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[Federal Register Volume 79, Number 214 (Wednesday, November 5, 2014)]
[Proposed Rules]
[Pages 65609-65612]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-26222]

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LIBRARY OF CONGRESS

Copyright Royalty Board

37 CFR Part 380

[Docket No. 2014-CRB-0001-WR (2016-2020) (Web IV)]

Digital Performance Right in Sound Recordings and Ephemeral 
Recordings

AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Proposed rule.

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SUMMARY: The Copyright Royalty Judges are publishing for comment 
proposed regulations governing the rates and terms for the digital 
performances of sound recordings by noncommercial educational 
webcasters and for the making of ephemeral recordings necessary for the 
facilitation of such transmissions for the period commencing January 1, 
2016, and ending on December 31, 2020.

DATES: Comments and objections, if any, are due no later than November 
26, 2014.

ADDRESSES: The proposed rule is posted on the agency's Web site 
(www.loc.gov/crb). Submit electronic comments online at http://www.regulations.gov or via email to crb@loc.gov. Those who chose not to 
submit comments electronically should see How to Submit Comments in the 
SUPPLEMENTARY INFORMATION section below for physical addresses and 
further instructions.

FOR FURTHER INFORMATION CONTACT: Richard Strasser, Senior Attorney, or 
Kimberly Whittle, Attorney Advisor, by telephone at (202) 707-7658, or 
by email at crb@loc.gov.

SUPPLEMENTARY INFORMATION:

Background

    On October 7, 2014, the Copyright Royalty Judges received a joint 
motion from SoundExchange, Inc. and College Broadcasters, Inc. to adopt 
a partial settlement of their interests regarding Web IV rates and 
terms for 2016-2020.\1\ Joint Motion to Adopt Partial Settlement, 
Docket No. 2014-CRB-0001-WR (2016-2020). Their interests concern the 
rule setting copyright royalty minimum fees and terms that the Judges 
will establish for compulsory copyright licenses for certain internet 
transmissions of sound recordings by college radio stations and other 
noncommercial educational webcasters for the period from January 1, 
2016, through December 31, 2020. SoundExchange, Inc. represents the 
interests of sound recording copyright owners and performers. College 
Broadcasters, Inc. represents the interests of users of the copyrighted 
material which users include college, university and high school radio 
and television stations and other electronic media organizations. The 
Judges hereby publish the proposal and request comments from the 
public.
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    \1\ Web IV is short for Webcasting IV. This proceeding is the 
fourth since the compulsory license for webcasting was established.
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    Section 114 of the Copyright Act, title 17 of the United States 
Code, provides a statutory license that allows for the public 
performance of sound recordings by means of a digital audio 
transmission by, among others, eligible nonsubscription transmission 
services and new subscription services. 17 U.S.C. 114(f). For purposes 
of the section 114 license, an ``eligible nonsubscription 
transmission'' is a noninteractive digital audio transmission that does 
not require a subscription for receiving the transmission. The 
transmission must also be made as part of a service that provides audio 
programming consisting in whole or in part of performances of sound 
recordings the purpose of which is to provide audio or other 
entertainment programming, but not to sell, advertise, or promote 
particular goods or services. See 17 U.S.C. 114(j)(6). A ``new 
subscription service'' is a ``service that performs sound recordings by 
means of noninteractive subscription digital audio transmissions and 
that is not a preexisting subscription or preexisting satellite digital 
audio radio service.'' 17 U.S.C. 114(j)(8).
    Services using the section 114 license may need to make one or more 
temporary or ``ephemeral'' copies of a sound recording in order to 
facilitate the transmission of that recording. The section 112 
statutory license allows for the making of these ephemeral 
reproductions. 17 U.S.C. 112(e).
    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 sections 114 and 112 statutory 
licenses. 17 U.S.C. 801(b)(1), 804(b)(3)(A). The current proceeding 
commenced in January 2014 for rates and terms that will become 
effective on January 1, 2016, and end on December 31, 2020. Pursuant to 
section 804(b)(3)(A), the Judges published in the Federal Register a 
notice commencing the proceeding and requesting that interested parties 
submit their petitions to participate. 79 FR 412 (January 3, 2014). The 
following parties submitted Petitions to Participate: 8tracks, Inc.; 
AccuRadio, LLC; Amazon.com, Inc.; Apple Inc; Beats Music, LLC; Clear 
Channel; CMN, Inc.; College Broadcasters, Inc. (CBI); 
CustomChannels.net, LLC; Digital Media Association (DiMA); Digitally 
Imported, Inc.; Educational Media Foundation; Feed Media, Inc.; Geo 
Music Group; Harvard Radio Broadcasting Inc. (WHRB); idobi Network; 
Intercollegiate Broadcasting System, Inc. (IBS); Music Reports Inc.; 
National Association of Broadcasters (NAB); National Music Publishers 
Association (NMPA); National Public Radio (NPR); National Religious 
Broadcasters Noncommercial Music License Committee (NRBNMLC); Pandora 
Media Inc.; Rhapsody International, Inc.; Sirius XM Radio Inc.;

[[Page 65610]]

SomaFM.com LLC; SoundExchange, Inc. (SX); Spotify USA Inc.; and 
Triton.\2\
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    \2\ The following ten parties have withdrawn their Petitions to 
Participate: 8tracks, Inc.; Amazon.com, Inc.; CMN, Inc.; 
CustomChannels.net, LLC; Digitally Imported, Inc.; Feed Media, Inc.; 
idobi Network; Rhapsody International, Inc.; SomaFM.com LLC; Spotify 
USA Inc. Two parties, Music Reports Inc. and Triton Digital, Inc., 
have been dismissed from the proceeding.
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    The Judges set the timetable for the three-month negotiation period 
for February 21, 2014, through May 22, 2014. See 17 U.S.C. 803(b)(3). 
The Judges set December 22, 2014, as the deadline by which participants 
were to submit amended written direct statements. On October 7, 2014, 
SoundExchange and CBI submitted to the Judges a joint motion to adopt a 
partial settlement of their interests in the proceeding. The parties 
requested that the Judges make their decision on the motion by 
approximately December 1, 2014, in order to allow the parties time to 
prepare for litigation should the Judges decline to adopt their 
proposed partial settlement.

Statutory Timing of Adoption of Rates and Terms

    Section 801(b)(7)(A) allows for the adoption of rates and terms 
negotiated by ``some or all of the participants in a proceeding at any 
time during the proceeding'' provided the parties submit the negotiated 
rates and terms to the Copyright Royalty Judges for approval. This 
section provides:

    (i) The Copyright Royalty Judges shall provide to 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 an opportunity 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 or rates.

17 U.S.C. 801(b)(7)(A). Rates and terms adopted pursuant to this 
provision are binding on all copyright owners of sound recordings, 
college radio stations, and other noncommercial educational webcasters 
performing the sound recordings for the license period 2016-2020.

Proposed Adjustments to Rates and Terms

    In the settlement proposal, SoundExchange and CBI request that the 
Judges adjust the details of 37 CFR part 380 Subpart C by ``(1) more 
strictly limiting eligibility for the rates set forth herein to 
services that remain below 159,140 aggregate tuning hours per channel 
or station per month; and (2) somewhat increasing the listenership cap 
for services electing the proxy reporting option.'' Joint Motion to 
Adopt Partial Settlement at 2. The proposed adjustments would affect 
Sec. Sec.  380.20 (general), 380.21 (definitions), 380.22 (fees), and 
380.23 (terms) and are reflected in the Proposed Regulations below.
    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 November 26, 2014.

How To Submit Comments

    Interested members of the public must submit comments to only one 
of the following addresses. If not commenting by email or online, 
commenters must submit an original of their comments, five paper 
copies, and an electronic version on a CD.
    Email: crb@loc.gov; or
    Online: http://www.regulations.gov; or
    U.S. mail: Copyright Royalty Board, P.O. Box 70977, Washington, DC 
20024-0977; or
    Overnight service (only USPS Express Mail is acceptable): Copyright 
Royalty Board, P.O. Box 70977, Washington, DC 20024-0977; or
    Commercial courier: Address package to: Copyright Royalty Board, 
Library of Congress, James Madison Memorial Building, LM-403, 101 
Independence Avenue SE., Washington, DC 20559-6000. Deliver to: 
Congressional Courier Acceptance Site, 2nd Street NE. and D Street NE., 
Washington, DC; or
    Hand delivery: Library of Congress, James Madison Memorial 
Building, LM-401, 101 Independence Avenue SE., Washington, DC 20559-
6000.

List of Subjects in 37 CFR Part 380

    Copyright, Sound recordings, Webcasters.

Proposed Regulations

    For the reasons set forth in the preamble, the Copyright Royalty 
Judges propose to amend 37 CFR part 380 as follows:

PART 380--RATES AND TERMS FOR CERTAIN ELIGIBLE NONSUBSCRIPTION 
TRANSMISSIONS, NEW SUBSCRIPTION SERVICES AND THE MAKING OF 
EPHEMERAL REPRODUCTIONS

0
1. The authority citation for part 380 continues to read as follows:

    Authority:  17 U.S.C. 112(e), 114(f), 804(b)(3).

0
2. Amend Sec.  380.20 by revising paragraph (a) to read as follows:

Subpart C--Noncommercial Educational Webcasters

Sec.  380.20  General.

    (a) Scope. This subpart establishes rates and terms, including 
requirements for royalty payments, recordkeeping and reports of use, 
for the public performance of sound recordings in certain digital 
transmissions made by Noncommercial Educational Webcasters as set forth 
herein in accordance with the provisions of 17 U.S.C. 114, and the 
making of Ephemeral Recordings by Noncommercial Educational Webcasters 
as set forth herein in accordance with the provisions of 17 U.S.C. 
112(e), during the period January 1, 2016, through December 31, 2020.
* * * * *
0
3. Amend Sec.  380.21 by revising the definitions for ``Collective'' 
and ``Noncommercial Educational Webcaster'' to read as follows:

Sec.  380.21  Definitions.

* * * * *
    Collective is the collection and distribution organization that is 
designated by the Copyright Royalty Judges. For the 2016-2020 license 
period, the Collective is SoundExchange, Inc.
* * * * *
    Noncommercial Educational Webcaster means a Noncommercial Webcaster 
(as defined in 17 U.S.C. 114(f)(5)(E)(i)) that
    (1) Has obtained a compulsory license under 17 U.S.C. 112(e) and 
114 and the implementing regulations therefor to make Eligible 
Transmissions and related ephemeral recordings;
    (2) Complies with all applicable provisions of Sections 112(e) and 
114 and applicable regulations;
    (3) Is directly operated by, or is affiliated with and officially 
sanctioned by, and the digital audio transmission operations of which 
are staffed substantially by students enrolled at, a domestically 
accredited primary or secondary school, college, university or other 
post-secondary degree-granting educational institution;

[[Page 65611]]

    (4) Is not a ``public broadcasting entity'' (as defined in 17 
U.S.C. 118(g)) qualified to receive funding from the Corporation for 
Public Broadcasting pursuant to the criteria set forth in 47 U.S.C. 
396; and
    (5) Takes affirmative steps not to make total transmissions in 
excess of 159,140 Aggregate Tuning Hours on any individual channel or 
station in any month, if in any previous calendar year it has made 
total transmissions in excess of 159,140 Aggregate Tuning Hours on any 
individual channel or station in any month.
* * * * *
0
4. Revise Sec.  380.22 to read as follows:

Sec.  380.22  Royalty fees for the public performance of sound 
recordings and for ephemeral recordings.

    (a) Minimum fee for eligible Noncommercial Educational Webcasters. 
Each Noncommercial Educational Webcaster that did not exceed 159,140 
total ATH for any individual channel or station for more than one 
calendar month in the immediately preceding calendar year and does not 
expect to make total transmissions in excess of 159,140 Aggregate 
Tuning Hours on any individual channel or station in any calendar month 
during the applicable calendar year shall pay an annual, nonrefundable 
minimum fee of $500 (the ``Minimum Fee'') for each of its individual 
channels, including each of its individual side channels, and each of 
its individual stations, through which (in each case) it makes Eligible 
Transmissions, for each calendar year it makes Eligible Transmissions 
subject to this subpart. For clarity, each individual stream (e.g., HD 
radio side channels, different stations owned by a single licensee) 
will be treated separately and be subject to a separate minimum. The 
Minimum Fee shall constitute the annual per channel or per station 
royalty for all Eligible Transmissions totaling not more than 159,140 
Aggregate Tuning Hours in a month on any individual channel or station, 
and for Ephemeral Recordings to enable such Eligible Transmissions. In 
addition, a Noncommercial Educational Webcaster electing the reporting 
waiver described in Sec.  380.23(g)(1), shall pay a $100 annual fee 
(the ``Proxy Fee'') to the Collective.
    (b) Consequences of unexpectedly exceeding ATH cap. In the case of 
a Noncommercial Educational Webcaster eligible to pay royalties under 
paragraph (a) that unexpectedly makes total transmissions in excess of 
159,140 Aggregate Tuning Hours on any individual channel or station in 
any calendar month during the applicable calendar year:
    (1) The Noncommercial Educational Webcaster shall, for such month 
and the remainder of the calendar year in which such month occurs, pay 
royalties in accordance, and otherwise comply, with the provisions of 
Part 380 Subpart A applicable to noncommercial webcasters;
    (2) The Minimum Fee paid by the Noncommercial Educational Webcaster 
for such calendar year will be credited to the amounts payable under 
the provisions of Part 380 Subpart A applicable to noncommercial 
webcasters; and
    (3) The Noncommercial Educational Webcaster shall, within 45 days 
after the end of such month, notify the Collective that it has made 
total transmissions in excess of 159,140 Aggregate Tuning Hours on a 
channel or station in a month; pay the Collective any amounts for such 
month due under the provisions of Part 380 Subpart A applicable to 
noncommercial webcasters; and provide the Collective a statement of 
account pursuant to Part 380 Subpart A.
    (c) Royalties for other Noncommercial Educational Webcasters. A 
Noncommercial Educational Webcaster that is not eligible to pay 
royalties under paragraph (a) shall pay royalties in accordance, and 
otherwise comply, with the provisions of Part 380 Subpart A applicable 
to noncommercial webcasters.
    (d) Estimation of performances. In the case of a Noncommercial 
Educational Webcaster that is required to pay royalties under paragraph 
(b) or (c) on a per-performance basis, that is unable to calculate 
actual total performances, and that is not required to report actual 
total performances under Sec.  380.23(g)(3), the Noncommercial 
Educational Webcaster may pay its applicable royalties on an ATH basis, 
provided that the Noncommercial Educational Webcaster shall pay such 
royalties at the applicable per-performance rates based on the 
assumption that the number of sound recordings performed is 12 per 
hour. The Collective may distribute royalties paid on the basis of ATH 
hereunder in accordance with its generally applicable methodology for 
distributing royalties paid on such basis. In addition, and for the 
avoidance of doubt, a Noncommercial Educational Webcaster offering more 
than one channel or station shall pay per-performance royalties on a 
per-channel or -station basis.
    (e) Ephemeral royalty. The royalty payable under 17 U.S.C. 112(e) 
for any ephemeral reproductions made by a Noncommercial Educational 
Webcaster is deemed to be included within the royalty payments set 
forth in paragraphs (a) through (c) of this section and to equal 5% of 
the total royalties payable under such paragraphs.
0
5. Amend Sec.  380.23 by revising paragraphs (c), (d), intro paragraph 
(f), (f)(2), (f)(4), (f)(9), (g)(1), and (g)(3) to read as follows:

Sec.  380.23  Terms for making payment of royalty fees and statements 
of account.

* * * * *
    (c) Minimum fee. Noncommercial Educational Webcasters shall submit 
the Minimum Fee, and Proxy Fee if applicable, accompanied by a 
statement of account, by January 31st of each calendar year, except 
that payment of the Minimum Fee, and Proxy Fee if applicable, by a 
Noncommercial Educational Webcaster that was not making Eligible 
Transmissions or Ephemeral Recordings pursuant to the licenses in 17 
U.S.C. 114 and/or 17 U.S.C. 112(e) as of said date but begins doing so 
thereafter shall be due by the 45th day after the end of the month in 
which the Noncommercial Educational Webcaster commences doing so. At 
the same time the Noncommercial Educational Webcaster must identify all 
its stations making Eligible Transmissions and identify which of the 
reporting options set forth in paragraph (g) of this section it elects 
for the relevant year (provided that it must be eligible for the option 
it elects).
    (d) [Reserved]
* * * * *
    (f) Statements of account. Any payment due under Sec.  380.22(a) 
shall be accompanied by a corresponding statement of account on a form 
provided by the Collective. A statement of account shall contain the 
following information:
    * * *
    (2) [Reserved]
    * * *
    (4) The signature of a duly authorized representative of the 
applicable educational institution;
    * * *
    (9) A statement to the following effect:

    I, the undersigned duly authorized representative of the 
applicable educational institution, have examined this statement of 
account; hereby state that it is true, accurate, and complete to my 
knowledge after reasonable due diligence; and further certify that 
the licensee entity named herein qualifies as a Noncommercial 
Educational Webcaster for the relevant year, and did not exceed 
159,140 total ATH in any month of the prior year for which the 
Noncommercial Educational Webcaster did not submit a statement of 
account and pay any required additional royalties.

[[Page 65612]]

    (g)* * *
    (1) Reporting waiver. In light of the unique business and 
operational circumstances with respect to Noncommercial Educational 
Webcasters, and for the purposes of this subpart only, a Noncommercial 
Educational Webcaster that did not exceed 80,000 total ATH for any 
individual channel or station for more than one calendar month in the 
immediately preceding calendar year and that does not expect to exceed 
80,000 total ATH for any individual channel or station for any calendar 
month during the applicable calendar year may elect to pay to the 
Collective a nonrefundable, annual Proxy Fee of $100 in lieu of 
providing reports of use for the calendar year pursuant to the 
regulations Sec.  370.4 of this chapter. In addition, a Noncommercial 
Educational Webcaster that unexpectedly exceeded 80,000 total ATH on 
one or more channels or stations for more than one month during the 
immediately preceding calendar year may elect to pay the Proxy Fee and 
receive the reporting waiver described in paragraph (g)(1) of this 
section during a calendar year, if it implements measures reasonably 
calculated to ensure that it will not make Eligible Transmissions 
exceeding 80,000 total ATH during any month of that calendar year. The 
Proxy Fee is intended to defray the Collective's costs associated with 
this reporting waiver, including development of proxy usage data. The 
Proxy Fee shall be paid by the date specified in paragraph (c) of this 
section for paying the Minimum Fee for the applicable calendar year and 
shall be accompanied by a certification on a form provided by the 
Collective, signed by a duly authorized representative of the 
applicable educational institution, stating that the Noncommercial 
Educational Webcaster is eligible for the Proxy Fee option because of 
its past and expected future usage and, if applicable, has implemented 
measures to ensure that it will not make excess Eligible Transmissions 
in the future.
    * * *
    (3) Census-basis reports. If any of the following three conditions 
is satisfied, a Noncommercial Educational Webcaster must report 
pursuant to paragraph (g)(3) of this section:
    (i) The Noncommercial Educational Webcaster exceeded 159,140 total 
ATH for any individual channel or station for more than one calendar 
month in the immediately preceding calendar year;
    (ii) The Noncommercial Educational Webcaster expects to exceed 
159,140 total ATH for any individual channel or station for any 
calendar month in the applicable calendar year; or
    (iii) The Noncommercial Educational Webcaster otherwise does not 
elect to be subject to paragraphs (g)(1) or (2) of this section.
    A Noncommercial Educational Webcaster required to report pursuant 
to paragraph (g)(3) of this section shall provide reports of use to the 
Collective quarterly on a census reporting basis in accordance with 
Sec.  370.4 of this chapter, except that, notwithstanding Sec.  
370.4(d)(2), such a Noncommercial Educational Webcaster shall not be 
required to include ATH or actual total performances, and may in lieu 
thereof provide channel or station name and play frequency, during the 
first calendar year it reports in accordance with paragraph (g)(3) of 
this section. For the avoidance of doubt, after a Noncommercial 
Educational Webcaster has been required to report in accordance with 
paragraph (g)(3) of this section for a full calendar year, it must 
thereafter include ATH or actual total performances in its reports of 
use. All reports of use under paragraph (g)(3) of this section shall be 
submitted to the Collective no later than the 45th day after the end of 
each calendar quarter.
* * * * *

    Dated: October 29, 2014.
Jesse M. Feder,
Copyright Royalty Judge.
[FR Doc. 2014-26222 Filed 11-4-14; 8:45 am]
BILLING CODE 1410-72-P
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