[Federal Register Volume 72, Number 85 (Thursday, May 3, 2007)]
[Notices]
[Pages 24623-24624]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-8515]


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LIBRARY OF CONGRESS

Copyright Office

[Docket No. 2007-4]


Notice of Intent to Audit

AGENCY: Copyright Office, Library of Congress.

ACTION: Public notice.

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SUMMARY: The Copyright Office of the Library of Congress is announcing

[[Page 24624]]

receipt of a notice of intent to audit 2005 statements of account 
concerning the eligible nonsubscription transmissions of sound 
recordings made by Microsoft Corporation (``Microsoft'') under 
statutory licenses.

FOR FURTHER INFORMATION CONTACT: Tanya M. Sandros, Acting General 
Counsel, P.O. Box 70977, Southwest Station, Washington, DC 20024-0977. 
Telephone: (202) 707-8380. Telefax: (202) 252-3423.

SUPPLEMENTARY INFORMATION: Section 106(6) of the Copyright Act, title 
17 of the United States Code, gives the copyright owner of a sound 
recording the right to perform a sound recording publicly by means of a 
digital audio transmission, subject to certain limitations. Among these 
limitations are certain exemptions and a statutory license which allows 
for the public performance of sound recordings as part of ``eligible 
nonsubscription transmissions.''\1\ 17 U.S.C. 114. A music service that 
operates under the section 114 statutory license may also make any 
necessary ephemeral reproductions to facilitate the digital 
transmission of the sound recording under a second license set forth in 
section 112(e) of the Copyright Act. Use of these licenses requires 
that services make payments of royalty fees to and file reports of 
sound recording performances with SoundExchange. SoundExchange is a 
collecting rights entity that was designated by the Librarian of 
Congress to collect statements of account and royalty fee payments from 
services and distribute the royalty fees to copyright owners and 
performers entitled to receive such royalties under sections 112(e) and 
114(g) following a proceeding before a Copyright Arbitration Royalty 
Panel (``CARP'')--the entity responsible for setting rates and terms 
for use of the section 112 and section 114 licenses prior to the 
passage of the Copyright Royalty and Distribution Reform Act of 2004 
(``CRDRA'''), Pub. L. No. 108-419, 118 Stat. 2341 (2004). See 69 FR 
5695 (February 6, 2004).
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    \1\An ``eligible nonsubscription transmission'' is a 
noninteractive digital audio transmission which, as the name 
implies, does not require a subscription for receiving the 
transmission. The transmission must also be made as a part of a 
service that provides audio programming consisting in whole or in 
part of performances of sound recordings the primary purpose of 
which is to provide audio or entertainment programming, but not to 
sell, advertise, or promote particular goods or services. See 17 
U.S.C. 114(j)(6).
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    This Act, which the President signed into law on November 30, 2004, 
and which became effective on May 31, 2005, amends the Copyright Act, 
title 17 of the United States Code, by phasing out the CARP system and 
replacing it with three permanent Copyright Royalty Judges (``CRJs''). 
Consequently, the CRJs carry out the functions heretofore performed by 
the CARPs, including the adjustment of rates and terms for certain 
statutory licenses such as the section 114 and 112 licenses. However, 
section 6(b)(3) of the Act states in pertinent part:

     [t]he rates and terms in effect under section 114(f)(2) or 
112(e) . . . on December 30, 2004, for new subscription services 
[and] eligible nonsubscription services . . . shall remain in effect 
until the later of the first applicable effective date for successor 
terms and rates . . . or such later date as the parties may agree or 
the Copyright Royalty Judges may establish.
    Successor rates and terms for the licenses are scheduled to be 
published in the Federal Register on Tuesday, May 1, 2007. However, 
these successor rates and terms carry an effective date beginning on 
January 1, 2006. Accordingly, the terms of the section 114 and 112 
licenses as previously constituted are still in effect for any request 
to audit 2005 statements of account.
    One of the previously constituted terms, set forth in Sec.  262.6 
of title 37 of the Code of Federal Regulations, states that 
SoundExchange, as the Designated Agent, may conduct a single audit of a 
Licensee for the purpose of verifying their royalty payments. As a 
preliminary matter, the Designated Agent is required to submit a notice 
of its intent to audit a Licensee with the Copyright Office and serve 
this notice on the service to be audited. 37 CFR 262.6(c).
    On December 23, 2005, SoundExchange filed with the Copyright Office 
a notice of intent to audit Microsoft for the years 2002, 2003, and 
2004. See 72 FR 624 (January 5, 2006). Subsequently, on March 29, 2007, 
SoundExchange filed a second notice of intent to audit Microsoft,\2\ 
pursuant to Sec.  262.6(c), notifying the Copyright Office of its 
intent to expand its current audit to cover 2005. This notice of intent 
to audit was received by the Copyright Office on April 2, 2007. Section 
262.6(c) requires the Copyright Office to publish a notice in the 
Federal Register within thirty days of receipt of the filing announcing 
the Designated Agent's intent to conduct an audit.
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    \2\A copy of the new Notice of Intent to Audit Microsoft is 
posted on the Copyright Office Web site at http://www.copyright.gov/carp/microsoft-notice2.pdf
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    In accordance with this regulation, the Office is publishing 
today's notice to fulfill this requirement with respect to the notice 
of intent to audit filed by SoundExchange on March 29, 2007.

    Dated: April 30, 2007
Tanya M. Sandros,
Acting General Counsel.
[FR Doc. E7-8515 Filed 5-2-07; 8:45 am]
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