[Federal Register Volume 75, Number 14 (Friday, January 22, 2010)]
[Proposed Rules]
[Pages 3666-3668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-1172]


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LIBRARY OF CONGRESS

Copyright Royalty Board

37 CFR Part 383

[Docket No. 2009-2 CRB New Subscription II]


Digital Performance Right in Sound Recordings and Ephemeral 
Recordings for a New Subscription Service

AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Proposed rule.

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

DATES: Comments and objections, if any, are due by no later than 
February 22, 2010.

ADDRESSES: Comments and objections may be sent electronically to 
[email protected]. In the alternative, send an original, five copies and an 
electronic copy on a CD either by mail or hand delivery. Please do not 
use multiple means of transmission. Comments and objections may not be 
delivered by an overnight delivery service other than U.S. Postal 
Service Express Mail. If by mail (including overnight delivery), 
comments and objections must be addressed to: Copyright Royalty Board, 
P.O. Box 70977, Washington, DC 20024-0977. If hand delivered by a 
private party, comments and objections must be brought to the Copyright 
Office Public Information Office, Library of Congress, James Madison 
Memorial Building, Room LM-401, 101 Independence Avenue, SE., 
Washington, DC 20559-6000, between 8:30 a.m. and 5 p.m. If delivered by 
commercial courier, comments and objections must be delivered between 
8:30 a.m. and 4 p.m. to the Congressional Courier Acceptance Site 
located at 2nd and D Street, NE., Washington, DC, and the envelope must 
be addressed as follows: Copyright Royalty Board, Library of Congress, 
James Madison Memorial Building, Room LM-403, 101 Independence Avenue, 
SE., Washington, DC 20559-6000.

FOR FURTHER INFORMATION CONTACT: Richard Strasser, Senior Attorney, or 
Gina Giuffreda, Attorney Advisor, by telephone at (202) 707-7658 or by 
e-mail at [email protected].

SUPPLEMENTARY INFORMATION:

Background

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

[[Page 3667]]

terms for the new subscription service at issue; and the Judges, after 
public comment, adopted the settlement as final regulations.\1\ See 72 
FR 72253 (December 20, 2007). The current rates expire on December 31, 
2010.
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    \1\ The new subscription service is defined at 37 CFR 383.2(h).
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    Pursuant to section 803(b)(1)(A)(i)(III) of the Copyright Act, the 
Judges, published in the Federal Register a notice commencing the rate 
determination proceeding for the license period 2011-2015 for the new 
subscription service defined in Sec.  383.2(h) and requesting 
interested parties to submit their petitions to participate. See 74 FR 
319 (January 5, 2009). Petitions to Participate in this proceeding were 
received from SoundExchange, Inc.; Royalty Logic, LLC (``RLI''); and 
Sirius XM Radio Inc. (``Sirius XM'').
    The Judges set the timetable for the three-month negotiation 
period, see 17 U.S.C. 803(b)(3), and directed the participants to 
submit their written direct statements no later than September 29, 
2009. On September 22, 2009, the Judges received a joint motion from 
all parties to stay the filing of the written direct statements in 
light of the parties reaching a settlement which they intended to 
submit to the Judges for adoption. On September 23, 2009, the Judges 
issued an order extending the deadline for the filing of written direct 
statements to October 29, 2009. See Order on Extending Deadline to File 
Written Direct Statements, Docket No. 2009-2 CRB New Subscription II 
(September 23, 2009). SoundExchange and Sirius XM submitted the 
settlement to the Judges on October 21, 2009.\2\
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    \2\ SoundExchange and Sirius XM also moved that the Judges stay 
further proceedings until the settlement process under 17 U.S.C. 
801(b)(7)(A) has been completed. They noted that RLI, the only other 
participant to the proceeding, joins in the request for stay. The 
Judges granted the motion. See Order on Joint Motion to Stay, Docket 
No. 2009-2 CRB New Subscription II (October 28, 2009).
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    Section 801(b)(7)(A) allows for the adoption of rates and terms 
negotiated by ``some or all of the participants in a proceeding at any 
time during the proceeding'' provided they are submitted to the 
Copyright Royalty Judges for approval. This section provides that in 
such event:

     The Copyright Royalty Judges shall provide to those 
that would be bound by the terms, rates, or other determination set 
by any agreement in a proceeding to determine royalty rates an 
opportunity to comment on the agreement and shall provide to 
participants in the proceeding under section 803(b)(2) that would be 
bound by the terms, rates, or other determination set by the 
agreement an opportunity to comment on the agreement and object to 
its adoption as a basis for statutory terms and rates; and
     The Copyright Royalty Judges may decline to adopt the 
agreement as a basis for statutory terms and rates for participants 
that are not parties to the agreement, if any participant described 
in clause (i) objects to the agreement and the Copyright Royalty 
Judges conclude, based on the record before them if one exists, that 
the agreement does not provide a reasonable basis for setting 
statutory terms or rates.

17 U.S.C. 801(b)(7)(A). Rates and terms adopted pursuant to this 
provision are binding on all copyright owners of sound recordings and 
new subscription services performing the sound recordings on digital 
audio channels programmed by the licensee for transmission by a cable 
or satellite television distribution service to its residential 
customers where the audio channels are bundled with television channels 
as part of a ``basic'' package of service and not for a separate fee. 
See 37 CFR 383.2(h).
    As noted above, the public may comment and object to any or all of 
the proposed regulations contained in this notice of proposed 
rulemaking. Such comments and objections must be submitted no later 
than February 22, 2010.

List of Subjects in 37 CFR Part 383

    Copyright, Digital audio transmissions, Performance right, Sound 
recordings.

Proposed Regulation

    For the reasons set forth in the preamble, the Copyright Royalty 
Judges propose to amend 37 CFR part 383 as follows:

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

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

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


Sec.  383.1  [Amended]

    2. Amend Sec.  383.1 as follows:
    a. In paragraph (a), by removing ``2010'' and adding in its place 
``2015''; and
    b. In paragraph (b), by removing ``112'' and adding in its place 
``112(e)''.


Sec.  383.2  [Amended]

    3. Amend Sec.  383.2 as follows:
    a. In paragraph (d), by removing ``2010'' and adding in its place 
``2015''; and
    b. In paragraph (e), by removing ``112'' and adding in its place 
``112(e)''.
    4. Amend Sec.  383.3 as follows:
    a. In paragraph (a) introductory text, by removing ``112'' and 
adding in its place ``112(e)'' and by adding ``during the License 
Period,'' after ``such transmissions,'';
    b. In paragraph (a)(1)(ii)(E), by removing ``and'';
    c. By adding new paragraphs (a)(1)(ii)(F) through (J);
    d. In paragraph (a)(2)(ii)(E), by removing ``and'';
    e. By adding new paragraphs (a)(2)(ii)(F) through (J);
    f. In paragraph (b), by removing ``112'' and adding in its place 
``112(e)''; and
    g. By adding a new paragraph (c).
    The additions to Sec.  383.3 read as follows:


Sec.  383.3  Royalty fees for public performances of sound recordings 
and the making of ephemeral recordings.

    (a) * * *
    (1) * * *
    (ii) * * *
    (F) 2011: $0.0155
    (G) 2012: $0.0159
    (H) 2013: $0.0164
    (I) 2014: $0.0169
    (J) 2015: $0.0174 and
    (2) * * *
    (ii) * * *
    (F) 2011: $0.0258
    (G) 2012: $0.0265
    (H) 2013: $0.0273
    (I) 2014: $0.0281
    (J) 2015: $0.0290
* * * * *
    (c) Ephemeral recordings. The royalty payable under 17 U.S.C. 
112(e) for the making of phonorecords used by the Licensee solely to 
facilitate transmissions during the License Period for which it pays 
royalties as and when provided in this part shall be included within, 
and constitute 5% of, such royalty payments.
    5. Revise Sec.  383.4 to read as follows:


Sec.  383.4  Terms for making payment of royalty fees.

    (a) Terms in general. Subject to the provisions of this section, 
terms governing timing and due dates of royalty payments to the 
Collective, late fees, statements of account, audit and verification of 
royalty payments and distributions, cost of audit and verification, 
record retention requirements, treatment of Licensees' confidential 
information, distribution of royalties by the Collective, unclaimed 
funds, designation of the Collective, and any definitions for 
applicable terms not defined herein and not otherwise inapplicable 
shall be those adopted by the Copyright Royalty Judges for subscription 
transmissions and the

[[Page 3668]]

reproduction of ephemeral recordings by preexisting satellite digital 
audio radio services in 37 CFR part 382, subpart B of this chapter, for 
the license period 2007-2012. For purposes of this section, the term 
``Collective'' refers to the collection and distribution organization 
that is designated by the Copyright Royalty Judges. For the License 
Period through 2015, the sole Collective is SoundExchange, Inc.
    (b) Reporting of performances. Without prejudice to any applicable 
notice and recordkeeping provisions, statements of account shall not 
require reports of performances.
    (c) Applicable regulations. To the extent not inconsistent with 
this part, all applicable regulations, including part 370 of this 
chapter, shall apply to activities subject to this part.

    Dated: January 15, 2010.
James Scott Sledge,
Chief U.S. Copyright Royalty Judge.
[FR Doc. 2010-1172 Filed 1-21-10; 8:45 am]
BILLING CODE 1410-72-P