Federal Register / Vol. 79, No. 211 / Friday, October 31, 2014 / Rules and Regulations 64669 

1Owners of rights in sound recordings are subject 

to compulsory licenses under the Copyright Act. 

See, e.g., 17 U.S.C. 112(e) (ephemeral recordings), 

114 (d)(2), (3) (transmission). The Judges are tasked 

to adjudicate, inter alia, disputes relating to 

licensing fees. See, e.g., 17 U.S.C. 112(e)(3), (4), 

114(f), 801, 803, 804. 

2See 76 FR 13026 (Mar. 9, 2011) (Web III). 

3 Intercollegiate Broadcasting Sys., Inc. v. 

Copyright Royalty Board, 684 F.3d 1332, 1342 (D.C. 

Cir. 2012), cert. denied, 133 S. Ct. 2735 (2013). 

4 Intercollegiate Broadcasting Sys., Inc. v. 

Copyright Royalty Board, No. 10–1314 (D.C. Cir. 

Sept. 30, 2013) (order granting joint motion for 

vacatur and remand). 

applicant must conduct the following 

test sequence for a total time of not less 

than 135 minutes: 

(1) Ten minutes at Rated 10-minute 

OEI TOTHAT, 

(2) Sixty-five minutes at rated 

maximum continuous thrust, 

(3) One minute at 50 percent of rated 

takeoff thrust, 

(4) Ten minutes at Rated 10-minute 

OEI TOTHAT, 

(5) One minute at flight idle, 

(6) Ten minutes at Rated 10-minute 

OEI TOTHAT, 

(7) Five minutes at rated maximum 

continuous thrust, 

(8) One minute at 50 percent of rated 

takeoff thrust, 

(9) Five minutes at Rated 10-minute 

OEI TOTHAT, 

(10) One minute at flight idle, 

(11) Ten minutes at Rated 10-minute 

OEI TOTHAT, 

(12) Five minutes at rated maximum 

continuous thrust, 

(13) One minute at 50 percent of rated 

takeoff thrust, 

(14) Nine minutes at Rated 10-minute 

OEI TOTHAT, and 

(15) One minute at flight idle 

(b) The test sequence of § 33.87(a)(1) 

through (a)(15) of these special 

conditions must be run continuously. If 

a stop occurs during these tests, the 

interrupted sequence must be repeated 

unless the applicant shows that the 

severity of the test would not be 

reduced if the current tests were 

continued. 

(c) Where the engine characteristics 

are such that acceleration to the Rated 

10-minute OEI TOTHAT results in a 

transient overtemperature in excess of 

the steady-state temperature limit 

identified in § 33.7(a)(3) of these special 

conditions, the transient gas 

overtemperature must be applied to 

each acceleration to the Rated 10- 

minute OEI TOTHAT of the test 

sequence in § 33.87(a) of these special 

conditions. 

§ 33.93 Teardown inspection. 

The applicant must perform the 

teardown inspection required by 

§ 33.93(a) after completing the 

endurance test prescribed by § 33.87 of 

these special conditions. 

§ 33.201 Design and test requirements for 

Early ETOPS eligibility. 

In addition to the requirements of 

§ 33.201(c)(1), the simulated ETOPS 

mission cyclic endurance test must 

include two cycles of 10 minute 

duration, each at the Rated 10-minute 

OEI TOTHAT; one before the last 

diversion cycle and one at the end of the 

ETOPS test. 

Issued in Burlington, Massachusetts, on 

October 23, 2014. 

Colleen M. D’Alessandro, 

Assistant Manager, Engine and Propeller 

Directorate, Aircraft Certification Service. 

[FR Doc. 2014–25884 Filed 10–30–14; 8:45 am] 

BILLING CODE 4910–13–P 

LIBRARY OF CONGRESS 

Copyright Royalty Board 

37 CFR Part 380 

[2005–1 CRB DTRA (Webcasting II)] 

Digital Performance Right in Sound 

Recordings and Ephemeral 

Recordings 

AGENCY: Copyright Royalty Board, 

Library of Congress. 

ACTION: Final Determination after 

Second Remand. 

SUMMARY: The Copyright Royalty Judges 

are announcing their final 

determination upholding the validity 

and application of the $500 minimum 

fee for noncommercial webcasters for 

the licensing period 2006 through 2010. 

The judges issued the determination in 

response to a second order of remand by 

the United States Court of Appeals for 

the District of Columbia Circuit. Their 

review of the evidence was de novo. The 

judges issued their initial determination 

in March 2014 and received no motions 

for rehearing. 

DATES: Effective date: October 31, 2014. 

Applicability date: The fee applies to 

the license period January 1, 2006, 

through December 31, 2010. 

ADDRESSES: The determination is also 

published on the agency’s Web site at 

www.loc.gov/crb. For related matters see 

also the Federal eRulemaking Portal at 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Richard Strasser, Senior Attorney, or 

Kim Whittle, Attorney Advisor, (202) 

707–7658 or crb@loc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The captioned matter began with a 

notice in the Federal Register in 

February 2005. In that notice, the 

Copyright Royalty Judges (Judges) 

commenced a rate-setting proceeding 

and solicited Petitions to Participate. 

See 70 FR 7970 (February 16, 2005). The 

aim of the proceeding was to establish 

royalty rates and terms, including the 

establishment of minimum fees, 

applicable to entities making ephemeral 

recordings of copyrighted sound 

recordings and digitally performing 

those recordings1. The Judges set rates 

and terms for use of the rights during 

the period 2006 through 2010, 

publishing their Final Determination on 

May 1, 2007. 72 FR 24084 (May 1, 2007) 

(Web II). 

Intercollegiate Broadcasting System, 

Inc. (IBS) appealed the Judges’ 

determination to the U.S. Court of 

Appeals for the DC Circuit. The DC 

Circuit remanded the Judges’ 

determination of the minimum fee 

established for noncommercial 

webcasters, viz. $500 per year per 

station or channel, citing insufficient 

evidence in the record to substantiate 

the $500 minimum fee. On May 18, 

2010, after granting the parties leave to 

engage in additional briefing and 

discovery, the Judges held a further 

hearing on remand. Following the 

remand hearing, the Judges issued their 

determination on September 17, 2010. 

75 FR 56873 (Sept. 17, 2010). 

IBS again appealed the Judges’ 

determination. During the pendency of 

the Web II appeal, the Judges issued a 

final determination regarding rates and 

terms for the same licenses for the 

period 2011 through 2015.2 (Web III). 

IBS appealed the Judges’ Web III 

determination challenging again the 

$500 minimum fee and asserting that 

appointment of the Judges violated the 

Appointments Clause of the U.S. 

Constitution. Given the overlap of issues 

and the introduction of a constitutional 

challenge, the DC Circuit stayed further 

proceedings on appeal in Web II. 

The DC Circuit decided Web III and 

concluded that the Judges’ 

appointments were unconstitutional. 

The DC Circuit struck portions of the 

Copyright Act that it determined to be 

unconstitutional and the Librarian of 

Congress appointed a panel of Judges 

consistent with the altered statute. The 

DC Circuit remanded Web III for further 

proceedings 3 by a constitutionally valid 

panel of Judges. After the Web III 

remand, on motion of the Web II parties, 

the DC Circuit vacated and remanded 

the Web II matter.4

The issue before the Judges is 

determination of the validity and 


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64670 Federal Register / Vol. 79, No. 211 / Friday, October 31, 2014 / Rules and Regulations 

5The Register of Copyrights completed her 

review of this determination on October 20, 2014, 

and stated that ‘‘[n]o correction or any further 

actions will be taken by the Register on this 

matter.’’ See 17 U.S.C. 802 (f)(1)(D). 

6This minimum fee, codified in 37 CFR 380.3(b) 

(2008), applies to both commercial and 

noncommercial webcasters. 

7The commercial webcasters and SoundExchange 

reached a settlement after the Final Determination 

was remanded, which the Judges adopted, leaving 

only the minimum fee for noncommercial 

webcasters for the Judges to determine in this 

remand proceeding. See 75 FR 6097 (Feb. 8, 2010). 

8The rates and terms established by the Judges 

‘‘shall include a minimum fee . . . .’’ 17 U.S.C. 

114(f)(2)(B). 

application of the $500 minimum fee for 

noncommercial webcasters for the 

period 2006 through 2010. The Judges, 

after notice to the parties, concluded 

that they should reach this 

determination, to the extent a new 

determination is required, under section 

803(b)(5) (paper proceedings) after a de 

novo review of the record. 

For all of the reasons discussed 

herein, the Judges determine that the 

minimum fee for noncommercial 

webcasters for the license term 2006 

through 2010 shall be and remain $500 

per station or channel, applicable to the 

annual flat fee royalties payable for 

usage of sound recordings for up to 

159,140 Aggregate Tuning Hours (ATH) 

per month. The Judges assert that the 

question on remand is moot. 

Nonetheless, the Judges detail in this 

determination reasons sufficient to 

uphold their decision on the merits, to 

the extent required. 

The Judges issued their Initial 

Determination on Second Remand on 

March 11, 2014. No party moved for 

rehearing. Accordingly, the Judges now 

issue their Final Determination in this 

matter.5

II. The Judges Conclude That the Issue 

on Remand Is Subsumed by the 

Affirmance of the Flat Royalty Rate of 

$500 

IBS argues in this remand proceeding 

that the Judges should eliminate, or 

significantly reduce, the $500 minimum 

fee for noncommercial webcasters that 

the Judges adopted and the DC Circuit 

remanded in the Web II Determination. 

That minimum fee was in effect for the 

period 2006 through 2010, and thus 

expired more than three years ago. Any 

change to the minimum fee at issue in 

this remand proceeding would have no 

prospective effect whatever on the rates 

that noncommercial webcasters pay. If a 

decision by the Judges in IBS’s favor at 

this stage were to have any effect at all, 

it would be by requiring a retrospective 

adjustment of noncommercial 

webcasters’ payment obligations (e.g., a 

refund of minimum fees already paid). 

Such a remedy would be warranted only 

if a reduction in the minimum fee 

would also result in a reduction of a 

noncommercial webcaster’s total 

payment obligation. 

The minimum fee that a webcaster 

pays is only one component of the 

webcasters’ total payment obligation 

under the section 114 and section 112(e) 

statutory licenses. The Final 

Determination established a rate 

structure for noncommercial webcasters 

that consisted of a flat annual fee of 

$500 for the first 159,140 ATH of usage 

per month, 37 CFR 380.3(a)(2)(i) (2008), 

plus a per-performance rate equal to the 

commercial rate for usage in excess of 

159,140 ATH per month. 37 CFR 

380.3(a)(2)(ii) (2008). In addition, 

noncommercial webcasters were subject 

to the contested $500 annual minimum 

fee. The minimum fee was nonrefundable, but recoupable against the 

$500 flat royalty fee. 37 CFR 380.3(b) 

(2008); see also Final Determination, 72 

FR at 24100.6

Because the $500 minimum fee was 

recoupable, a noncommercial 

webcaster’s single payment of $500 

satisfied both the minimum fee and the 

$500 flat rate for the first 159,140 ATH 

of monthly usage. Nonetheless, the flat 

rate and the minimum fee are separate 

and distinct components of the rate 

structure, codified in separate sections 

of the Code of Federal Regulations. 

In its decision of the appeal of the 

Final Determination, the DC Circuit 

‘‘vacate[d] the $500 minimum fee’’ for 

both commercial 7 and noncommercial 

webcasters and ‘‘remand[ed] that 

portion of the determination to the 

Copyright Royalty Judges for further 

proceedings not inconsistent with this 

opinion.’’ 574 F.3d at 772. ‘‘All other 

portions of the determination [were] 

affirmed.’’ Id.; accord id. at 753. 

The plain language of the DC Circuit’s 

remand order demonstrates that the 

court affirmed the flat rate component of 

the rate structure for noncommercial 

webcasters. Even if the Judges were to 

reduce the minimum fee retroactively, 

noncommercial webcasters’ obligation 

to pay a flat royalty rate of $500 

annually would be unaffected. 

Consequently, a decision in IBS’s favor 

on the minimum fee issue would have 

no effect on noncommercial webcasters’ 

total payment obligations. That is, given 

that the $500 payment satisfied both the 

minimum fee and the $500 flat rate for 

the first 159,140 ATH of usage, IBS and 

its constituents would realize no 

benefit, even if the Judges were to 

reduce the minimum fee, thereby 

eliminating any actual issue for 

adjudication. The Judges conclude, 

therefore, that the instant matter has 

been rendered moot and that IBS lacks 

a ‘‘significant interest in the 

proceedings’’ as required by section 

803(b)(2)(C) of the Act. 

III. Assuming the Issue on Remand 

States an Issue for Adjudication, the 

Judges’ Determination on Remand Is 

Narrowed by the Directive From the 

D.C. Circuit 

A. The First Remand 

In vacating and remanding the Judges’ 

original Web II Determination with 

regard to the ‘‘Minimum Annual Fee’’ 8

for noncommercial webcasters subject to 

the statutory license, the D.C. Circuit 

held: 

Because there is no record evidence that 

$500 represented SoundExchange’s 

administrative cost per channel or station, 

the Judges’ determination in this regard 

cannot be sustained. 

Intercollegiate Broadcast System, Inc. 

v. Copyright Royalty Board, 574 F.3d 

748, 767 (D.C. Cir. 2009) (emphasis 

added). The basis for the Court’s 

holding was that, in the absence of 

sufficient evidence, ‘‘the $500 minimum 

fee was arbitrary, capricious and not 

supported by record evidence . . . .’’ Id. 

at 772 (emphasis added). 

Accordingly, the D.C. Circuit 

‘‘remand[ed] the issue of the appropriate 

minimum fee for noncommercials.’’ Id. 

at 767. To allow for a cure of this defect 

on remand, the D.C. Circuit instructed 

the Judges to undertake ‘‘further 

proceedings not inconsistent with this 

opinion,’’ id., which required the Judges 

to receive and consider new ‘‘record 

evidence’’ of ‘‘SoundExchange’s 

administrative cost per channel or 

station.’’ Id. at 767 (emphasis added). 

For the first remand, the Judges 

permitted the Participants to submit 

additional papers and to engage in 

supplemental discovery. Thereafter, on 

May 18, 2010, the Judges conducted the 

remand hearing required by the D.C. 

Circuit. To the extent this second 

remand presents an issue for 

adjudication, the current, reconstituted 

panel of Judges has conducted a de novo 

review of the evidence and transcripts 

of the first remand and analyzed the 

propriety of the annual $500 minimum 

fee per station or channel. 

B. The Participants’ Witnesses and 

Relevant Evidence 

In the first remand proceeding, 

SoundExchange, as the collective 

representing the licensors, presented the 

written and oral testimony of W. Tucker 

McCrady, a member of its Licensing 

Committee, which, is directly 


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9Frederick Kass is also retired from the United 

States Navy, having achieved the rank of Captain. 

Kass (Pre-remand) WDT ¶ 1. Accordingly, the 

Judges refer to him in this Determination as Captain 

Kass. 

10Because the D.C. Circuit remanded for a 

determination of ‘‘the issue of the appropriate 

minimum fee for noncommercials,’’ the Judges 

construe the IBS proposal as a request for a 

minimum of fee of zero. The Judges do not reach 

the question whether a minimum fee of $0 could 

ever satisfy the statutory mandate to ‘‘include a 

minimum fee for each . . . type of service. . . .’’ 

17 U.S.C. 114(f)(2)(B). 

11Specifically—and separate and apart from the 

minimum fee issue—IBS also requested for these 

proposed new classes of noncommercial 

webcasters: (1) A new flat royalty rate of $50 per 

annum for the noncommercial webcasters IBS 

classified as ‘‘Small’’; (2) a new flat royalty rate of 

$20 per annum for the noncommercial webcasters 

IBS classified as ‘‘Very Small’’; and (3) new terms 

that would exempt both such proposed classes from 

recordkeeping and reporting requirements. By 

seeking different royalty rates and terms, IBS has 

raised issues that go beyond the scope of the 

remand instructions. Indeed, as the D.C. Circuit 

made clear, except for the minimum fee issue, ‘‘[a]ll 

other portions of the determination are affirmed.’’ 

574 F.3d at 772 (emphasis added). 

12The remaining 58 noncommercial webcasters 

also were charged the $500 minimum fee, but they 

recouped that minimum fee either because they 

exceeded the ATH threshold cap or because they 

streamed multiple channels or stations. 

responsible for negotiating and 

approving any settlements related to 

statutory licenses on behalf of 

SoundExchange. McCrady WDT at 1. 

Mr. McCrady is also associate counsel, 

digital legal affairs, for Warner Music 

Group (WMG). Id. SoundExchange also 

presented the written and oral 

testimony of Barrie Kessler, its chief 

operating officer. SoundExchange also 

introduced into evidence agreements it 

reached pursuant to the Webcaster 

Settlement Acts of 2008 and 2009, with 

(i) College Broadcasters, Inc. (CBI) for 

noncommercial educational webcasters; 

(ii) National Association of Broadcasters 

(NAB) for broadcasters who also 

webcast performances of sound 

recordings; (iii) Sirius XM Radio, Inc. 

(Sirius XM) for webcasts of signals 

provided by satellite services; and (iv) 

DiMA for commercial webcasters. 5/18/ 

10 Tr. at 13 (McCrady). 

IBS represents a membership of more 

than 1,000 student-staffed stations and 

webcasting operations affiliated with 

domestic academic institutions, and 

purports to be the largest such 

organization in the United States. 

Frederick J. Kass, Jr. (Pre-Remand) WDT 

at ¶ 6. IBS presented its case principally 

through the written and oral testimony 

of Captain Kass, treasurer, director of 

operations (chief operating officer), and 

a director of IBS.9 In addition, IBS 

presented the written testimony of John 

E. Murphy, general manager of WHUS, 

a university radio station at the 

University of Connecticut, and 

Benjamin Shaiken, at the time a student 

at the University of Connecticut and 

operations manager of WHUS. 

C. The Minimum Fee Proposals of the 

Participants 

1. The SoundExchange Proposal 

SoundExchange proposed the same 

dollar level for a minimum fee for 

noncommercial webcasters, $500, as it 

had proposed prior to the first remand. 

Specifically, SoundExchange proposed: 

Each Noncommercial Webcaster will pay 

an annual, nonrefundable minimum fee of 

$500 for each calendar year or part of a 

calendar year of the license period during 

which they are [sic] Licensees pursuant to 

licenses under 17 U.S.C. 114. This annual 

minimum fee is payable for each individual 

channel and each individual station 

maintained by Noncommercial Webcasters 

and is also payable for each individual Side 

Channel maintained by Broadcasters who are 

Licensees. The minimum fee payable under 

17 U.S.C. 112 is deemed to be included 

within the minimum fee payable under 17 

U.S.C. 114. Upon payment of the minimum 

fee, the Licensee will receive a credit in the 

amount of the minimum fee against any 

additional royalty fees payable in the same 

calendar year. 

Proposed Rates and Terms of 

SoundExchange, Inc. for the Remand 

Proceeding Concerning the Minimum 

Fee Payable by Noncommercial 

Webcasters (Jan. 11, 2010). 

Consistent with the Judges’ prior 

ruling in Web II, SoundExchange’s 

proposed minimum fee would be ‘‘fully 

recoupable’’ against royalty fees owed 

by noncommercial webcasters subject to 

the statutory license. 5/18/10 Tr. at 14 

(McCrady). 

2. The IBS Proposal 

IBS proposed that certain smaller 

noncommercial webcasters be exempt 

from paying any minimum fee. 5/18/10 

Tr. at 76, 83–85 (Kass); Kass 

(Supplemental) WDT at 2 (For certain 

smaller noncommercial webcasters, 

‘‘[t]he imposition of a minimum fee 

should be rejected by the Judges.’’) 10

More particularly, IBS proposed that an 

exemption from the minimum fee be 

provided to webcasters that met IBS’s 

proposed (and unprecedented) 

classification as either ‘‘Small 

Noncommercial Webcasters,’’ defined 

by IBS as those whose total 

performances of digitally recorded 

music is less than 15,914 ATH per 

month, or ‘‘Very Small Noncommercial 

Webcasters,’’ defined by IBS as those 

whose total performances of digitally 

recorded music is less than 6,365 ATH 

per month. IBS’s Restated Rate Proposal 

(June 1, 2010). IBS did not propose a 

separate minimum fee for 

noncommercial webcasters who 

performed more than 15,914 ATH per 

month, nor did IBS object to 

SoundExchange’s proposed minimum 

fee for noncommercial webcasters who 

webcast more than 15,914 ATH per 

month. 

In addition, IBS raised issues that 

went beyond the scope of the remand 

instructions of the D.C. Circuit.11

D. The Participants’ Testimony and 

Evidence 

1. SoundExchange’s Testimony and 

Evidence 

SoundExchange—through Ms. 

Kessler’s testimony—provided precisely 

the type of evidence required by the 

D.C. Circuit in its remand instructions. 

That is, Ms. Kessler testified regarding 

the costs incurred by SoundExchange to 

administer the royalty payment and 

distribution process under the statutory 

license. As Ms. Kessler testified, broadly 

speaking, ‘‘there is not necessarily much 

difference between a noncommercial 

service and a commercial service in 

terms of the effort required for 

[SoundExchange] to administer . . . use 

of sound recordings.’’ Kessler Corrected 

WDT at 3. 

Ms. Kessler testified that 305 

noncommercial webcasters paid the 

minimum fee of $500 in 2009. Kessler 

Corrected WDT at 3; 5/18/10 Tr. at 34 

(Kessler).12 According to Ms. Kessler, by 

making these payments, the 

noncommercial webcasters 

demonstrated that they were able and 

willing to pay the minimum fee. 5/18/ 

10 Tr. at 33 (Kessler). 

According to Ms. Kessler, 

SoundExchange does not track the 

administrative costs on a licensee, 

station, or channel basis in the ordinary 

course of business. 5/18/10 Tr. at 37 

(Kessler). However, for this remand 

proceeding, SoundExchange estimated 

its administrative costs and found that 

the average per channel or station cost 

for webcasters for 2008 was $803. 5/18/ 

10 Tr. at 36 (Kessler); Kessler Corrected 

WDT at 9–10. Further, Ms. Kessler 

testified that this average cost exceeded 

the average revenue derived by 

SoundExchange from noncommercial 

webcasters. 5/18/10 Tr. at 34 (Kessler). 

Ms. Kessler testified that, for all 

licensees, regardless of size or 

classification, SoundExchange must 

perform certain basic processes to 

administer the collection and 

distribution of royalty fees related to use 

of sound recordings. She also testified 

that that there was no positive 

correlation between the volume of 

sound recordings performed by a station 


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13According to Ms. Kessler, although the 

particular per channel or station costs deviate from 

the average (by definition, the value of each item 

within a heterogeneous set will deviate from the 

set’s average value), those deviations are not a 

function of the classification of the service as 

commercial or noncommercial. Rather, those 

deviations are a function of the amount of ‘‘time 

and attention’’ required of SoundExchange to 

administer the license, which itself is a function of 

the quality of the data provided by the service 

operating the channel or station. 5/18/10 Tr. at 37– 

38 (Kessler). 

14The written testimony of Messrs. Murphy and 

Shaiken were introduced previously in Web III on 

April 22, 2010, and were subsequently designated 

as evidence by IBS and admitted in the first Web 

II remand proceeding. 5/18/10 Tr. at 66–67. 

15The Judges note that, as Mr. McCrady testified, 

generally, minimum fees ‘‘are intended not only to 

cover our costs of negotiating and administering the 

license, but to assure that we will receive a 

substantial guaranteed stream of revenue for making 

available our large repertoire of sound recordings.’’ 

McCrady WDT at 5. Although in the present 

proceeding the minimum fee has been based on the 

administrative costs incurred by SoundExchange, 

nothing set forth herein should be construed as 

precluding a minimum fee from also serving to 

guarantee a stream of revenue for licensees as 

appropriate in the particular proceeding. 

or channel and the administrative work 

required of SoundExchange, nor, as 

noted supra, was there a greater amount 

of time and effort expended to 

administer the licensing process for 

commercial webcasters compared to 

noncommercial webcasters.13 In fact, as 

Ms. Kessler testified, SoundExchange 

‘‘at times has to devote more time to 

working with a noncommercial service 

than it would a commercial service, 

because of the small and often 

inexperienced staff and relative lack of 

automation in the operations of many 

noncommercial webcasters.’’ Kessler 

Corrected WDT at 4. 

Moreover, SoundExchange’s 

additional documentary evidence 

regarding the minimum fee contained in 

other agreements was consistent with 

the use of the $500 minimum fee in this 

proceeding. All of the agreements filed 

pursuant to the Webcaster Settlement 

Acts of 2008 and 2009 and introduced 

into evidence by SoundExchange 

contained minimum fees similar to the 

$500 per station or channel proposed by 

SoundExchange. Of particular 

importance, one of those agreements 

was the agreement between 

SoundExchange and noncommercial 

educational webcasters (the CBI 

Agreement) for the same type of services 

as would be covered under the IBS 

proposal. More specifically, the CBI 

Agreement contains the identical 

minimum fee of $500 per year per 

station or channel. 5/18/10 Tr. at 14 

(McCrady). 

Mr. McCrady testified that this 

proposed $500 minimum fee 

represented a substantial discount for 

noncommercial webcasters. 

Specifically, Mr. McCrady testified 

that—with regard to Commercial 

Webcasters—WMG required that its 

negotiated voluntary licenses for its full 

catalogue must generate payments 

anticipated to be at least $25,000. 5/18/ 

10 Tr. at 25 (McCrady), and the lowest 

commercial minimum fee is 20% of 

revenue. 5/18/10 Tr. at 20 (McCrady). 

On percentage terms, therefore, the $500 

minimum fee would represent a 

substantial discount because—accepting 

arguendo IBS’s assertion that the 

average annual operating budget of its 

member stations is $9,000, see 5/18/10 

Tr. at 20 (McCrady) and 5/18/10 Tr. at 

71 (Kass)—that proposed $500 

minimum fee would be less than 6% of 

that amount. 

2. IBS’s Testimony and Evidence 

IBS’s primary contention to support a 

zero minimum fee for ‘‘Small’’’’ and 

‘‘Very Small’’ noncommercial 

webcasters is essentially that those 

entities are unable to afford the $500 

minimum fee proposed by 

SoundExchange. 5/18/10 Tr. at 103 

(Kass). More specifically, Capt. Kass 

testified that, according to a prior survey 

by IBS of its member stations—a survey 

undertaken ‘‘back aways’’ and not 

proffered by IBS—the average annual 

operating budget for those campus 

stations was approximately $9,000 per 

year. 5/18/10 Tr. at 71 (Kass); Kass (PreRemand) WDT at 9. 

Messrs. Kass, Murphy, and Shaiken 

all testified about certain distinctions 

between college (and, to a lesser extent, 

high school) radio stations and 

commercial radio stations. Kass (PreRemand) WDT at ¶¶ 7–8; 10–13; 4/22/ 

10 Tr. at 761, 765(Kass); Murphy WDT 

at ¶¶ 4–10; Shaiken WDT ¶¶ 5–9.14 The 

gravamen of these asserted distinctions 

was that smaller webcasters affiliated 

with educational institutions have an 

instructional need for sound recordings 

that, according to IBS, must be 

distinguished from the demand of other 

webcasters, in a manner that would 

preclude any minimum fee. 

However, the evidence and testimony 

introduced by IBS did not address the 

issue of whether SoundExchange 

incurred administrative costs in 

connection with licensing of sound 

recordings performed by academic 

institutions, or the dollar value of such 

administrative costs. 

E. Analysis and Determination 

The Judges concluded in the first 

remand that SoundExchange’s $500 

minimum fee proposal is clearly 

appropriate and eminently reasonable. 

The Judges in this remand reach the 

same conclusion and find several bases 

in the record for this conclusion. 

First, IBS did not proffer any evidence 

to contradict Ms. Kessler’s testimony. 

Accordingly, the Judges find as a fact 

that the cost to administer the statutory 

license, including for the 

noncommercial webcasters represented 

by IBS, is $803 per year on average. It 

is reasonable and appropriate for the 

minimum fee at least to cover 

SoundExchange’s administrative cost. 

Moreover, as noted at the outset of this 

Determination, the D.C. Circuit 

expressly remanded the prior 

Determination with a directive that the 

Judges develop just such a record 

regarding SoundExchange’s 

administrative costs, in order to ground 

a decision as to the minimum fee on 

evidentiary bases.15

Second, the CBI Agreement admitted 

into evidence is persuasive 

corroborating evidence. The CBI 

Agreement confirms that 

SoundExchange’s proposal represents a 

minimum fee that has actually been 

negotiated in the marketplace between 

a willing buyer and a willing seller. The 

Judges further note that the negotiated 

CBI Agreement employs the same 

minimum fee per station or channel, up 

to the 159,140 ATH threshold, without 

the smaller sub-classifications proposed 

by IBS. 

Third, the undisputed fact that 305 

noncommercial webcasters paid the 

$500 minimum fee in 2009 is persuasive 

evidence that this minimum fee has not 

only been included in an agreement, but 

has actually been paid in the 

marketplace. Just as webcasting rates 

(beyond a minimum fee) must represent 

marketplace rates, so too should a 

statutory minimum fee bear a 

relationship to the minimum fees that 

actually are paid for similar services. 

In stark contrast, the testimony and 

evidence proffered by IBS do not 

present any countervailing 

considerations. 

First, IBS proffered no record 

evidence to support the contention that 

the ‘‘Small’’ or ‘‘Very Small’’ 

noncommercial webcasters as defined 

by IBS would be unable to pay a $500 

minimum fee. Indeed, IBS did not offer 

testimony from any entity that 

demonstrably qualified as a ‘‘Small’’ or 

‘‘Very Small’’ noncommercial 

webcaster. Mere conclusory statements 

that a $500 minimum payment would 

be unaffordable for smaller 

noncommercial webcasters do not serve 

as probative evidence. 

Second, the only testimony that 

mentions any specifics about the 


rmajette on DSK2VPTVN1PROD with RULES
Federal Register / Vol. 79, No. 211 / Friday, October 31, 2014 / Rules and Regulations 64673 

16The contrast between the economic value of a 

sound recording and the economic value of 

administrative services is instructive in this regard. 

Administrative services, like any private services or 

goods, are priced in a market at a level that permits 

the seller to recover at least its average variable cost 

of providing those services. By contrast, the 

marginal cost of producing an additional copy of a 

sound recording is essentially zero, so the 

determination of the price for the sound recording, 

on the supply side, is influenced by that economic 

fact (and by the recurring sinking of long-term costs 

to create the recording and the need to provide an 

incentive for the creation of future sound 

recordings). Noncommercial webcasters might have 

been able to argue for a different or lower royalty 

rate based on this economic argument, but the 

Judges cannot apply this principle to the valuation 

of a service, such as the provision of administrative 

functions that, like all private goods or services, are 

provided at a positive marginal cost. 

17Pursuant to 17 U.S.C. 114(f)(2)(B), the Judges 

can identify and then account for those differences 

in the ‘‘nature of the use of sound recordings’’ that 

would support a different rate or term. 

18 ‘‘Small’’ and ‘‘Very Small’’ noncommercial 

webcasters would obtain a free ride under the IBS 

proposal because they receive benefits from 

SoundExchange’s administrative services. As 

explained by Mr. McCrady, rather than having to 

negotiate licenses with individual copyright owners 

in a market without a statutory license, 

noncommercial webcasters enjoy ‘‘one-stop 

shopping’’ for rights to all recordings at a preestablished price. McCrady WDT at 11. 

19The Judges do not rely upon Mr. McCrady’s 

testimony regarding the nature of the use of the 

sound recordings by academic institutions. He 

testified that the $500 minimum fee is appropriate 

because it provides an important educational 

message for students regarding the value of 

recorded music and the need to pay for it. 5/18/10 

Tr. at 23 (McCrady). Mr. McCrady did not purport 

to be an educator, he did not claim any direct 

knowledge of the scope or content of the 

educational work undertaken by academic 

institutions that authorize their students to play 

sound recordings, and SoundExchange did not 

proffer evidence to indicate that Mr. McCrady 

possessed the competency to testify as to any 

relationship between the educational mission of 

these institutions and the establishment of a 

minimum fee. Although such a ‘‘message’’ might 

well be appropriate as part of an economics or 

business school class or internship, that message 

might not be part of the curriculum in a music or 

communications class or internship. Further, a 

student’s understanding of the economic issues 

regarding the pricing of sound recordings cannot be 

imparted in such an ad hoc manner. 

finances of smaller webcasters is the 

reference by Capt. Kass to the survey 

performed ‘‘back aways’’ that 

supposedly showed that IBS members 

had an average annual operating budget 

of $9,000. Kass (Pre-Remand) WDT at ¶ 

9. IBS did not offer that purported 

survey into evidence. Without 

documentary evidence that would allow 

the Judges to assess the validity of the 

survey, the Judges cannot accept Capt. 

Kass’s reference to that survey as 

evidence. See 37 CFR 351.l0(e). 

Moreover, assuming arguendo the 

Judges could accept such a casual 

reference as probative, the assertion 

would not advance IBS’s case. On its 

face, an assertion that the average 

operating budget for IBS members is 

$9,000 does not establish that its 

members lack the capacity to make a 

minimum payment of $500. 

Third, the evidence strongly suggests 

that the ATH cutoffs that IBS proposed 

for ‘‘Small’’ and ‘‘Very Small’’ 

noncommercial webcasters are arbitrary. 

It appears that, for these proposed 

smaller categories, IBS chose ATH 

levels that represent 10% and 4%, 

respectively, of the ATH cutoff (159,400 

ATH) for all noncommercial webcasters 

contained in SoundExchange’s rate 

proposal. IBS’s Restated Rate Proposal 

(June 1, 2010). Nothing in the record 

substantiates these ATH levels as 

probative of the ability, vel non, of a 

noncommercial webcaster to pay a $500 

minimum fee. 

Fourth, even if there were a sufficient 

basis in the record to conclude that 

‘‘Small’’ and/or ‘‘Very Small’’ 

noncommercial webcasters were unable 

to pay a $500 minimum fee, that alone 

would not demonstrate that a willing 

seller in a hypothetical marketplace 

would be prepared to offer a lower 

minimum fee. That proposition is 

particularly dubious in this proceeding 

given the evidence in the record 

(discussed supra) that SoundExchange’s 

average annual administrative cost 

exceeds $500 per station or channel. 

Fifth, the particular economic 

circumstances of the academic 

webcasters represented by IBS are 

germane only to the determination of 

the statutory royalty rate that they are 

required to pay—a royalty 

determination previously rendered by 

the Judges and affirmed by the D.C. 

Circuit. Indeed, the prior Determination 

by the Judges, affirmed by the D.C. 

Circuit, acknowledged the 

appropriateness of lower rates for 

noncommercial webcasters compared to 

the rates set for commercial webcasters. 

The issue at hand on this remand is 

different—whether there should be a 

distinction regarding the minimum 

fee—not the royalty rate—among 

different groups within the category of 

noncommercial webcasters.16

Finally, the testimony of the IBS 

witnesses regarding the nature of the 

use of sound recordings 17 by academic 

institutions is not pertinent to the 

setting of the minimum fee based on 

SoundExchange’s administrative costs. 

That is, payment of a minimum fee of 

zero, and indeed any minimum fee 

significantly below SoundExchange’s 

actual administrative costs, would 

provide a webcaster with an unjustified 

free ride 18 in terms of the cost of 

administering the license, because 

SoundExchange incurs that cost 

regardless of the nature of the use of the 

sound recording.19

IV. Conclusion 

For the foregoing reasons, developed 

from a de novo review of the record, the 

Judges conclude that the $500 minimum 

fee proposed by SoundExchange for all 

noncommercial webcasters for the 

license term 2006 through 2010 is 

appropriate and consistent with the 

relevant willing buyer/willing seller 

statutory standard. The Judges hereby 

expressly adopt the same minimum fee 

as set forth in the Final Determination 

published on May 1, 2007, and the 

Order on Remand. See 37 CFR 

380.3(b)(2). The Judges also conclude 

that IBS failed to support the zero 

minimum fee that it proposed for subcategories of noncommercial 

webcasters, either with relevant 

evidence or economic analysis 

consistent with the applicable statutory 

standard. 

September 17, 2014. 

So Ordered. 

Suzanne M. Barnett, 

Chief United States Copyright Royalty Judge. 

David R. Strickler, 

United States Copyright Royalty Judge. 

Jesse M. Feder, 

United States Copyright Royalty Judge. 

Dated: October 22, 2014. 

Suzanne M. Barnett, 

Chief United States Copyright Royalty Judge. 

Approved by: 

James H. Billington, 

Librarian of Congress. 

[FR Doc. 2014–25971 Filed 10–30–14; 8:45 am] 

BILLING CODE 1410–72–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 180 

[EPA–HQ–OPP–2014–0467; FRL–9917–03] 

AAAPD and AAASD; Tolerance 

Exemption 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: This regulation establishes an 

exemption from the requirement of a 

tolerance for residues of a-alkyl 

(minimum C6 linear, branched, 

saturated and/or unsaturated)-whydroxypolyoxyethylene polymer with 

or without polyoxypropylene, mixture 

of di- and monohydrogen phosphate 

esters and the corresponding 

ammonium, calcium, magnesium, 

monoethanolamine, potassium, sodium, 

and zinc salts of the phosphate esters; 

minimum oxyethylene content is 2 


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