[Federal Register Volume 88, Number 191 (Wednesday, October 4, 2023)]
[Proposed Rules]
[Pages 68527-68529]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21123]


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LIBRARY OF CONGRESS

Copyright Royalty Board

37 CFR Part 384

[Docket No. 21-CRB-0013-BER (2024-2028)]


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

AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Proposed rule.

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    SUMMARY: The Copyright Royalty Judges solicit comments on proposed 
rates and terms for the making of ephemeral copies of sound recordings 
to facilitate digital audio transmissions of those sound recordings to 
business establishments pursuant to the limitation on exclusive rights 
specified by the Copyright Act for the period from January 1, 2024, 
through December 31, 2028.

DATES: Comments and objections, if any, are due no later than October 
24, 2023.

ADDRESSES: You may submit comments and objections, identified by docket 
number 21-CRB-0013-BER (2024-2028) online through eCRB at https://app.crb.gov/.
    Instructions: All comments must include the Copyright Royalty Board 
name and the docket number for this proposed rule. All properly filed 
comments will appear without change in eCRB at https://app.crb.gov, 
including any personal information provided.
    Docket: For access to the docket to read background documents or 
comments received, go to eCRB, the Copyright Royalty Board's electronic 
filing and case management system, at https://app.crb.gov/, and search 
for docket number 21-CRB-0013-BER (2024-2028).

FOR FURTHER INFORMATION CONTACT: Anita Brown, CRB Program Specialist, 
(202) 707-7658, [email protected].

SUPPLEMENTARY INFORMATION: The Copyright Act provides that the 
Copyright Royalty Judges (Judges) commence a proceeding every fifth 
year to determine royalty rates and terms for the recording of 
ephemeral copies of sound recordings pursuant to the statutory license 
in 17 U.S.C. 112(e)(1) to facilitate digital audio transmissions of 
those sound recordings to business establishments pursuant to the 
limitation on exclusive rights specified by 17 U.S.C. 114(d)(1)(C)(iv). 
See 17 U.S.C. 804(b)(2).
    In accordance with section 804(b)(2), the Judges commenced the 
proceeding to set rates and terms for the period 2024-2028 on January 
5, 2022 (87 FR 490). In the Federal Register notice, the Judges 
requested that interested parties submit petitions to participate. 
Petitions to Participate were received from: Mood Media Corp., Music 
Choice, Rockbot, Inc., Sirius XM Radio Inc. and Its Wholly Owned 
Subsidiaries, SoundExchange, Inc., Soundtrack Your Brand Sweden AB, and 
Stingray Music USA Inc. The Judges initiated the three-month 
negotiation period and directed the participants to submit written 
direct statements no later than September 19, 2022. See 17 U.S.C. 
803(b)(3).
    On September 19, 2022, the Judges received a Motion to Adopt 
Settlement stating that all participants \1\ had reached a settlement 
obviating the need for written direct statements or a hearing.
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    \1\ Soundtrack Your Brand Sweden AB had withdrawn its Petition 
to Participate on April 5, 2022.
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    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 both 
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 [to 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).
    Royalty rates and terms adopted pursuant to section 801(b)(7)(A) 
are binding on all copyright owners of sound recordings and all 
business establishment services making an ephemeral recording of a 
sound recording for the period January 1, 2024, through December 31, 
2028.

List of Subjects in 37 CFR Part 384

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

Proposed Regulations

    For the reasons set forth in the preamble, the Copyright Royalty 
Judges propose to amend part 384 of chapter III of title 37 of the Code 
of Federal Regulations as follows:

PART 384--RATES AND TERMS FOR THE MAKING OF EPHEMERAL RECORDINGS BY 
BUSINESS ESTABLISHMENT SERVICES

0
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]

0
2. In Sec.  384.1(a), remove the phrase ``January 1, 2019, through 
December 31, 2023'' and add in its place ``January 1, 2024, through 
December 31, 2028''.
0
3. In Sec.  384.3, revise paragraphs (a) and (b) to read 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 recordings 
subject to protection under title 17, United States Code:

                       Table 1 to Paragraph (a)(1)
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                          Year                               Rate (%)
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2024....................................................            14.0
2025....................................................            14.5
2026....................................................           14.75
2027....................................................            15.0
2028....................................................            15.0
------------------------------------------------------------------------

    (2) Gross Proceeds as used in this section means all fees and 
payments, including those made in kind, received

[[Page 68528]]

from any source before, during or after the License Period that are 
derived from the use of sound recordings subject to protection under 
title 17, United States Code, 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).
    (3) Subject to paragraph (a)(4) of this section, the royalty 
specified in paragraph (a)(1) of this section for a particular Business 
Establishment Service offering may be reduced by a percentage 
corresponding to the ``Direct License Share'' for such Business 
Establishment Service offering, as follows:
    (i) If the transmissions of the Business Establishment Service 
offering are entirely made over the internet or the Licensee otherwise 
is able to count all of its Performances to business subscribers, the 
Direct License Share for such Business Establishment Service offering 
is its Performances of directly licensed sound recordings and sound 
recordings for which no license is required (e.g., sound recordings in 
which the copyrights are owned by the Licensee) (collectively, 
``Excluded Recordings'') divided by its total Performances.
    (ii) If the transmissions of the Business Establishment Service 
offering are made to 10% or more of the bona fide subscriber locations 
of the Business Establishment Service offering over the internet, or 
the Licensee otherwise is able to count its Performances to 10% or more 
of bona fide subscriber locations of the Business Establishment Service 
offering, and the Business Establishment Service offering provides 
transmissions of a substantially similar set of channels (fairly 
represented by the countable channels) to other subscriber locations by 
means that do not allow the Licensee to count Performances (e.g., by 
satellite with no usage feedback), the Direct License Share for such 
Business Establishment Service offering is its Performances of Excluded 
Recordings to the locations where the Licensee is able to count its 
Performances divided by its total Performances to the locations where 
the Licensee is able to count its Performances. When reporting under 
Sec.  370.4(d)(2)(vii) of this chapter, such total countable 
Performances of sound recordings that are not Excluded Recordings shall 
be treated and reported as the ``actual total performances'' of the 
Business Establishment Service if the Direct License Share is 
calculated pursuant to this paragraph (a)(3)(ii).
    (iii) If paragraphs (a)(3)(i) and (ii) of this section do not 
apply, but the Licensee transmits a set of webcast channels 
substantially similar to and representative of the Business 
Establishment Service offering to consumers over the internet or by 
other means that allow the Licensee to count Performances on those 
channels (``Reference Channels''), the Direct License Share for such 
Business Establishment Service offering is its Performances of Excluded 
Recordings on the Reference Channels divided by its total Performances 
on the Reference Channels.
    (iv) Otherwise, the Direct License Share for such Business 
Establishment Service offering is a fraction calculated on a subscriber 
location-by-subscriber location basis, or if that is impracticable, on 
a uniform basis for all subscriber locations, where:
    (A) The numerator is the play frequency (as defined in Sec.  
370.4(b) of this chapter) of Excluded Recordings for the Business 
Establishment Service offering during a period of time each day as 
follows:
    (1) If the Direct License Share is calculated on a subscriber 
location-by subscriber location basis, during a continuous 12-hour 
period to be selected by the Licensee for each location for the month 
for which the payment is made, provided that each such location's hours 
of operation fall entirely within the selected 12-hour period, or if 
such location is in operation for more than 12 hours per day, the 
selected 12-hour period consists of hours the location is in operation, 
including its main hours of operation; or
    (2) If the Direct License Share is calculated on a uniform basis 
for all locations, during the hours of 9 a.m. to 9 p.m. local time; and
    (B) The denominator is the total play frequency (as defined in 
Sec.  370.4(b) of this chapter) for the Business Establishment Service 
offering between the same hours as used in the numerator.
    (4) The Direct License Share reduction in paragraph (a)(3) of this 
section is available to a Licensee only if the Licensee provides the 
Collective, by no later than the due date for the relevant payment 
under Sec.  384.4(c), a list of each Copyright Owner from which the 
Licensee claims to have a direct license of rights to Excluded 
Recordings that is in effect for the month for which the payment is 
made and of each sound recording for which the Licensee takes the 
reduction, identified by featured artist name, sound recording title, 
and International Standard Recording Code (ISRC) number or, if the ISRC 
is not available and feasible, album title and copyright owner name. 
Notwithstanding Sec.  384.5, the Collective may disclose such 
information as reasonably necessary for it to confirm whether a claimed 
direct license exists and claimed sound recordings are properly 
excludable.
    (5) For purposes of paragraph (a)(3) of this section, Performance 
means:
    (i) Except as discussed in paragraph (a)(5)(ii) of this section, a 
Performance is an instance in which any portion of a sound recording is 
publicly performed to a Business Establishment Service subscriber 
location within the United States (e.g., the delivery of any portion of 
a single track from a compact disc to one subscriber location).
    (ii) An instance in which a portion of a sound recording is 
publicly performed to a Business Establishment Service subscriber 
location within the United States is not a Performance if it 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 use during news, talk and sports 
programming, brief background use during disk jockey announcements, 
brief use during commercials of sixty seconds or less in duration, or 
brief use during sporting or other public events; and
    (B) 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), except for ambient 
music that is background at a public event.
    (b) Minimum fee. Each Licensee shall pay a minimum fee of $25,000 
for each calendar year of the License Period in which it makes 
Ephemeral Recordings for use to facilitate transmissions under the 
limitation on exclusive rights specified by 17 U.S.C. 114(d)(1)(C)(iv), 
whether or not it does so for all or any part of the year. These 
minimum fees shall be nonrefundable, but shall be fully creditable to 
royalty payments due under paragraph (a) of this section for the same 
calendar year (but not any subsequent calendar year).
* * * * *
0
4. Amend Sec.  384.4 as follows:
0
a. Redesignate paragraphs (f), (g), and (h) as paragraphs (g), (i), and 
(j).
0
b. Add new paragraph (f).
0
c. Revise newly redesignated paragraph (g) introductory text.
0
d. Further redesignate newly redesignated paragraphs (g)(3) through (8) 
as paragraphs (g)(4) through (9) and add new paragraph (g)(3).

[[Page 68529]]

0
e. Add new paragraph (h).
0
f. Revise newly redesignated paragraph (i)(1).
0
g. In newly redesignated paragraph (i)(2), remove ``(g)(1)'' and add 
``(i)(1)'' in its place.
    The additions and revisions read as follows:


Sec.  384.4  Terms for making payment of royalty fees and statements of 
account.

* * * * *
    (f) Use of account numbers. If the Collective notifies a Licensee 
of an account number to be used to identify its royalty payments for a 
particular Business Establishment Service offering, the Licensee must 
include that account number on its check or check stub for any payment 
for that Business Establishment Service offering made by check, in the 
identifying information for any payment for that Business Establishment 
Service offering made by electronic transfer, in its statements of 
account for that Business Establishment Service offering under 
paragraph (g) of this section, and in the transmittal of its Reports of 
Use for that Business Establishment Service offering under Sec.  370.4 
of this chapter.
    (g) Statements of account. For any part of the License Period 
during which a Licensee operates a Business Establishment Service, at 
the time when a minimum payment is due under paragraph (d) of this 
section, and by 45 days after the end of each month during the period, 
the Licensee shall deliver to the Collective a statement of account 
containing the information set forth in this paragraph (g) on a form 
prepared, and made available to Licensees, by the Collective. In the 
case of a minimum payment, or if a payment is owed for such month, the 
statement of account shall accompany the payment. A statement of 
account shall contain only the following information:
    (1) Such information as is necessary to calculate the accompanying 
royalty payment, or if no payment is owed for the month, to calculate 
any portion of the minimum fee recouped during the month;
    (2) The name, address, business title, telephone number, facsimile 
number (if any), electronic mail address and other contact information 
of the person to be contacted for information or questions concerning 
the content of the statement of account;
    (3) The account number assigned to the Licensee by the Collective 
for the relevant Business Establishment Service offering (if the 
Licensee has been notified of such account number by the Collective);
    (4) The signature of:
    (i) The owner of the Licensee or a duly authorized agent of the 
owner, if the Licensee is not a partnership or corporation;
    (ii) A partner or delegee, if the Licensee is a partnership; or
    (iii) An officer of the corporation, if the Licensee is a 
corporation;
    (5) The printed or typewritten name of the person signing the 
statement of account;
    (6) The date of signature;
    (7) If the Licensee is a partnership or corporation, the title or 
official position held in the partnership or corporation by the person 
signing the statement of account;
    (8) A certification of the capacity of the person signing; and
    (9) A statement to the following effect:
    I, the undersigned owner or agent of the Licensee, or officer or 
partner, have examined this statement of account and hereby state that 
it is true, accurate and complete to my knowledge after reasonable due 
diligence.
    (h) International Standard Recording Codes. Notwithstanding Sec.  
370.4(d)(2)(v) of this chapter, the Licensee must use International 
Standard Recording Codes (ISRCs) in its Reports of Use, where available 
and feasible.
    (i) * * *
    (1) * * * However, in any case in which a Licensee has not provided 
a compliant Report of Use, whether for the License Period or otherwise, 
and the board of directors of the Collective determines that further 
efforts to seek the missing Report of Use from the Licensee would not 
be warranted, the Collective may determine that it will distribute the 
royalties associated with the Licensee's missing Report of Use on the 
basis of a proxy data set approved by the board of directors of the 
Collective.
* * * * *

David P. Shaw,
Chief Copyright Royalty Judge.
[FR Doc. 2023-21123 Filed 10-3-23; 8:45 am]
BILLING CODE 1410-72-P