[Federal Register Volume 76, Number 147 (Monday, August 1, 2011)]
[Rules and Regulations]
[Pages 45695-45696]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-19306]
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LIBRARY OF CONGRESS
Copyright Royalty Board
37 CFR Parts 370 and 382
[Docket No. RM 2011-5]
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 their regulations to
authorize the use of proxy reports of use to permit distribution of
royalties collected for the period April 1, 2004, through December 31,
2009, for the public performance of sound recordings by means of
digital audio transmissions pursuant to statutory license. Proxy
reports of use will be used for those services for which no reports of
use were submitted or for which the reports of use were unusable.
DATES: Effective Date: August 31, 2011.
FOR FURTHER INFORMATION CONTACT: Richard Strasser, Senior Attorney, or
Gina Giuffreda, Attorney Advisor, by telephone at (202) 707-7658 or e-
mail at crb@loc.gov.
SUPPLEMENTARY INFORMATION:
Background
Sections 112 and 114 of the Copyright Act, title 17 of the United
States Code, are the statutory licenses governing the public
performance of sound recordings by certain types of eligible services
\1\ by means of a digital audio transmission. 17 U.S.C. 112(e), 114.
Services operating under these licenses are required to, among other
things, pay royalty fees and report to copyright owners of sound
recordings on the use of their works. Id. The Copyright Act directs the
Copyright Royalty Judges (``Judges'') to determine the royalty rates to
be paid, 17 U.S.C. 114(f)(1)(A), (f)(2)(A) and 17 U.S.C. 112(e)(3), and
to establish regulations to give copyright owners reasonable notice of
the use of their works and create and maintain records of use for
delivery to copyright owners. 17 U.S.C. 114(f)(4)(A) and 17 U.S.C.
112(e)(4). The purpose of the notice and recordkeeping requirement is
to ensure that the royalties collected under the statutory licenses are
distributed by a central source--a Collective--or other agents
designated to receive royalties from the Collective to the correct
recipients. The Judges promulgated final notice and recordkeeping
regulations on October 13, 2009.\2\ See 74 FR 52418.
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\1\ The types of eligible services consist of subscription,
nonsubscription, satellite digital audio radio services, and
business establishment services.
\2\ Until that time, interim regulations were in effect. See 71
FR 59010 (October 6, 2006).
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On March 24, 2011, SoundExchange, Inc., the entity designated by
the Judges as the Collective, petitioned the Judges to commence a
rulemaking proceeding to consider adopting regulations to authorize
SoundExchange ``to use proxy reporting data to distribute to copyright
owners and performers certain sound recording royalties for periods
before 2010 that are otherwise undistributable due to licensees'
failure to provide reports of use'' or their provision of ``reports of
use that are so deficient as to be unusable.'' Petition of
SoundExchange, Inc., for a Rulemaking to Authorize Use of a Proxy to
Distribute Certain Pre-2010 Sound Recordings at 1 and 2 (March 24,
2011). The proxy proposed by SoundExchange uses ``available data for
services of the same license type, for the same year.'' Id at 9.
SoundExchange stated that the proxy would be used to distribute $28
million in royalties, which represents 4.5% of all the royalties
collected for the relevant timeframe--April 1, 2004, through December
31, 2009. Id. at 2. In
[[Page 45696]]
support of its request, SoundExchange noted that a proxy had been
utilized once before when the lack of reports of use rendered the
reasonable distribution of royalties difficult if not impossible. Id.
at 3. In that instance, reporting data did not exist for the period
from when the statutory licenses first became available for services
other than preexisting subscription services (October 1998) to the
promulgation of interim notice and recordkeeping regulations (March
2004).\3\ See Notice and Recordkeeping for Use of Sound Recordings
Under Statutory License, Docket No. RM 2002-1G, Final rule, 69 FR
58241. There the proxy data was used to distribute 100% of the
royalties collected for that time period. Id.
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\3\ Prior to May 31, 2005, the statutory licenses were
administered by the Copyright Office under the Copyright Arbitration
Royalty Panel (``CARP'') system. The Copyright Royalty and
Distribution Reform Act of 2004, Public Law 108-419, 118 Stat. 234,
replaced the CARP system with the Copyright Royalty Judges.
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On April 19, 2011, the Judges published a notice of proposed
rulemaking (``NPRM'') seeking comment on SoundExchange's proposal. 76
FR 21833. In addition to soliciting comments on the proposal, the
Judges invited comment on, among other things, the reasonableness,
fairness and appropriateness of the use of the proposed proxy and
sought comment on possible alternatives to the proposed proxy. Id. at
21834-35 (April 19, 2011). Comments were due May 19, 2011.
The Judges received a single comment from SoundExchange in response
to the NPRM. SoundExchange noted that since the filing of its petition,
additional reports of use had been provided allowing a further
distribution of royalties, thereby reducing the amount of
undistributable royalties to $19.4 million, or about 3% of the total
royalties collected for the April 1, 2004, to December 31, 2009,
period. Comments of SoundExchange, Inc. at 1. In response to the
questions posed in the NPRM, SoundExchange reiterated that the proposed
proxy would be applied to a much smaller percentage of royalties than
the one the Copyright Office approved for the October 1998 to March
2004 period. See e.g., id. at 4, 5. SoundExchange also recounted its
efforts in arriving at the proposed proxy and noted that it ``has not
devised any alternative that would be demonstrably more fair.'' Id. at
5.
Given that the proxy will be applied to a small percentage of
royalties for the relevant time period and that no viable alternatives
have been provided, the Judges are adopting as final the proposed
regulations as set forth in the NPRM allowing for the use of the proxy
proposed by SoundExchange for the distribution of royalties for the
period of April1, 2004, through December 31, 2009. Adoption of the
proposed regulations, especially in the absence of opposition to the
proposed proxy, will promote the expeditious distribution of the
affected royalties.
The Judges also are adopting as final the technical corrections to
part 382 proposed by SoundExchange as set forth in the NPRM reflecting
the renumbering of certain sections in part 370 resulting from the
Judges' adoption of final notice and recordkeeping regulations in
October 2009.
List of Subjects
37 CFR Part 370
Copyright, Sound recordings.
37 CFR Part 382
Copyright, Digital audio transmissions, Performance right, Sound
recordings.
Final Regulations
For the reasons set forth in the preamble, the Copyright Royalty
Judges amend 37 CFR parts 370 and 382 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. Section 370.3 is amended by adding new paragraph (i) to read as
follows:
Sec. 370.3 Reports of use of sound recordings under statutory license
for preexisting subscription services.
* * * * *
(i) In any case in which a preexisting subscription service has not
provided a report of use required under this section for use of sound
recordings under section 112(e) or section 114 of title 17 of the
United States Code, or both, prior to January 1, 2010, reports of use
for the corresponding calendar year filed by other preexisting
subscription services shall serve as the reports of use for the non-
reporting service, solely for purposes of distribution of any
corresponding royalties by the Collective.
0
3. Section 370.4 is amended by adding new paragraph (f) 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.
* * * * *
(f) In any case in which a nonsubscription transmission service,
preexisting satellite digital audio radio service, new subscription
service, or business establishment service has not provided a report of
use required under this section for use of sound recordings under
section 112(e) or section 114 of title 17 of the United States Code, or
both, prior to January 1, 2010, reports of use for the corresponding
calendar year filed by other services of the same type shall serve as
the reports of use for the non-reporting service, solely for purposes
of distribution of any corresponding royalties by the Collective.
PART 382--RATES AND TERMS FOR DIGITAL TRANSMISSIONS OF SOUND
RECORDINGS AND THE REPRODUCTION OF EPHEMERAL RECORDINGS BY
PREEXISTING SUBSCRIPTION SERVICES AND PREEXISTING SATELLITE DIGITAL
AUDIO RADIO SERVICES
0
4. The authority citation of part 382 continues to read as follows:
Authority: 17 U.S.C. 112(e), 114, and 801(b)(1).
Sec. 382.3 [Amended]
0
5. Section 382.3(c)(1) is amended by removing ``Sec. 370.2'' and
adding ``Sec. 370.3'' in its place.
Sec. 382.13 [Amended]
0
6. Section 382.13(f)(1) is amended by removing ``Sec. 370.3'' and
adding ``Sec. 370.4'' in its place.
Dated: July 14, 2011.
James Scott Sledge,
Chief U.S. Copyright Royalty Judge.
Approved by:
James H. Billington,
Librarian of Congress.
[FR Doc. 2011-19306 Filed 7-29-11; 8:45 am]
BILLING CODE 1410-72-P