[Federal Register Volume 83, Number 227 (Monday, November 26, 2018)]
[Rules and Regulations]
[Pages 60362-60363]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25458]



Copyright Royalty Board

37 CFR Part 384

[Docket No. 17-CRB-0001-BER (2019-2023)]

Determination of Royalty Rates and Terms for Making Ephemeral 
Copies of Sound Recordings for Transmission to Business Establishments 
(Business Establishments III)

AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Final rule.


SUMMARY: The Copyright Royalty Judges (Judges) publish final 
regulations setting rates and terms for the making of an ephemeral 
recording of a sound recording by a business establishment service for 
the period January 1, 2019, through December 31, 2023.

DATES: Effective date: January 1, 2019.

ADDRESSES: For access to the docket to read submitted background 
documents go to eCRB, the Copyright Royalty Board's electronic filing 
and case management system, at https://app.crb.gov/ and search for 
docket number 17-CRB-0001-BER (2019-2023).

FOR FURTHER INFORMATION CONTACT: Anita Blaine, CRB Program Specialist, 
by telephone at (202) 707-7658 or email at [email protected].

SUPPLEMENTARY INFORMATION: In 1995, Congress enacted the Digital 
Performance Right in Sound Recordings Act, Public Law 104-39, which 
created an exclusive right, subject to certain limitations, for 
copyright owners of sound recordings to perform publicly those sound 
recordings by means of certain digital audio transmissions. Among the 
limitations on the performance right was the creation of a statutory 
license for nonexempt, noninteractive digital subscription 
transmissions. 17 U.S.C. 114(d).
    The scope of the section 114 statutory license was expanded in 1998 
upon the passage of the Digital Millennium Copyright Act of 1998 
(DMCA), Public Law 105-34. The DMCA created, inter alia, a statutory 
license for the making of an ``ephemeral recording'' of a sound 
recording by certain transmitting organizations. 17 U.S.C. 112(e). This 
license, among other things, allows entities that transmit performances 
of sound recordings to business establishments to make an ephemeral 
recording of a sound recording for later transmission, pursuant to the 
limitations set forth in section 114(d)(1)(C)(iv).
    Chapter 8 of the Copyright Act requires the Judges to conduct 
proceedings every five years to determine the royalty rates and terms 
for ``the activities described in section 112(e)(1) relating to the 
limitation on exclusive rights specified by section 114(d)(1)(C)(iv).'' 
17 U.S.C. 801(b)(1), 804(b)(2). Accordingly, the Judges published a 
notice commencing the current proceeding and requesting that interested 
parties submit petitions to participate. 82 FR 143 (Jan. 3, 2017).
    The Judges received Petitions to Participate from Mood Media 
Corporation, Music Choice, David Powell, David Rahn,\1\ Rockbot, 
Inc.,\2\ Sirius XM Radio Inc., and SoundExchange, Inc. The Judges 
initiated the three-month negotiation period and directed the 
participants to submit written direct statements no later than May 14, 

    \1\ In his Petition to Participate, Mr. Rahn identified himself 
as a shareholder in SBR Creative Media, Inc. and its subsidiary 
CustomerChannels.net, LLC.
    \2\ Rockbot withdrew its Petition to Participate on January 11, 

    On May 4, 2018, the Judges received a joint Motion to Adopt 
Settlement from Mr. Rahn, Mood Media Corp., Music Choice, Sirius XM 
Radio Inc., and SoundExchange, Inc., (Moving Parties) stating that they 
had reached a settlement obviating the need for written evidentiary 
statements or a hearing.\3\

    \3\ According to the Motion, David Powell, although having filed 
a Petition to Participate, did not otherwise participate in the 
proceeding. Motion at 2. The Moving Parties represent that counsel 
for Mood Media attempted unsuccessfully to contact Mr. Powell to 
discuss the filing of the Motion. Id. at 2-3. Mr. Powell also did 
not respond to the request for comments on the proposed regulations. 
On May 14, 2018, shortly before the proposed regulations were 
published, however, Mr. Powell filed a ``Verified Motion for 
Enlargement of Time, and Agreed with Settlement Parties to Adopt 
Settlement Ex-Parte,'' which the Judges accept as a notice that Mr. 
Powell does not object to the settlement. The Judges make no finding 
with regard to Mr. Powell's eligibility to participate in this 
proceeding. To the extent Mr. Powell has an interest in the business 
establishment services license, he will be bound by the royalty 
rates and terms the Judges adopt.

    Section 801(b)(7)(A) of the Copyright Act authorizes the Judges to 
adopt royalty 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 Judges for approval. The Judges must 
provide ``an opportunity to comment on the agreement'' to participants 
and non-participants in the rate proceeding who ``would be bound by the 
terms, rates, or other determination set by any

[[Page 60363]]

agreement. . . .'' 17 U.S.C. 801(b)(7)(A)(i). Participants in the 
proceeding may also ``object to [the agreement's] adoption as a basis 
for statutory terms and rates.'' Id.
    The Judges ``may decline to adopt the agreement as a basis for 
statutory terms and rates for participants that are not parties to the 
agreement,'' only ``if any participant [in the proceeding] objects to 
the agreement and the [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)(ii). Accordingly, on May 17, 2018, the Judges published a 
document requesting comment on the proposed rates and terms. 83 FR 
22907. The Judges received no timely comments or objections in response 
to the May 17 document.
    Having received no opposition to the proposal and finding that the 
agreement among the moving parties provides a reasonable basis for 
setting statutory terms and rates, the Judges, by this notice, adopt as 
final regulations the rates and terms for the making of an ephemeral 
recording by a business establishment service for the period January 1, 
2019, through December 31, 2023.

List of Subjects in 37 CFR Part 384

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

Final Regulations

    For the reasons set forth in the preamble, the Judges amend part 
384 of chapter III of title 37 of the Code of Federal Regulations as 


1. The authority citation for part 384 continues to read as follows:

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

Sec.  384.1  [Amended]

2. In Sec.  384.1, amend paragraph (a) by removing ``January 1, 2014, 
through December 31, 2018'' and adding ``January 1, 2019, through 
December 31, 2023'' in its place.

3. Amend Sec.  384.3 by:
a. Revising paragraph (a); and
b. In paragraph (b), removing ``$10,000'' and adding ``$20,000'' in its 
    The revision reads as follows:

Sec.  384.3  Royalty fees for ephemeral recordings.

    (a) Basic royalty rate. (1) For the making of any number of 
Ephemeral Recordings in the operation of a Business Establishment 
Service, a Licensee shall pay a royalty equal to the following 
percentages of such Licensee's ``Gross Proceeds'' derived from the use 
in such service of musical programs that are attributable to 
copyrighted recordings:

                             Year                                Rate %
2019.........................................................       12.5
2020.........................................................      12.75
2021.........................................................       13.0
2022.........................................................      13.25
2023.........................................................       13.5

    (2) ``Gross Proceeds'' as used in this section means all fees and 
payments, including those made in kind, received from any source 
before, during or after the License Period that are derived from the 
use of copyrighted sound recordings during the License Period pursuant 
to 17 U.S.C. 112(e) for the sole purpose of facilitating a transmission 
to the public of a performance of a sound recording under the 
limitation on exclusive rights specified in 17 U.S.C. 114(d)(1)(C)(iv). 
The attribution of Gross Proceeds to copyrighted recordings may be made 
on the basis of:
    (i) For classical programs, the proportion that the playing time of 
copyrighted classical recordings bears to the total playing time of all 
classical recordings in the program; and
    (ii) For all other programs, the proportion that the number of 
copyrighted recordings bears to the total number of all recordings in 
the program.
* * * * *

Sec.  384.5  [Amended]

4. In Sec.  384.5, amend paragraph (d)(4) by removing the second comma 
before the word ``subject''.

    Dated: September 17, 2018.

David R. Strickler,
Copyright Royalty Judge.

Jesse M. Feder,
Copyright Royalty Judge.

Suzanne M. Barnett,
Chief Copyright Royalty Judge.

Carla D. Hayden,
Librarian of Congress.
[FR Doc. 2018-25458 Filed 11-23-18; 8:45 am]