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[Federal Register Volume 77, Number 80 (Wednesday, April 25, 2012)]
[Proposed Rules]
[Pages 24662-24667]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-9927]

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LIBRARY OF CONGRESS

Copyright Royalty Board

37 CFR Part 381

[Docket No. 2011-2 CRB NCEB II]

Determination of Reasonable Rates and Terms for Noncommercial 
Broadcasting

AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Proposed rule.

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SUMMARY: The Copyright Royalty Judges are publishing for comment 
proposed rates and terms for use of certain works in connection with 
noncommercial broadcasting for the period commencing January 1, 2013, 
and ending on December 31, 2017.

DATES: Comments and objections, if any, are due no later than May 25, 
2012.

ADDRESSES: Comments and objections may be sent electronically to 
crb@loc.gov. In the alternative, send an original, five copies and an 
electronic copy on a CD either by mail or by hand delivery. Please do 
not use multiple means of transmission. Comments and objections may not 
be delivered by an overnight delivery service other than the U.S. 
Postal Service Express Mail. If by mail (including overnight delivery), 
comments and objections must be addressed to: Copyright Royalty Board, 
P.O. Box. 70977, Washington, DC 20024-0977. If hand delivered by a 
private party, comments and objections must be brought to the Copyright 
Office, Public Information Office, Library of Congress, James Madison 
Memorial Building, Room LM-401, 101 Independence Avenue SE., 
Washington, DC 20559-6000, between 8:30 a.m. and 5 p.m. If delivered by 
a commercial courier, comments and objections must be delivered between 
8:30 a.m. and 4 p.m. to the Congressional Courier Acceptance Site 
located at 2nd and D Street NE., Washington, DC, and the envelope must 
be addressed to: Copyright Royalty Board, Library of Congress, James 
Madison Memorial Building, Room LM-403, 101 Independence Avenue SE., 
Washington, DC 20559-6000.

[[Page 24663]]

FOR FURTHER INFORMATION CONTACT: LaKeshia Keys, Program Specialist, by 
telephone: (202) 707-7658 or email at crb@loc.gov.

SUPPLEMENTARY INFORMATION: 

Background

    Section 118 of the Copyright Act, title 17 of the United States 
Code, establishes a statutory license for the use of certain 
copyrighted works in connection with noncommercial television and radio 
broadcasting. Chapter 8 of the Copyright Act requires the Copyright 
Royalty Judges (``Judges'') to conduct proceedings every five years to 
determine the rates and terms for the section 118 license.\1\ 17 U.S.C. 
801(b)(1), 804(b)(6). In accordance with section 804(b)(6), the Judges 
commenced the proceeding to set rates and terms for the period 2008-
2012 on January 9, 2006, 71 FR 1453, and published final regulations 
setting those rates and terms on November 30, 2007. 72 FR 67646. 
Therefore, the next proceeding to determine the rates and terms for the 
section 118 license was to be commenced in January 2011 for the period 
2013-2017. 17 U.S.C. 804(b)(6).
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    \1\ Prior to the enactment of the Copyright Royalty and 
Distribution Reform Act of 2004, which established the Copyright 
Royalty Judges, rates and terms for the section 118 statutory 
license were set under the Copyright Arbitration Royalty Panel 
system, which was administered by the Librarian of Congress.
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    Accordingly, the Judges published in the Federal Register a notice 
commencing the proceeding to determine the rates and terms for the 
2013-2017 period and requesting interested parties to submit their 
petitions to participate. 76 FR 591 (January 5, 2011). Petitions to 
Participate were received from: The American Society of Authors, 
Composers and Publishers (``ASCAP''); SESAC, Inc.; Broadcast Music, 
Inc. (``BMI''); Educational Media Foundation (``EMF''); Music Reports, 
Inc.; National Public Radio, the Public Broadcasting Service, and 
noncommercial radio and television stations eligible to receive funding 
from the Corporation for Public Broadcasting jointly (``NPR/PBS/CPB''); 
National Religious Broadcasters Noncommercial Music License Committee 
(``NRBNMLC''); the Church Music Publishers' Association; the National 
Music Publishers' Association, Inc. and the Harry Fox Agency, jointly 
(``NMPA/HFA''); the Catholic Radio Association (``CRA''); and the 
American Council on Education (``ACE''). The Judges set the timetable 
for the three-month negotiation period, see 17 U.S.C. 803(b)(3), and 
directed the participants to submit their written direct statements no 
later than October 31, 2011. In response to the October 31 deadline, 
the Judges received written direct statements from CRA, BMI, ASCAP, and 
Music Reports, Inc.\2\ as well as several notifications of settlement 
and proposed rates and terms for the Copyright Royalty Judges to adopt.
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    \2\ Pursuant to 17 U.S.C. 803(b)(6)(C)(x), the Judges set the 
60-day discovery period to run from November 30, 2011, through 
January 30, 2012. During the discovery period, Music Reports, Inc., 
and CRA each withdrew from the proceeding on December 13, 2011, and 
January 27, 2012, respectively. CRA also requested that the Judges 
vacate their Order dated January 20, 2012, compelling CRA to produce 
certain discovery; the Judges deny this request as moot, given CRA's 
withdrawal from the proceeding.
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    There are two ways that copyright owners and public broadcasting 
entities \3\ may negotiate rates and terms under the section 118 
statutory license. First, copyright owners may negotiate rates and 
terms with specific public broadcasting entities for the use of all of 
the copyright owners' works covered by the license. Section 118(b)(2) 
provides that such license agreements ``shall be given effect in lieu 
of any determination by the * * * Copyright Royalty Judges,'' provided 
that copies of the agreement are submitted to the Judges ``within 30 
days of execution.'' 17 U.S.C. 118(b)(2). The Judges received several 
agreements in this category for which no further action is required.
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    \3\ A ``public broadcasting entity'' is defined as a 
``noncommercial educational broadcast station as defined in section 
397 of title 47 and any nonprofit institution or organization 
engaged in the activities described in paragraph (2) of subsection 
(c)'' of section 118. 17 U.S.C. 118(f).
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    Second, copyright owners and public broadcasting entities may 
negotiate rates and terms for categories of copyrighted works and uses 
that would be binding on all owners and entities and submit them to the 
Judges for approval. Section 801(b)(7)(A) provides that in such event:

    (i) The Copyright Royalty Judges shall provide those that would 
be bound by the terms, rates, or other determination set by any 
agreement in a proceeding to determine royalty rates an opportunity 
to comment on the agreement and shall provide to participants in the 
proceeding under section 803(b)(2) that would be bound by the terms, 
rates, or other determination set by the agreement to comment on the 
agreement and object to its adoption as a basis for statutory terms 
and rates; and
    (ii) the Copyright Royalty Judges may decline to adopt the 
agreement as a basis for statutory terms and rates for participants 
that are not parties to the agreement, if any participant described 
in clause (i) objects to the agreement and the Copyright Royalty 
Judges conclude, based on the record before them if one exists, that 
the agreement does not provide a reasonable basis for setting 
statutory terms and rates.

17 U.S.C. 801(b)(7)(A). The Judges received seven proposals within this 
category from the following participants: (1) SESAC and ACE; (2) BMI 
and ACE; (3) ASCAP and ACE; (4) NMPA/HFA and NRBNMLC; (5) SESAC and 
NRBNMLC, (6) ASCAP and NRBNMLC; and (7) BMI and NRBNMLC.\4\
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    \4\ On October 31, 2011, EMF notified the Judges that as a 
member of NRBNMLC it was a party to each of the joint proposals 
involving NRBNMLC.
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ACE Joint Proposals

    The joint proposals entered into by ACE and each of SESAC, BMI, and 
ASCAP propose to modify the royalty rates set forth in Sec.  381.5. The 
rates proposed in the ASCAP/ACE and BMI/ACE submissions reflect a 
change in both the fees and the fee structure, going from a flat rate 
to tiered rates primarily based on the number of full-time students 
enrolled in the educational entity operating the station, with an 
exception that looks to the college radio station's authorized 
effective radiation power (``ERP'') as set forth in its current FCC 
license. ASCAP/ACE Joint Proposal at 4; BMI/ACE Joint Proposal at 4. 
Moreover, the proposed rates for ASCAP and BMI eliminate the need for 
the historic annual Consumer Price Index adjustments, as the proposed 
rates increase at the rate of two percent per year. Id. at 5.
    The SESAC/ACE submission retains a flat rate which is then 
adjusted, starting in 2014, by the change in the Consumer Price Index 
or two percent, whichever is greater. SESAC/ACE Joint Proposal at 2.\5\
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    \5\ The proposed elimination of the CPI adjustments for ASCAP 
and BMI necessitated a change to Sec.  381.10. However, no proposed 
language was provided with the initial proposals. Consequently, the 
Judges issued an order requesting proposed language to Sec.  381.10, 
and the parties provided the same. See Order Regarding Submission of 
Settlement Proposals, Docket No. 2011-3 CRB NCEB II (February 2, 
2012). See also Joint Submission of American Council on Education, 
the American Society of Composers, Authors and Publishers, Broadcast 
Music, Inc., and SESAC, Inc. (filed March 16, 2012).
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    Each joint proposal proposes to require that each annual payment of 
the royalty rate be accompanied by a declaration stating the number of 
full-time students enrolled in the educational entity operating the 
station and/or the ERP as specified in the entity's current FCC 
license. See proposed Sec.  381.5(d).

NRBNMLC Joint Proposals

    The joint proposals entered into by NRBNMLC and each of NMPA/HFA, 
ASCAP, BMI, and SESAC propose carrying forward unchanged the current 
provisions set forth in Sec. Sec.  381.1 (except

[[Page 24664]]

to replace ``2008'' with ``2013'' and ``2012'' with ``2017''), 381.2, 
381.9, and 381.11.
    The joint proposal between NMPA/HFA and NRBNMLC stated that the 
rates in Sec.  381.7(b)(4) should remain the same as those currently 
set for 2008-2012, ``subject to the additional provisions'' of 
Sec. Sec.  381.7(b)(3) and (5), since they ``are reasonable'' and ``no 
circumstances exist that would warrant modification of these fees.'' 
NMPA/HFA and NRBNMLC Joint Proposal at 2. The proposal also stated that 
separate negotiations were ongoing between HFA and NMPA and NPR and PBS 
with respect to provisions in Sec.  381.7 other than Sec.  381.7(b)(4). 
Id. at 2-3. When such proposal did not appear to be forthcoming, the 
Judges issued an order requesting in part that such proposal, if 
finalized, be submitted by March 16, 2012, in order to allow for 
publication of all proposed rates and terms in a single document. See 
Order Regarding Submission of Settlement Proposals, Docket No. 2011-2 
CRB NCEB II (February 2, 2012); see also n.5. However, after receiving 
no responsive filings, the Judges issued a subsequent order requiring 
HFA, NMPA, NPR, and PBS to show cause why the provisions to be covered 
by their separate proposal (Sec. Sec.  381.7(b)(1)(i)-(iii), 
381.7(b)(2)(i)-(iv), 381.7(c), 381.7(d), and 381.7(e)) should not be 
removed from Part 381. See Order to Show Cause, Docket No. 2011-2 CRB 
NCEB II (March 28, 2012). In response, HFA, NMPA, NPR and PBS submitted 
their joint proposal covering the provisions specified in the March 28 
order. Specifically, they proposed that the rates set forth in 
Sec. Sec.  381.7(b)(1) and (2) ``be changed to reflect a rate increase 
consistent with the prior percentage increase from the 2003-2007 
license period to the 2008-2012 license period'' as such increase ``is 
fair and reasonable.'' Response to Order to Show Cause, and Joint 
Proposal of the Harry Fox Agency, Inc., National Music Publishers' 
Association, Inc., National Public Radio, Inc. and Public Broadcasting 
Service, at 3 (April 4, 2012). These parties proposed no changes to 
Sec. Sec.  381.7(c)-(e) and requested that these provisions be carried 
forward as is because they ``are fair and reasonable in that they 
facilitate efficient, consistent and accurate payments of royalties for 
uses governed by [Sec.  ] 381.7.'' Id. at 4.
    Each of the joint proposals between NRBNMLC and ASCAP, BMI, and 
SESAC propose modifications to Sec.  381.6. Under the proposals, 
alternatives have been provided to a Religious/Community Noncommercial 
Radio Station in determining its Population Count which is the basis of 
the rates paid. In addition, the proposals include a new reduced rate 
for a Religious/Community Noncommercial Radio Station using a talk 
format necessitating a number of newly defined terms. Finally, the 
proposals address a Religious/Community Noncommercial Radio Station's 
broadcast of in-band, on-channel, digital radio (``HD Radio'') signals.

Other Provisions

    Finally, the Judges have removed and reserved two sections for 
which no proposals were submitted. Specifically, Sec.  381.4, which 
governed performance of musical compositions by PBS, NPR and other 
public broadcasting entities engaged in the activities of 17 U.S.C. 
118(c), and Sec.  381.8, which governed the terms and rates of royalty 
payments for the use of published pictorial, graphic, and sculptural 
works in PBS-distributed programs as well as in other than PBS-
distributed programs, have been removed and their section numbers 
reserved.
    As noted above, the public may comment and object to any or all of 
the proposed regulations contained in this notice. Such comments and 
objections must be submitted no later than May 25, 2012.

List of Subjects in 37 CFR Part 381

    Copyright, Music, Radio, Television, Rates.

Proposed Regulations

    For the reasons set forth in the preamble, the Copyright Royalty 
Judges propose to amend Part 381 to Chapter III of title 37 of the Code 
of Federal Regulations to read as follows:

PART 381--USE OF CERTAIN COPYRIGHTED WORKS IN CONNECTION WITH 
NONCOMMERCIAL EDUCATIONAL BROADCASTING

    1. The authority citation for part 381 continues to read as 
follows:

    Authority:  17 U.S.C. 118, 801(b)(1) and 803.

Sec.  381.1  [Amended]

    2. Section 381.1 is amended by removing ``2008'' and adding 
``2013'' in its place and by removing ``2012'' and adding ``2017'' in 
its place.

Sec.  381.4  [Removed and Reserved]

    3. Remove and reserve Sec.  381.4.
    4. Section 381.5 is amended by revising paragraphs (c) and (d) to 
read as follows:

Sec.  381.5  Performance of musical compositions by public broadcasting 
entities licensed to colleges and universities.

* * * * *
    (c) Royalty rate. A public broadcasting entity within the scope of 
this section may perform published nondramatic musical compositions 
subject to the following schedule of royalty rates:
    (1) For all such compositions in the repertory of ASCAP, the 
royalty rates shall be as follows:
    (i)

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                                        Number of full-time
                                             students             2013      2014      2015      2016      2017
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Level 1...........................  or the effective radiated power (ERP) as specified in its 
current FCC license. An exact copy of such declaration shall be 
furnished to each of ASCAP, BMI and SESAC.
* * * * *
    5. Section 381.6 is amended as follows:
    a. By redesignating paragraphs (b) through (e) as paragraphs (c) 
through (f), respectively;
    b. By adding a new paragraph (b);
    c. By revising newly redesignated paragraph (d);
    d. By revising newly redesignated paragraph (e); and
    e. By removing current paragraph (f).

    The additions and revisions to Sec.  381.6 read as follows:

Sec.  381.6  Performance of musical compositions by other public 
broadcasting entities.

* * * * *
    (b) Definitions. As used in paragraphs (d) and (e) of this section, 
the following terms and their variant forms mean the following:
    (1) Feature Music shall mean any performance of a musical work, 
whether live or recorded, that is the principal focus of audience 
attention. Feature Music does not include bridge, background, or 
underscore music, themes or signatures, interstitial music between 
programs such as in public service announcements or program sponsorship 
identifications, brief musical transitions in and out of program 
segments (not to exceed 60 seconds in duration), incidental 
performances of music during broadcasts of public, religious, or sports 
events, or brief performances during news, talk, religious, and sports 
programming of no more than 30 seconds in duration.
    (2) Population Count. The combination of:
    (i) The number of persons estimated to reside within a station's 
Predicted 60 dBu Contour, based on the most recent available census 
data; and
    (ii) The nonduplicative number of persons estimated to reside in 
the Predicted 60 dBu Contour of any Translator or Booster Station that 
extends a public broadcasting entity's signal beyond the contours of a 
station's Predicted 60 dBu Contour.
    (iii) In determining Population Count, a station or a Translator or 
Booster Station may use and report the total population data, from a 
research company generally recognized in the broadcasting industry, for 
the radio market within which the station's community license is 
located.
    (3) Predicted 60 dBu Contour shall be calculated as set forth in 47 
CFR 73.313.
    (4) Talk Format Station shall mean a noncommercial radio station:
    (i) Whose program content primarily consists of talk shows, news 
programs, sports, community affairs or religious sermons (or other non-
music-oriented programming);
    (ii) That performs Feature Music in less than 20% of its 
programming annually; and
    (iii) That performs music-oriented programming for no more than 
four (4) programming hours during the hours from 6 a.m. to 10 p.m. each 
weekday, with no two (2) hours of such programming occurring 
consecutively, with the exception of up to five (5) weekdays during the 
year.
    (5) Weekday shall mean the 24-hour period starting at 12 a.m. 
through 11:59 p.m. on Mondays, Tuesdays, Wednesdays, Thursdays and 
Fridays occurring between January 1 of a given year up to and including 
Thanksgiving day of that year.
    (6) Translator Station and Booster Station shall have the same 
meanings as set forth in 47 CFR 74.1201.
* * * * *
    (d) Royalty rate. A public broadcasting entity within the scope of 
this section may perform published nondramatic musical compositions 
subject to the following schedule of royalty rates:
    (1) For all such compositions in the repertory of ASCAP, the 
royalty rates shall be as follows:
    (i) Music Fees (Stations with 20% or more programming containing 
Feature Music):

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                                         Population count         2013      2014      2015      2016      2017
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Level 1...........................  0-249,999.................      $631      $644      $657      $670      $683
Level 2...........................  250,000-499,999...........     1,126     1,149     1,171     1,195     1,219

[[Page 24666]]

 
Level 3...........................  500,000-999,999...........     1,688     1,722     1,756     1,791     1,827
Level 4...........................  1,000,000-1,499,999.......     2,251     2,296     2,342     2,389     2,437
Level 5...........................  1,500,000-1,999,999.......     2,814     2,870     2,928     2,986     3,046
Level 6...........................  2,000,000-2,499,999.......     3,377     3,445     3,513     3,584     3,655
Level 7...........................  2,500,000-2,999,999.......     3,939     4,018     4,098     4,180     4,264
Level 8...........................  3,000,000 and above.......     5,628     5,741     5,855     5,972     6,092
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     (ii) Talk Format Station Fees (Stations with =20% Feature Music programming:

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                                         Population count         2013      2014      2015      2016      2017
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Level 1...........................  0-249,999.................      $138      $140      $143      $146      $149
Level 2...........................  250,000-499,999...........       230       234       239       244       248
Level 3...........................  500,000-999,999...........       345       352       359       366       373
Level 4...........................  1,000,000-1,499,999.......       459       468       478       487       497
Level 5...........................  1,500,000-1,999,999.......       574       586       597       609       622
Level 6...........................  2,000,000-2,499,999.......       689       702       716       731       745
Level 7...........................  2,500,000-2,999,999.......       804       820       836       853       870

[[Page 24667]]

 
Level 8...........................  3,000,000 and above.......     1,149     1,171     1,195     1,219     1,243
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     (ii) Talk fees for stations with pre>
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