18342 Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Proposed Rules 

V. Public Participation and Request for 

Comments 

We view public participation as 

essential to effective rulemaking, and 

will consider all comments and material 

received during the comment period. 

Your comment can help shape the 

outcome of this rulemaking. If you 

submit a comment, please include the 

docket number for this rulemaking, 

indicate the specific section of this 

document to which each comment 

applies, and provide a reason for each 

suggestion or recommendation. 

Submitting comments. We encourage 

you to submit comments through the 

Federal Decision Making Portal at 

https://www.regulations.gov. To do so, 

go to https://www.regulations.gov, type 

USCG–2022–0200 in the search box and 

click ‘‘Search.’’ Next, look for this 

document in the Search Results column, 

and click on it. Then click on the 

Comment option. If you cannot submit 

your material by using https://

www.regulations.gov, call or email the 

person in the FOR FURTHER INFORMATION

CONTACT section of this proposed rule 

for alternate instructions. 

Viewing material in docket. To view 

documents mentioned in this proposed 

rule as being available in the docket, 

find the docket as described in the 

previous paragraph, and then select 

‘‘Supporting & Related Material’’ in the 

Document Type column. Public 

comments will also be placed in our 

online docket and can be viewed by 

following instructions on the https://

www.regulations.gov Frequently Asked 

Questions web page. We review all 

comments received, but we will only 

post comments that address the topic of 

the proposed rule. We may choose not 

to post off-topic, inappropriate, or 

duplicate comments that we receive. 

Personal information. We accept 

anonymous comments. Comments we 

post to https://www.regulations.gov will 

include any personal information you 

have provided. For more about privacy 

and submissions to the docket in 

response to this document, see DHS’s 

eRulemaking System of Records notice 

(85 FR 14226, March 11, 2020). 

List of Subjects in 33 CFR Part 165 

Harbors, Marine safety, Navigation 

(water), Reporting and recordkeeping 

requirements, Security measures, 

Waterways. 

For the reasons discussed in the 

preamble, the Coast Guard is proposing 

to amend 33 CFR part 165 as follows: 

PART 165—REGULATED NAVIGATION 

AREAS AND LIMITED ACCESS AREAS 

■ 1. The authority citation for part 165 

continues to read as follows: 

Authority: 46 U.S.C. 70034, 70051; 33 CFR 

1.05–1, 6.04–1, 6.04–6, and 160.5; 

Department of Homeland Security Delegation 

No. 00170.1, Revision No. 01.2. 

■ 2. Add § 165.T13–0200 to read as 

follows: 

§ 165.T13–0200 Safety Zone; Hydroplane 

and Raceboat Museum Test Area, Lake 

Washington, WA. 

(a) Location. The safety zone will 

cover all navigable waters within a 

4,000-yard oval radius drawn from 

47°34′31′′ N, 122°16′34′′ W, thence to 

position 47°34′02′′ N, 122°15′44′′ W, 150 

yards offshore of the Stan Sayres 

Memorial Hydroplane Pits downward to 

150 yards off the Adams Street Boat 

Ramp which will be marked with buoys, 

located on Lake Washington. These 

coordinates are based on World 

Geodetic System (WGS 84). 

(b) Definitions. As used in this 

section, a designated representative 

means a Coast Guard Patrol 

Commander, including a Coast Guard 

coxswain, petty officer, or other officer 

operating a Coast Guard vessel and a 

Federal, State, and local officer 

designated by or assisting the Captain of 

the Port Sector Puget Sound (COTP) in 

the enforcement of the safety zone. 

(c) Regulations. (1) Under the general 

safety zone regulations in subpart C of 

this part, you may not enter the safety 

zone described in paragraph (a) of this 

section unless authorized by the COTP 

or the COTP’s designated representative. 

(2) To seek permission to enter, 

contact the COTP or the COTP’s 

representative by VHF Channel 16. 

Those in the safety zone must comply 

with all lawful orders or directions 

given to them by the COTP or the 

COTP’s designated representative. 

(d) Enforcement period. This section 

will be enforced from 10 a.m. until 2 

p.m. on May 24, 2022. 

Dated: March 24, 2022. 

P.M. Hilbert, 

Captain, U.S. Coast Guard, Captain of the 

Port Sector Puget Sound. 

[FR Doc. 2022–06657 Filed 3–29–22; 8:45 am] 

BILLING CODE 9110–04–P 

LIBRARY OF CONGRESS 

Copyright Royalty Board 

37 CFR Part 385 

[Docket No. 21–CRB–0001–PR (2023–2027)] 

Determination of Royalty Rates and 

Terms for Making and Distributing 

Phonorecords (Phonorecords IV) 

AGENCY: Copyright Royalty Board, 

Library of Congress. 

ACTION: Proposed rule; withdrawal. 

SUMMARY: The Copyright Royalty Judges 

withdraw a proposed rule that would 

have set continued, unaltered rates and 

terms for subpart B configurations 

subject to the statutory license to use 

nondramatic musical works to make and 

distribute phonorecords of those works 

(the Mechanical License). 

DATES: The Copyright Royalty Board is 

withdrawing the proposed rule 

published June 25, 2021 (86 FR 33601) 

as of March 24, 2022. 

ADDRESSES: Docket: For access to the 

docket to read background documents 

or comments received, go to eCRB at 

https://app.crb.gov and perform a case 

search for docket 21–CRB–0001–PR 

(2023–2027). 

FOR FURTHER INFORMATION CONTACT: 

Anita Brown, Program Specialist, (202) 

707–7658, crb@loc.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

The Copyright Royalty Judges (Judges) 

received a Motion to Adopt Settlement 

of Statutory Royalty Rates and Terms for 

Subpart B Configurations (Motion) from 

National Music Publishers’ Association, 

Inc. and Nashville Songwriters 

Association International (together, 

Licensors) and Sony Music 

Entertainment, UMG Recordings, Inc., 

and Warner Music Group Corp. 

(together, Labels). The Licensors and 

Labels (together, Moving Parties) sought 

approval of a partial settlement of the 

license rate proceeding before the 

Judges titled Determination of Royalty 

Rates and Terms for Making and 

Distributing Phonorecords 

(Phonorecords IV), Docket No. 21–CRB– 

0001–PR (2023–2027). The Moving 

Parties asserted that they had agreed to 

a settlement as to royalty rates and 

applicable regulatory terms relating to 

physical phonorecords, permanent 

downloads, ringtones, and music 

bundles presently addressed in 37 CFR 

part 385, subpart B (Subpart B 

Configurations). The Moving Parties’ 

settlement agreement also addressed 

payment of late fees relating to Subpart 

B Configurations. 


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1Songwriters and independent music publishers 

Anthony Garnier, Abby North, David Poe, and 

Michelle Shocked filed individual comments. Joint 

comments were filed by: Helienne Lindvall, David 

Lowery, and Blake Morgan (Lindvall Comments); 

Songwriters Guild of America, Inc., Society of 

Composers and Lyricists, Music Creators North 

America, Rick Carnes, and Ashley Irwin (together, 

SGA). Attorneys Gwendolyn Seale and Peter W. 

DiZozza, Esq. filed comments as music industry 

lawyers but not on behalf of any specific client/s. 

2 GEO filed an Objection to Fraudulent Motion 

. . . on May 27, 2021. On the same day, GEO filed 

an Objection to Settlement . . . .’’ GEO filed these 

objections before the Judges published the proposed 

rule for comment. GEO’s filings did not seek relief 

and were not proper motions. On July 20, 2021, the 

Judges therefore denied GEO’s motions and 

suggested GEO express his apparent opposition to 

the settlement by way of a comment in response to 

the published proposed rule. See Order Denying 

Three Motions . . . (Jul. 20, 2021). 

3Commenters were independent music publisher 

Monica Corton and singer, songwriter, and teacher 

Rosanne Cash. 

4 GEO styled his comment as ‘‘George Johnson’s 

Fourth Opposition Motion Objecting to . . . 

Settlement . . . Also Filed as Comments. (Aug. 10, 

2021). Subsequently, GEO filed four notices 

informing the Judges of inflation rates and a motion 

seeking indexing of subpart B rates. 

5The Moving Parties alleged that the Labels 

represent ‘‘the vast majority of the U.S. sound 

recording market.’’ They also asserted that NMPA 

‘‘protects and advances the interests of over 300 

music publishers’’ and that NSAI is a trade 

association with over 4,000 members ‘‘dedicated to 

serving songwriters . . . .’’ Further Comments at 2. 

6Lynne Robin Green filed an individual 

comment. Gwendolyn Seale and Monica Corton 

augmented previous comments. Abby North 

augmented her earlier comments in a joint filing 

with Erin McAnally and Chelsea Crowell. Helienne 

Lindvall, David Lowery, and Blake Morgan 

augmented their previous joint comment (Second 

Lindvall Comments). The Songwriters Guild of 

America, Inc.; Society of Composers & Lyricists; 

and Music Creators North America; along with 

individuals Rick Carnes and Ashley Irwin filed a 

joint comment, which was endorsed by Alliance for 

Women Film Composers, Alliance of Latin 

American Composers & Authors, Asia-Pacific Music 

Creators Alliance, European Composers and 

Songwriters Alliance, The Ivors Academy, Music 

Answers, Pan-African Composers and Songwriters 

Alliance, Screen Composers Guild of Canada, and 

Songwriters Association of Canada (endorsers and 

second submission of commenters together, Second 

SGA Comments). Attorney Kevin M. Casini 

commented as an advocate, not for any particular 

client. 

7The deadline for comments was November 22. 

The CRB’s electronic filing system noted the date 

and time of GEO’s filing as November 23, 2021 at 

12:04 a.m. The Judges accept this technically late 

filing. 

8The Register found that a ‘‘paucity of evidence’’ 

in the record to support a determination of separate 

rates for the separate licenses ‘‘does not dispatch 

the . . . Judges’ statutory obligations.’’ Review of 

Copyright Royalty Judges Determination, 73 FR 

9143, 9145 (Feb. 19, 2008). The Register noted that 

the Judges have subpoena power to compel 

witnesses to appear and give testimony. Id. 

Section 801(b)(7)(A) of the Copyright 

Act authorizes the Judges to adopt rates 

and terms negotiated by ‘‘some or all of 

the participants in a proceeding at any 

time during the proceeding’’ provided 

the settling parties submit the 

negotiated rates and terms to the Judges 

for approval. That provision directs the 

Judges to provide those who would be 

bound by the negotiated rates and terms 

an opportunity to comment on the 

agreement. 

The Judges published the proposed 

settlement in the Federal Register and 

requested comments from the public. 86 

FR 40793 (Jun. 25, 2021). Comments 

were due by July 25, 2021. The Judges 

received comments from 14 interested 

parties.1 One participant, George 

Johnson (GEO) filed three motions 

opposing the proposed settlement.2

Because of some technical issues with 

the CRB electronic filing system, the 

Judges reopened the comment period 

with a new deadline of August 10, 2021. 

See 86 FR 40793 (Jul. 29, 2021). During 

the second comment period, the Judges 

received comments from two interested 

parties 3 and GEO.4 On August 10, 2021, 

the closing date for comments, the 

Moving Parties filed comments in 

further support of the proposed 

settlement. 

In their comments, the Moving Parties 

reasserted their respective ‘‘significant 

interest[s]’’ in the proceeding.5 See 

Comments in Further Support of the 

Settlement . . . for Subpart B 

Configurations (Aug. 10, 2021) (Further 

Comments) at 1. The Moving Parties 

referred to the Congressional 

encouragement of settlement of royalty 

rate issues. Id. at 3. In the Motion 

seeking adoption of the settled rates and 

terms, the Moving Parties averred that 

the settlement would continue subpart 

B rates at their current levels and that 

the late fee provisions in the current 

regulations would ‘‘continue to be 

applicable’’ to the Labels ‘‘and all other 

licensees’’ of the mechanical rights at 

issue in subpart B. Motion at 3. 

Immediately preceding this synopsis of 

the settlement terms, however, in a 

section headed ‘‘Parties,’’ the Moving 

Parties indicated ‘‘[c]oncurrent with the 

settlement, the Joint Record Company 

Participants and NMPA have separately 

entered into a memorandum of 

understanding addressing certain 

negotiated licensing processes and late 

fee waivers.’’ Motion at 3. 

The Moving Parties’ comment in 

support of adoption of the settlement 

contained additional material, i.e., the 

memorandum of understanding (MOU) 

as an attachment, the Judges reopened 

for a second time the comment period 

on the proposed rule. See 86 FR 58626 

(Oct. 22, 2021). This third comment 

period ended on November 22, 2021. Id. 

Commenters expressed concern 

regarding this mention of an undefined 

MOU between the Labels and NMPA. 

During the third comment period, the 

Judges received seven comments.6 GEO 

also filed a ‘‘Second Round of 

Comments . . .’’ opposing the 

settlement.7

Statutory Standard and Precedent 

Section 801(b)(7)(A) of the Copyright 

Act is clear that the Judges have the 

authority to adopt settlements between 

some or all of the participants to a 

proceeding at any time during a 

proceeding, so long as those that would 

be bound by the agreed rates and terms 

are given an opportunity to comment. 

Id. at (b)(7)(A)(i). The Judges give notice 

by publishing a settlement as a 

proposed rule in the Federal Register. 

They are obliged to give notice and offer 

all interested parties an opportunity to 

comment, but only participants have the 

opportunity to comment and object to a 

proposed settlement. See id. (emphasis 

added). Section 801(b)(7)(A)(ii) provides 

that the Judges ‘‘may decline to adopt 

the agreement as a basis for statutory 

terms and rates for participants that are 

not parties to the agreement,’’ only ‘‘if 

any participant [in the proceeding] 

objects to the agreement and the 

[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)(ii). 

Regardless of the comments of 

interested parties or participants, the 

Judges are not compelled to adopt a 

settlement to the extent it includes 

provisions that are inconsistent with the 

statutory license. See Review of 

Copyright Royalty Judges 

Determination, 74 FR 4537, 4540 (Jan. 

26, 2009) (error for Judges to adopt 

settlement without threshold 

determination of legality); see also 

Review of Copyright Royalty Judges 

Determination, 73 FR 9143, 9146 (Feb. 

19, 2008) (error not to set separate rates 

as required under § 112 and 114 when 

parties’ unopposed settlement combined 

rates in contravention of those statutory 

sections).8

As the Register of Copyrights 

(Register) observed in the 2009 review 

of the Judges’ decision, nothing in the 

statute precludes rejection of any 

portions of a settlement that would be 

contrary to provisions of the applicable 

license or otherwise contrary to the 

statute. Id. In the instance under review 

by the Register, the settlement 

agreement purported to alter the date(s) 

for payment of royalties granting 

licensees a longer period than section 

115 provided. 74 FR at 4542. The 

Register also noted that nothing in the 


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9The Moving Parties did not define ‘‘recorded 

music market.’’ The study to which they referred 

analyzed recorded music revenues. 

10The Moving Parties minimized the subpart B 

revenue by splitting it between physical sales (9%) 

and digital downloads (6%), glossing over the total 

for mechanical licenses, which was, in fact, 15%. 

11SGA also reported that physical phonorecords 

and permanent downloads accounted for over 25% 

of total recorded music revenues worldwide in 

2020. SGA Comments at 10, citing International 

Federation of the Phonographic Industry report of 

global recorded music revenues for 2020, https://

www.ifpi.org/our-industry/industry-data/ (last 

visited Mar. 16, 2022) (reporting 25.3% combined 

revenue). 

12According to SGA, record labels introduced the 

‘‘controlled composition clause’’ in 1978 in 

response to the increase of the statutory rate from 

$.02 per unit in effect between 1909 and 1978, to 

$0.275 per unit. See SGA Comments at 3. The 

controlled composition clause continues. In other 

words, the statutory royalty rate of $.091 per unit 

translates to $.06825 per unit actually paid by the 

subpart B licensor. Id. 

statute relating to adoption of 

settlements precludes the Judges from 

considering comments of nonparticipants ‘‘which argue that proposed 

[settlement] provisions are contrary to 

statutory law.’’ Id. at 4540. 

The Judges received a relatively large 

number of negative comments from 

interested parties. The only participant 

who objected to the proposed settlement 

was GEO. His objections tracked many 

of the negative comments by other 

parties who are not participants but who 

could be bound by the regulation. The 

Judges have also reviewed the proposed 

settlement for consistency with the law 

and the statutory license. 

Synopsis of Related Non-Participant 

and Moving Parties’ Comments 

The comments of interested parties in 

this proceeding were uniformly negative 

regarding the proposed settlement. 

Their comments were largely 

overlapping and are summarized, along 

with the Moving Parties’ comments as 

follows. 

Importance of Subpart B Configurations 

The Moving Parties downplayed the 

importance of Subpart B Configurations 

in the universe of music consumption. 

See Further Comments at 3–4. The 

Moving Parties emphasized that 83% of 

the recorded music market 9 comes from 

streaming. See id. In the same 

paragraph, however, they conceded that 

Subpart B Configurations account for 

15% of the market.10 Id. The Moving 

Parties acknowledged that the Subpart B 

Configurations represent a ‘‘not 

immaterial source of revenue’’ for 

songwriters and publishers. Id. 

More than one commenter cited 

publications of the Recording Industry 

Association of America (RIAA) that give 

perspective to the apparent diminution 

of Subpart B Configurations, both to the 

rightsholders and to music consumers. 

See, e.g., Comments of Gwendolyn Seale 

(Jul. 26, 2021) (Seale Comments) at 4; 

Comments of Michelle Shocked (Jul. 26, 

2021) (Shocked Comments) at 1; 

Comments of SGA (Jul. 26, 2021) (SGA 

Comments) at 10 11 (all citing ‘‘Year-End 

2020 RIAA Revenue Statistics,’’ https:// 

www.riaa.com/wp-content/uploads/ 

2021/02/2020-Year-End-Music-IndustryRevenue-Report.pdf (last visited 02/14/ 

2022) (RIAA Report)); Comments of 

Monica Corton (Nov. 22, 2021) (Second 

Corton Comments) at 2 (vinyl ‘‘seems to 

be surging . . .’’). The RIAA Report 

reflected near static sales of physical 

product (including digital downloads) 

but noted that ‘‘[f]or the first time since 

1986, revenues from vinyl records were 

larger than from CDs. . . . [V]inyl grew 

by 28.7% by value year-over-year 

. . . .’’ RIAA Report at 2. 

Commenter Corton detailed the 

rightsholders’ mechanical license 

earnings from vinyl and CD albums as 

compared to downloading or streaming 

individual tracks. See Second Corton 

Comments at 2. She alleged that 

retailers are selling new vinyl releases 

for $25 to $50 (rounded). Assuming the 

wholesale price to be 50% of the retail 

price, she calculated that retailers are 

paying $12.50 to $25 to the record 

companies. Id. Corton contended that 

even in the surging market, under 

standard publisher-record company 

contracts, the record label pays the 

publisher $0.91 for a ten-track album 

($.091 per track, limit ten, regardless of 

the actual number of tracks on the 

album). Id. Corton asserted that most 

labels enforce a ‘‘controlled composition 

clause’’ 12 in their contracts with 

publishers, limiting their earnings on an 

album to 75% of the statutory 

mechanical license rate and a standard 

ten song cap, or $0.6825 per album, 

which the publisher generally splits 50– 

50 with the songwriter. Id. The royalty 

that reaches the songwriter is $0.3412 

for all the protected works on the 

marketed album. Id. Even after 

compensating performers, record labels 

appear to be receiving over $10 per 

permanent album to the songwriters’ 

$0.34. Id. 

Commenter Roseanne Cash asserted 

that mechanical royalties are ‘‘one of the 

most reliable ways a songwriter can still 

make a minimum-to-decent wage 

. . . .’’ Comments of Roseanne Cash at 

1 (Aug. 2, 2021). She asserted that the 

need for fair subpart B rates is ‘‘more 

dire because of the lack of fairness in 

compensation from streaming services. 

Streaming services are not in the music 

business. They are in the tech business, 

and they have built multi-billion dollar 

profit machines on the back of 

songwriters and musicians whom they 

use as loss-leader content.’’ Id. at 2. 

Rate ‘‘Freeze’’ 

Almost every commenter emphasized 

that the subpart B mechanical rates have 

remained unchanged for well over a 

decade, since 2006. See, e.g., Comments 

of Kevin M. Casini (Nov. 21, 2021) 

(Casini Comments) at 3 (‘‘what has not 

been frozen since 2006: the cost of 

living.’’). According to SGA, from 

enactment of the governing statute in 

1909 until 1978, mechanical royalties 

were set at $ 0.02 per unit. See 

Comments of SGA (Jul. 26, 2021) (SGA 

Comments) at 3. In 1978, Congress 

raised the rate to $ 0.0275 per unit, 

which was offset by a ‘‘controlled 

composition clause’’ in sound recording 

contracts by which creators were 

obliged to lower that new 1978 

mechanical royalty rate by 25%. Id. The 

statutory rate gradually increased until 

2006, when the CRB maintained the 

existing rate at $ 0.091 per unit in 

mechanical rate proceedings 

commenced in 2006, 2011, and 2016. Id. 

The controlled composition clause 

remains a feature of sound recording 

contracts. Second Corton Comments at 

2. 

Commenters advocated application of 

an inflation adjustment beginning, at a 

minimum, in 2006. See, e.g. SGA 

Comments at 4; Corton Comments at 4; 

Casini Comments at 4. According to the 

proponents of a cost of living 

adjustment (COLA) applied to the 2006 

rates, that adjustment would yield a 

2021 royalty rate of $ 0.12 (an upward 

31.9% inflation adjustment over the 

sixteen-year period). See, e.g., SGA 

Comments at 4. SGA conceded that the 

COLA extrapolation cannot be 

considered dispositive on the issue of 

new rate-setting, but they contended 

that it does ‘‘starkly demonstrate the 

outrageous unfairness that has been 

imposed on the music creator 

community over a period of more than 

an entire century.’’ Id. 

Conflicts of Interest 

More than one commenter questioned 

whether the underlying negotiations 

could be, in fact, arm’s length 

transactions because of the vertical 

integration of music publishing and 

recording. The proposed settlement at 

issue was negotiated by and among the 

‘‘three major, multinational record 

conglomerates UMG, SME and WMG, 

the US music publisher trade group 

NMPA (whose largest members include 

the music publishing affiliates of those 

major record companies), and 


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13The cited Billboard article describes a 

mechanism for allocating unclaimed royalty funds 

among publishers based upon market share. 

However, neither the Billboard article nor 

Supplemental Statement in Phonorecords II reveal 

details of the agreement. 

inexplicably, the [NSAI] . . . the 

‘Settling Parties’. . . .’’ SGA Comments 

at 4. 

When the Settling Parties gave notice 

of their impending settlement, they 

included reference to a separate 

memorandum of understanding between 

NMPA and the record labels. Notice of 

Settlement in Principle (Mar. 2, 2021) 1 

(‘‘NMPA, UMG, WMG and SME have 

also reached an agreement in principle 

concerning a separate memorandum of 

understanding addressing certain 

related issues.’’) See, e.g., Second Seale 

Comments at 6 (representative 

negotiators of subpart B settlement and 

MOU ‘‘represent ‘willing buyers’ and 

‘willing sellers’ who are effectively the 

same parties at the corporate level.’’); 

Comments of Anthony Garnier (Jul. 19, 

2021) (‘‘Vertical integration . . . 

between the major labels and major 

publishers poses a serious conflict of 

interest and engenders self-dealing 

among negotiators’’). 

Moving Parties stated, categorically, 

that no publisher would negotiate a 

below-market mechanical royalty rate 

and extend that rate to competitors of its 

‘‘sister record company.’’ See Further 

Comments at 5. The Moving Parties 

referred the Judges to their 

determination in Phonorecords III 

wherein the Judges discounted claims of 

self-dealing, noting that the negotiating 

parties—the same parties as are 

presenting the present settlement for 

approval—‘‘would not ‘engage[ ] in anticompetitive price-fixing at belowmarket rates . . . .’ ’’ Id. (citing Final 

Determination, Determination of 

Royalty Rates and Terms for . . . 

Phonorecords, Docket No. 16–CRB– 

0003–PR (Phonorecords III)). 

Lack of Transparency Regarding MOU 

In the Motion seeking adoption of the 

settled rates and terms, the Moving 

Parties averred that the settlement 

would continue subpart B rates at their 

current levels and that the late fee 

provisions in the current regulations 

would ‘‘continue to be applicable’’ to 

the Labels ‘‘and all other licensees’’ of 

the mechanical rights at issue in subpart 

B. Motion at 3. Immediately preceding 

their synopsis of the settlement terms, 

however, in a section headed ‘‘Parties,’’ 

the Moving Parties indicated 

‘‘[c]oncurrent with the settlement, the 

Joint Record Company Participants and 

NMPA have separately entered into a 

memorandum of understanding 

addressing certain negotiated licensing 

processes and late fee waivers.’’ Motion 

at 3. 

Commenters assailed a lack of 

transparency in the settlement with 

regard to the memorandum of 

understanding (MOU). They contended 

that there must be a hidden quid pro 

quo unrevealed in the proposed 

settlement or the Motion. In their 

Further Comments, the Moving Parties 

explained the offhand revelation of the 

MOU: They viewed it as ‘‘routine, and 

irrelevant to the Judges’ decisionmaking concerning the Settlement.’’ Id. 

at 6. The Moving Parties further 

addressed this purported oversight in 

the Motion by indicating that all but ‘‘a 

low single digit percentage’’ of the 

music publishers have opted into the 

MOUs of the past. They also opined that 

‘‘thousands of independent publishers’’ 

will voluntarily opt in to the latest 

iteration of the MOU. Further 

Comments at 7. 

The Moving Parties contended that 

the MOU is a private contract and not 

something to be codified as it does not 

address statutory rates. See id. at 8. As 

the commenters noted, however, the 

MOU is tied directly to the rate 

determination. The current MOU is 

conditional and was not effective until 

the parties to the MOU (the Moving 

Parties, except NSAI) submitted a 

motion to adopt the proposed settlement 

in Phonorecords IV as rates and terms 

for the subpart B configurations. Id., at 

Exhibit C, 2. 

Further, the MOU contains a late fee 

waiver provision, contrary to published 

regulations, which add a late fee of up 

to 1.5% per month until the 

rightsholder receives royalties that are 

due monthly. See 37 CFR 385.3. In their 

comments, Lindvall, Lowery, Morgan, 

and Castle questioned who might 

receive the benefit of the waived late 

fees. See Comments of Lindvall, 

Lowery, Morgan, Castle (Nov. 22, 2021) 

(Second Lindvall Comments). The 

commenters in this proceeding, 

representing songwriters and 

independent or self-publishers, object 

strenuously to terms that they 

considered ‘‘hidden’’ and that would 

affect the amount of remuneration they 

receive in exchange for licensing their 

protected works. 

Restating their particularized 

argument, the Moving Parties 

maintained that the current MOU was 

the fourth such arrangement between 

Labels and NMPA to address 

‘‘mechanical licensing process issues 

unique to record companies.’’ Id. at 6. 

Further, the Moving Parties asserted 

that, in any event, the existence of 

MOUs has been public knowledge. See 

Further Comments at 6–7 (citing E. 

Christman, ‘‘NMPA, Major Labels Sign 

on Terms of Agreement,’’ Billboard (Oct. 

7. 2009) and Exhibit B Supplemental 

Statement in Phonorecords II (April 11, 

2012).13

Several commenters professed no 

knowledge of the current MOU or the 

history of MOUs. See SGA Comments at 

9; Seale Comments at 3. Further, as they 

pointed out, songwriters are not parties 

to the MOU. The benefits of the 

agreement are alleged to accrue to the 

benefit of only certain music publishers. 

See Seale Comments at 3. This benefit, 

some asserted, is consideration for the 

publishers agreeing to continue the 

freeze of subpart B rates. See Second 

Seale Comments at 3; Second Lindvall 

Comments at 10–11. Songwriters cannot 

be said to have agreed to a royalty late 

fee waiver if they are not parties to the 

‘‘private contract’’ that potentially 

deprives them of those late fees. See, 

e.g., Lindvall Comments at 11 

(settlement expressly refers to 

undisclosed terms; those ‘‘outside the 

insider group’’ cannot agree without 

knowledge of extent of consideration 

exchanged). 

Lack of Representation by Negotiators 

The Moving Parties asserted that the 

NMPA ‘‘protects and advances the 

interests of over 300 music publishers 

. . . and their songwriting partners 

. . . .’’ Further Comments at 2. They 

further asserted that NSAI is a trade 

organization ‘‘of over 4,000 members 

dedicated to serving songwriters of all 

genres of music.’’ Id. Commenters 

pointed out several issues with the 

negotiating representatives, NMPA and 

NSAI. 

Several commenters, comprising 

independent songwriters, independent 

publishers, and music industry lawyers, 

challenged the validity of the 

representatives. See, e.g., Corton 

Comments at 2 (many NSAI members 

unaware that organization is agreeing to 

these rates; no mention on NSAI 

website); Second Lindvall Comments at 

19 (judges suggest unhappy songwriters 

might ‘‘seek representation elsewhere 

. . . .’’; ‘‘the problem is that there was 

likely no ‘representation’ in the first 

place . . . .’’); Seale Comments at 3 

(NMPA, NSAI do not represent 

‘‘countless millions’’ of owners); 

Comments of Anthony Garnier (Jul. 19, 

2021) (NMPA, NSAI have not consulted 

with any other songwriter 

organizations); Comments of Abby 

North (Jul. 26, 2021) (North Comments) 

at 3 (NMPA, NSAI do not have broad 

authority they claim); Comments of 


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14 GEO Fourth Opposition Motion was filed on 

the final day of the second comment period (Fourth 

Opposition). GEO Response and Further Opposition 

was filed August 21, 2021, after the close of the 

second comment period (Further Opposition). 

Nonetheless, the Judges reopened the matter for 

further comment and the Judges therefore accept 

the August 21, 2021, filing as a timely comment 

during the third comment period, which closed 

November 22, 2021. Though not a comment in 

response to the Federal Register notices, GEO filed 

a Written Direct Statement on October 13, 2021 

(within the third comment period), which included 

arguments opposing the proposed subpart B 

settlement at issue. GEO filed a Second Round of 

Comments on November 23, 2021. These comments 

were filed a day after the close of the third comment 

period; GEO filed Corrected Second Round of 

Comments on December 1, 2021 (Corrected Second 

Comments). The Judges have occasionally afforded 

GEO limited leeway in these proceedings, as Mr. 

Johnson is appearing pro se in this proceeding. In 

this instance, the Judges accept the Second Round 

of Comments, as amended on December 1, 2021. 

15Rates are not set by motion, but by agreement 

or following a full adjudication. While GEO’s 

motions did not result in adoption of an inflation 

index, GEO’s position on this issue is, and has been, 

clear. 

16A one-sentence paragraph in the Motion stated 

simply: ‘‘Concurrent with the settlement, the Joint 

Record Company Participants and NMPA have 

separately entered into a memorandum of 

understanding addressing certain negotiated 

licensing processes and late fee waivers.’’ Motion at 

3. This revelation was at the end of the section 

entitled ‘‘Parties,’’ not in the following section 

entitled ‘‘Nature of the Settlement.’’ 

Abby North (Nov. 22, 2021) at 1 (Second 

North Comments) (rightsholders that are 

not NMPA members cannot opt in to 

receive money under MOU); SGA 

Comments at 5 (music creator 

community ‘‘blindsided’’ by settlement). 

SGA asserts that its own membership 

numbers 4,500 and its co-commenter 

SCL has over 2,000 members, but it was 

not included in the negotiations of rates 

or the MOU. See SGA Comments at 5. 

Claiming no voice in the negotiations 

that resulted in the proposed settlement, 

the commenters asserted that the 

resulting rates are contrary to statutory 

requirements inasmuch as they 

represent rates negotiated by a willing 

buyer and imposed on an ‘‘unwilling 

seller.’’ See Comments of David Poe (Jul. 

12, 2021); Corton Comments at 2 (NSAI 

members unaware of organization’s 

negotiating positions; nothing on NSAI 

website about MOU; without 

knowledge, songwriter member cannot 

be a willing seller). 

Negotiating Strategy 

The Moving Parties supported the 

negotiated settlement by reporting that, 

in the period 2006 to 2008, they spent 

‘‘tens of millions of dollars litigating’’ 

the mechanical royalty rates only to 

have the Judges adopt the rates in place 

at that time as reflective of the 

marketplace. Further Comments at 3. 

They then projected that the possibility 

of an adjudicated change in the current 

subpart B rates was outweighed by the 

cost of litigating the rates and the 

uncertainty of the outcome of litigation. 

Id. at 4. Building on the small market 

share of Subpart B Configurations, the 

Moving Parties contended that 

agreement to static subpart B rates was 

an important concession in the context 

of the mechanical license proceeding. 

Id. 

Commenters took umbrage at the 

conclusion by NMPA, the publisher 

trade group, that ‘‘the game is not worth 

the candle.’’ See Seale Comments at 6– 

7. Monica Corton, a veteran in the music 

publishing business, noted that the 

negotiators’ conclusion to freeze 

Subpart B Configuration rates as a 

‘‘component’’ of an overall negotiating 

strategy to increase digital streaming 

rates is, after 15 years, ‘‘no longer 

justifiable.’’ Second Corton Comments 

at 1. 

Mr. Johnson’s Objections to the 

Settlement 

The only participant in the captioned 

proceeding to offer comments on the 

notice of the proposed settlement was 

George Johnson (GEO). The substance of 

his comments in opposition to adoption 

of the settlement tracked with the 

negative comments of other interested 

parties detailed above. GEO’s filings 

include: GEO Fourth Opposition Motion 

(Aug. 10, 2021); Response and Further 

Opposition to Comments/Motion and 

Fraudulent Settlement for Subpart B 

Configurations (Aug. 21, 2021) (Further 

Opposition); Second Round of 

Comments (Nov. 23, 2021); Corrected 

Second Round of Comments (Dec. 1, 

2021) (Corrected Second Comments).14

Importance of Subpart B Configurations 

GEO pointed to the RIAA report cited 

by other commenters to emphasize that 

Subpart B Configurations are a growing 

part of the music business, comprising 

15% of the market. See Further 

Opposition at 5. He claimed the 

importance of subpart B royalties is 

clear because affected parties ‘‘are all 

perfectly willing to spend millions of 

dollars to fight GEO’s proposal to 

increase the 9.1 cents for lost inflation 

. . . .’’ Id. Other commenters indicated 

similar concerns. 

Rate ‘‘Freeze’’ 

GEO has long advocated inclusion of 

an inflation index in royalty rates set by 

the Judges, including the subpart B rates 

at issue here. In support of his 

advocacy, GEO has filed 27 pleadings, 

including motions seeking imposition of 

an inflation index on section 115 rates 15

and periodic notices of U.S. inflation 

rates. His plea is bolstered by the many 

commenters who, almost unanimously, 

included this suggestion. 

Conflicts of Interest 

GEO has long assailed the apparent 

conflict of interests when recording 

companies engage in negotiations with 

their related music publishing houses to 

set royalty rates for the labels to pay to 

publishers. In this proceeding, GEO 

further argued that major negotiating 

parties, three record labels and three 

publishers, are ‘‘just two hands of the 

same three foreign corporations 

negotiating with themselves in an 

American rate proceeding, supposedly 

designed to help American songwriters 

and music publishers.’’ Corrected 

Second Comments at 2 (emphasis in 

original). 

Based upon his assumption of selfdealing in this instance, GEO alleged 

fraud, undue influence, anti-trust 

violations, and international intrigue. 

Id. at 8–9, 12–13. 

Lack of Transparency Regarding MOU 

In his analysis of the validity of the 

MOU, GEO invoked the same conflicts 

of interest arguments. He referred to the 

‘‘No. 2 Same Parties rule under willing 

buyer, willing seller . . . .’’ Corrected 

Second Comments at 1 (emphasis in 

original). GEO did not identify the 

source of this ‘‘rule’’ and although the 

Judges are familiar with the concept, 

they are unaware of any set of rules 

relating to the determination of a willing 

buyer/willing seller market value. 

GEO asserted, further, that the MOU 

‘‘seems to be a clear quid pro quo’’ to 

freeze subpart B rates in exchange for 

the late fee provisions ‘‘and other 

substantial financial consideration only 

benefiting members of NMPA . . .’’ Id.; 

see id. at 8. 

GEO also claimed that this MOU, 

although it is a fourth iteration of side 

agreements among the parties, was 

formerly a secret and that it only came 

to light after commenters raised 

questions about the reference to it in the 

Motion.16 Id. at 3. GEO further ascribed 

malevolent intent to the Moving Parties’ 

timing—filing additional information 

relating to the MOU on the last day of 

the comment period. Id. 

Lack of Representation by Negotiators 

GEO claimed to speak for all 

songwriters and independent or selfpublishers. He contended he abandoned 

his membership in NSAI because he felt 

NSAI did not represent his interests. Id. 

at 10. Without representation by NSAI, 

GEO concluded that he had no choice 

but to participate in this proceeding 

formally and advocate for his own 

interests and those of others similarly 


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17 It seems clear that the language of section 

801(b)(7)(A) inherently presumes that uncontested 

settlements are factually reasonable, but, even then, 

the Judges must be satisfied that the settlement is 

consistent with the law. 

situated. Id. Citing all of the other 

reasons he objected to the settlement 

(self-dealing, freezing the rate, using 

subpart B as a bargaining chip in 

streaming negotiations, undisclosed 

MOU waiving rights to late fees), GEO 

contended that NSAI and NMPA cannot 

possibly be representing the interests of 

the section 115 rightsholders. 

GEO’s comments repeated the refrain 

of other commenters. He and they 

disagree with the settlement proposed 

by trade organizations that claim to 

represent their interests. They 

contended that they are not willing 

sellers in this equation. Id. at 11. 

Negotiating Strategy 

Several commenters cited the 

negotiating parties’ admission that they 

considered the subpart B rates as 

insignificant in the context of section 

115 licenses. GEO echoed their concerns 

that the copyright owners’ negotiators 

used subpart B as a loss leader in their 

attempts to negotiate higher streaming 

royalty rates. GEO argued further that 

the streaming services use the frozen 

subpart B rates, to which NSAI and 

NMPA agree, as a justification for 

maintaining or lowering section 115 

streaming rates. Id at 14. He also opined 

that keeping subpart B rates frozen, for 

yet another rate period, will provide a 

convincing benchmark for the streaming 

services not only in this proceeding, but 

in the next, Phonorecords V. Id. at 15. 

GEO’s General Objections 

GEO asserted that the section 115 

licenses were ‘‘designed to help 

American songwriters and . . . 

publishers.’’ Id. at 2. Similarly, GEO 

contended that the Judges’ rate setting 

proceedings ‘‘are designed to help 

songwriters . . . .’’ Id. at 5. In his 

objection, he argued that the settlement 

is contrary to those asserted statutory 

purposes. 

GEO argued that the Moving Parties 

failed to provide evidence that the 

proposed settlement is reasonable. Id. In 

that way, he advocated assigning a 

burden of proof to the Moving Parties. 

GEO made several objections based on 

supposition, rumor, or surmise. For 

example, he asserted that there is ‘‘an 

issue of NMPA possibly getting secret 

‘donations’ from . . . major publishers 

which may amount to tens of millions 

of dollars going to NMPA.’’ Id. at 2. 

Judges’ Analysis and Conclusions 

The Judges note that each faction in 

this discussion has alleged that the 

other side has failed to present evidence 

that the proposal is or is not a 

reasonable foundation upon which to 

base mechanical license rates and terms 

for subpart B musical works 

configurations. Although chapter 8 of 

the Copyright Act encourages parties to 

enter into settlement negotiations, 

ultimately the decision as to whether a 

contested settlement 17 should be 

approved on motion is subject to the 

Judges’ discretion, informed by the 

submissions of the moving parties and 

the commenters, and by the Judges’ 

application of the law to the facts. 

Only one participant in this 

proceeding, GEO, objected to the 

proposed settlement. As shown by the 

foregoing synopsis, however, GEO’s 

objections did not come to the Judges in 

a vacuum. The statute requires 

publication of a settlement proposal and 

solicitation of comments from interested 

parties—parties who would be bound by 

the proposed rates and terms. Nonparticipants who commented on the 

proposal uniformly objected to adoption 

of the proposed rates and terms and for 

reasons that paralleled those stated by 

GEO. Interested parties’ comments are 

filed in the record of the proceeding and 

the Judges must analyze those 

comments even though the Judges may 

not base rejection of a settlement solely 

on negative comments from nonparticipants alone. 

It is thus clear that the Judges’ review 

of this or any proposed rates and terms 

is not a routine matter. The Judges must 

analyze carefully the terms of the 

settlement in light of the participant’s 

objections. They must also evaluate the 

settlement in view of the requirements 

of section 115. The proposed settlement 

must not be contrary to the statutory 

terms of the mechanical license. 

Reasonableness 

Weighing the objections of GEO and 

considering those objections in the 

context of the record before them, the 

Judges make the following conclusions. 

Importance of Subpart B Configurations 

Royalties from Subpart B 

Configurations are not inconsequential 

to the rightsholders. Subpart B 

Configurations are qualitatively 

different from the digital streaming 

configurations; consequently, the Judges 

can and do set separate rates for the 

Subpart B Configurations. Even though 

the physical and ‘‘permanent’’ 

download products are different in 

character from streaming uses, the 

Judges cannot and do not treat them 

with any less care and attention. 

Subpart B Configurations, in particular 

vinyl recordings, are a significant source 

of income for section 115 rightsholders. 

The royalties they generate should not 

be treated as de minimis, or as a ‘‘throw 

away’’ negotiating chip to encourage 

better terms for streaming 

configurations. 

Rate ‘‘Freeze’’ 

In the dynamic music industry, there 

is insufficient reason to conclude that a 

static musical works rate is reasonable. 

The determination rendered in 2008, 

with an effective date of 2006, cannot 

continue to bind the parties sixteen 

years later, absent sufficient record 

evidence that the status quo remains 

grounded in current facts and is a 

reasonable option. Since 2006, the retail 

marketplace for music has changed 

dramatically with regard to the Subpart 

B Configurations. From 2006 to 2008 

(and, indeed, in years prior) the Subpart 

B Configurations dominated the 

recorded music marketplace. 

By 2020, industry data collected by 

the Recording Industry Association of 

America showed that various forms of 

digital streaming accounted for 83% of 

recorded music market revenues. 

Notwithstanding the decrease in 

revenues attributable to Subpart B 

Configurations, in 2020, vinyl record 

sales surpassed the volume of CD album 

sales, signaling a resurgence in vinyl as 

a music medium. Even if the sales 

figures were otherwise, however, 

sixteen years at a static rate is 

unreasonable under the current record, 

if for no other reason than the 

continuous erosion of the value of the 

dollar by persistent inflation that 

recently has increased significantly. In 

this regard, application of a consumer 

price index cost of living increase, 

beginning in 2006, would yield a 

statutory subpart B royalty rate for 2021 

of approximately $0.12 per unit as 

compared with the $0.091 that prevails, 

which adjustment, as noted supra, 

represents a 31.9% increase. 

The disparity between the static rate 

and the dynamic market is even more 

stark when considering the ‘‘controlled 

composition clause’’ that contractually 

lowers the statutory rate by 25%. Add 

to that the record labels’ limit on album 

royalties to ten tracks, regardless of the 

number of songs actually included in 

each album. In other words, the 

statutory rate is not the effective rate 

record labels use in compensating 

songwriters and publishers. 

The proposed settlement did not 

include any adjustment to subpart B 

rates, not even an indexed increase. 

Adjudication of rates may provide the 

parties an opportunity to present 


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evidence of the advisability of such an 

indexed increase. 

Conflicts of Interest 

Conflicts are inherent if not inevitable 

in the composition of the negotiating 

parties. Vertical integration linking 

music publishers and record labels 

raises a warning flag. No party opposing 

the present settlement has evinced 

actual or implied evidence of 

misconduct, other than the corporate 

structure of the record labels on the one 

hand and the publishers on the other. 

While corporate relationships alone do 

not suffice as probative evidence of 

wrongdoing, they do provide smoke; the 

Judges must therefore assure themselves 

that there is no fire. The potential for 

self-dealing present in the negotiation of 

this proposed settlement and the 

questionable effects of the MOU are 

sufficient to question the reasonableness 

of the settlement at issue as a basis for 

setting statutory rates and terms. 

Lack of Transparency in MOU 

The Moving Parties noted in passing 

that their agreement also included a 

memorandum of understanding that did 

not have any impact on the 

reasonableness of the settlement terms. 

Reasonableness, however, is 

undermined by associated bargained-for 

provisions as to which the Judges have 

an inadequate basis for evaluation. 

The Moving Parties assertion that the 

MOU is ‘‘irrelevant’’ and 

inconsequential to the settlement terms 

is facially invalid. First, the MOU is a 

side agreement between recording 

companies and publishers, which does 

not include participation by or 

agreement of either songwriters or a 

significant number of owners of musical 

works subject to the section 115 license. 

Second, the MOU grants a late fee 

waiver to licensees that are party to the 

agreement. This waiver of fees seems to 

have an indirect impact on proposed 

royalty returns to rightsholders. Without 

more complete knowledge of the 

implications of the MOU, however, the 

Judges are unable to evaluate the 

proposed settlement as a whole. 

The Moving Parties asserted that the 

MOU is a private contract between 

private parties. It appears rather to be an 

attempt to modify the application of the 

terms of statutory licenses they 

allegedly are negotiating in the context 

of a rate-setting proceeding under the 

Copyright Act. By its terms, the current 

MOU was conditional and was not 

effective until the parties to the MOU 

(the Moving Parties, except NSAI) 

submitted a motion to adopt the 

proposed settlement as rates and terms 

for the Subpart B Configurations in 

Phonorecords IV. 

Further, in their pleadings, the 

Moving Parties asserted that they 

withheld information regarding the 

MOU because they considered it 

‘‘irrelevant’’ to statutory rate setting. 

Determining relevance is a judgment 

call reserved to the Judges. The 

contracting parties cannot hide changed 

application of a statutory rate scheme 

behind a ‘‘private contract’’ when that 

contract has implications for noncontracting parties and the ‘‘private 

contract’’ details necessarily inform the 

reasonableness of the proposed 

settlement. The Judges, not a 

participant, can and will decide what is 

‘‘irrelevant’’ to this rate setting 

proceeding. 

Finally, the Moving Parties justified 

the MOU by noting that it is the fourth 

iteration of similar agreements. The fact 

that this MOU is the fourth of its kind 

does not prove that it is appropriate or 

an acceptable corollary to the statutory 

rates set by this tribunal. Repetition 

alone does not make a practice 

advisable or fair. Nor does it indicate 

that the practice or its details are 

universally known and approved. 

Parties have an undeniable right of 

contract. The Judges, however, are not 

required to adopt the terms of any 

contract, particularly when the contract 

at issue relates in part, albeit by 

reference, to additional unknown terms 

that indicate additional unrevealed 

consideration passing between the 

parties, which consideration might have 

an impact on effective royalty rates. 

Lack of Representation by Negotiators 

The licensors in this proceeding are 

represented by their respective trade 

associations. The commenters asserted 

that the trade associations, NSAI in 

particular, did not appear to be 

representing the best interests of the 

music creators. It is not within the 

purview of the Judges to select or direct 

what parties file petitions to participate 

in rate setting proceedings. 

Dissatisfaction with the actions of a 

participant can only be contested by 

another participant, presenting 

competent evidence to inform the 

Judges of a reasonable outcome; it is not 

a proper or adequate basis to decline to 

adopt the settlement. 

Negotiating Strategy 

The Moving Parties justified their 

negotiating strategy and the outcome by 

asserting that the Judges previously 

continued existing rates after the 

interested parties spent ‘‘tens of 

millions’’ of dollars litigating the same 

rates in the mid-2000s. As the Moving 

Parties noted, however, the Judges’ 

decision at that time was reflective of 

the conditions of that market. The 

Moving Parties seemed to be projecting 

what actions the Judges might take on 

a new evidentiary record. The 2022 

recorded music marketplace is not the 

2006 marketplace. The Judges’ 

determination of current rates and terms 

should be reflective of the current 

marketplace. 

GEO’s Other Objections 

Contrary to GEO’s assertions that the 

section 115 licenses were ‘‘designed to 

help American songwriters,’’ the 

statutory rates are intended to benefit 

both rightsholders and licensees by 

permitting fair and fairly compensated 

exploitation of copyrighted works in an 

administratively manageable way. Until 

a recent statutory change, the Judges 

were instructed to weigh various factors 

in setting mechanical royalty rates to 

assure reasonable results, fair to both 

sides and of benefit to the musicconsuming public. The current statutory 

standard for determining rates, the 

standard applicable in this proceeding, 

is the willing buyer-willing seller 

standard, which is aimed at finding a 

free and competitive market rate for the 

licenses. See 17 U.S.C. 115 (c)(1)(F). 

GEO alleged that, under the MOU, 

NMPA might receive ‘‘secret ‘donations’ 

from these major publishers which may 

amount to tens of millions of dollars 

going to NMPA.’’ Second Corrected 

Comments at 2. Although GEO’s 

revelation of an ‘‘issue’’ of ‘‘secret 

donations’’ might initially seem lacking 

in factual bases, it is noteworthy that the 

MOU contains the following language. 

For the avoidance of doubt, as provided in 

Section 10.3 of MOU1, it shall not be a 

breach of this MOU4 if NMPA chooses to 

seek a donation from Participating Publishers 

as part of the enrollment process. If, after the 

Administrator’s final accounting and 

resolution of any disputes, Participating 

Publisher claims for a given Phase of Group 

6 are for less than the 11 payments made by 

a Participating Record Company for such 

Phase, then the Administrator shall return 

any unclaimed monies to the Participating 

Record Company, and Section 4.21 of MOU1 

shall apply, unless RIAA and NMPA agree to 

simplified procedures for the refund process. 

Further Comments, Exhibit C 

(Memorandum of Understanding) at 10– 

11. 

The provisions of Sections 10.3 and 

4.21 of MOU 1 are not in the record of 

this proceeding and remain unknown to 

the Judges. They may support GEO’s 

concerns regarding the provision 

condoning NMPA’s solicitation of a 

‘‘donation’’ as part of an enrollment 

process. GEO did not provide an 


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18Further, given the absence of any discovery in 

connection with the procedures for review of a 

proposed settlement, the absence of evidence at this 

stage of the proceeding cannot be a sufficient basis 

to ignore an issue that the Judges find to be a matter 

of concern. 

19Section 801(b)(7)(A) does not state which 

party—proponent or objector—might bear a burden 

of proof in connection with the Judges’ evaluation 

of a proposed settlement and objections thereto. 

The Judges do not believe that a ‘‘burden of proof’’ 

issue exists in this settlement process, because 

evidence as described in the Judges’ Rules, 37 CFR 

351.10, is not required. However, were a burden of 

proof applicable in this proceeding, the Judges find 

that, if the burden were placed on the proposers of 

this settlement, they failed to meet that burden and, 

if the burden of proof were placed on GEO and/or 

the other commenters referenced above, they have 

met that burden. 

evidentiary basis for his claim that, 

under this provision of the MOU, 

NMPA might benefit to the extent of 

‘‘tens of millions of dollars.’’ The extent 

of NMPA’s power to solicit donations 

‘‘as part of the enrollment process’’ and 

the potential value of those donations, 

however, raised concerns with 

commenters who questioned the quid 

pro quo of the MOU and concern the 

Judges.18

If adopted by the Judges, the proposed 

settlement is one that would bind not 

only the parties to the MOU, but also 

songwriter licensors. Songwriters, 

however, are not parties to the MOU 

and would apparently not share in any 

benefit that might flow to licensors 

under the MOU. 

Consistency With the Law and the 

Statutory License 

The Judges reviewed the proposed 

settlement with regard to whether any 

portions of the settlement would be 

contrary to provisions of the applicable 

license or otherwise contrary to the 

statute, pursuant to the Register’s prior 

rulings. See e.g., Review of Copyright 

Royalty Judges Determination, 74 FR 

4537, 4540 (Jan 26, 2009). Upon such 

review, the Judges see no basis to 

conclude the settlement is contrary to 

law, except with regard to 801(b)(7)(A). 

Conclusion 

Rightsholders are free to choose their 

representation in these proceedings. 

Admittedly, individual songwriters and 

self-publishers have traditionally 

chosen not to expend the resources 

necessary to participate in these 

proceedings at the same level as trade 

organizations and major technology 

companies. Nonetheless, the outcomes 

of these proceedings can have a 

significant impact on the lives of the 

individual rightsholders. In this 

proceeding, the Judges received lengthy 

comments from SGA, which claims to 

represent thousands of songwriters. For 

SGA’s comments to have independent 

influence, however, SGA would have 

needed to join the proceeding as a 

participant. Nonetheless, with regard to 

the present proposed settlement, the 

comments of non-participants 

cumulatively served to amplify those of 

the objecting participant. 

Pursuant to section 801(b)(7)(A)(ii), 

based on the totality of the present 

record—including the Judges’ 

application of the law to that record, as 

well as GEO’s objections, which, as 

noted supra, are consistent with the 

non-participant comments—the Judges 

find that the proposed settlement does 

not provide a reasonable basis for 

setting statutory rates and terms.19

Furthermore, the Judges find a paucity 

of evidence regarding the terms, 

conditions, and effects of the MOU. 

Based on the record, the Judges also find 

they are unable to determine the value 

of consideration offered and accepted by 

each side in the MOU. These unknown 

factors, as highlighted in the record 

comments, provide the Judges with 

additional cause to conclude that the 

proposed settlement does not provide a 

reasonable basis for setting statutory 

rates and terms. 

Dated: March 24, 2022. 

Suzanne M. Barnett, 

Chief Copyright Royalty Judge. 

[FR Doc. 2022–06691 Filed 3–29–22; 8:45 am] 

BILLING CODE 1410–72–P 


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