Appendix
Cease-and-Desist Order

Decision

Whether or notbroadcasters avoidedusing musical works
administered by thecopyright management
operator that was new tothe market (“NewEntrant”)

Due to the Respondent’s (JASRAC’s) collection ofbroadcast royalties by way of comprehensive
collection, in programs produced by themselves,
broadcasters (mainly FM radio stations) avoided
for the most part usage of works administered by
the New Entrant from the first half of October
2006, because the use of such works would incur
additional copyright fee payments.

○ In stating whether or not broadcasters avoided usage of such works, it must besaid that the reason for restricting such arguments to programs produced bybroadcasters (mainly FM radio stations) themselves lacks rationale. Also, there
exists no evidence to conclude that broadcasters other than FM radio stations
avoided the use of works administered by the New Entrant.
○ It can be concluded that works administered by the New Entrant were used to aconsiderable degree, even in programs produced by broadcasters (mainly FMradio stations) themselves, between October and December 2006.
○ It cannot be concluded that broadcasters generally avoided using works
administered by the New Entrant, and it can only be concluded that broadcasters
merely acted cautiously with regard to the use of such works.
○ The main reason for the broadcasters acting cautiously with regard to the use ofworks administered by the New Entrant is not the Respondent’s practices inquestion, but has been concluded to be the bewilderment and confusion on thepart of the broadcasters as a result of the New Entrant’s entrance into thecopyright management business for broadcast usage without adequate
administration systems.

The circumstances underwhich a major music
publisher which had
assigned theadministration of
copyrights pertaining tobroadcasting to the New
Entrant terminated its
management trust
contract

As the Respondent did not amend its method ofcollecting broadcast royalties, it could not be
expected that broadcasters would stop avoiding theuse of such works and broadcast royalties could beearned, and this led to the termination of thecontract.

○ The major music publisher which had entrusted the administration of copyrights
pertaining to broadcasting to the New Entrant did not have knowledge ofobjective usage statistics of works administered by the New Entrant. In reality,
it cannot be said that broadcasters generally avoided using works administered by
the New Entrant, and because it can only be concluded that broadcasters merelyacted cautiously with regard to the use of such works, it cannot be said that themusic publisher in question terminated its management trust contract with theNew Entrant based on accurate information.
○ Also, it cannot be said that the main reason for the broadcasters acting cautiouslywith regard to the use of works administered by the New Entrant was the accrualof additional copyright fee payments based on the comprehensive fee collection
stipulated in the usage license agreement between the Respondent and thebroadcasters, but can be concluded to be the ill-prepared entry of the New Entrant
into the copyright management business and the bewilderment and confusion on
the part of the broadcasters that this caused.
○ As such, it is difficult to say that the music publisher in question terminated its
management trust contract as a result of the Respondent’s practices in question.

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Cease-and-Desist OrderDecision

The relationship between
copyright owners otherthan the aforementioned
major music publisher
and the New Entrant

As the Respondent continues the practices inquestion, because it could hardly be expected thatbroadcasters would use works administered by theNew Entrant, copyright owners other than theaforementioned major music publisher very
seldom entrusted the administration of music
copyrights with regard to broadcasting to the New
Entrant. Therefore, the New Entrant cannot
obtain a sizable repertoire and is in a situation
where it is difficult to conduct copyrightadministration business for broadcasting.

○ Because it is possible to conclude that the New Entrant has been entrusted withthe administration of a significant number of works including popular works, andthat a significant number of broadcasters are prepared to enter into negotiations
with the New Entrant regarding the conclusion of usage license agreements, it canbe considered that the New Entrant is capable of collecting a reasonable amountof broadcast royalties by concluding usage license contracts with broadcasters,
and that the reason its broadcast royalty revenue remains low is because it has notconcluded usage license contracts with broadcasters.
○ Of the copyright owners’ testimonies included in the record of oral statements
submitted by the investigator, it is arguable whether it was in fact heard thatworks administered by the New Entrant would not be used due to the accrual of
additional copyright fee payments resulting from the Respondent’s
comprehensive fee collection method. Even had there been such rumors, itcannot be concluded that such rumors concurred with reality.
○ As such, it would be difficult to conclude that copyright owners other than theaforementioned major music publisher did not entrust the New Entrant with theadministration of music copyrights for broadcasting as a result of the
Respondent’s practices in question.

The non-entry of othercopyright managementbusiness operators

The reason why other copyright managementbusiness operators do not enter the managementbusiness for broadcasting is because theRespondent has concluded usage license contracts
which stipulate the said comprehensive feecollection method with all of the broadcasters andcollects broadcast royalties based on thesecontracts.
Because it is expected thatbroadcasters will not use works administered bycopyright management business operators otherthan the Respondent due to the accrual ofadditional fee payments, they are unable to obtainfrom copyright owners the entrustment of music
copyrights with regard to broadcasting.

○ It can be concluded from evidence that the administration of music with regard tobroadcasting is extremely complex and costly and that this has the effect of
discouraging copyright management business operators from entering the market
for the administration of broadcasting. As such, portions of the testimony by therepresentatives of other copyright management business operators included in therecord of oral statements submitted by the investigator which are in line with theassertions of the investigator cannot be accepted, and there is no other evidence
which allows for the confirmation of the investigator’s assertions.

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