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[Federal Register: April 1, 2010 (Volume 75, Number 62)]
[Proposed Rules]               
[Page 16377-16387]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01ap10-26]                         

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LIBRARY OF CONGRESS

Copyright Royalty Board

37 CFR Part 380

[Docket No. 2009-1 CRB Webcasting III]

 
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 broadcasters and noncommercial 
educational webcasters and for the making of ephemeral recordings 
necessary for the facilitation of such transmissions for the period 
commencing January 1, 2011, and ending on December 31, 2015.

DATES: Comments and objections, if any, are due no later than April 22, 
2010.

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 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, LM-403, 101 Independence Avenue, SE., 
Washington, DC 20559-6000.

FOR FURTHER INFORMATION CONTACT: Richard Strasser, Senior Attorney, or 
Gina Giuffreda, Attorney Advisor, by telephone at (202) 707-7658 or e-
mail at crb@loc.gov.

SUPPLEMENTARY INFORMATION:

Background

    Section 114 of the Copyright Act, title 17 of the United States 
Code, provides a statutory license which 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 which 
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, beginning with the license period 2006 through 2010.\1\ 17 
U.S.C. 801(b)(1), 804(b)(3)(A). The Judges announced their final 
determination of the rates and terms for the 2006-2010 license period 
on May 1, 2007. 72 FR 24084 (May 1, 2007), affirmed in part, remanded 
in part, Intercollegiate Broadcast System v. Copyright Royalty Board, 
574 F.3d 748 (DC Cir. 2009).
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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 sections 114 and 112 
statutory licenses were set under the Copyright Arbitration Royalty 
Panel system, which was administered by the Librarian of Congress.
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    Therefore, the next proceeding to determine reasonable terms and 
rates of royalty payment for the sections 114 and 112 licenses was to 
be commenced in January 2009, with such rates and terms to become 
effective on January 1, 2011. 17 U.S.C. 804(b)(3)(A). Pursuant to 
section 804(b)(3)(A), the Judges published in the Federal Register a 
notice commencing the rate determination proceeding for the license 
period 2011-2015 and requesting interested parties to submit their 
petitions to participate. 74 FR 318 (January 5, 2009). Petitions to 
Participate were received from: Intercollegiate Broadcast System, Inc./
Harvard Radio Broadcasting Co.; Live365, Inc.; LoudCity LLC; AccuRadio, 
LLC, Digitally Imported, Inc., Got Radio, LLC, IoWorldMedia, Inc., 
Radio Paradise, Inc., and SomaFM.com LLC, filing jointly; 
SoundExchange, Inc. (``SoundExchange''); Amazon.com; RealNetworks, 
Inc.; College Broadcasters, Inc. (``CBI''); David W. Rahn; Royalty 
Logic, Inc.; Commonwealth Broadcasting Corporation; Sirius XM Radio, 
Inc.; Clear Channel Communications, Inc.; National Religious 
Broadcasters Music License Committee; National Religious Broadcasters 
Noncommercial Music License Committee; Apple, Inc.; Digital Media 
Association, Inc.; Citadel Broadcasting Corporation, Clarke 
Broadcasting Corporation, Entercom Communications Corp., Galaxy 
Communications LP, and Greater Media, Inc., filing jointly; CBS Radio, 
Inc.; NCE Radio Coalition.; Slacker, Inc.; Catholic Radio Association; 
Yahoo! Inc.; Spatial Audio Solutions; National Association of 
Broadcasters (``NAB''); Bonneville International Corporation; Pandora 
Media, Inc.; mSpot, Inc.; MTV Networks Viacom; and Access2ip.

[[Page 16378]]

    The Judges set the timetable for the three-month negotiation 
period, see 17 U.S.C. 803(b)(3), from March 2, 2009, through June 1, 
2009. On June 1, 2009, the Judges received a joint motion from 
SoundExchange and NAB to adopt a partial settlement for certain 
Internet transmissions by commercial broadcasters. On June 24, 2009, 
the Judges set September 29, 2009, as the deadline by which 
participants were to submit their written direct statements. On August 
13, 2009, SoundExchange and CBI submitted to the Judges a joint motion 
to adopt a partial settlement for certain Internet transmissions by 
college radio stations and other noncommercial educational webcasters.
    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 they are submitted to the 
Copyright Royalty Judges for approval. This section provides that in 
such event:

    (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)(1)(7)(A). Rates and terms adopted pursuant to this 
provision are binding on all copyright owners of sound recordings and 
commercial broadcasters and college radio stations and other 
noncommercial educational webcasters performing the sound recordings 
for the license period 2011-2015.\2\
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    \2\ The Judges are proposing to separate the current section 380 
into three subparts. Proposed Subpart A contains the rates and terms 
for commercial webcasters and noncommercial webcasters for the 2006-
2010 license period. Rates and terms for the license period 2011-
2015 for these services will be determined after a full hearing 
before the Judges and will be published in a separate document. 
Proposed Subpart B contains the rates and terms governing the 
transmissions of broadcasters under sections 114 and 112 for 2011-
2015, and proposed Subpart C contains the rates and terms governing 
the transmissions of noncommercial educational webcasters under the 
114 and 112 licenses for 2011-2015.
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    As part of this notice, the Judges are modifying two aspects of the 
proposed rates and terms in proposed Subpart B for broadcasters making 
certain eligible transmissions of sound recordings. First, 
SoundExchange and NAB have included language in their proposal that 
states that the rate for ephemeral recordings has no precedential 
effect in any judicial, administrative, or other proceeding. The Judges 
decline to include such language within our regulations. Our task, as 
set forth in section 112 and chapter 8 of the Copyright Act, is to 
adopt rates and terms for the compulsory license for the making of 
ephemeral reproductions to facilitate digital audio transmissions. Such 
language is not relevant to this task. See Mechanical and Digital 
Phonorecord Delivery Rate Determination Proceeding, Docket No. 2006-3 
CRB DPRA, 73 FR 57033, 57034 (October 1, 2008); Noncommercial 
Educational Broadcasting Statutory License, Docket No. 2006-2 CRB 
NCBRA, 72 FR 19138, 19139 (April 17, 2007).
    The Judges also decline for the same reason to include the language 
proposed by SoundExchange and NAB regarding the legal effect of the 
Collective's acceptance of an election, payment or reporting on the 
compliance of a Broadcaster or Small Broadcaster with the sections 
112(e) or 114 licenses or the reservation of right to sue by the 
Collective or Copyright Owner for noncompliance. Again, such language 
is not relevant to our task of setting rates and terms under sections 
112 and 114 of the Copyright Act.
    The Judges are modifying two aspects of the proposed rates and 
terms in proposed Subpart C for noncommercial educational webcasters. 
In the settlement proposal submitted to the Judges, SoundExchange and 
CBI included a provision governing reporting by noncommercial 
educational webcasters--proposed Sec. Sec.  380.23(g)(2) and (g)(3) 
herein--stating that such reporting requirements would be those in the 
notice and recordkeeping regulations in part 370 as they existed on 
January 1, 2009, specifically to then Sec. Sec.  370.3 and 
370.3(c)(2)(vi). The Judges amended these regulations on October 11, 
2009, see 74 FR 52418, and consequently, sections were renumbered. 
Proposed Sec. Sec.  380.23(g)(2) and (g)(3) reflect the current section 
numbers of part 370, namely, Sec. Sec.  370.4 and 370.4(d)(2)(vi), 
respectively, and the references to January 1, 2009, have been deleted. 
Next, for the reasons stated above in rejecting similar language in the 
SoundExchange/NAB proposal, the Judges decline to include in our 
regulations the language proposed by SoundExchange and CBI regarding 
what represents compliance with the sections 112(e) and 114 licenses 
and the reservation of right to sue.
    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 April 22, 2010.

List of Subjects in 37 CFR Part 380

    Copyright, Sound recordings.

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

    1. The authority citation for part 380 continues to read as 
follows:

    Authority:  17 U.S.C. 112(e), 114(f), 804(b)(3).

Subpart A--Commercial Webcasters and Noncommercial Webcasters

    2. Designate existing Sec.  380.1 through Sec.  380.8 as Subpart A, 
and add a heading for Subpart A to read as set forth above.
    3. Add Subpart B to read as follows:
Subpart B--Broadcasters
Sec.
380.10 General.
380.11 Definitions.
380.12 Royalty fees for the public performance of sound recordings 
and for ephemeral recordings.
380.13 Terms for making payment of royalty fees and statements of 
account.
380.14 Confidential information.
380.15 Verification of royalty payments.
380.16 Verification of royalty distributions.
380.17 Unclaimed funds.

    Authority:  17 U.S.C. 112(e), 114(f), 804(b)(3).

Subpart B--Broadcasters


Sec.  380.10  General.

    (a) Scope. This subpart establishes rates and terms of royalty 
payments for the public performance of sound recordings in certain 
digital transmissions made by Broadcasters as set forth herein in 
accordance with the provisions of 17 U.S.C. 114, and the making of 
Ephemeral Recordings by Broadcasters as set forth herein in accordance 
with the provisions of 17 U.S.C. 112(e), during the period January 1, 
2011, through December 31, 2015.

[[Page 16379]]

    (b) Legal compliance. Broadcasters relying upon the statutory 
licenses set forth in 17 U.S.C. 112(e) and 114 shall comply with the 
requirements of those sections, the rates and terms of this subpart, 
and any other applicable regulations not inconsistent with the rates 
and terms set forth herein.
    (c) Relationship to voluntary agreements. Notwithstanding the 
royalty rates and terms established in this subpart, the rates and 
terms of any license agreements entered into by Copyright Owners and 
digital audio services shall apply in lieu of the rates and terms of 
this subpart to transmission within the scope of such agreements.


Sec.  380.11  Definitions.

    For purposes of this subpart, the following definitions shall 
apply:
    Aggregate Tuning Hours means the total hours of programming that 
the Broadcaster has transmitted during the relevant period to all 
listeners within the United States from any channels and stations that 
provide audio programming consisting, in whole or in part, of Eligible 
Transmissions.
    Broadcaster means an entity that
    (1) Has a substantial business owning and operating one or more 
terrestrial AM or FM radio stations that are licensed as such by the 
Federal Communications Commission;
    (2) 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;
    (3) Complies with all applicable provisions of Sections 112(e) and 
114 and applicable regulations; and
    (4) Is not a noncommercial webcaster as defined in 17 U.S.C. 
114(f)(5)(E)(i).
    Broadcaster Webcasts mean eligible nonsubscription transmissions 
made by a Broadcaster over the Internet that are not Broadcast 
Retransmissions.
    Broadcast Retransmissions mean eligible nonsubscription 
transmissions made by a Broadcaster over the Internet that are 
retransmissions of terrestrial over-the-air broadcast programming 
transmitted by the Broadcaster through its AM or FM radio station, 
including ones with substitute advertisements or other programming 
occasionally substituted for programming for which requisite licenses 
or clearances to transmit over the Internet have not been obtained. For 
the avoidance of doubt, a Broadcast Retransmission does not include 
programming that does not require a license under United States 
copyright law or that is transmitted on an Internet-only side channel.
    Collective is the collection and distribution organization that is 
designated by the Copyright Royalty Judges. For the 2011-2015 license 
period, the Collective is SoundExchange, Inc.
    Copyright Owners are sound recording copyright owners who are 
entitled to royalty payments made under this subpart pursuant to the 
statutory licenses under 17 U.S.C. 112(e) and 114(f).
    Eligible Transmission shall mean either a Broadcaster Webcast or a 
Broadcast Retransmission.
    Ephemeral Recording is a phonorecord created for the purpose of 
facilitating an Eligible Transmission of a public performance of a 
sound recording under a statutory license in accordance with 17 U.S.C. 
114(f), and subject to the limitations specified in 17 U.S.C. 112(e).
    Performance is each instance in which any portion of a sound 
recording is publicly performed to a listener by means of a digital 
audio transmission (e.g., the delivery of any portion of a single track 
from a compact disc to one listener) but excluding the following:
    (1) A performance of a sound recording that does not require a 
license (e.g., a sound recording that is not copyrighted);
    (2) A performance of a sound recording for which the Broadcaster 
has previously obtained a license from the Copyright Owner of such 
sound recording; and
    (3) An incidental performance that both:
    (i) Makes no more than incidental use of sound recordings 
including, but not limited to, brief musical transitions in and out of 
commercials or program segments, brief performances during news, talk 
and sports programming, brief background performances during disk 
jockey announcements, brief performances during commercials of sixty 
seconds or less in duration, or brief performances during sporting or 
other public events and
    (ii) Other than ambient music that is background at a public event, 
does not contain an entire sound recording and does not feature a 
particular sound recording of more than thirty seconds (as in the case 
of a sound recording used as a theme song).
    Performers means the independent administrators identified in 17 
U.S.C. 114(g)(2)(B) and (C) and the parties identified in 17 U.S.C. 
114(g)(2)(D).
    Qualified Auditor is a Certified Public Accountant.
    Small Broadcaster is a Broadcaster that, for any of its channels 
and stations (determined as provided in Sec.  380.12(c)) over which it 
transmits Broadcast Retransmissions, and for all of its channels and 
stations over which it transmits Broadcaster Webcasts in the aggregate, 
in any calendar year in which it is to be considered a Small 
Broadcaster, meets the following additional eligibility criteria:
    (1) During the prior year it made Eligible Transmissions totaling 
less than 27,777 Aggregate Tuning Hours; and
    (2) During the applicable year it reasonably expects to make 
Eligible Transmissions totaling less than 27,777 Aggregate Tuning 
Hours; provided that, one time during the period 2011-2015, a 
Broadcaster that qualified as a Small Broadcaster under the foregoing 
definition as of January 31 of one year, elected Small Broadcaster 
status for that year, and unexpectedly made Eligible Transmissions on 
one or more channels or stations in excess of 27,777 aggregate tuning 
hours during that year, may choose to be treated as a Small Broadcaster 
during the following year notwithstanding paragraph (1) of the 
definition of ``Small Broadcaster'' if it implements measures 
reasonably calculated to ensure that it will not make Eligible 
Transmissions exceeding 27,777 aggregate tuning hours during that 
following year. As to channels or stations over which a Broadcaster 
transmits Broadcast Retransmissions, the Broadcaster may elect Small 
Broadcaster status only with respect to any of its channels or stations 
that meet all of the foregoing criteria.


Sec.  380.12  Royalty fees for the public performance of sound 
recordings and for ephemeral recordings.

    (a) Royalty rates. Royalties for Eligible Transmissions made 
pursuant to 17 U.S.C. 114, and the making of related ephemeral 
recordings pursuant to 17 U.S.C. 112(e), shall, except as provided in 
Sec.  380.13(g)(3), be payable on a per-performance basis, as follows:
    (1) 2011: $0.0017;
    (2) 2012: $0.0020;
    (3) 2013: $0.0022;
    (4) 2014: $0.0023;
    (5) 2015: $0.0025.
    (b) Ephemeral royalty. The royalty payable under 17 U.S.C. 112(e) 
for any reproduction of a phonorecord made by a Broadcaster during this 
license period and used solely by the Broadcaster to facilitate 
transmissions for which it pays royalties as and when provided in this 
section is deemed to be included within such royalty payments and to 
equal the percentage of such royalty payments determined by the 
Copyright Royalty Judges for other webcasting as set forth in Sec.  
380.3.

[[Page 16380]]

    (c) Minimum fee. Each Broadcaster will pay an annual, nonrefundable 
minimum fee of $500 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 or part of a calendar year during 2011-2015 during which 
the Broadcaster is a licensee pursuant to licenses under 17 U.S.C. 
112(e) and 114, provided that a Broadcaster shall not be required to 
pay more than $50,000 in minimum fees in the aggregate (for 100 or more 
channels or stations). For the purpose of this subpart, 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, except that identical streams for simulcast stations 
will be treated as a single stream if the streams are available at a 
single Uniform Resource Locator (URL) and performances from all such 
stations are aggregated for purposes of determining the number of 
payable performances hereunder. Upon payment of the minimum fee, the 
Broadcaster will receive a credit in the amount of the minimum fee 
against any additional royalties payable for the same calendar year for 
the same channel or station. In addition, an electing Small Broadcaster 
also shall pay a $100 annual fee (the ``Proxy Fee'') to the Collective 
for the reporting waiver discussed in Sec.  380.13(g)(2).


Sec.  380.13  Terms for making payment of royalty fees and statements 
of account.

    (a) Payment to the Collective. A Broadcaster shall make the royalty 
payments due under Sec.  380.12 to the Collective.
    (b) Designation of the Collective. (1) Until such time as a new 
designation is made, SoundExchange, Inc., is designated as the 
Collective to receive statements of account and royalty payments from 
Broadcasters due under Sec.  380.12 and to distribute such royalty 
payments to each Copyright Owner and Performer, or their designated 
agents, entitled to receive royalties under 17 U.S.C. 112(e) and 
114(g).
    (2) If SoundExchange, Inc. should dissolve or cease to be governed 
by a board consisting of equal numbers of representatives of Copyright 
Owners and Performers, then it shall be replaced by a successor 
Collective upon the fulfillment of the requirements set forth in 
paragraph (b)(2)(i) of this section.
    (i) By a majority vote of the nine Copyright Owner representatives 
and the nine Performer representatives on the SoundExchange board as of 
the last day preceding the condition precedent in paragraph (b)(2) of 
this section, such representatives shall file a petition with the 
Copyright Royalty Board designating a successor to collect and 
distribute royalty payments to Copyright Owners and Performers entitled 
to receive royalties under 17 U.S.C. 112(e) or 114(g) that have 
themselves authorized such Collective.
    (ii) The Copyright Royalty Judges shall publish in the Federal 
Register within 30 days of receipt of a petition filed under paragraph 
(b)(2)(i) of this section an order designating the Collective named in 
such petition.
    (c) Monthly payments and reporting. Broadcasters must make monthly 
payments where required by Sec.  380.12, and provide statements of 
account and reports of use, for each month on the 45th day following 
the month in which the Eligible Transmissions subject to the payments, 
statements of account, and reports of use were made. All monthly 
payments shall be rounded to the nearest cent.
    (d) Minimum payments. A Broadcaster shall make any minimum payment 
due under Sec.  380.12(b) by January 31 of the applicable calendar 
year, except that payment by a Broadcaster 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 Broadcaster commences to do so.
    (e) Late fees. A Broadcaster shall pay a late fee for each instance 
in which any payment, any statement of account or any report of use is 
not received by the Collective in compliance with applicable 
regulations by the due date. The amount of the late fee shall be 1.5% 
of a late payment, or 1.5% of the payment associated with a late 
statement of account or report of use, per month, or the highest lawful 
rate, whichever is lower. The late fee shall accrue from the due date 
of the payment, statement of account or report of use until a fully 
compliant payment, statement of account or report of use is received by 
the Collective, provided that, in the case of a timely provided but 
noncompliant statement of account or report of use, the Collective has 
notified the Broadcaster within 90 days regarding any noncompliance 
that is reasonably evident to the Collective.
    (f) Statements of account. Any payment due under Sec.  380.12 shall 
be accompanied by a corresponding statement of account. A statement of 
account shall contain the following information:
    (1) Such information as is necessary to calculate the accompanying 
royalty payment;
    (2) The name, address, business title, telephone number, facsimile 
number (if any), electronic mail address (if any) and other contact 
information of the person to be contacted for information or questions 
concerning the content of the statement of account;
    (3) The handwritten signature of:
    (i) The owner of the Broadcaster or a duly authorized agent of the 
owner, if the Broadcaster is not a partnership or corporation;
    (ii) A partner or delegee, if the Broadcaster is a partnership; or
    (iii) An officer of the corporation, if the Broadcaster is a 
corporation.
    (4) The printed or typewritten name of the person signing the 
statement of account;
    (5) The date of signature;
    (6) If the Broadcaster is a partnership or corporation, the title 
or official position held in the partnership or corporation by the 
person signing the statement of account;
    (7) A certification of the capacity of the person signing; and
    (8) A statement to the following effect:

    I, the undersigned owner or agent of the Broadcaster, or officer 
or partner, have examined this statement of account and hereby state 
that it is true, accurate, and complete to my knowledge after 
reasonable due diligence.

    (g) Reporting by Broadcasters in General. (1) Broadcasters other 
than electing Small Broadcasters covered by paragraph (g)(2) of this 
section shall submit reports of use on a per-performance basis in 
compliance with the regulations set forth in part 370 of this chapter, 
except that the following provisions shall apply notwithstanding the 
provisions of such part 370 of this chapter from time to time in 
effect:
    (i) Broadcasters may pay for, and report usage in, a percentage of 
their programming hours on an Aggregate Tuning Hour basis as provided 
in paragraph (g)(3) of this section.
    (ii) Broadcasters shall submit reports of use to the Collective on 
a monthly basis.
    (iii) As provided in paragraph (d) of this section, Broadcasters 
shall submit reports of use by no later than the 45th day following the 
last day of the month to which they pertain.
    (iv) Except as provided in paragraph (g)(3) of this section, 
Broadcasters shall submit reports of use to the Collective on a census 
reporting basis (i.e., reports of use shall include every sound 
recording performed in the relevant month and the number of 
performances thereof).

[[Page 16381]]

    (v) Broadcasters shall either submit a separate report of use for 
each of their stations, or a collective report of use covering all of 
their stations but identifying usage on a station-by-station basis;
    (vi) Broadcasters shall transmit each report of use in a file the 
name of which includes
    (A) The name of the Broadcaster, exactly as it appears on its 
notice of use, and
    (B) If the report covers a single station only, the call letters of 
the station.
    (vii) Broadcasters shall submit reports of use with headers, as 
presently described in Sec.  370.4(e)(7) of this chapter.
    (viii) Broadcasters shall submit a separate statement of account 
corresponding to each of their reports of use, transmitted in a file 
the name of which includes
    (A) The name of the Broadcaster, exactly as it appears on its 
notice of use, and
    (B) If the statement covers a single station only, the call letters 
of the station.
    (2) On a transitional basis for a limited time in light of the 
unique business and operational circumstances currently existing with 
respect to Small Broadcasters and with the expectation that Small 
Broadcasters will be required, effective January 1, 2016, to report 
their actual usage in compliance with then-applicable regulations. 
Small Broadcasters that have made an election pursuant to paragraph (h) 
of this section for the relevant year shall not be required to provide 
reports of their use of sound recordings for Eligible Transmissions and 
related Ephemeral Recordings. The immediately preceding sentence 
applies even if the Small Broadcaster actually makes Eligible 
Transmissions for the year exceeding 27,777 Aggregate Tuning Hours, so 
long as it qualified as a Small Broadcaster at the time of its election 
for that year. In addition to minimum royalties hereunder, electing 
Small Broadcasters will pay to the Collective a $100 Proxy Fee to 
defray costs associated with this reporting waiver, including 
development of proxy usage data.
    (3) Broadcasters generally reporting pursuant to paragraph (g)(1) 
of this section may pay for, and report usage in, a percentage of their 
programming hours on an Aggregate Tuning Hours basis, if
    (i) Census reporting is not reasonably practical for the 
programming during those hours, and
    (ii) If the total number of hours on a single report of use, 
provided pursuant to paragraph (g)(1) of this section, for which this 
type of reporting is used is below the maximum percentage set forth 
below for the relevant year:
    (A) 2011: 16%;
    (B) 2012: 14%;
    (C) 2013: 12%;
    (D) 2014: 10%;
    (E) 2015: 8%.
    (iii) To the extent that a Broadcaster chooses to report and pay 
for usage on an Aggregate Tuning Hours basis pursuant to paragraph 
(g)(3) of this section, the Broadcaster shall
    (A) Report and pay based on the assumption that the number of sound 
recordings performed during the relevant programming hours is 12 per 
hour;
    (B) Pay royalties (or recoup minimum fees) at the per-performance 
rates provided in Sec.  380.12 on the basis of paragraph (g)(3)(iii)(A) 
of this section;
    (C) Include Aggregate Tuning Hours in reports of use; and
    (D) Include in reports of use complete playlist information for 
usage reported on the basis of Aggregate Tuning Hours.
    (h) Election of Small Broadcaster Status. To be eligible for the 
reporting waiver for Small Broadcasters with respect to any particular 
channel in a given year, a Broadcaster must satisfy the definition set 
forth in Sec.  380.11 and must submit to the Collective a completed and 
signed election form (available on the SoundExchange Web site at http://www.soundexchange.com) by no later than January 31 of the applicable 
year. Even if a Broadcaster has once elected to be treated as a Small 
Broadcaster, it must make a separate, timely election in each 
subsequent year in which it wishes to be treated as a Small 
Broadcaster.
    (i) Distribution of royalties. (1) The Collective shall promptly 
distribute royalties received from Broadcasters to Copyright Owners and 
Performers, or their designated agents, that are entitled to such 
royalties. The Collective shall only be responsible for making 
distributions to those Copyright Owners, Performers, or their 
designated agents who provide the Collective with such information as 
is necessary to identify and pay the correct recipient. The Collective 
shall distribute royalties on a basis that values all performances by a 
Broadcaster equally based upon information provided under the report of 
use requirements for Broadcasters contained in Sec.  370.4 of this 
chapter and this subpart, except that in the case of electing Small 
Broadcasters, the Collective shall distribute royalties based on proxy 
usage data in accordance with a methodology adopted by the Collective's 
Board of Directors.
    (2) If the Collective is unable to locate a Copyright Owner or 
Performer entitled to a distribution of royalties under paragraph 
(g)(1) of this section within 3 years from the date of payment by a 
Broadcaster, such distribution may be first applied to the costs 
directly attributable to the administration of that distribution. The 
foregoing shall apply notwithstanding the common law or statutes of any 
State.
    (j) Retention of records. Books and records of a Broadcaster and of 
the Collective relating to payments of and distributions of royalties 
shall be kept for a period of not less than the prior 3 calendar years.


Sec.  380.14  Confidential information.

    (a) Definition. For purposes of this subpart, ``Confidential 
Information'' shall include the statements of account and any 
information contained therein, including the amount of royalty 
payments, and any information pertaining to the statements of account 
reasonably designated as confidential by the Broadcaster submitting the 
statement.
    (b) Exclusion. Confidential Information shall not include documents 
or information that at the time of delivery to the Collective are 
public knowledge. The party claiming the benefit of this provision 
shall have the burden of proving that the disclosed information was 
public knowledge.
    (c) Use of Confidential Information. In no event shall the 
Collective use any Confidential Information for any purpose other than 
royalty collection and distribution and activities related directly 
thereto.
    (d) Disclosure of Confidential Information. Access to Confidential 
Information shall be limited to:
    (1) Those employees, agents, attorneys, consultants and independent 
contractors of the Collective, subject to an appropriate 
confidentiality agreement, who are engaged in the collection and 
distribution of royalty payments hereunder and activities related 
thereto, for the purpose of performing such duties during the ordinary 
course of their work and who require access to the Confidential 
Information;
    (2) An independent and Qualified Auditor, subject to an appropriate 
confidentiality agreement, who is authorized to act on behalf of the 
Collective with respect to verification of a Broadcaster's statement of 
account pursuant to Sec.  380.15 or on behalf of a Copyright Owner or 
Performer with respect to the verification of royalty distributions 
pursuant to Sec.  380.16;
    (3) Copyright Owners and Performers, including their designated 
agents, whose works have been used under the

[[Page 16382]]

statutory licenses set forth in 17 U.S.C. 112(e) and 114(f) by the 
Broadcaster whose Confidential Information is being supplied, subject 
to an appropriate confidentiality agreement, and including those 
employees, agents, attorneys, consultants and independent contractors 
of such Copyright Owners and Performers and their designated agents, 
subject to an appropriate confidentiality agreement, for the purpose of 
performing their duties during the ordinary course of their work and 
who require access to the Confidential Information; and
    (4) In connection with future proceedings under 17 U.S.C. 112(e) 
and 114(f) before the Copyright Royalty Judges, and under an 
appropriate protective order, attorneys, consultants and other 
authorized agents of the parties to the proceedings or the courts.
    (e) Safeguarding of Confidential Information. The Collective and 
any person identified in paragraph (d) of this section shall implement 
procedures to safeguard against unauthorized access to or dissemination 
of any Confidential Information using a reasonable standard of care, 
but not less than the same degree of security used to protect 
Confidential Information or similarly sensitive information belonging 
to the Collective or person.


Sec.  380.15  Verification of royalty payments.

    (a) General. This section prescribes procedures by which the 
Collective may verify the royalty payments made by a Broadcaster.
    (b) Frequency of verification. The Collective may conduct a single 
audit of a Broadcaster, upon reasonable notice and during reasonable 
business hours, during any given calendar year, for any or all of the 
prior 3 calendar years, but no calendar year shall be subject to audit 
more than once.
    (c) Notice of intent to audit. The Collective must file with the 
Copyright Royalty Board a notice of intent to audit a particular 
Broadcaster, which shall, within 30 days of the filing of the notice, 
publish in the Federal Register a notice announcing such filing. The 
notification of intent to audit shall be served at the same time on the 
Broadcaster to be audited. Any such audit shall be conducted by an 
independent and Qualified Auditor identified in the notice, and shall 
be binding on all parties.
    (d) Acquisition and retention of report. The Broadcaster shall use 
commercially reasonable efforts to obtain or to provide access to any 
relevant books and records maintained by third parties for the purpose 
of the audit. The Collective shall retain the report of the 
verification for a period of not less than 3 years.
    (e) Acceptable verification procedure. An audit, including 
underlying paperwork, which was performed in the ordinary course of 
business according to generally accepted auditing standards by an 
independent and Qualified Auditor, shall serve as an acceptable 
verification procedure for all parties with respect to the information 
that is within the scope of the audit.
    (f) Consultation. Before rendering a written report to the 
Collective, except where the auditor has a reasonable basis to suspect 
fraud and disclosure would, in the reasonable opinion of the auditor, 
prejudice the investigation of such suspected fraud, the auditor shall 
review the tentative written findings of the audit with the appropriate 
agent or employee of the Broadcaster being audited in order to remedy 
any factual errors and clarify any issues relating to the audit; 
Provided that an appropriate agent or employee of the Broadcaster 
reasonably cooperates with the auditor to remedy promptly any factual 
error or clarify any issues raised by the audit.
    (g) Costs of the verification procedure. The Collective shall pay 
the cost of the verification procedure, unless it is finally determined 
that there was an underpayment of 10% or more, in which case the 
Broadcaster shall, in addition to paying the amount of any 
underpayment, bear the reasonable costs of the verification procedure.


Sec.  380.16  Verification of royalty distributions.

    (a) General. This section prescribes procedures by which any 
Copyright Owner or Performer may verify the royalty distributions made 
by the Collective; Provided, however, that nothing contained in this 
section shall apply to situations where a Copyright Owner or Performer 
and the Collective have agreed as to proper verification methods.
    (b) Frequency of verification. A Copyright Owner or Performer may 
conduct a single audit of the Collective upon reasonable notice and 
during reasonable business hours, during any given calendar year, for 
any or all of the prior 3 calendar years, but no calendar year shall be 
subject to audit more than once.
    (c) Notice of intent to audit. A Copyright Owner or Performer must 
file with the Copyright Royalty Board a notice of intent to audit the 
Collective, which shall, within 30 days of the filing of the notice, 
publish in the Federal Register a notice announcing such filing. The 
notification of intent to audit shall be served at the same time on the 
Collective. Any audit shall be conducted by an independent and 
Qualified Auditor identified in the notice, and shall be binding on all 
Copyright Owners and Performers.
    (d) Acquisition and retention of report. The Collective shall use 
commercially reasonable efforts to obtain or to provide access to any 
relevant books and records maintained by third parties for the purpose 
of the audit. The Copyright Owner or Performer requesting the 
verification procedure shall retain the report of the verification for 
a period of not less than 3 years.
    (e) Acceptable verification procedure. An audit, including 
underlying paperwork, which was performed in the ordinary course of 
business according to generally accepted auditing standards by an 
independent and Qualified Auditor, shall serve as an acceptable 
verification procedure for all parties with respect to the information 
that is within the scope of the audit.
    (f) Consultation. Before rendering a written report to a Copyright 
Owner or Performer, except where the auditor has a reasonable basis to 
suspect fraud and disclosure would, in the reasonable opinion of the 
auditor, prejudice the investigation of such suspected fraud, the 
auditor shall review the tentative written findings of the audit with 
the appropriate agent or employee of the Collective in order to remedy 
any factual errors and clarify any issues relating to the audit; 
Provided that the appropriate agent or employee of the Collective 
reasonably cooperates with the auditor to remedy promptly any factual 
errors or clarify any issues raised by the audit.
    (g) Costs of the verification procedure. The Copyright Owner or 
Performer requesting the verification procedure shall pay the cost of 
the procedure, unless it is finally determined that there was an 
underpayment of 10% or more, in which case the Collective shall, in 
addition to paying the amount of any underpayment, bear the reasonable 
costs of the verification procedure.


Sec.  380.17  Unclaimed funds.

    If the Collective is unable to identify or locate a Copyright Owner 
or Performer who is entitled to receive a royalty distribution under 
this subpart, the Collective shall retain the required payment in a 
segregated trust account for a period of 3 years from the date of 
distribution. No claim to such distribution shall be valid after the 
expiration of the 3-year period. After expiration of this period, the 
Collective may apply the unclaimed funds to offset any costs deductible 
under 17 U.S.C.

[[Page 16383]]

114(g)(3). The foregoing shall apply notwithstanding the common law or 
statutes of any State.
    4. Add Subpart C to read as follows:
Subpart C--Noncommercial Educational Webcasters
Sec.
380.20 General.
380.21 Definitions.
380.22 Royalty fees for the public performance of sound recordings 
and for ephemeral recordings.
380.23 Terms for making payment of royalty fees and statements of 
account.
380.24 Confidential information.
380.25 Verification of royalty payments.
380.26 Verification of royalty distributions.
380.27 Unclaimed funds.

    Authority: 17 U.S.C. 112(e), 114(f), 804(b)(3).

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, 2011, through December 31, 2015.
    (b) Legal compliance. Noncommercial Educational Webcasters relying 
upon the statutory licenses set forth in 17 U.S.C. 112(e) and 114 shall 
comply with the requirements of those sections, the rates and terms of 
this subpart, and any other applicable regulations not inconsistent 
with the rates and terms set forth herein. However, if a Noncommercial 
Educational Webcaster is also eligible for any other rates and terms 
for its Eligible Transmissions during the period January 1, 2011, 
through December 31, 2015, it may, by written notice to the Collective 
in a form to be provided by the Collective, elect to be subject to such 
other rates and terms rather than the rates and terms specified in this 
subpart. If a single educational institution has more than one station 
making Eligible Transmissions, each such station may determine 
individually whether it elects to be subject to this subpart.
    (c) Relationship to voluntary agreements. Nothwithstanding the 
royalty rates and terms established in this subpart, the rates and 
terms of any license agreements entered into by Copyright Owners and 
digital audio services shall apply in lieu of the rates and terms of 
this subpart to transmissions within the scope of such agreements.


Sec.  380.21  Definitions.

    For purposes of this subpart, the following definitions shall 
apply:
    ATH or Aggregate Tuning Hours means the total hours of programming 
that a Noncommercial Educational Webcaster has transmitted during the 
relevant period to all listeners within the United States over all 
channels and stations that provide audio programming consisting, in 
whole or in part, of Eligible Transmissions, including from any 
archived programs, less the actual running time of any sound recordings 
for which the Noncommercial Educational Webcaster has obtained direct 
licenses apart from 17 U.S.C. 114(d)(2) or which do not require a 
license under United States copyright law. By way of example, if a 
Noncommercial Educational Webcaster transmitted one hour of programming 
to 10 simultaneous listeners, the Noncommercial Educational Webcaster's 
Aggregate Tuning Hours would equal 10. If three minutes of that hour 
consisted of transmission of a directly licensed recording, the 
Noncommercial Educational Webcaster's Aggregate Tuning Hours would 
equal 9 hours and 30 minutes. As an additional example, if one listener 
listened to a Noncommercial Educational Webcaster for 10 hours (and 
none of the recordings transmitted during that time was directly 
licensed), the Noncommercial Educational Webcaster's Aggregate Tuning 
Hours would equal 10.
    Collective is the collection and distribution organization that is 
designated by the Copyright Royalty Judges. For the 2011-2015 license 
period, the Collective is SoundExchange, Inc.
    Copyright Owners are sound recording copyright owners who are 
entitled to royalty payments made under this subpart pursuant to the 
statutory licenses under 17 U.S.C. 112(e) and 114(f).
    Eligible Transmission means an eligible nonsubscription 
transmission made by a Noncommercial Educational Webcaster over the 
Internet.
    Ephemeral Recording is a phonorecord created for the purpose of 
facilitating an Eligible Transmission of a public performance of a 
sound recording under a statutory license in accordance with 17 U.S.C. 
114(f), and subject to the limitations specified in 17 U.S.C. 112(e).
    Noncommercial Educational Webcaster means 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; and
    (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.
    Performance is each instance in which any portion of a sound 
recording is publicly performed to a listener by means of a digital 
audio transmission (e.g., the delivery of any portion of a single track 
from a compact disc to one listener) but excluding the following:
    (1) A performance of a sound recording that does not require a 
license (e.g., a sound recording that is not copyrighted);
    (2) A performance of a sound recording for which the Noncommercial 
Educational Webcaster has previously obtained a license from the 
Copyright Owner of such sound recording; and
    (3) An incidental performance that both:
    (i) Makes no more than incidental use of sound recordings, 
including, but not limited to, brief musical transitions in and out of 
commercials or program segments, brief performances during news, talk 
and sports programming, brief background performances during disk 
jockey announcements, brief performances during commercials of sixty 
seconds or less in duration, or brief performances during sporting or 
other public events; and
    (ii) Other than ambient music that is background at a public event, 
does not contain an entire sound recording and does not feature a 
particular sound recording of more than thirty seconds (as in the case 
of a sound recording used as a theme song).
    Performers means the independent administrators identified in 17 
U.S.C. 114(g)(2)(B) and (C) and the parties identified in 17 U.S.C. 
114(g)(2)(D).

[[Page 16384]]

    Qualified Auditor is a Certified Public Accountant.


Sec.  380.22  Royalty fees for the public performance of sound 
recordings and for ephemeral recordings.

    (a) Minimum fee. Each Noncommercial Educational Webcaster shall pay 
an annual, nonrefundable minimum fee for $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. 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) Additional usage fees. If, in any month, a Noncommercial 
Educational Webcaster makes total transmissions in excess of 159,140 
Aggregate Tuning Hours on any individual channel or station, the 
Noncommercial Educational Webcaster shall pay additional usage fees 
(``Usage Fees'') for the Eligible Transmissions it makes on that 
channel or station after exceeding 159,140 total ATH at the following 
per-performance rates:
    (1) 2011: $0.0017;
    (2) 2012: $0.0020;
    (3) 2013: $0.0022;
    (4) 2014: $0.0023;
    (5) 2015: $0.0025.
    (6) For a Noncommercial Educational Webcaster unable to calculate 
actual total performances and not required to report ATH or actual 
total performances under Sec.  380.23(g)(3), the Noncommercial 
Educational Webcaster may pay its Usage Fees on an ATH basis, provided 
that the Noncommercial Educational Webcaster shall pay its Usage Fees 
at the per-performance rates provided in paragraphs (b)(1) through (5) 
of this section 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 Usage Fees on a per-channel or -station basis.
    (c) Ephemeral royalty. The royalty payable under 17 U.S.C. 112(e) 
for any ephemeral reproductions made by a Noncommercial Educational 
Webcaster and covered by this subpart is deemed to be included within 
the royalty payments set forth in paragraphs (b)(1) through (5) of this 
section and to equal the percentage of such royalty payments determined 
by the Copyright Royalty Judges for other webcasting in Sec.  380.3.


Sec.  380.23  Terms for making payment of royalty fees and statements 
of account.

    (a) Payment to the Collective. A Noncommercial Educational 
Webcaster shall make the royalty payments due under Sec.  380.22 to the 
Collective.
    (b) Designation of the Collective. (1) Until such time as a new 
designation is made, SoundExchange, Inc., is designated as the 
Collective to receive statements of account and royalty payments from 
Noncommercial Educational Webcasters due under Sec.  380.22 and to 
distribute such royalty payments to each Copyright Owner and Performer, 
or their designated agents, entitled to receive royalties under 17 
U.S.C. 112(e) or 114(g).
    (2) If SoundExchange, Inc., should dissolve or cease to be governed 
by a board consisting of equal numbers of representatives of Copyright 
Owners and Performers, then it shall be replaced by a successor 
Collective upon the fulfillment of the requirements set forth in 
paragraph (b)(2)(i) of this section.
    (i) By a majority vote of the nine Copyright Owner representatives 
and the nine Performer representatives on the SoundExchange board as of 
the last day preceding the condition precedent in paragraph (b)(2) of 
this section, such representatives shall file a petition with the 
Copyright Royalty Board designating a successor to collect and 
distribute royalty payments to Copyright Owners and Performers entitled 
to receive royalties under 17 U.S.C. 112(e) or 114(g) that have 
themselves authorized such Collective.
    (ii) The Copyright Royalty Judges shall publish in the Federal 
Register within 30 days of receipt of a petition filed under paragraph 
(b)(2)(i) of this section an order designating the Collective named in 
such petition.
    (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. 
Payments of minimum fees must be accompanied by a certification, signed 
by an officer or another duly authorized faculty member or 
administrator of the institution with which the Noncommercial 
Educational Webcaster is affiliated, on a from provided by the 
Collective, that the Noncommercial Educational Webcaster.
    (1) Qualifies as a Noncommercial Educational Webcaster for the 
relevant year; and
    (2) 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 Usage Fees. 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) Usage fees. In addition to its obligations pursuant to 
paragraph (c) of this section, a Noncommercial Educational Webcaster 
must make monthly payments of Usage Fees where required by Sec.  
380.22(b), and provide statements of account to accompany these 
payments, for each month on the 45th day following the month in which 
the Eligible Transmissions subject to the Usage Fees and statements of 
account were made. All monthly payments shall be rounded to the nearest 
cent.
    (e) Late fees. A Noncommercial Educational Webcaster shall pay a 
late fee for each instance in which any payment, any statement of 
account or any report of use is not received by the Collective in 
compliance with the applicable regulations by the due date. The amount 
of the late fee shall be 1.5% of the late payment, or 1.5% of the 
payment associated with a late statement of account or report of use, 
per month, compounded monthly for the balance due, or the highest 
lawful rate, whichever is lower. The late fee shall accrue from the due 
date of the payment, statement of account or report of use until a 
fully compliant payment, statement of account or report of use (as 
applicable) is received by the Collective, provided that, in the case 
of a timely provided but noncompliant statement of account or report of 
use, the Collective has notified the Noncommercial Educational 
Webcaster within 90 days

[[Page 16385]]

regarding any noncompliance that is reasonably evident to the 
Collective.
    (f) Statements of account. Any payment due under Sec.  380.22 shall 
be accompanied by a corresponding statement of account. A statement of 
account shall contain the following information:
    (1) The name of the Noncommercial Educational Webcaster, exactly as 
it appears on the notice of use, and if the statement of account covers 
a single station only, the call letters or name of the station;
    (2) Such information as is necessary to calculate the accompanying 
royalty payment as prescribed in this subpart;
    (3) The name, address, business title, telephone number, facsimile 
number (if any), electronic mail address (if any) and other contact 
information of the person to be contacted for information or questions 
concerning the content of the statement of account;
    (4) The handwritten signature of an officer or another duly 
authorized faculty member or administrator of the applicable 
educational institution;
    (5) The printed or typewritten name of the person signing the 
statement of account;
    (6) The date of signature;
    (7) The title or official position held by the person signing the 
statement of account;
    (8) A certification of the capacity of the person signing; and
    (9) A statement to the following effect:

    I, the undersigned officer or other duly authorized faculty 
member or administrator of the applicable educational institution, 
have examined this statement of account and hereby state that it is 
true, accurate, and complete to my knowledge after reasonable due 
diligence.

    (g) Reporting by Noncommercial Educational Webcasters in general--
(1) Reporting waiver. In light of the unique business and operational 
circumstances currently existing with respect to Noncommercial 
Educational Webcasters, and for the purposes of this subpart only, a 
Noncommercial Educational Webcaster that did not exceed 55,000 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 55,000 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 55,000 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 55,000 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 an officer or another duly authorized faculty 
member or administrator 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.
    (2) Sample-basis reports. A 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 that does not expect to exceed 159,140 total ATH for 
any individual channel or station for any calendar month during the 
applicable calendar year may elect to provide reports of use on a 
sample basis (two weeks per calendar quarter) in accordance with the 
regulations at Sec.  370.4 of this chapter, except that, 
notwithstanding Sec.  370.4(d)(2)(vi), such an electing 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. Notwithstanding the foregoing, a Noncommercial 
Educational Webcaster that is able to report ATH or actual total 
performances is encouraged to do so. These reports of use shall be 
submitted to the Collective no later than January 31st of the year 
immediately following the year to which they pertain.
    (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 (i.e., reports of use 
shall include every sound recording performed in the relevant quarter), 
containing information otherwise complying with applicable regulations 
(but no less information than required by Sec.  370.4 of this chapter), 
except that, notwithstanding Sec.  370.4(d)(2)(vi), 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.
    (h) Distribution of royalties. (1) The Collective shall promptly 
distribute royalties received from Noncommercial Educational Webcasters 
to Copyright Owners and Performers, or their designated agents, that 
are entitled to such royalties. The Collective shall only be 
responsible for making distributions to those Copyright Owners, 
Performers, or their designated agents who provide the Collective with 
such information as is necessary to identify and pay the correct 
recipient. The Collective shall distribute royalties on a basis that 
values all performances by a Noncommercial Educational Webcaster 
equally based upon the information provided under the report of use 
requirements for Noncommercial Educational Webcasters contained in 
Sec.  370.4 of this chapter and this subpart, except that in the case 
of Noncommercial Educational Webcasters that elect to pay a Proxy Fee 
in lieu of providing reports of use pursuant to paragraph (g)(1) of 
this section, the Collective shall distribute the aggregate royalties 
paid by electing

[[Page 16386]]

Noncommercial Educational Webcasters based on proxy usage data in 
accordance with a methodology adopted by the Collective's Board of 
Directors.
    (2) If the Collective is unable to locate a Copyright Owner or 
Performer entitled to a distribution of royalties under paragraph 
(h)(1) of this section within 3 years from the date of payment by a 
Noncommercial Educational Webcaster, such distribution may first be 
applied to the costs directly attributable to the administration of 
that distribution. The foregoing shall apply notwithstanding the common 
law or statutes of any State.
    (i) Server logs. Noncommercial Educational Webcasters shall retain 
for a period of no less than three full calendar years server logs 
sufficient to substantiate all information relevant to eligibility, 
rate calculation and reporting under this subpart. To the extent that a 
third-party Web hosting or service provider maintains equipment or 
software for a Noncommercial Educational Webcaster and/or such third 
party creates, maintains, or can reasonably create such server logs, 
the Noncommercial Educational Webcaster shall direct that such server 
logs be created and maintained by said third party for a period of no 
less than three full calendar years and/or that such server logs be 
provided to, and maintained by, the Noncommercial Educational 
Webcaster.


Sec.  380.24  Confidential information.

    (a) Definition. For purposes of this subpart, ``Confidential 
Information'' shall include the statements of account and any 
information contained therein, including the amount of Usage Fees paid, 
and any information pertaining to the statements of account reasonably 
designated as confidential by the Noncommercial Educational Webcaster 
submitting the statement.
    (b) Exclusion. Confidential Information shall not include documents 
or information that at the time of delivery to the Collective are 
public knowledge. The party claiming the benefit of this provision 
shall have the burden of proving that the disclosed information was 
public knowledge.
    (c) Use of Confidential Information. In no event shall the 
Collective use any Confidential Information for any purpose other than 
royalty collection and distribution and activities related directly 
thereto.
    (d) Disclosure of Confidential Information. Access to Confidential 
Information shall be limited to:
    (1) Those employees, agents, attorneys, consultants and independent 
contractors of the Collective, subject to an appropriate 
confidentiality agreement, who are engaged in the collection and 
distribution of royalty payments hereunder and activities related 
thereto, for the purpose of performing such duties during the ordinary 
course of their work and who require access to Confidential 
Information;
    (2) An independent Qualified Auditor, subject to an appropriate 
confidentiality agreement, who is authorized to act on behalf of the 
Collective with respect to verification of a Noncommercial Educational 
Webcaster's statement of account pursuant to Sec.  380.25 or on behalf 
of a Copyright Owner or Performer with respect to the verification of 
royalty distributions pursuant to Sec.  380.26;
    (3) Copyright Owners and Performers, including their designated 
agents, whose works have been used under the statutory licenses set 
forth in 17 U.S.C. 112(e) and 114(f) by the Noncommercial Educational 
Webcaster whose Confidential Information is being supplied, subject to 
an appropriate confidentiality agreement, and including those 
employees, agents, attorneys, consultants and independent contractors 
of such Copyright Owners and Performers and their designated agents, 
subject to an appropriate confidentiality agreement, for the purpose of 
performing their duties during the ordinary course of their work and 
who require access to the Confidential Information; and
    (4) In connection with future proceedings under 17 U.S.C. 112(e) 
and 114(f) before the Copyright Royalty Judges, and under an 
appropriate protective order, attorneys, consultants and other 
authorized agents of the parties to the proceedings or the courts.
    (e) Safeguarding of Confidential Information. The Collective and 
any person identified in paragraph (d) of this section shall implement 
procedures to safeguard against unauthorized access to or dissemination 
of any Confidential Information using a reasonable standard of care, 
but no less than the same degree of security used to protect 
Confidential Information or similarly sensitive information belonging 
to the Collective or person.


Sec.  380.25  Verification of royalty payments.

    (a) General. This section prescribes procedures by which the 
Collective may verify the royalty payments made by a Noncommercial 
Educational Webcaster.
    (b) Frequency of verification. The Collective may conduct a single 
audit of a Noncommercial Educational Webcaster, upon reasonable notice 
and during reasonable business hours, during any given calendar year, 
for any or all of the prior 3 calendar years, but no calendar year 
shall be subject to audit more than once.
    (c) Notice of intent to audit. The Collective must file with the 
Copyright Royalty Board a notice of intent to audit a particular 
Noncommercial Educational Webcaster, which shall, within 30 days of the 
filing of the notice, publish in the Federal Register a notice 
announcing such filing. The notification of intent to audit shall be 
served at the same time on the Noncommercial Educational Webcaster to 
be audited. Any such audit shall be conducted by an independent 
Qualified Auditor identified in the notice and shall be binding on all 
parties.
    (d) Acquisition and retention of report. The Noncommercial 
Educational Webcaster shall use commercially reasonable efforts to 
obtain or to provide access to any relevant books and records 
maintained by third parties for the purpose of the audit. The 
Collective shall retain the report of the verification for a period of 
not less than 3 years.
    (e) Acceptable verification procedure. An audit, including 
underlying paperwork, which was performed in the ordinary course of 
business according to generally accepted auditing standards by an 
independent Qualified Auditor, shall serve as an acceptable 
verification procedure for all parties with respect to the information 
that is within the scope of the audit.
    (f) Consultation. Before rendering a written report to the 
Collective, except where the auditor has a reasonable basis to suspect 
fraud and disclosure would, in the reasonable opinion of the auditor, 
prejudice the investigation of such suspected fraud, the auditor shall 
review the tentative written findings of the audit with the appropriate 
agent or employee of the Noncommercial Educational Webcaster being 
audited in order to remedy any factual errors and clarify any issues 
relating to the audit; Provided that an appropriate agent or employee 
of the Noncommercial Educational Webcaster reasonably cooperates with 
the auditor to remedy promptly any factual errors or clarify any issues 
raised by the audit.
    (g) Costs of the verification procedure. The Collective shall pay 
the cost of the verification procedure, unless it is finally determined 
that there was an underpayment of 10% or more, in which case the 
Noncommercial Educational Webcaster shall, in addition to paying the 
amount of any underpayment, bear the reasonable costs of the 
verification procedure.

[[Page 16387]]

Sec.  380.26  Verification of royalty distributions.

    (a) General. This section prescribes procedures by which any 
Copyright Owner or Performer may verify the royalty distributions made 
by the Collective; Provided, however, that nothing contained in this 
section shall apply to situations where a Copyright Owner or Performer 
and the Collective have agreed as to proper verification methods.
    (b) Frequency of verification. A Copyright Owner or Performer may 
conduct a single audit of the Collective upon reasonable notice and 
during reasonable business hours, during any given calendar year, for 
any or all of the prior 3 calendar years, but no calendar year shall be 
subject to audit more than once.
    (c) Notice of intent to audit. A Copyright Owner or Performer must 
file with the Copyright Royalty Board a notice of intent to audit the 
Collective, which shall, within 30 days of the filing of the notice, 
publish in the Federal Register a notice announcing such filing. The 
notification of intent to audit shall be served at the same time on the 
Collective. Any audit shall be conducted by an independent Qualified 
Auditor identified in the notice, and shall be binding on all Copyright 
Owners and Performers.
    (d) Acquisition and retention of report. The Collective shall use 
commercially reasonable efforts to obtain or to provide access to any 
relevant books and records maintained by third parties for the purpose 
of the audit. The Copyright Owner or Performer requesting the 
verification procedure shall retain the report of the verification for 
a period of not less than 3 years.
    (e) Acceptable verification procedure. An audit, including 
underlying paperwork, which was performed in the ordinary course of 
business according to generally accepted auditing standards by an 
independent Qualified Auditor, shall serve as an acceptable 
verification procedure for all parties with respect to the information 
that is within the scope of the audit.
    (f) Consultation. Before rendering a written report to a Copyright 
Owner or Performer, except where the auditor has a reasonable basis to 
suspect fraud and disclosure would, in the reasonable opinion of the 
auditor, prejudice the investigation of such suspected fraud, the 
auditor shall review the tentative written findings of the audit with 
the appropriate agent or employee of the Collective in order to remedy 
any factual errors and clarify any issues relating to the audit; 
Provided that the appropriate agent or employee of the Collective 
reasonably cooperates with the auditor to remedy promptly any factual 
errors or clarify any issues raised by the audit.
    (g) Costs of the verification procedure. The Copyright Owner or 
Performer requesting the verification procedure shall pay the cost of 
the procedure, unless it is finally determined that there was an 
underpayment of 10% or more, in which case the Collective shall, in 
addition to paying the amount of any underpayment, bear the reasonable 
costs of the verification procedure.


Sec.  380.27  Unclaimed funds.

    If the Collective is unable to identify or locate a Copyright Owner 
or Performer who is entitled to receive a royalty distribution under 
this subpart, the Collective shall retain the required payment in a 
segregated trust account for a period of 3 years from the date of 
distribution. No claim to such distribution shall be valid after the 
expiration of the 3-year period. After expiration of this period, the 
Collective may apply the unclaimed funds to offset any costs deductible 
under 17 U.S.C. 114(g)(3). The foregoing shall apply notwithstanding 
the common law or statutes of any State.

    Dated: March 29, 2010.
James Scott Sledge,
Chief, U.S. Copyright Royalty Judge.
[FR Doc. 2010-7368 Filed 3-31-10; 8:45 am]
BILLING CODE 1410-72-P
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