[Federal Register Volume 84, Number 209 (Tuesday, October 29, 2019)]
[Proposed Rules]
[Pages 57833-57836]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-23486]


=======================================================================
-----------------------------------------------------------------------

LIBRARY OF CONGRESS

Copyright Royalty Board

37 CFR Part 380

[Docket No. 19-CRB-0005-WR (2021-2025) (Web V)]


Determination of Royalty Rates and Terms for Ephemeral Recording 
and Digital Performance of Sound Recordings (Web V)

AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Proposed rule related to public broadcasters (radio).

-----------------------------------------------------------------------

SUMMARY: The Copyright Royalty Judges are publishing for comment 
proposed regulations governing the rates and terms for the digital 
performances of sound recordings by certain public radio stations and 
for the making of ephemeral recordings necessary to facilitate those 
transmissions for the period commencing January 1, 2021, and ending on 
December 31, 2025.

DATES: Comments and objections, if any, are due no later than November 
19, 2019.

ADDRESSES: You may submit comments and proposals, identified by docket 
number 19-CRB-0005-WR (2021-2025), by any of the following methods:
    CRB's electronic filing application: Submit comments and proposals 
online in eCRB at https://app.crb.gov/.
    U.S. mail: Copyright Royalty Board, P.O. Box 70977, Washington, DC 
20024-0977; or
    Overnight service (only USPS Express Mail is acceptable): Copyright 
Royalty Board, P.O. Box 70977, Washington, DC 20024-0977; or
    Commercial courier: Address package to: Copyright Royalty Board, 
Library of Congress, James Madison Memorial Building, LM-403, 101 
Independence Avenue SE, Washington, DC 20559-6000. Deliver to: 
Congressional Courier Acceptance Site, 2nd Street NE and D Street NE, 
Washington, DC; or
    Hand delivery: Library of Congress, James Madison Memorial 
Building, LM-401, 101 Independence Avenue SE, Washington, DC 20559-
6000.
    Instructions: Parties unable to use eCRB must submit an original, 
two paper copies, and an electronic version on a CD. All submissions 
must include a reference to the Copyright Royalty Board name and docket 
number (19-CRB-0005-WR (2021-2025)), as well as the Federal Register 
citation for this proposed rule. All submissions will be posted without 
change to eCRB at https://app.crb.gov/ including any personal 
information provided.
    Docket: For access to the docket to read submitted background 
documents or comments, go to eCRB, the Copyright Royalty Board's 
electronic filing and case management system, at https://app.crb.gov/ 
and search for docket number 19-CRB-0005-WR (2021-2025).

FOR FURTHER INFORMATION CONTACT: Anita Blaine, Program Specialist, by 
telephone at (202) 707-0078 or email at [email protected].

SUPPLEMENTARY INFORMATION: On September 23, 2019, the Copyright Royalty 
Judges (Judges) received a joint motion from SoundExchange, Inc. 
(``SoundExchange''), National Public Radio, Inc. (``NPR''), and the 
Corporation for Public Broadcasting (``CPB'') (together, the ``Settling 
Parties'') to adopt a partial settlement of their interests related to 
Web V royalty rates and terms for 2021-2025 \1\ for

[[Page 57834]]

certain internet transmissions by public broadcasters, NPR, American 
Public Media, Public Radio International, Public Radio Exchange, and 
certain other unnamed public radio stations. Joint Motion to Adopt 
Partial Settlement, Docket No. 19-CRB-0005-WR (2021-2025). Their 
interests concern the rule setting minimum copyright royalty fees and 
terms that the Judges will establish for compulsory copyright licenses 
for certain internet transmissions of sound recordings by public radio 
stations for the period from January 1, 2021, through December 31, 
2025. SoundExchange, Inc. represents the interests of sound recording 
copyright owners and performers. The public broadcaster parties are 
users of the copyrighted material, and CPB provides significant funding 
for those parties. CPB is the entity that will pay the royalties 
pursuant to the settlement. The Judges hereby publish the agreed 
proposal and request comments from the public.
---------------------------------------------------------------------------

    \1\ Web V is short for Webcasting V. This proceeding is the 
fifth since Congress enacted the compulsory sound recording 
performance license for webcasting.
---------------------------------------------------------------------------

    Section 114 of the Copyright Act, title 17 of the United States 
Code, provides a statutory license that allows for the public 
performance of sound recordings by means of a digital audio 
transmission by, among others, eligible nonsubscription transmission 
services. 17 U.S.C. 114(f). For purposes of the section 114 license, an 
``eligible nonsubscription transmission'' is a noninteractive digital 
audio transmission that does not require a subscription for receiving 
the transmission. The transmission must also be made as part of a 
service that provides audio programming consisting in whole or in part 
of performances of sound recordings the purpose of which is to provide 
audio or other entertainment programming, but not to sell, advertise, 
or promote particular goods or services. See 17 U.S.C. 114(j)(6).
    Services using the section 114 license may need to make one or more 
temporary or ``ephemeral'' copies of a sound recording to facilitate 
the transmission of that recording. The section 112 statutory license 
allows for the making of the necessary ephemeral reproductions. 17 
U.S.C. 112(e).
    Chapter 8 of the Copyright Act requires the Judges to conduct 
proceedings every five years to determine the rates and terms for the 
sections 114 and 112 statutory licenses. 17 U.S.C. 801(b)(1), 
804(b)(3)(A). The current proceeding commenced in January 2019 for 
rates and terms that will become effective on January 1, 2021, and end 
on December 31, 2025. Pursuant to section 804(b)(3)(A), the Judges 
published in the Federal Register a notice commencing the proceeding 
and requesting that interested parties submit their petitions to 
participate. 84 FR 359 (Jan. 24, 2019). NPR \2\ and SoundExchange each 
submitted petitions to participate, as did other parties.
---------------------------------------------------------------------------

    \2\ NPR is participating on behalf of itself, its member and 
affiliated stations, and all public radio stations and entities 
eligible to receive funding from CPB. NPR Petition to Participate at 
1 (Feb. 4, 2019).
---------------------------------------------------------------------------

    On September 23, 2019, the Settling Parties submitted to the Judges 
a joint motion to adopt a partial settlement of their interests in the 
proceeding. The parties requested that the Judges ``endeavor to 
determine before the deadline for the filing of written rebuttal 
statements in this Proceeding (January 10, 2020) whether they will 
adopt the settlement.'' Joint Motion at 1.

Statutory Timing of Adoption of Rates and Terms

    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 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).

Proposed Adjustments to Rates and Terms

    The Settlement continues the structure of previous settlements 
between the parties, while increasing the payment to be made by CPB. 
Joint Motion at 2. Because the Settlement applies to only a closed 
group of licensees, and has only a single payor (CPB), the Settlement 
is being submitted to the Judges for adoption as a statutory rate and 
terms only so that it will be binding on all artists and copyright 
owners, including those that are not members of SoundExchange. Joint 
Motion at 2-3. The parties have agreed to continue their prior 
reporting arrangements but have not included the details of those 
arrangements in the Settlement, which, they believe, is consistent with 
guidance that the Judges have provided. Joint Motion at 3 and n.1. The 
parties have styled their proposed regulations as a replacement subpart 
D to appear in the Judges' regulations at 37 CFR part 380 and have set 
forth in proposed new subpart D only regulatory provisions specific to 
Public Broadcasters, on the assumption that the generally applicable 
provisions in subpart A will apply to Public Broadcasters to the extent 
consistent with subpart D. Joint Motion at 6, Attachment A.
    The public may comment and object to any or all of the proposed 
regulations contained in this document. Such comments and objections 
must be submitted no later than November 19, 2019.

List of Subjects in 37 CFR Part 380

    Copyright, Sound recordings, Webcasters.

    For the reasons set forth in the preamble, the Copyright Royalty 
Judges propose to amend 37 CFR part 380 as follows:

PART 380--RATES AND TERMS FOR TRANSMISSIONS BY ELIGIBLE 
NONSUBSCRIPTION SERVICES AND NEW SUBSCRIPTION SERVICES AND FOR THE 
MAKING OF EPHEMERAL REPRODUCTIONS TO FACILITATE THOSE TRANSMISSIONS

0
1. The authority citation for part 380 continues to read as follows:

    Authority:  17 U.S.C. 112(e), 114(f), 804(b)(3).

0
2. Revise subpart D to read as follows:

Subpart D--Public Broadcasters

Sec.
380.30 Definitions.
380.31 Royalty fees for the public performance of sound recordings 
and for ephemeral recordings.
380.32 Terms for making payment of royalty fees and statements of 
account.


Sec.  380.30  Definitions.

    For purposes of this subpart, the following definitions apply:
    Authorized website is any website operated by or on behalf of any 
Public Broadcaster that is accessed by website Users through a Uniform 
Resource Locator (``URL'') owned by such Public Broadcaster and through 
which website

[[Page 57835]]

Performances are made by such Public Broadcaster.
    CPB is the Corporation for Public Broadcasting.
    Music ATH is aggregate tuning hours of website Performances of 
sound recordings of musical works.
    NPR is National Public Radio, Inc.
    Originating Public Radio Station is a noncommercial terrestrial 
radio broadcast station that--
    (1) Is licensed as such by the Federal Communications Commission;
    (2) Originates programming and is not solely a repeater station;
    (3) Is a member or affiliate of NPR, American Public Media, Public 
Radio International, or Public Radio Exchange, a member of the National 
Federation of Community Broadcasters, or another public radio station 
that is qualified to receive funding from CPB pursuant to its criteria;
    (4) Qualifies as a ``noncommercial webcaster'' under 17 U.S.C. 
114(f)(4)(E)(i); and
    (5) Either--
    (i) Offers website Performances only as part of the mission that 
entitles it to be exempt from taxation under section 501 of the 
Internal Revenue Code of 1986 (26 U.S.C. 501); or
    (ii) In the case of a governmental entity (including a Native 
American Tribal governmental entity), is operated exclusively for 
public purposes.
    Person is a natural person, a corporation, a limited liability 
company, a partnership, a trust, a joint venture, any governmental 
authority or any other entity or organization.
    Public Broadcasters are NPR, American Public Media, Public Radio 
International, and Public Radio Exchange, and up to 530 Originating 
Public Radio Stations as named by CPB. CPB shall notify SoundExchange 
annually of the eligible Originating Public Radio Stations to be 
considered Public Broadcasters per this definition (subject to the 
numerical limitations set forth in this definition). The number of 
Originating Public Radio Stations treated per this definition as Public 
Broadcasters shall not exceed 530 for a given year without 
SoundExchange's express written approval, except that CPB shall have 
the option to increase the number of Originating Public Radio Stations 
that may be considered Public Broadcasters as provided in Sec.  
380.31(c).
    Side Channel is any internet-only program available on an 
Authorized website or an archived program on such Authorized website 
that, in either case, conforms to all applicable requirements under 17 
U.S.C. 114.
    Term is the period January 1, 2021, through December 31, 2025.
    Website is a site located on the World Wide Web that can be located 
by a website User through a principal URL.
    Website Performances are all public performances by means of 
digital audio transmissions of sound recordings, including the 
transmission of any portion of any sound recording, made through an 
Authorized website in accordance with all requirements of 17 U.S.C. 
114, from servers used by a Public Broadcaster (provided that the 
Public Broadcaster controls the content of all materials transmitted by 
the server), or by a contractor authorized pursuant to Sec.  380.31(f), 
that consist of either the retransmission of a Public Broadcaster's 
over-the-air terrestrial radio programming or the digital transmission 
of nonsubscription Side Channels that are programmed and controlled by 
the Public Broadcaster; provided, however, that a Public Broadcaster 
may limit access to an Authorized website, or a portion thereof, or any 
content made available thereon or functionality thereof, solely to 
website Users who are contributing members of a Public Broadcaster. 
This term does not include digital audio transmissions made by any 
other means.
    Website Users are all those who access or receive website 
Performances or who access any Authorized website.


Sec.  380.31  Royalty fees for the public performance of sound 
recordings and for ephemeral recordings.

    (a) Royalty rates. The total license fee for all website 
Performances by Public Broadcasters during each year of the Term, up to 
the total Music ATH set forth in paragraphs (a)(1) through (5) of this 
section for the relevant calendar year, and Ephemeral Recordings made 
by Public Broadcasters solely to facilitate such website Performances, 
shall be $800,000 (the ``License Fee''), unless additional payments are 
required as described in paragraph (c) of this section. The total Music 
ATH limits are:
    (1) 2021: 360,000,000;
    (2) 2022: 370,000,000;
    (3) 2023: 380,000,000;
    (4) 2024: 390,000,000; and
    (5) 2025: 400,000,000.
    (b) Calculation of License Fee. It is understood that the License 
Fee includes:
    (1) An annual minimum fee for each Public Broadcaster for each year 
during the Term;
    (2) Additional usage fees for certain Public Broadcasters; and
    (3) A discount that reflects the administrative convenience to the 
Collective (for purposes of this subpart, the term ``Collective'' 
refers to SoundExchange, Inc.) of receiving annual lump sum payments 
that cover a large number of separate entities, as well as the 
protection from bad debt that arises from being paid in advance.
    (c) Increase in Public Broadcasters. If the total number of 
Originating Public Radio Stations that wish to make website 
Performances in any calendar year exceeds the number of such 
Originating Public Radio Stations considered Public Broadcasters in the 
relevant year, and the excess Originating Public Radio Stations do not 
wish to pay royalties for such website Performances apart from this 
subpart, CPB may elect by written notice to the Collective to increase 
the number of Originating Public Radio Stations considered Public 
Broadcasters in the relevant year effective as of the date of the 
notice. To the extent of any such elections, CPB shall make an 
additional payment to the Collective for each calendar year or part 
thereof it elects to have an additional Originating Public Radio 
Station considered a Public Broadcaster, in the amount of the annual 
minimum fee applicable to Noncommercial Webcasters under subpart B of 
this part for each additional Originating Public Radio Station per 
year. Such payment shall accompany the notice electing to have an 
additional Originating Public Radio Station considered a Public 
Broadcaster.
    (d) Allocation between ephemeral recordings and performance royalty 
fees. The Collective must credit 5% of all royalty payments as payment 
for Ephemeral Recordings and credit the remaining 95% to section 114 
royalties. All Ephemeral Recordings that a Licensee makes which are 
necessary and commercially reasonable for making noninteractive digital 
transmissions are included in the 5%.
    (e) Effect of non-performance by any Public Broadcaster. In the 
event that any Public Broadcaster violates any of the material 
provisions of 17 U.S.C. 112(e) or 114 or this subpart that it is 
required to perform, the remedies of the Collective shall be specific 
to that Public Broadcaster only, and shall include, without limitation, 
termination of that Public Broadcaster's right to be treated as a 
Public Broadcaster per this paragraph (e) upon written notice to CPB. 
The Collective and Copyright Owners also shall have whatever rights may 
be available to them against that Public Broadcaster under applicable 
law. The Collective's remedies for such a breach or failure by an 
individual Public Broadcaster shall not include termination of the 
rights of other Public Broadcasters to be treated as Public 
Broadcasters per this paragraph (e), except that if CPB fails to pay 
the

[[Page 57836]]

License Fee or otherwise fails to perform any of the material 
provisions of this subpart, or such a breach or failure by a Public 
Broadcaster results from CPB's inducement, and CPB does not cure such 
breach or failure within 30 days after receiving notice thereof from 
the Collective, then the Collective may terminate the right of all 
Public Broadcasters to be treated as Public Broadcasters per this 
paragraph (e) upon written notice to CPB. In such a case, a prorated 
portion of the License Fee for the remainder of the Term (to the extent 
paid by CPB) shall, after deduction of any damages payable to the 
Collective by virtue of the breach or failure, be credited to statutory 
royalty obligations of Public Broadcasters to the Collective for the 
Term as specified by CPB.
    (f) Use of contractors. The right to rely on this subpart is 
limited to Public Broadcasters, except that a Public Broadcaster may 
employ the services of a third Person to provide the technical services 
and equipment necessary to deliver website Performances on behalf of 
such Public Broadcaster, but only through an Authorized website. Any 
agreement between a Public Broadcaster and any third Person for such 
services shall:
    (1) Obligate such third Person to provide all such services in 
accordance with all applicable provisions of the statutory licenses and 
this subpart;
    (2) Specify that such third Person shall have no right to make 
website Performances or any other performances or Ephemeral Recordings 
on its own behalf or on behalf of any Person or entity other than a 
Public Broadcaster through the Public Broadcaster's Authorized website 
by virtue of its services for the Public Broadcaster, including in the 
case of Ephemeral Recordings, pre-encoding or otherwise establishing a 
library of sound recordings that it offers to a Public Broadcaster or 
others for purposes of making performances, but instead must obtain all 
necessary licenses from the Collective, the copyright owner or another 
duly authorized Person, as the case may be;
    (3) Specify that such third Person shall have no right to grant any 
sublicenses under the statutory licenses; and
    (4) Provide that the Collective is an intended third-party 
beneficiary of all such obligations with the right to enforce a breach 
thereof against such third Person.


Sec.  380.32  Terms for making payment of royalty fees and statements 
of account.

    (a) Payment to the Collective. CPB shall pay the License Fee to the 
Collective in five equal installments of $800,000 each, which shall be 
due December 31, 2020, and annually thereafter through December 31, 
2024.
    (b) Reporting. CPB and Public Broadcasters shall submit reports of 
use and other information concerning website Performances as agreed 
upon with the Collective.
    (c) Terms in general. Subject to the provisions of this subpart, 
terms governing late fees, distribution of royalties by the Collective, 
unclaimed funds, record retention requirements, treatment of Licensees' 
confidential information, audit of royalty payments and distributions, 
and any definitions for applicable terms not defined in this subpart 
shall be those set forth in subpart A of this part.

    Dated: October 23, 2019.
Jesse M. Feder,
Chief Copyright Royalty Judge.
[FR Doc. 2019-23486 Filed 10-28-19; 8:45 am]
 BILLING CODE 1410-72-P