    (B) the imputed value of occupancy of residential property for 
which no Federal income tax deduction is claimed as a business expense;
    (C) costs of purchasing phonorecords of sound recordings used in 
the Small Pureplay Webcaster's service;
    (D) royalties paid for the public performance of sound recordings; 
or
    (E) the reasonable costs of collecting overdue accounts receivable, 
provided that the reasonable costs of collecting any single overdue 
account receivable may not exceed the actual account receivable.
    (g) ``Gross Revenues'' means all revenue of any kind earned by the 
Commercial Webcaster or its Affiliates from all its operations, in 
accordance with U.S. Generally Accepted Accounting Principles, and 
includes -
    (A) all cash or cash equivalents;
    (B) the fair market value of goods, services, or other non-cash 
consideration (including real, personal, tangible, and intangible 
property);
    (C) in-kind and cash donations and other gifts (but not capital 
contributions made in exchange for an equity interest in the 
recipient); and
    (D) amounts earned by such person or entity but paid to an 
Affiliate of such person or entity in lieu of payment to such person or 
entity.
    For the avoidance of doubt, Gross Revenues includes revenue from 
activities other than making Eligible Transmissions, including revenue 
from transmissions of sound recordings licensed directly from the 
relevant copyright owners. Commercial Webcasters with substantial 
revenue from activities other than making Eligible Transmissions under 
the statutory licenses in Sections 112(e) and 114 may wish not to elect 
to be subject to these Rates and Terms.
    (h)  ``Small Pureplay Webcaster'' shall mean a Commercial Webcaster 
that (a) together with its Affiliates, has not had annual Gross 
Revenues of more than $1,250,000 from its (or their) worldwide

[[Page 34798]]

activities, in any two previous calendar years, and (b) in any calendar 
year in which it is to be considered a Small Pureplay Webcaster 
reasonably expects to have, together with its Affiliates, (i) annual 
Gross Revenues of not more than $1,250,000 from its (or their) 
worldwide activities; and (ii) average monthly aggregate tuning hours 
for all programming transmitted within the United States, less the 
actual running time of any sound recording licensed directly from the 
relevant copyright owners, that is less than the relevant threshold 
from the following table:

 
                  Year                    Maximum Aggregate Tuning Hours
 
 2006-2008                                7 million ATH
 2009                                     8 million ATH
 2010                                     8.5 million ATH
 2011                                     9 million ATH
 2012-2014                                10 million ATH
 

    Small Pureplay Webcaster status is available in 2006-2014 only (not 
2015).
    (i) ``SoundExchange'' shall mean SoundExchange, Inc. and shall 
include its successors and assigns.
    (j) ``Subscription Service'' means a service providing Eligible 
Transmissions that are subscription transmissions (as defined in 17 
U.S.C. Sec.  114(j)(14)).
    (k) ``Syndicated Service'' means a service providing Eligible 
Transmissions selected or controlled, or made using ephemeral 
recordings controlled, by the relevant Commercial Webcaster but 
presented in such a manner that (i) the end user can receive Eligible 
Transmissions without visiting a page, interface, display, application, 
player, software or other electronic property predominantly associated 
with the service, or (ii) the end user can receive Eligible 
Transmissions through a website, application, player, software or other 
electronic property of any kind that is owned, controlled or branded by 
a third party, in whole or in part, directly or indirectly pursuant to 
a Third Party Business Arrangement.
    (l)  ``Third Party Business Arrangement'' means any arrangement 
with a third party where the third party (or another party on behalf of 
such third party) provides monies or other consideration recognizable 
as revenue under GAAP to a Commercial Webcaster or an Affiliate. For 
the avoidance of doubt, the provision of a ``white label'' service 
would constitute a Third Party Business Agreement.

ARTICLE 2 - AGREEMENT PURSUANT TO WEBCASTER SETTLEMENT ACT OF 2009

    2.1 Availability of Rates and Terms. Pursuant to the Webcaster 
Settlement Act of 2009, and subject to the provisions set forth below, 
Commercial Webcasters may elect to be subject to the rates and terms 
set forth herein (the ``Rates and Terms'') in their entirety, with 
respect to such Commercial Webcasters' Eligible Transmissions and 
related ephemeral recordings, for any calendar year that it qualifies 
as a Commercial Webcaster during the period beginning on January 1, 
2006, and ending on December 31, 2015, in lieu of other rates and terms 
from time to time applicable under 17 U.S.C. Sec.  112(e) and 114, by 
complying with the procedure set forth in Section 2.2 hereof. Any 
person or entity that does not satisfy the eligibility criteria to be a 
Commercial Webcaster and make a timely election pursuant to Section 2.2 
must comply with otherwise applicable rates and terms.
    2.2 Election Process in General. To elect to be subject to these 
Rates and Terms, in lieu of any royalty rates and terms that otherwise 
might apply under 17 U.S.C. Sec.  Sec.  112(e) and 114, for any one or 
more calendar years that it qualifies as a Commercial Webcaster during 
the period beginning on January 1, 2006, and ending on December 31, 
2015, a Commercial Webcaster shall submit to SoundExchange a completed 
and signed election form (available on the SoundExchange Web site at 
http://www.soundexchange.com) by no later than January 31 of the 
applicable year, except that election forms for 2006-2009 shall be due 
by no later than 30 days after publication of these Rates and Terms in 
the Federal Register. On any such election form, the Commercial 
Webcaster must, among other things, certify that it qualifies as a 
Commercial Webcaster for the relevant year. Even if an entity has once 
elected to be treated as a Commercial Webcaster, it must make a 
separate, timely election in each subsequent year in which it wishes 
(and is eligible) to be treated as such. Notwithstanding anything else 
in these Rates and Terms, a person or entity otherwise qualifying as a 
Commercial Webcaster that has participated in any way in any appeal of 
the Final Determination of the Copyright Royalty Judges concerning 
royalty rates and terms under Section 112(e) and 114 of the Copyright 
Act for the period January 1, 2006, through December 31, 2010 published 
in the Federal Register at 72 Fed. Reg. 24084 (May 1, 2007) (the 
``Final Determination'') or any proceeding before the Copyright Royalty 
Judges to determine royalty rates and terms under Section 112(e) and 
114 of the Copyright Act for the period January 1, 2011, through 
December 31, 2015 (including Docket No. 2009-1 CRB Webcasting III and 
Docket No. 2009-2 CRB New Subscription II, as noticed in the Federal 
Register at 74 Fed. Reg. 318-20 (Jan. 5, 2009)) shall not be treated as 
a Commercial Webcaster or have the right to claim the benefit of these 
Rates and Terms, unless it withdraws from such proceeding no later than 
five business days after submitting to SoundExchange a completed and 
signed election form as contemplated by this Section 2.2.
    2.3 Election of Small Pureplay Webcaster Status. A Commercial 
Webcaster that elects to be subject to these Rates and Terms and 
qualifies as a Small Pureplay Webcaster may elect to be treated as a 
Small Pureplay Webcaster for any one or more calendar years that it so 
qualifies during the period 2006-2014. To do so, the Commercial 
Webcaster shall submit to SoundExchange a completed and signed election 
form (available on the SoundExchange Web site at http://www.soundexchange.com) by no later than January 31 of the applicable 
year, except that election forms for 2006-2009 shall be due by no later 
than 30 days after publication of these Rates and Terms in the Federal 
Register. On any such election form, the Commercial Webcaster must, 
among other things, certify that it qualifies as a Small Pureplay 
Webcaster for the relevant year and provide Gross Revenues and 
aggregate tuning hours information relevant to determining eligibility. 
Even if an Eligible Small Webcaster has once elected to be treated as a 
Small Pureplay Webcaster, it must make a separate, timely election in 
each subsequent year in which it wishes (and is eligible) to be treated 
as such. For the avoidance of doubt, if a Commercial Webcaster that has 
once made an election to be subject to these Rates and Terms as a Small 
Pureplay Webcaster wishes to not make such an election in subsequent 
years, and is eligible to be treated as an Eligible Small Webcaster 
under the agreement entered into by SoundExchange under the Webcaster 
Settlement Act and published in the Federal Register at 74 Fed. Reg. 
9302 (March 3, 2009), the Commercial Webcaster may elect to be treated 
as an Eligible Small Webcaster under such agreement for such subsequent 
years. >
    2.4Representation of Compliance and Non-waiver. By electing to 
operate pursuant to these Rates and Terms, an entity represents and 
warrants that it qualifies as a Commercial Webcaster, and if 
applicable, as a Small Pureplay Webcaster. By accepting an election by 
a transmitting entity or payments or reporting made pursuant to these 
Rates

[[Page 34799]]

and Terms, SoundExchange does not acknowledge that the transmitting 
entity qualifies as a Commercial Webcaster, Small Pureplay Webcaster or 
that it has complied with the requirements of the statutory licenses 
under Sections 112(e) and 114 of the Copyright Act (including these 
Rates and Terms). It is the responsibility of each transmitting entity 
to ensure that it is in full compliance with applicable requirements of 
the statutory licenses under Sections 112(e) and 114 of the Copyright 
Act. SoundExchange is not in a position to, and does not, make 
determinations as to whether each of the many services that rely on the 
statutory licenses is eligible for statutory licensing or any 
particular royalty payment classification, nor does it continuously 
verify that such services are in full compliance with all applicable 
requirements. Accordingly, a Commercial Webcaster agrees that 
SoundExchange's acceptance of its election, payment or reporting does 
not give or imply any acknowledgment that it is in compliance with the 
requirements of the statutory licenses (including these Rates and 
Terms) and shall not be used as evidence that it is in compliance with 
the requirements of the statutory licenses (including these Rates and 
Terms). SoundExchange and copyright owners reserve all their rights to 
take enforcement action against a transmitting entity that is not in 
compliance with all applicable requirements.

ARTICLE 3 - SCOPE

    3.1In General. In consideration for the payment of royalties 
pursuant to Article 4 and such other consideration specified herein, 
Commercial Webcasters that have made a timely election to be subject to 
these Rates and Terms as provided in Section 2.2 are entitled to 
publicly perform sound recordings within the scope of the statutory 
license provided by Section 114 by means of Eligible Transmissions, and 
to make related ephemeral recordings for use solely for purposes of 
such Eligible Transmissions within the scope of Section 112(e), in 
accordance with and subject to the limitations set forth in these Rates 
and Terms and in strict conformity with the provisions of 17 U.S.C. 
Sec.  Sec.  112(e) and 114 and their implementing regulations (except 
as otherwise specifically provided herein), in lieu of other rates and 
terms from time to time applicable under 17 U.S.C. Sec.  112(e) and 
114, for each calendar year during the period beginning on January 1, 
2006, and ending on December 31, 2015, during which they have made such 
an election.
    3.2Applicability to All Eligible Services Operated by or for a 
Commercial Webcaster. If a Commercial Webcaster has made a timely 
election to be subject to these Rates and Terms as provided in Section 
2.2, these Rates and Terms shall apply to all Eligible Transmissions 
made by or for the Commercial Webcaster that qualify as a Performance 
under 37 C.F.R. Sec.  380.2(i), and related ephemeral recordings.
    3.3No Implied Rights. These Rates and Terms extend only to electing 
Commercial Webcasters and grant no rights, including by implication or 
estoppel, to any other person or except as specifically provided 
herein. Without limiting the generality of the foregoing, these Rates 
and Terms do not grant (i) any copyright ownership interest in any 
sound recording; (ii) any trademark or trade dress rights; (iii) any 
rights outside the United States (as defined in 17 U.S.C. Sec.  101); 
(iv) any rights of publicity or rights to any endorsement by 
SoundExchange or any other person; or (v) any rights with respect to 
performances or reproductions outside the scope of these Rates and 
Terms or the statutory licenses under 17 U.S.C. Sec.  Sec.  112(e) and 
114.

ARTICLE 4 - ROYALTIES

    4.1 Minimum Fee. Each Commercial Webcaster will pay an annual, 
nonrefundable minimum fee of $25,000. Upon payment of the minimum fee, 
the Commercial Webcaster will receive a credit in the amount of the 
minimum fee paid against any royalties payable by it under these Rates 
and Terms for the same calendar year.
    4.2 Royalty Rates in General. Royalties for Eligible Transmissions 
made pursuant to 17 U.S.C. Sec.  114, and the making of related 
ephemeral recordings pursuant to 17 U.S.C. Sec.  112(e), shall be 
payable as provided in this Section 4.2, except as provided in Section 
4.3.
    (a) A Commercial Webcaster that makes Eligible Transmissions 
through a Bundled Service, Syndicated Service or Subscription Service, 
shall pay royalties for such Eligible Transmissions on a per 
performance basis, as follows:


 
                  Year                         Rate per Performance
 
 2006                                     $0.0008
 2007                                     $0.0011
 2008                                     $0.0014
 2009                                     $0.0015
 2010                                     $0.0016
 2011                                     $0.0017
 2012                                     $0.0020
 2013                                     $0.0022
 2014                                     $0.0023
 2015                                     $0.0025
 

    (b) To the extent a Commercial Webcaster is not required to pay 
royalties under Section 4.2(a), it shall pay royalties equal to the 
greater of the following (on an annual basis, as provided in Section 
4.5):
    (i) A usage-based royalty computed on a per-performance basis, or 
in the years where specified on an aggregate tuning hour basis, as 
follows:

 
                                                   Per Aggregate Tuning
      Year                Per Performance                  Hour
 
2006              $0.00080                        1.2[cent]
2007              $0.00084                        1.26[cent]
2008              $0.00088                        1.32[cent]
2009              $0.00093                        ......................
2010              $0.00097                        ......................
2011              $0.00102                        ......................
2012              $0.00110                        ......................
2013              $0.00120                        ......................
2014              $0.00130                        ......................
2015              $0.00140                        ......................
 

    (ii) 25% of Gross Revenues from activities in the United States (as 
defined in 17 U.S.C. Sec.  101).
    4.3 Royalty Rates for Small Pureplay Webcasters Through 2014. For 
Eligible Transmissions made pursuant to 17 U.S.C. Sec.  114, and the 
making of related ephemeral recordings pursuant to 17 U.S.C. Sec.  
112(e), during the period 2006-2014, electing Small Pureplay Webcasters 
shall pay royalties equal to the greater of the following (on an annual 
basis, as provided in Section 4.5):
    (i) A percentage of Gross Revenues, as follows:

 
                                       Year                                                                                          Percentage
 
2006-2008                                                                          10% of the first $250,000 in Gross Revenues from activities in the United States (as defined in 17 U.S.C.
                                                                                    Sec.   101), and 12% of any Gross Revenues in excess of $250,000 from activities in the United States,
                                                                                    during the applicable year
 

[[Page 34800]]

 
2009-2014                                                                          12% of the first $250,000 in Gross Revenues from activities in the United States, and 14% of any Gross
                                                                                    Revenues in excess of $250,000 from activities in the United States, during the applicable year
 

    (ii) 7% of Expenses during the applicable year
    Provided, however, that Eligible Transmissions shall be subject to 
the royalty rates provided in Section 4.2(a) if they are (a) above the 
aggregate tuning hour thresholds in Section 1.2(h) or (b) made through 
a Bundled Service, Syndicated Service or Subscription Service;
    And Further Provided, however, that if a Commercial Webcaster has 
made payments for a calendar year based on the expectation that it will 
qualify as a Small Pureplay Webcaster, but it exceeds the $1.25 Million 
Gross Revenues cap for the year, it shall pay for that entire year and 
the following year (if it again exceeds $1.25 Million Gross Revenues 
cap for that following year) at a rate that is the greater of (x) a 
royalty determined as provided above in this Section 4.3 and (y) 25% of 
Gross Revenues from activities in the United States (as defined in 17 
U.S.C. Sec.  101), except that if the year in which the Commercial 
Webcaster exceeds the $1.25 Million Gross Revenues cap is 2014, it 
shall in 2015 pay pursuant to Section 4.2. For the avoidance of doubt, 
the rate set forth in this paragraph shall be available to a Commercial 
Webcaster for no more than two years in total (whether those years are 
consecutive or not), and if a Commercial Webcaster has exceeded the 
$1.25 Million Gross Revenues cap for two previous years, it shall 
thereafter be ineligible for Small Pureplay Webcaster status and must 
make payments pursuant to Section 4.2.
    4.4 Ephemeral Royalty. The royalty payable under 17 U.S.C. Sec.  
112(e) for any ephemeral reproductions made by a Commercial Webcaster 
and covered hereby is deemed to be included within the royalty payments 
set forth above. SoundExchange has discretion to allocate payments 
hereunder between the statutory licenses under Sections 112(e) and 114 
in the same manner as statutory webcasting royalties for the period 
2011-2015.
    4.5 True-Up for Greater of Royalties. In making monthly payments, a 
Commercial Webcaster subject to Section 4.2(a) or 4.3 shall, at the 
time a payment is due, calculate its liability for the year through the 
end of the applicable month under all relevant subparts of the royalty 
calculation, and pay the applicable royalty for the year through the 
end of the applicable month, less any amounts previously paid for such 
year.
    4.6 True-Up for Certain Corporate Transactions. If a transmitting 
entity that has at any time elected to be treated as a Small Pureplay 
Webcaster under these Rates and Terms, and has not ceased to qualify as 
such through growth in its business and thereafter paid full royalties 
under Section 4.2 for a period of at least twelve (12) full months, 
becomes a party to or subject of any merger, sale of stock or all or 
substantially all of its assets, or other corporate restructuring, such 
that, upon the consummation of such transaction, the transmitting 
entity or its successor (including a purchaser of all or substantially 
all of its assets) does not qualify, or reasonably expect to qualify, 
as a Small Pureplay Webcaster for the then-current year, then the 
transmitting entity or its successor shall, within thirty (30) days 
after the consummation of such transaction, pay to SoundExchange either 
-
    (i) the difference between (a) the payment the transmitting entity 
would have been required to make under Section 4.2 for each year in 
which it elected to be treated as a Small Pureplay Webcaster under 
these Rates and Terms, from January 1, 2006 through the date of such 
transaction, or if it elected to be treated as a Small Pureplay 
Webcaster under these Rates and Terms for more than four years between 
January 1, 2006 and the date of such transaction, for the most recent 
four such years, and (b) the royalty payments it made under these Rates 
and Terms for such years; or
    (ii) 30% of all value inuring in connection with such transaction 
to the transmitting entity and its Affiliates, shareholders, management 
personnel and other persons and entities associated with the 
transmitting entity receiving value in consideration for such 
transaction, including money, and the fair market value of securities 
and other consideration, provided for stock in the transmitting entity 
or assets of the transmitting entity, the value of consideration 
provided in connection with any merger, and compensation that becomes 
payable to management personnel of the transmitting entity and their 
family members in connection with such transaction.
    The burden of proof shall be on the transmitting entity or its 
successor to demonstrate its actual usage for purposes of determining 
the payment it would have been required to make under such commercial 
webcasting rates for each such year.
    4.7 Payment. Payments of all amounts specified in these Rates and 
Terms shall be made to SoundExchange. Minimum fees shall be paid by 
January 31 of each year, except that Small Pureplay Webcasters may 
elect to make their minimum payments in four equal quarterly 
installments, which shall be due on January 31, April 14, July 15 and 
October 15.
    4.8 Monthly Obligations. Commercial Webcasters must make monthly 
payments once its royalty obligation exceeds the minimum fee it has 
paid, and provide statements of account and reports of use, for each 
month on the 45th day following the end of the month in which the 
Eligible Transmissions subject to the payments, statements of account, 
and reports of use were made.
    4.9 Past Periods. Notwithstanding anything else in this Agreement, 
to the extent that a Commercial Webcaster that elects to be subject to 
these Rates and Terms has not paid royalties for all or any part of the 
period beginning on January 1, 2006, and ending on the last day of the 
month in which these Rates and Terms are published in the Federal 
Register, any amounts payable under these Rates and Terms for Eligible 
Transmissions during such period for which payment has not previously 
been made shall be paid by no later than 60 days after publication of 
these Rates and Terms in the Federal Register, including late fees as 
provided in Section 4.10 from the original due date.
    4.10 Late Fees. A Commercial Webcaster shall pay a late fee for 
each instance in which any payment, any statement of account or any 
report of use is not received by SoundExchange in compliance with these 
Rates and Terms and applicable regulations by the due date. The amount 
of the late fee shall be 1.5% of a late payment, or 1.5% of the payment 
associated with a late statement of account or report of use, per 
month, compounded monthly, or the highest lawful rate, whichever is 
lower. The late fee shall accrue from the due date of the payment, 
statement of account or report of use until a fully-compliant payment, 
statement of account or report of use is received by SoundExchange.

[[Page 34801]]

ARTICLE 5 - REPORTING

    5.1 Census Reporting. Commercial Webcasters shall submit reports of 
use on a per-performance basis in full compliance with the regulations 
set forth in 37 CFR Part 370 and any subsequent amendments or 
modifications thereto or replacement regulations, except that the 
following provisions shall apply notwithstanding the provisions of 
applicable regulations from time to time in effect:
    (a) Commercial Webcasters shall submit reports of use to 
SoundExchange on a monthly basis.
    (b) As provided in Section 4.8, Commercial Webcasters shall submit 
reports of use by no later than the 45th day following the last day of 
the month to which they pertain.
    (c) Commercial Webcasters shall submit reports of use to 
SoundExchange on a census reporting basis (i.e., reports of use shall 
include every sound recording performed in the relevant month and the 
number of performances thereof).
    (d) Commercial Webcasters shall transmit each report of use in a 
file the name of which includes the name of the Commercial Webcaster, 
exactly as it appears on its notice of use.
    (e) Commercial Webcasters shall submit reports of use with headers, 
as presently described in 37 C.F.R. Sec.  370.3(d)(7) or as may be 
provided by successor regulations.
    (f) Commercial Webcasters shall submit a separate statement of 
account corresponding to each of their reports of use, transmitted in a 
file the name of which includes the name of the Commercial Webcaster, 
exactly as it appears on its notice of use.
    5.2 Server Logs. To the extent not already required by the current 
regulations set forth in 37 C.F.R. Part 380, Commercial Webcasters 
shall retain for a period of at least four years server logs reasonably 
sufficient to substantiate all information relevant to eligibility, 
rate calculation and reporting hereunder. To the extent that a third-
party web hosting or service provider maintains equipment or software 
for a Commercial Webcaster and/or such third party creates, maintains, 
or can reasonably create such server logs, the Commercial Webcaster 
shall direct that such server logs be created and maintained by said 
third party for a period of at least four years and/or that such server 
logs be provided to, and maintained by, the Commercial Webcaster. 
SoundExchange shall have access to all such server logs pursuant to 
applicable regulations for the verification of statutory royalty 
payments (presently 37 C.F.R. Sec.  380.6).

ARTICLE 6 - ADDITIONAL PROVISIONS

    6.1 Applicable Regulations. To the extent not inconsistent with the 
terms herein, use of sound recordings by Commercial Webcasters shall be 
governed by, and Commercial Webcasters shall comply with, applicable 
regulations, including 37 C.F.R. Parts 370 and 380. Without limiting 
the foregoing, the provisions of applicable regulations for the 
retention of records and verification of statutory royalty payments 
(presently 37 C.F.R. Sec.  Sec.  380.4(h) and 380.6) shall apply 
hereunder. Commercial Webcasters shall cooperate in good faith with any 
such verification, and the exercise by SoundExchange of any right with 
respect thereto shall not prejudice any other rights or remedies of 
SoundExchange or sound recording copyright owners.
    6.2 Participation in Proceedings. A Commercial Webcaster that 
elects to be subject to these Rates and Terms agrees that it has 
elected to do so in lieu of any different statutory rates and terms 
that may otherwise apply and in lieu of participating at any time in a 
proceeding to set rates and terms for any part of the 2006-2015 period. 
Thus, once a Commercial Webcaster has elected to be subject to these 
Rates and Terms, it shall not at any time directly or indirectly 
participate as a party, intervenor, amicus curiae or otherwise, or in 
any manner give evidence or otherwise support or assist, in any further 
proceedings to determine royalty rates and terms for reproduction of 
ephemeral phonorecords or digital audio transmission under Section 
112(e) or 114 of the Copyright Act for all or any part of the period 
2006-2015, including any appeal of the Final Determination, any 
proceedings on remand from such an appeal, any proceeding before the 
Copyright Royalty Judges to determine royalty rates and terms 
applicable to the statutory licenses under Sections 112(e) and 114 of 
the Copyright Act for the period 2011-2015, any appeal of such 
proceeding, or any other related proceedings, unless subpoenaed on 
petition of a third party (without any action by a Commercial Webcaster 
to encourage or suggest such a subpoena or petition) and ordered to 
testify or provide documents in such proceeding.
    6.3  Use of Agreement in Future Proceedings. Consistent with 17 
U.S.C. Sec.  114(f)(5)(C), Commercial Webcasters and SoundExchange 
agree that neither the Webcaster Settlement Act nor any provisions of 
these Rates and Terms shall be admissible as evidence or otherwise 
taken into account in any administrative, judicial, or other government 
proceeding involving the setting or adjustment of the royalties payable 
for the public performance or reproduction in ephemeral phonorecords or 
copies of sound recordings, the determination of terms or conditions 
related thereto, or the establishment of notice or recordkeeping 
requirements by the Copyright Royalty Judges. These Rates and Terms 
shall be considered as a compromise motivated by the unique business, 
economic and political circumstances of Commercial Webcasters, 
copyright owners and performers rather than as matters that would have 
been negotiated in the marketplace between a willing buyer and a 
willing seller. No person or entity may, in any way, seek to use in any 
way these Rates and Terms in any such proceeding.
    6.4 Effect of Direct Licenses. Any copyright owner may enter into a 
voluntary agreement with any Commercial Webcaster setting alternative 
rates and terms governing the Commercial Webcasters' transmission of 
copyrighted works owned by the copyright owner, and such voluntary 
agreement may be given effect in lieu of the Rates and Terms set forth 
herein.
    6.5 Default. A Commercial Webcaster shall comply with all the 
requirements of these Rates and Terms. If it fails to do so, 
SoundExchange may give written notice to the Commercial Webcaster that, 
unless the breach is remedied within 30 days from the date of notice, 
the Commercial Webcaster's authorization to make public performances 
and ephemeral reproductions under these Rates and Terms is terminated 
by SoundExchange. No such cure period shall apply before termination in 
case of material noncompliance on a recurring basis. Any transmission 
made by a Commercial Webcaster in violation of these Rates and Terms or 
Section 112(e) or 114 or their implementing regulations (except to the 
extent such implementing regulations are inconsistent with these Rates 
and Terms), outside the scope of these Rates and Terms, or after the 
expiration or termination of these Rates and Terms shall be fully 
subject to, among other things, the copyright owners' rights under 17 
U.S.C. Sec.  106 and the remedies in 17 U.S.C. Sec.  501-506.

ARTICLE 7 - MISCELLANEOUS

    7.1 Applicable Law and Venue. These Rates and Terms shall be 
governed by, and construed in accordance with, the laws of the District 
of Columbia

[[Page 34802]]

(without giving effect to conflicts of law principles thereof). All 
actions or proceedings arising directly or indirectly from or in 
connection with these Rates and Terms shall be litigated only in the 
United States District Court for the District of Columbia located in 
Washington, D.C. SoundExchange and Commercial Webcasters consent to the 
jurisdiction and venue of the foregoing court and consent that any 
process or notice of motion or other application to said court or a 
judge thereof may be served inside or outside the District of Columbia 
by registered mail, return receipt requested, directed to the person 
for which it is intended at its last known address (and service so made 
shall be deemed complete five (5) days after the same has been posted 
as aforesaid) or by personal service or in such other manner as may be 
permissible under the rules of that court.
    7.2 Rights Cumulative. The remedies provided in these Rates and 
Terms and available under applicable law shall be cumulative and shall 
not preclude assertion by any party of any other rights or the seeking 
of any other remedies against another party hereto. These Rates and 
Terms shall not constitute a waiver of any violation of Section 112 or 
114 or their implementing regulations (except to the extent such 
implementing regulations are inconsistent with these Rates and Terms). 
No failure to exercise and no delay in exercising any right, power or 
privilege shall operate as a waiver of such right, power or privilege. 
No single or partial exercise of any right, power or privilege granted 
under these Rates and Terms or available under applicable law shall 
preclude any other or further exercise thereof or the exercise of any 
other right, power or privilege. No waiver by any party of full 
performance by another party in any one or more instances shall be a 
waiver of the right to require full and complete performance of these 
Rates and Terms and of obligations under applicable law thereafter.
    7.3 Entire Agreement. These Rates and Terms represent the entire 
and complete agreement between SoundExchange and a Commercial Webcaster 
with respect to the subject matter hereof and supersede all prior and 
contemporaneous agreements and undertakings of SoundExchange and a 
Commercial Webcaster with respect to the subject matter hereof.
[FR Doc. E9-17092 Filed 7-16-09; 8:45 am]
BILLING CODE 1410-30-S