[Federal Register Volume 81, Number 97 (Thursday, May 19, 2016)]
[Rules and Regulations]
[Pages 31506-31511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11746]


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LIBRARY OF CONGRESS

Copyright Royalty Board

37 CFR Part 370

[Docket No. RM 2008-7]


Notice and Recordkeeping for Use of Sound Recordings Under 
Statutory License

AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Final rule.

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SUMMARY: The Copyright Royalty Judges are amending a Copyright Royalty 
Board rule regarding reporting requirements for certain Educational 
Stations that pay no more than the minimum fee for their use of sound 
recordings under the applicable statutory licenses.

DATES: Effective May 19, 2016.

[[Page 31507]]


FOR FURTHER INFORMATION CONTACT: Kimberly Whittle at (202) 707-7658 or 
at [email protected].

SUPPLEMENTARY INFORMATION:

Introduction

    On May 2, 2014, the Copyright Royalty Judges (Judges) published a 
document in the Federal Register seeking comments on two unrelated 
rulemaking proposals (Proposal).\1\ For the proposal that is the 
subject of this document the Judges requested comments on a proposed 
rule amendment to relax certain reporting requirements for educational 
stations that pay no more than the minimum fee for the use of sound 
recordings under the statutory licenses in Sections 112(e) and 114 of 
the Copyright Act. The Judges received over twenty comments on the 
proposal, most of which supported it. For the reasons discussed below, 
the Judges adopt the proposed amendment.
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    \1\ See 79 FR 25038. The Judges continue to analyze the second 
rulemaking proposal, submitted by SoundExchange, Inc., and the 
comments responsive thereto.
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Background

    On October 28, 2009, College Broadcasters, Inc. (CBI), American 
Council on Education (ACE), and Intercollegiate Broadcasting System, 
Inc. (IBS) (collectively, ``Petitioners'') filed a motion with the 
Judges seeking clarification of an issue purportedly raised by final 
regulations that the Judges adopted regarding reporting requirements 
for entities that digitally transmit sound recordings pursuant to 
section 114(d)(2) of the Copyright Act or that make ephemeral 
phonorecords of sound recordings pursuant to section 112(e) of that 
Act.\2\ Joint Petition for Clarification, Notice and Recordkeeping for 
Use of Sound Recordings Under the Statutory License, Docket No. RM 
2008-7 (Oct. 28, 2009) (Joint Petition). The regulations at issue are 
found in 37 CFR 370.4, and they prescribe rules for the maintenance and 
delivery of reports of use (ROUs).\3\
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    \2\ The release adopting the regulations appeared in 74 FR 52418 
(Oct. 13, 2009). The applicable rules are codified in 37 CFR part 
370.
    \3\ An ROU is a report required to be provided by an entity that 
transmits sound recordings pursuant to the statutory licenses in 
section 114(d)(2) or that makes ephemeral recordings of sound 
recordings pursuant to section 112(e) of the Copyright Act. 37 CFR 
370.1(i). ROUs must be delivered to the Collective designated by the 
Judges (currently SoundExchange, Inc.). See, e.g., 37 CFR 370.4(c). 
ROUs must include the name of the entity making the transmissions, a 
category transmission code, the featured artist of the sound 
recording, and the sound recording title, among other information. 
The current proceeding is focused only on the reporting requirements 
of ``nonsubscription transmission services,'' which are entities 
that provide audio programming consisting of performances of sound 
recordings. See 37 CFR 370.1(e). Such services are often referred to 
as webcasters.
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    For nonsubscription transmission services, except those qualifying 
as minimum fee broadcasters, the ROU must include the actual total 
performances of each sound recording during the reporting period. 37 
CFR 370.4(d)(2)(vi). Minimum fee broadcasters, however, may report, as 
an alternative to actual total performances, the aggregate tuning 
hours, the channel or program name, and play frequency. 37 CFR 
370.4(d)(2)(vii).
    Whereas most services must prepare an ROU for each calendar month 
of the year, a minimum fee broadcaster need only prepare an ROU for a 
two-week period for each calendar quarter of the year. 37 CFR 
370.4(d)(3).\4\ However, the regulations exempt minimum-fee 
broadcasters from the census reporting requirement (i.e., the 
requirement to report actual total performances) only if their stations 
are licensed by the Federal Communications Commission (FCC) because the 
FCC licensing is part of the definition of ``broadcaster.'' Petitioners 
asked that the Judges ``clarify'' that the regulations also exempt 
minimum-fee broadcasters that are not FCC-licensed broadcasters if they 
are ``educational'' in nature. Joint Petition at 2-4.
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    \4\ The weeks need not be consecutive but both must be 
completely within the calendar quarter. 37 CFR 370.4(d)(3)(ii).
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    After reviewing the Joint Petition, the Judges concluded that 
Petitioners were not seeking a clarification of the final regulations 
but rather were seeking a substantive change. In other words, the 
``clarification'' that the Petitioners sought actually amounted to a 
request to amend the census reporting requirement regulations to exempt 
non-FCC-licensed minimum-fee educational webcasters. The Judges thus 
determined that Petitioners' petition for clarification should be 
treated as a petition for rulemaking and made the Joint Petition 
subject to notice and public comment.\5\
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    \5\ 79 FR at 25039.
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    On May 2, 2014, the Judges published the Proposal in the Federal 
Register seeking comments on the Petitioners' proposal.\6\ The Judges 
requested comments on not only the Petitioners' principal proposal, 
which would exempt non-FCC-licensed minimum fee educational webcasters 
from the census reporting requirement, but also on a broader 
alternative proposal that Petitioners proffered that would expand the 
census reporting exemption to entities that are noncommercial 
webcasters but that would not be considered educational entities under 
the Petitioners' proposal.
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    \6\ 79 FR 25038. In the interest of administrative efficiency, 
the Judges also sought comments in the same notice on an unrelated 
petition for rulemaking that SoundExchange submitted. 
SoundExchange's proposal, which requested a broad range of changes 
to CRB rules, is still pending. The current release addresses only 
the census reporting requirement proposal submitted by the 
Petitioners.
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    In response to the Proposal, the Judges received approximately 
twenty-four comments.\7\ No commenter opposed the Petitioners' proposal 
for educational webcasters. SoundExchange did, however, oppose 
Petitioners' broader alternative proposal to exclude from the census 
reporting requirements noneducational noncommercial webcasters. As 
discussed below, the Judges are adopting the Petitioners' proposed 
exemption for non-FCC-licensed educational broadcasters, but are not 
adopting the broader noncommercial webcaster exemption.
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    \7\ The Judges received comments that addressed in some fashion 
the Petitioners' proposal from the following: All-Campus Radio 
Network (ACRN), Andrea Baker, CBI, IBS, KBCU-FM, KBHU-FM, KNHC, 
KSSU, KUIW, KWSC-FM, KXUL, Lasell College Radio, the National 
Association of Broadcasters and Radio Music License Committee (NAB/
RMLC), NPR, SCAD Atlanta Radio, SoundExchange, WBSU, WGSU-FM, WJCU, 
WKNC-FM, WRFL-FM, WSDP-FM, WSLX, and WSOU-FM (Seton Hall 
University).
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Petitioners' Rule Proposal

    Petitioners propose that the definition of a ``minimum fee 
broadcaster'' in 37 CFR 370.4(b)(3) be amended to include a 
nonsubscription service that: (1) Is directly operated by, or 
affiliated with and officially sanctioned by a domestically accredited 
primary or secondary school, college, university, or other post-
secondary degree-granting educational institution; and (2) the digital 
audio transmission operations of which are, during the course of the 
year, staffed substantially by students enrolled in such institution; 
and (3) is not a ``public broadcasting entity'' (as defined in 17 
U.S.C. 118(g)) qualified to receive funding from the Corporation for 
Public Broadcasting (CPB) pursuant to the criteria set forth in 47 
U.S.C. 396; and (4) is exempt from taxation under section 501 of the 
Internal Revenue Code, has applied for such exemption, or is operated 
by a State or possession or any governmental entity or subordinate 
thereof, or by the United States or District of Columbia, for 
exclusively public purposes. Joint Petition at 2 n.1. While the 
proposed language upon which the Judges requested comments did not 
incorporate CBI's singular reference to ``Educational Stations,'' the 
proposal retained the substance of the Petitioners' proposal.
    In the Proposal soliciting comment on the proposal, in addition to 
seeking

[[Page 31508]]

comments on the proposal generally, the Judges also sought comments on 
certain specific issues. In particular, the Judges sought comment on 
how unlicensed minimum fee ``Educational Stations,'' as that term would 
be defined in Petitioners' proposal, have been reporting under the 
current regulations. The Judges also asked whether any such entities 
have ceased operations, as predicted by Petitioners and if so, how 
many. If none ceased operations, the Judges asked whether the need 
still exists for Petitioners' proposed amendment. The Judges also asked 
whether Petitioners have, in the first instance, made their case 
persuasively that the proposed amendment is warranted. If the change is 
warranted, the Judges asked whether they should adopt (1) Petitioners' 
preferred definition, which applies only to Educational Stations, or 
(2) the broader, alternate definition.\8\
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    \8\ 79 FR at 25040.
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Comment Summary

    Of the 24 comments the Judges reviewed, none opposed the specific 
language included in the Proposal, although, as discussed below, 
SoundExchange opposed adopting a more expansive exemption from the 
census reporting requirements for noncommercial webcasters that are not 
affiliated with an educational organization.
    All-Campus Radio Network's (ACRN) comment is illustrative of those 
that supported the proposal. Because it has no FCC license, ACRN cannot 
qualify as a ``minimum fee broadcaster'' under 37 CFR 370.4(b)(3).\9\ 
ACRN is, however, a Noncommercial Educational Webcaster (NEW) as 
defined in 37 CFR 380.21.\10\ As such, ACRN has a reporting waiver 
under 37 CFR 380.23(c) and (g)(1), which authorizes payment to the 
Collective of a $100 proxy fee in lieu of maintaining and delivering 
ROUs. ACRN would like to continue to report as a NEW indefinitely.\11\ 
In the alternative, ACRN supports the proposal to change 37 CFR 
370.4(b)(2) so that ACRN would qualify as a minimum fee 
broadcaster.\12\ It views this option as less desirable, however.
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    \9\ Section 370.4(b)(3) states that a minimum fee broadcaster is 
a nonsubscription service that meets the definition of a broadcaster 
pursuant to Sec.  380.2(b) and the service's payments for eligible 
transmissions do not exceed the annual minimum fee established for 
licensees relying upon the statutory licenses set forth in 17 U.S.C. 
112 and 114. At the time of the motion for clarification 37 CFR 
380.2 defined a broadcaster as a type of Licensee that owns and 
operates a terrestrial AM or FM radio station that is licensed by 
the Federal Communications Commission.
    \10\ Under Sec.  380.21, a NEW is a noncommercial webcaster (as 
defined in 17 U.S.C. 114(f)(5)(E)(i)) that has obtained a compulsory 
license, complies with all applicable provisions of the license, is 
operated by or affiliated with and sanctioned by a primary or 
secondary school, college or university or other degree-granting 
educational institution, and is not a public broadcasting entity 
qualified to receive funding from the CPB. 17 CFR 380.21. As part of 
the supporting regulations for the Section 112 and 114 webcasting 
licenses, Sec.  380.21, by its terms, expires at the end of each 
licensing period (currently December 31, 2020). See 37 CFR 
380.20(a). The most recent iteration of Sec.  380.21, which was 
adopted after comments in the current rulemaking proceeding were 
filed, includes an additional requirement that the noncommercial 
webcaster take affirmative steps not to make total transmissions in 
excess of 159,140 Aggregate Tuning Hours on any individual channel 
or station in any month, if in any previous calendar year it has 
made total transmissions in excess of 159,140 Aggregate Tuning Hours 
on any individual channel or station in any month. 37 CFR 380.21 
(2015).
    \11\ As part of the supporting regulations for the webcasting 
licenses, the reporting waiver expires every five years, unless it 
is renewed.
    \12\ ACRN states that the proposed changes are ``warranted only 
if the alternative to report under 380.23 were to not sunset 
[sic].'' ACRN Comment at 3, emphasis in original. Read in the 
context of the ACRN letter as a whole, it appears that ACRN meant 
that the proposed changes would be warranted only if the alternative 
to report under 380.23 were to sunset.
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    KBCU-FM, KBHU, KNHC, KSSU, KWSC-FM, and KXUL all generally 
concurred with the position of ACRN. KUIW and Lasell College Radio, 
which also support the proposal, state that they would probably have to 
cease broadcasting if the reporting provision for NEWs were to expire 
and they could not qualify as minimum fee broadcasters.\13\
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    \13\ KUIW Comment at 1-2. Lasell Comment at 1-2. Each commenter 
recommends that the reporting requirements applicable to NEWs be 
made permanent. Such a recommendation is beyond the scope of the 
proposal upon which the Judges sought comment in the current 
proceeding. As such, the Judges do not have adequate support in the 
record to support adopting such a proposal.
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    CBI supports continuing the reporting requirements in Sec.  380.23, 
which were negotiated as part of a settlement with SoundExchange, 
because, according to CBI, those requirements are simpler to follow and 
impose fewer obstacles than the rules with which non-NEWS must comply. 
CBI Comment at 5. CBI states that it conducted a survey and determined 
that fewer than 13% of non-FCC-licensed stations are currently able to 
report actual total performance (ATP) data. According to CBI, fewer 
than 18% of those stations reported that they would be able to find a 
means to comply with full census ATP reporting should the requirements 
in Sec.  380.23 be allowed to expire and the proposed regulations in 
the Joint Petition not be adopted.\14\ Neither CBI nor any other 
commenter provided data on any non-licensed entity that ceased 
operation due to the ROU reporting requirement. That being said, the 
great majority of commenters that are subject to the ROU reporting 
requirement appear to be paying the $100 proxy fee in lieu of reporting 
(an alternative that is now available through 2020). See Determination 
(final), Determination of Royalty Rates and Terms for Ephemeral 
Recording and Webcasting Digital Performance of Sound Recordings (Web-
IV), Docket No. 14-CRB-0001-WR (2016-2020) (Mar. 2, 2016).
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    \14\ Andrea Baker supports applying the Petitioner's preferred 
definition of ``minimum fee broadcaster'' because, according to Ms. 
Baker, the proposal is more likely to move users of sound recordings 
away from reporting of sampled data. The proposal would in fact 
allow more users to choose to report sampled data. Through 2020, 
however, to the extent they qualify to pay the proxy fee in lieu of 
reporting, the users that would benefit from the proposal are not 
reporting any sound recording play data.
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    Not surprisingly, IBS also supports its Joint Petition. IBS adds 
that it agrees with SoundExchange's position that NEWs with fewer than 
55,000 aggregate tuning hours (ATH) per month should be permitted to 
pay an annual $100 proxy fee in lieu of census reporting. IBS also 
contends that NEWs with fewer than 15,914 ATH monthly should pay a $50 
proxy fee and NEWS with fewer than 6,365 ATH monthly should pay a $20 
proxy fee. IBS believes that each of these categories should be exempt 
from the $500 annual minimum fee. Reply Comments of IBS at 1. Because 
IBS made its suggestions in Reply Comments, the Judges were unable to 
include them in the Proposal, and therefore have no basis upon which to 
adopt them.
    The National Association of Broadcasters (NAB) and the Radio Music 
License Committee (RMLC) advocate an exemption from all reporting 
requirements for broadcasters that currently pay the minimum fee of 
$500. They contend that many of these entities are already exempt from 
reporting requirements as long as they pay the $100 annual proxy fee 
(i.e., small broadcasters that stream no more than 27,777 aggregate 
tuning hours (ATH) and noncommercial educational webcasters that stream 
less than 55,000 annual ATH). Moreover, according to NAB, most of these 
entities play ``mainstream'' music that larger broadcasters play so the 
allocations of royalties paid by these entities could be made based on 
playlist data collected from larger broadcasters. NAB/RMLC Comment at 
51-52.
    According to National Public Radio, Inc. (NPR), the current 
recordkeeping and reporting system is the result of a settlement 
agreement between SoundExchange and the CPB. NPR estimates that about 
402 stations operate

[[Page 31509]]

under the agreement. NPR Comment at 7. NPR notes that it aggregates the 
reports of each of these stations and reports directly to SoundExchange 
on behalf of all the stations. NPR states that it currently operates 
under the settlement agreement with SoundExchange, and, as a result, it 
is not subject to certain of the reporting and recordkeeping 
requirements in the regulations. NPR believes, however, that the 
regulations should be flexible to allow parties that are not parties to 
agreements to be able to use the license in a manner that is not overly 
burdensome. NPR Comment at 1-3.
    SCAD Atlanta Radio \15\ is a NEW under 37 CFR 380.21. It is a web-
only, student-run station and does not have an FCC license so it cannot 
qualify as a minimum fee broadcaster under 37 CFR 370.4(b)(3). As a 
NEW, SCAD Atlanta pays the proxy fee in lieu of reporting, as permitted 
under 37 CFR 380.23. It would like to continue to report that way and 
therefore requests that the sunset provisions in the regulations be 
removed. In the alternative, SCAD Atlanta supports the proposed change 
to 37 CFR 370.4(b)(2), which would qualify SCAD Atlanta as a minimum 
fee broadcaster if the NEW designation sunsets. SCAD Atlanta states 
that if it lost the ability to report as a NEW and was forced to report 
monthly census data, the station would face considerable hardship and 
expense. SCAD Atlanta Comment at 2.
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    \15\ SCAD Atlanta states that the station is produced by 
students at the Atlanta location of the Savannah College of Art and 
Design. The Judges also received a substantially identical comment 
from ``SCAD Radio,'' which states that the station is produced by 
students at the Savannah location of the Savannah College of Art and 
Design.
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    In its initial comment, SoundExchange stated that the Joint 
Petition is moot through 2015 (and now presumably through 2020). 
According to SoundExchange, pursuant to 37 CFR 380.23(g)(2), a NEW with 
usage at a level covered by the minimum fee is currently permitted to 
provide ROUs on a sample basis as contemplated by proposed Sec.  
370.4(b)(2) and is even excused from reporting its ATH. SoundExchange 
Comment at 3. SoundExchange notes that such services report play 
frequency in lieu of reporting ATH or actual total performances.
    SoundExchange states that the vast majority of NEWs are not even 
required to provide sample ROUs. SoundExchange states that, pursuant to 
37 CFR 380.23(g)(1), NEWs with the lowest intensity of usage may elect 
to pay a proxy fee of $100 and forgo providing ROUs altogether. 
According to SoundExchange, for 2013, 97% of NEWs elected this 
reporting waiver and were not required to provide any ROUs. As a result 
of the Web-IV Determination, Sec.  380.23(g)(1) and (2) remain in 
effect through 2020, at which point the Judges will determine rates and 
terms for the next rate period (2021-2025) (Web-V).
    Nevertheless, SoundExchange does not oppose the Petitioners' 
proposed definition of ``Minimum Fee Broadcaster'' for Sec.  
370.4(b)(2). SoundExchange highlights certain technical errors in the 
proposal (i.e., SoundExchange opines that there should be a comma 
following the phrase ``officially sanctioned by'' in Sec.  
370.4(b)(2)(ii) and the reference in proposed Sec.  370.4(b)(2)(iv) 
should be Section 118(f) (rather than 118(g)).\16\ SoundExchange also 
recommends changing the proposed term from ``Minimum Fee Broadcaster'' 
to ``Eligible Minimum Fee Webcaster'' (or the like) to more accurately 
reflect the fact that certain of the services covered are not 
broadcasters. SoundExchange Comment at n.2.\17\ According to 
SoundExchange, adoption of this proposal ``seems like a reasonable 
deviation from the important principle of census reporting.'' 
SoundExchange Comment at 4.
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    \16\ The Judges adopted these technical corrections in the final 
regulation.
    \17\ The Judges believe that the term ``eligible minimum fee 
webcaster'' more accurately reflects the fact that some of the 
entities covered by the definition would not satisfy the applicable 
definition of broadcaster and therefore accept SoundExchange's 
suggestion in the adopted regulation.
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    SoundExchange does not support the broader alternative proposal to 
include internet-only noncommercial webcasters that are not educational 
webcasters (which are not currently covered by Sec.  380.23(g)(2)). For 
such webcasters, if they are staffed by professionals or use modern 
content management technology capable of readily generated ROUs on a 
census basis, they should not be exempted from census reporting just 
because they are low-intensity noncommercial users. SoundExchange does 
not believe that the Petitioners have made the case for a broader 
exemption. SoundExchange Comment at 4.
    While SoundExchange is not opposed to the narrow proposed 
definition of Minimum Fee Broadcaster in Sec.  370.4(b) (with the 
technical corrections discussed above), SoundExchange notes that ``NEWs 
would like to include in the notice and recordkeeping regulations the 
outright reporting waiver and play frequency reporting provisions of 
Section 380.23(g), but not the late fee for ROUs provided in Section 
380.23(e) or the server log retention provisions of Section 
380.23(i).'' SoundExchange Reply Comments at 7. SoundExchange does not 
believe that NEWs should be given their requested ``special exemption'' 
in these regulations because, according to SoundExchange, ``their 
concerns are addressed directly in the terms to which CBI agreed.'' 
SoundExchange Reply Comments at 8.
    SoundExchange does not believe it is fair for NEWs to pick and 
choose their favorite provisions from Sec.  380.23 that were negotiated 
by CBI. SoundExchange notes that the agreement to settle the Web IV 
proceeding as to NEWs on a basis that would generally extend the 
relevant provisions of Sec.  380.23 moots the issues raised in the 
Joint Petition through 2020. Anticipating the adoption of such 
agreement, which the Judges adopted during the Web IV proceeding, 
SoundExchange found no reason for the Judges to adopt the proposals in 
the NPRM based on the Joint Petition. SoundExchange speculates that 
under such a scenario, the Judges could revisit the question of 
reporting by NEWs based on a fresh record in five years. Otherwise, 
SoundExchange recommends that the Judges either adopt the equivalent of 
all the relevant provisions of Sec.  380.23 (i.e., the proposed late 
fee for ROUs and proposed recordkeeping provisions) or adopt only the 
changes to the definition of Minimum Fee Broadcaster proposed in the 
NPRM. SoundExchange Reply Comments at 9.

SoundExchange Settlement With CBI

    In the context of the Web IV proceeding, the Judges were presented 
with two settlements that bear on the reporting requirements at issue 
in this rulemaking.\18\ In one settlement, SoundExchange and CBI 
requested that the Judges adopt their agreement as a partial settlement 
of rates and terms under Section 112(e) and 114 of the Copyright Act 
(Act) for eligible nonsubscription transmissions by NEWs over the 
internet, and related ephemeral recordings. In the Federal Register 
document adopting the SoundExchange/CBI settlement, the Judges noted:
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    \18\ See 80 FR 58201 (Sept. 28, 2015) (adopting proposed 
settlement between SoundExchange and CBI) and 80 FR 59588 (Oct. 2, 
2015) (adopting proposed settlement between SoundExchange and NPR 
and the CPB).

    Commercial webcasters are required to make detailed, census 
reports of all sound recordings they transmit. NEWs with limited 
listenership may pay the Collective a proxy fee to avoid the burden 
of census

[[Page 31510]]

reporting. . . . A NEW electing the reporting waiver in 37 CFR 
380.23(g)(1) must pay a $100 annual proxy fee to the Collective. 
Proposed Rule 37 CFR 380.22(a).\19\
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    \19\ 80 FR at 58201.

    In adopting the SoundExchange/CBI Settlement, the Judges noted the 
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relevance of the Settlement to the current rulemaking proceeding:

    Many if not most of the comments responsive to the proposed 
recordkeeping provisions were filed by NEWs that apparently would 
qualify under the proposed Settlement to pay the proxy fee in lieu 
of census reporting in the upcoming license period. Extension until 
December 31, 2020, of the proxy fee in lieu of census reporting does 
not, however, address the precise issue raised in that rulemaking 
proceeding. The Judges shall address this issue along with a number 
of other issues relating to Part 370 in a separate publication 
focused directly on the May 2, 2014, Notice of Proposed 
Rulemaking.\20\
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    \20\ 80 FR 58201, 58205 (Sept. 28, 2015).

    In other words, although the SoundExchange/CBI settlement provided 
a means for qualifying NEWs to pay a $100 proxy fee in lieu of census 
reporting through December 31, 2020, it does not, as the current 
proposal would, provide a permanent means for entities that meet the 
proposed definition of noncommercial educational webcasters to pay the 
proxy fee in lieu of census reporting. In light of the overwhelming 
support in favor of such a reporting waiver and the lack of opposition, 
the Judges find that adopting the proposed alternative for a permanent 
exemption from census reporting requirements is beneficial and 
consistent with the Copyright Act.
    Given their adoption of the proposed exemption, the Judges decline 
to adopt a broader alternative proposed by Petitioners. Notwithstanding 
the unique stature of NEWs as noncommercial entities with an 
educational mission, the Judges do not believe extending the exemption 
to other noncommercial webcasters would be consistent with the policy 
intended to ease reporting obligations on NEWs. As discussed by some of 
the commenters, NEWs are often student-operated stations. The students 
generally perform station operations to supplement their academic 
pursuits during a given academic term. As a rule, with semester and 
summer breaks, the stations lack operational continuity.
    Without a paid administrative staff and adequate financial and 
technological support, census reporting would present a significant 
challenge for those stations that could cause the educational 
institution to discontinue the stations to avoid the administrative 
burdens. Neither the students, the educational entity, nor the artists 
would benefit from elimination of the campus stations. The Judges agree 
with SoundExchange, however, that noncommercial noneducational 
webcasters have not made the case that they face the same challenges. 
Therefore, the Judges decline to extend the reporting requirement 
exemption to noncommercial webcasters that do not have the requisite 
affiliation with an educational institution.
    SoundExchange contends that in light of the agreements 
SoundExchange, CPB, CBI, and NPR reached during the Web IV proceeding, 
which the Judges adopted, the current rulemaking is moot, at least 
through 2020. While the Judges agree that many webcasters that are 
eligible for either of the agreements will choose to pay the proxy fee 
in lieu of reporting, each such agreement has conditions and 
limitations that would not apply with respect to the proposal the 
Judges adopt today. Moreover, by adopting the proposal in the Petition 
as a permanent rule, the Judges provide certainty that, even if the 
current agreements are not extended in subsequent rate periods, 
eligible noncommercial educational webcasters will be able to avail 
themselves of the reduced reporting requirements in Sec.  370.4, 
regardless of whether they are licensed with the FCC. Such certainty is 
sufficient justification for adopting the proposal.

Final Regulations

    In consideration of the foregoing, the Copyright Royalty Judges 
amend 37 CFR part 370 as follows:

PART 370--NOTICE AND RECORDKEEPING REQUIREMENTS FOR STATUTORY 
LICENSES

0
1. The authority citation for part 370 continues to read as follows:

    Authority:  17 U.S.C. 112(e)(4), 114(f)(4)(A).


0
2. Revise Sec.  370.4(a) and (b) to read as follows:


Sec.  370.4  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 for the maintenance and 
delivery of Reports of Use of sound recordings under section 112(e) or 
section 114 of title 17 of the United States Code, or both, by 
nonsubscription transmission services, preexisting satellite digital 
audio radio services, new subscription services, and business 
establishment services.
    (b) Definitions. For purposes of this section, the following 
definitions apply:
    Aggregate Tuning Hours means 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 (d)(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.
    AM/FM Webcast means 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).
    Broadcaster means an entity that:
    (i) Has a substantial business owning and operating one or more 
terrestrial AM or FM radio stations that are licensed as such by the 
Federal Communications Commission;
    (ii) Has obtained a compulsory license under 17 U.S.C. 112(e) and 
114 and the implementing regulations therefor to make Eligible 
Transmissions and related ephemeral recordings;

[[Page 31511]]

    (iii) Complies with all applicable provisions of Sections 112(e) 
and 114 and applicable regulations; and
    (iv) Is not a noncommercial webcaster as defined in 17 U.S.C. 
114(f)(5)(E)(i).
    Eligible Minimum Fee Webcaster means a nonsubscription transmission 
service whose payments for eligible transmissions do not exceed the 
annual minimum fee established for licensees relying upon the statutory 
licenses set forth in 17 U.S.C. 112(e) and 114; and either:
    (i) Meets the definition of a broadcaster; or
    (ii) Is directly operated by, or affiliated with and officially 
sanctioned by, a domestically accredited primary or secondary school, 
college, university or other post-secondary degree-granting educational 
institution; and
    (A) The digital audio transmission operations of which are, during 
the course of the year, staffed substantially by students enrolled in 
such institution; and
    (B) Is not a ``public broadcasting entity'' (as defined in 17 
U.S.C. 118(f)) qualified to receive funding from the Corporation for 
Public Broadcasting pursuant to the criteria set forth in 47 U.S.C. 
396; and
    (C) Is exempt from taxation under section 501 of the Internal 
Revenue Code, has applied for such exemption, or is operated by a State 
or possession or any governmental entity or subordinate thereof, or by 
the United States or District of Columbia, for exclusively public 
purposes.
    Minimum fee broadcaster means a nonsubscription service that meets 
the definition of a broadcaster and the service's payments for eligible 
transmissions do not exceed the annual minimum fee established for 
licensees relying upon the statutory licenses set forth in 17 U.S.C. 
112 and 114.
    Performance means 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).
    Play frequency means 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 recording. If a 
particular sound recording is transmitted to listeners on a particular 
channel or program only once during the reporting period, then the play 
frequency is one. If the sound recording is transmitted 10 times during 
the reporting period, then the play frequency is 10.
* * * * *

    Dated: May 10, 2016.
Suzanne M. Barnett,
Chief Copyright Royalty Judge.
    Approved by:
David S. Mao,
Acting Librarian of Congress.
[FR Doc. 2016-11746 Filed 5-18-16; 8:45 am]
 BILLING CODE 1410-72-P