Federal Register / Vol. 77, No. 145 / Friday, July 27, 2012 / Proposed Rules 44179 

C. Alternative Methods for Obtaining 

Antimicrobial Use Data 

FDA is seeking public comment on 

alternative methods available to the 

Agency for obtaining additional data 

and information about the extent of 

antimicrobial drug use in foodproducing animals. Specifically, the 

Agency is requesting public input on 

alternative methods for assessing 

antimicrobial use the Agency can 

employ within its existing authority that 

may further support the analysis of 

factors related to the development and 

spread of antimicrobial resistance in 

connection with the use of medically 

important antibiotics in food-producing 

animals. 

III. Comments 

Interested persons may submit to the 

Division of Dockets Management (see 

ADDRESSES) either electronic or written 

comments regarding this document. It is 

only necessary to send one set of 

comments. Identify comments with the 

docket number found in brackets in the 

heading of this document. Received 

comments may be seen in the Division 

of Dockets Management between 9 a.m. 

and 4 p.m., Monday through Friday. 

This advanced notice of proposed 

rulemaking is issued under section 512 

of the FD&C Act (21 U.S.C. 360b) and 

under the authority of the 

Commissioner of Food and Drugs. 

IV. References 

The following references have been 

placed on display in the Division of 

Dockets Management (see ADDRESSES) 

and may be seen by interested persons 

between 9 a.m. and 4 p.m., Monday 

through Friday. (FDA has verified the 

Web site address, but we are not 

responsible for any subsequent changes 

to the Web site after this document 

publishes in the Federal Register.) 

1. U.S. General Accounting Office, 

‘‘Antibiotic Resistance: Agencies Have Made 

Limited Progress Addressing Antibiotic Use 

in Animals,’’ GAO–11–801, Washington, DC, 

General Accounting Office, 2011 (http:// 

www.gao.gov/new.items/d11801.pdf). 

2. Guidance for Industry #209, entitled 

‘‘The Judicious Use of Medically Important 

Antimicrobial Drugs in Food-Producing 

Animals’’ (http://www.fda.gov/ 

AnimalVeterinary/ 

GuidanceComplianceEnforcement/ 

GuidanceforIndustry/default.htm). 

Dated: June 29, 2012. 

Leslie Kux, 

Assistant Commissioner for Policy. 

[FR Doc. 2012–18366 Filed 7–26–12; 8:45 am] 

BILLING CODE 4160–01–P 

LIBRARY OF CONGRESS 

Copyright Office 

37 CFR Parts 201 and 210 

[Docket No. 2012–7] 

Mechanical and Digital Phonorecord 

Delivery Compulsory License 

AGENCY: Copyright Office, Library of 

Congress. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Copyright Office of the 

Library of Congress is proposing to 

amend its regulations for reporting 

Monthly and Annual Statements of 

Account for the making and distribution 

of phonorecords under the compulsory 

license, 17 U.S.C. 115, to bring the 

regulations up to date to reflect recent 

and pending rate determinations by the 

Copyright Royalty Judges, which among 

other things provide new rates for 

limited downloads, interactive 

streaming and incidental digital 

phonorecord deliveries, and to 

harmonize these reporting requirements 

with the existing regulations for 

reporting the making and distribution of 

physical phonorecords, permanent 

downloads and ringtones. 

DATES: Comments are due no later than 

September 25, 2012. Reply comments 

are due October 25, 2012. 

ADDRESSES: The Copyright Office 

strongly prefers that comments be 

submitted electronically. A comment 

submission page is posted on the 

Copyright Office Web site at http:// 

www.copyright.gov/docs/section115/ 

soa/comments/. The Web site interface 

requires submitters to complete a form 

specifying name and other required 

information, and to upload comments as 

an attachment. To meet accessibility 

standards, all comments must be 

uploaded in a single file in either the 

Adobe Portable Document File (PDF) 

format that contains searchable, 

accessible text (not an image); Microsoft 

Word; WordPerfect; Rich Text Format 

(RTF); or ASCII text file format (not a 

scanned document). The maximum file 

size is 6 megabytes (MB). The name of 

the submitter and organization should 

appear on both the form and the face of 

the comments. All comments will be 

posted publicly on the Copyright Office 

Web site exactly as they are received, 

along with names and, if provided, 

organizations. If electronic submission 

of comments is not feasible, please 

contact the Copyright Office at (202) 

707–XXXX for special instructions. 

FOR FURTHER INFORMATION CONTACT: 

Tanya Sandros, Deputy General 

Counsel, or Stephen Ruwe, Attorney 

Advisor, Office of the General Counsel, 

PO Box 70400, Washington, DC 20024– 

0400 Telephone: (202) 707–1673. 

Telefax: (202) 252–3423. 

SUPPLEMENTARY INFORMATION: 

Background 

Section 115 of the Copyright Act 

provides a compulsory license for 

reproducing and distributing 

phonorecords of a musical work. The 

mechanical license limits the exclusive 

rights granted to copyright owners by 

enabling anyone to make a phonorecord 

of an eligible musical work for the 

purpose of distributing it to the public 

for private use. 

The mechanical license may be used 

once phonorecords of a nondramatic 

musical work have been distributed to 

the public in the United States under 

the authority of the copyright owner. In 

order to legally use the mechanical 

license, the licensee has to comply with 

the requirements in the statute and pay 

a royalty fee to the copyright owner. The 

mechanical license has its limitations; it 

is only available to make and distribute 

phonorecords of a musical work and it 

does not allow the licensee to reproduce 

and distribute another’s sound 

recording, or change the ‘‘basic melody 

or fundamental character of the work.’’ 

17 U.S.C. 115(a)(2). 

The mechanical license was 

established in the 1909 Copyright Act as 

the first compulsory license in United 

States copyright law. Congress created 

the license because it wanted to make 

musical compositions available for 

public use, prevent monopoly, and at 

the same time ensure that compensation 

is provided to copyright owners. The 

first mechanical license was established 

in response to the 1908 Supreme Court 

holding in White-Smith Music 

Publishing Co. v. Apollo Co., 209 U.S. 

1 (1908). The Court decided that piano 

rolls were not considered ‘copies’ of a 

musical work because they did not 

contain a system of notation that could 

be read. Instead, the Court held they 

were merely mechanical reproductions 

made for the purpose of performing 

music. This decision prompted 

Congress to extend copyright protection 

to include the right to make mechanical 

devices which embody the musical 

work. H.R. Rep. No. 60–2222, at 9 

(1909). However, Congress was 

concerned that extending the right of 

reproduction to include mechanical 

devices like piano rolls would enable a 

cartel of music publishers to exercise 

monopoly power over the recording of 

music to the possible detriment of the 

copyright owners of the musical work. 

To ensure a balance, Congress created 


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the first compulsory license in 1909 to 

allow anyone to ‘‘cover’’ (i.e. make a 

new recording of) the musical work 

once a copyright owner made or 

authorized a recording of his or her 

musical work, as long as the licensee 

adhered to the terms of the license and 

paid the established royalty to the 

copyright owner. 

Whether to retain the compulsory 

license was a key issue during the 

discussions on the general revision of 

the copyright law in the 1960s. The 

outcome of this review was the decision 

to retain the license based on a finding 

that ‘‘a compulsory licensing system is 

still warranted as a condition for the 

rights of reproducing and distributing 

phonorecords of copyrighted music.’’ 

H.R. Rep. No. 83, at 66–67 (1967). In the 

Copyright Act of 1976, Congress 

reaffirmed the compulsory license and 

directed the Copyright Office to 

establish terms and regulations for the 

filing of Notices of Intention to Obtain 

a Compulsory License and for reporting 

Monthly and Annual Statements of 

Account. 17 U.S.C. 115(b)(1) and (c)(5). 

These regulations can now be found 

within 37 CFR 201.18 and 201.19. 

Congress again amended the 

mechanical license in 1995 when 

Congress passed the Digital Performance 

Rights in Sound Recordings Act 

(‘‘DPRA’’). This Act amended section 

115 to address the effects of new 

technology on copyrighted works. DPRA 

had two main purposes: (1) To ensure 

that recording artists and record 

companies will be protected as new 

technologies affect the way in which 

their creative works are used, and (2) to 

create fair and efficient licensing 

mechanisms that address the complex 

issues facing copyright owners and 

copyright users as a result of the rapid 

growth of digital audio services. 

Specifically, DPRA amended the 

section 115 compulsory license to 

include the ability to distribute a 

phonorecord through digital 

transmission, i.e., as a ‘‘digital 

phonorecord delivery.’’ The Copyright 

Act defines a ‘‘digital phonorecord 

delivery’’ in relevant part as ‘‘each 

individual delivery of a phonorecord by 

digital transmission of a sound 

recording which results in a specifically 

identifiable reproduction by or for any 

transmission recipient of a phonorecord 

of that sound recording.’’ 17 U.S.C. 

115(d). 

Since passage of the Copyright 

Royalty and Distribution Reform Act of 

2003, the rates and terms for making 

and distributing phonorecords under 

the compulsory license have been 

established by the Copyright Royalty 

Judges. On January 9, 2006 the 

Copyright Royalty Judges published a 

Notice announcing commencement of a 

proceeding to determine rates and terms 

due under the compulsory license. The 

Copyright Royalty Judges concluded 

this proceeding in 2009. The new rates 

maintained a flat penny rate for the 

making and distribution of physical 

phonorecords, permanent digital 

downloads and ringtones. However, the 

2009 determination adopting new rates 

for the section 115 compulsory license 

included a new definition for ringtones 

and it set forth more complex methods 

for calculating the royalty for limited 

downloads, interactive streaming, and 

incidental digital phonorecord 

deliveries, which included a multi-step 

process and specifications for five 

different types of services. Final 

Determination of Rates and Terms of the 

Copyright Royalty Board, 2006–3 CRB 

DPRA (74 FR 4510, January 26, 2009, 

amended 74 FR 6832, February 11, 

2009). The Copyright Royalty Judges are 

also in the final stages of adopting new 

rates and terms for the next licensing 

term for these and other new services, 

including limited offerings, mixed 

service bundles, paid locker services 

and purchased content locker services. 

Proposed rule, Adjustment of 

Determination of Compulsory License 

Rates for Mechanical and Digital 

Phonorecords, 77 FR 29259, (May 17, 

2012). The new proposed rates are based 

upon the same basic methodology 

adopted in the last rate setting 

proceeding. 

The existing regulations addressing 

Statements of Account are designed to 

address flat penny rates, such as those 

that are still applicable for the making 

and distribution of physical 

phonorecords, permanent digital 

downloads and ringtones. However, the 

current regulations do not specifically 

accommodate the more complex 

methods for calculating the royalty for 

limited downloads, interactive 

streaming, incidental digital 

phonorecord deliveries, or the new 

services identified in the Copyright 

Royalty Judge’s May 17, 2012 Notice of 

Proposed Rulemaking. A group of 

industry stakeholders comprised of 

Recording Industry Association of 

America, Inc., National Music 

Publishers Association, Songwriters 

Guild of America, Digital Media 

Association, Music Reports, Inc., 

RightsFlow, Inc., and American 

Association of Independent Music 

(collectively ‘‘Stakeholders’’) expressed 

their concern with this state of affairs. 

Following a number of meetings with 

the Copyright Office, the Stakeholders 

offered proposed solutions to a number 

of issues for which there was general 

industry-wide agreement. (Letter from 

Stakeholders to Copyright Office, dated 

April 30, 2010). 

In light of the changes to the rate 

structure for use of the license and the 

Stakeholders’ expressed concerns, the 

Office is initiating this public notice and 

comment proceeding to amend its 

regulations governing the filing of 

Statements of Account in order to 

incorporate specific reporting 

regulations for the making and 

distribution of these new digital 

phonorecord formats under the new rate 

structure established by the Copyright 

Royalty Judges for these configurations 

in the Final Determination of Rates and 

Terms of the Copyright Royalty Board, 

2006–3 CRB DPRA, and the proposed 

new rates and terms for the next 

licensing period. 

The Copyright Office is acting under 

the authority set forth in 17 U.S.C. 

115(c)(5), which grants the Copyright 

Office authority to issue regulations 

regarding Statements of Account. ‘‘Each 

monthly payment shall be made under 

oath and shall comply with 

requirements that the Register of 

Copyrights shall prescribe by regulation. 

The Register shall also prescribe 

regulations under which detailed 

cumulative annual statements of 

account, certified by a certified public 

accountant, shall be filed for every 

compulsory license under this section. 

The regulations covering both the 

monthly and the annual statements of 

account shall prescribe the form, 

content, and manner of certification 

with respect to the number of records 

distributed.’’ 17 U.S.C. 115(c)(5). 

Specifically, the Copyright Office 

proposes the creation of a new Part 210 

in title 37 of the Code of Federal 

Regulations for the regulations 

governing use of the compulsory 

license. Subpart A will be reserved for 

regulations governing the filing of 

Notices of Intention to Use the 

Compulsory License. These regulations, 

currently in § 201.18, are to be 

incorporated into Subpart A once the 

Office concludes its ongoing rulemaking 

proceeding concerning the electronic 

submission of such notices with the 

Office. See 77 FR 31327 (May 25, 2012). 

Subparts B and C will contain Statement 

of Account provisions for reporting 

royalties for the making and distribution 

of phonorecords. The Statement of 

Account provisions in § 201.19 are 

currently based on the penny rate 

royalty formula for physical 

phonorecords and permanent digital 

phonorecord deliveries. As the a penny 

rate for this type of licensed activity 

continues under the existing and 


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proposed rates the Statement of Account 

provisions in § 201.19 are incorporated 

into proposed Subpart B of Part 210 

with only minor amendments, as 

referenced herein. Subpart C, on the 

other hand, includes new proposed 

regulations modeled on the current 

regulations in § 201.19 and are designed 

to specifically accommodate the new 

rate structure for limited downloads, 

interactive streaming, incidental digital 

phonorecord deliveries, and the 

proposed new services. Adoption of 

regulatory amendments specific to the 

proposed rates and terms for limited 

offerings, mixed service bundles, music 

bundles, paid locker services and 

purchased content locker services set 

forth in proposed Subpart C are 

dependent upon final action by the 

Copyright Royalty Judges. Should the 

Copyright Royalty Judges not adopt the 

proposed rates and terms for these new 

services, alternative regulatory changes 

may be adopted in the final rules to 

cover these services. 

In large part, the proposed regulations 

incorporate by reference the 

methodology adopted by the Copyright 

Royalty Judges in their 2009 

determination and mirrored in the 

proposed regulations adopting new rates 

and terms for the upcoming licensing 

period. Nevertheless, the Office has 

identified a number of issues associated 

with the new rate structure that require 

careful consideration before adoption of 

final regulations. Prior to initiating this 

proceeding, the Office consulted with 

interested parties on these points for the 

purpose of understanding the extent of 

the issues and the need for specific 

regulations to address these points. Each 

of these points and proposed 

amendments to the regulations are 

discussed herein in light of these initial 

discussions. The Office seeks public 

comment on the proposed changes and 

whether additional changes are needed. 

1. Issues Presented Involving 

Calculations of Royalties 

A. Royalties for Public Performances of 

Musical Works That Are Applicable to 

the Licensed Activities 

Calculation of the royalties for the 

making and distribution of limited 

DPDs, interactive streams, incidental 

DPDs and the proposed new services 

allows the licensee to deduct royalties 

due for public performances of musical 

works that are applicable to the licensed 

activities. 37 CFR 385.12(b)(2) and 

proposed 385.22(b)(2). The Office is 

aware that in some instances these 

values are unknown, and that the 

regulations need to address the 

appropriate method for accounting for 

this unknown element in the Statements 

of Account. Preliminary input from the 

Stakeholders has indicated general 

agreement that when the amount of 

public performance royalties to be 

deducted pursuant to 37 CFR 

385.12(b)(2) and proposed 385.22(b)(2) 

is not known (e.g., because neither a 

final nor an interim rate has yet been 

determined), a licensee may compute 

the public performance royalty based on 

a reasonable estimate of the expected 

final royalties made in accordance with 

U.S. Generally Accepted Accounting 

Principles (GAAP) and that the 

aggregate amount of public performance 

royalties then sought from the service by 

performance rights societies may be 

deducted from the royalties owed for 

use of the section 115 compulsory 

license. 

The Office also observes that there 

may be cases in which there will be 

interim royalties and that therefore it is 

prudent to allow licensees to compute 

the public performance royalty based on 

the royalties that have been established 

on an interim basis. In addition, the 

Stakeholders generally agree that an 

adjustment to account for the 

determination of the service’s aggregate 

final public performance royalties then 

would be made in an amended Annual 

Statement of Account for the year in 

which a service’s aggregate final public 

performance royalty rate is determined. 

In the past, the Copyright Office has 

applied GAAP when estimates are 

required to complete a formula under 

section 115. GAAP was first applied to 

the section 115 compulsory license in 

1978 when the Office adopted its Final 

Regulations of Compulsory License for 

Making and Distributing Phonorecords, 

45 FR 79038 (November 28, 1980). In 

taking this approach, the Office noted 

that Congress’s intention was to have 

some assurance that record companies 

would not manipulate their statements 

when allowing an estimate to be made 

in the reserve calculation. ‘‘The Office 

believes that the statutory requirement 

for an annual CPA audit, coupled with 

our regulatory requirements including 

the application of ‘generally accepted 

accounting principles’ (GAAP) to the 

recognition of revenue from the sale of 

phonorecords, should go a long way 

toward assuring copyright owners 

payment of all monies to which they are 

entitled—that is, statutory royalties for 

all phonorecords shipped, minus 

phonorecords returned within a 

reasonable time-frame.’’ 45 FR 79038. 

Additionally the regulations stated, 

‘‘The Copyright Office believes that the 

application of GAAP will reduce the 

likelihood of unusually high reserves, 

thereby minimizing the possibility for 

losses of earned interest.’’ Id. 

Currently, GAAP applies to several 

different provisions in the section 115 

regulations adopted by the Copyright 

Royalty Judges. Their regulations state 

that GAAP should be applied to the 

calculations of service revenue. 37 CFR 

385.11; also see proposed 37 CFR 

385.21. Additionally, GAAP is applied 

to situations where the licensee 

calculates an applicable percentage 

based on offering type. 37 CFR 385.13(b) 

and (c); also see, e.g., proposed 37 CFR 

385.23(b). Finally in 37 CFR 

201.19(f)(6)(ii) of the Office’s 

regulations, GAAP is applied not only to 

the reserve calculation but also to the 

certification statement, which states that 

the auditing CPA will review the 

statements in accordance with GAAP. 

In light of the history that GAAP has 

had in the administration of the 

compulsory license, the proposed 

regulations adopt this approach. The 

Copyright Office would like comments 

on whether to apply GAAP for the 

estimate of the public performance 

rights royalty calculation in the absence 

of an interim or final rate; and 

alternatively if GAAP is not the right 

approach, identification of an 

alternative methodology. 

B. Application of Negative Reserve 

Balances in Calculating Payment 

Amounts 

Under the existing Statement of 

Account regulations designed to address 

flat penny rates, licensees are permitted 

to account for negative reserve balances 

in calculating their royalty payments. 

By way of explanation, a negative 

reserve balance exists when physical 

phonorecords are returned to a 

compulsory licensee after the 

corresponding reserves for returns, and 

all other eligible reserves, have been 

eliminated. The result is that the 

compulsory licensee has paid royalties 

for the returned physical phonorecords 

and can include that amount as a credit 

in calculating the royalty payment for 

the current accounting period. While 

the Stakeholders agree that a licensee is 

permitted to establish reserves based 

only on its shipments of physical 

phonorecords, they disagree as to 

whether a compulsory licensee is and 

should be permitted to apply a negative 

reserve balance to future DPD 

distributions. 

Copyright owners have stated that 

negative reserve balances only apply to 

physical phonorecords. In doing so, 

they have pointed out that the existing 

regulations specifically state that ‘‘[t]o 

the extent that the terms reserve, credit 

and return appear in this section, such 


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provisions shall not apply to digital 

phonorecord deliveries.’’ 37 CFR 

201.19(a)(9). Copyright owners have 

also argued that it is bad policy to allow 

licensees to apply royalties associated 

with negative reserve balances against 

royalties due for digital uses as it would 

encourage the practice of overshipping. 

Record labels have stated that they 

understand that negative reserve 

balances cannot be established for DPD 

distributions. Nevertheless, they 

contend that the current regulations 

clearly allow credits for negative reserve 

balances created by returns of physical 

phonorecords to be applied to royalties 

due for digital uses. They have argued 

that there is no justification for 

requiring a compulsory licensee to pay 

royalties on new DPD distributions 

when, due to returns of physical 

phonorecords, it has overpaid the same 

copyright owner in a previous period for 

these same physical phonorecords that 

have not been distributed within the 

meaning of 17 U.S.C. 115(c)(2). They 

have added that it is absurd to think that 

record companies would incur 

additional costs to ‘‘overship’’ products. 

While the Office has not proposed an 

amendment to allow licensees to apply 

a credit for a negative reserve balance to 

royalties due for digital uses, it would 

like to receive comments on whether 

there is statutory authority for allowing 

the application of a credit for negative 

reserve balances to digital phonorecord 

deliveries. Assuming there is statutory 

authority to allow the application of 

credits for negative reserve balances to 

the ‘‘net balance’’ owed, are there 

reasons to limit the application of 

credits for negative reserve balances to 

physical phonorecords? If licensees 

should be allowed to apply credits for 

negative reserve balances to royalties 

due for digital uses, should the credits 

for negative reserve balances be 

calculated on a per work basis or should 

the regulations permit the application of 

credits for negative reserve balances to 

be cross-collaterialized to royalties due 

to a particular copyright owner for 

different works? And, in what form 

should such regulations be established? 

C. Degree of Rounding for Decimal 

Points 

For purposes of consistency, the 

Copyright Office would like to address 

the degree of rounding appropriate 

when computing the royalty in the 

Statements of Account. It appears that 

the appropriate per work royalty 

allocation, in terms of the number of 

decimal places, is undetermined. 

Fractions of a penny can quickly add up 

to substantial sums of money if the 

volume of transactions is high. 

Consequently, the Office requests 

suggestions as to the degree of rounding 

that would be appropriate for reporting 

royalties associated with limited 

downloads, interactive streams, and 

incidental digital phonorecord 

deliveries made under the compulsory 

license. In considering the appropriate 

level for reporting royalty fees, the 

Office notes that past rates for the public 

performance of sound recordings and 

for ephemeral recordings have been set 

out to between four and six decimal 

places based upon a fraction of a dollar 

rate. See 17 CFR 380.3. Consideration 

should be given to whether a variance 

can be allowed based on the system of 

accounting, or whether reporting to a 

certain decimal place should be 

completely uniform. 

2. Issues Presented Involving Method of 

Payment and Delivery of Royalties 

A. Electronic Payment 

The current regulations for section 

115 provide that the Statements of 

Account shall be ‘‘served on the 

copyright owner or the agent with 

authority to receive Monthly Statements 

of Account on behalf of the copyright 

owner to whom or which it is directed, 

together with the total royalty for the 

month covered by the Monthly 

Statement, by mail or by reputable 

courier service.’’ 37 CFR 201.19(e)(7)(i). 

The Stakeholders have informed the 

Office that they agree in principle that 

a compulsory licensee should be able to 

make royalty payments by electronic 

funds transfer if the copyright owner 

and compulsory licensee (or its agent) 

so agree, regardless of the means of 

delivery of Statements of Account. They 

also agreed that when both the Monthly 

Statement of Account and payment are 

sent by mail or courier service, they 

should be sent together; otherwise they 

should be sent contemporaneously. 

In light of the general agreement by 

the Stakeholders regarding payment, the 

Office proposes to maintain the current 

default requirement that payment be 

sent by mail or courier service. The 

Office also proposes to allow copyright 

owners and licensees to agree to 

alternatives to the current default 

methods of payment through mail or 

courier service. Finally, the Office 

proposes to maintain the requirement 

that when both the Monthly Statement 

of Account and payment are sent by 

mail or courier service, they should be 

sent together and that otherwise they 

should be sent contemporaneously. The 

Copyright Office requests comments on 

these proposals. 

B. Electronic Statements of Account 

The Stakeholders generally support 

the idea that the Office’s section 115 

regulations should permit electronic 

delivery of Statements of Account. 

However, the Stakeholders were not 

able to agree on the circumstances, if 

any, in which it should be mandatory 

for compulsory licensees to provide, 

and copyright owners to accept, 

Statements of Account by electronic 

means. 

Copyright owners who have 

expressed an opinion to the Office on 

this topic support mandatory electronic 

reporting as a general default rule for 

both copyright owners and compulsory 

licensees. They would allow however 

that if any copyright owner, or its agent, 

does not, in the ordinary course of 

operating its business, conduct business 

via the internet, or if a compulsory 

licensee or its agent does not make a 

printable and electronically 

downloadable version available by 

posting such Statements of Account to 

a password-protected internet account 

created for the copyright owner or its 

agent, the copyright owner or its agent 

may request, and the compulsory 

licensee shall provide, paper Statements 

of Account. 

Representatives of digital music 

services (DiMA) and licensing services 

(MRI, RightsFlow) support the default 

rule proposed by copyright owners. 

However, they take no position as to the 

need for electronic reporting between 

record companies and publishers, 

noting that consideration should be 

made for the unique historical business 

practices between record labels and 

publishers. 

Record labels believe that the Office 

should not require record companies 

doing their own reporting to transition 

to electronic reporting on any particular 

timetable. They pointed out that in 

cases where neither the record company 

nor the publisher has felt a need to 

abandon paper-based processes that 

have worked for decades, forcing such 

a transition would be a massive and 

highly disruptive process. As such they 

urge that electronic reporting should be 

a permissible option, unless the 

copyright owner indicates that it would 

rather stick with paper reporting. 

The Office is not persuaded that it is 

wise to compel copyright owners to 

accept and licensees to serve Statements 

of Account via an electronic 

transmission as a default rule. The 

Office is concerned that, as a practical 

matter, many copyright owners may not 

be equipped to accept Statements of 

Account in this manner. As such, the 

Office proposes to maintain the current 


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requirement that Statements of Account 

be sent by mail or courier service as a 

default rule. 

However, the Office does understand 

that in many cases a copyright owner 

may reasonably wish to compel certain 

licensees, who submit voluminous 

Statements of Account, to serve them in 

electronic format. The Office notes that 

the regulations for filing Notices of 

Intention to use the compulsory license 

allows for filing the Notice 

electronically and for copyright owners 

to require submission of Notices of 

Intention in an electronic format in the 

case where the Notice covers more than 

50 musical works. 37 CFR 201.18(f)(6). 

Section 201.18(a)(7) also allows 

copyright owners to offer alternative 

means for service, including by means 

of electronic transmission. The Office 

has adopted these rules to increase 

efficiencies for both the copyright 

owners and the licensees and has 

provided an exception to the 

requirement for a handwritten signature 

when service is made electronically. 

Because these rules appear to be 

working well and offer flexibility for 

electronic submissions of Notices, the 

Office proposes adopting parallel 

provisions for filing a Statement of 

Account, whereby copyright owners 

may require a licensee submitting a 

Statement of Account covering more 

than 50 works to provide the copyright 

owner with an electronic copy of the 

Statement of Account, and whereby a 

copyright owner may make known its 

willingness to accept Statements of 

Account and payment by means of 

electronic transmission. Furthermore, 

the Office proposes an exception to the 

requirement for a handwritten signature 

when service is made electronically, 

and a new provision for retention of 

records that support certification of 

Statements of Account that are served 

electronically. The Copyright Office 

requests comments on these proposals 

regarding submission of Statements of 

Account in electronic format and by 

electronic transmission. Additionally, 

the Office would like to know whether 

there are copyright owners that prefer 

paper statements and to what extent 

digital reporting has become the normal 

course of business. 

C. Minimum Amount for Payment 

The royalty formula is based on a 

percentage of income or based on the 

number of plays for each work. In some 

cases, either when revenue is small or 

a particular work has not received many 

plays, the royalty owed for payment is 

nominal. The Copyright Office is aware 

that the transactional efforts and costs to 

provide payment can, in some 

situations, be more burdensome for both 

copyright owners and licensees than the 

actual value of the payment. 

It has been suggested that a minimum 

Monthly Statement of Account 

threshold should be met before payment 

is due in order to make processing 

payment for the Statements of Account 

more manageable. The Stakeholders 

have suggested that a royalty amount of 

at least 50 dollars should be owed to a 

copyright owner before payments are 

made, and Monthly Statements of 

Account are required, unless the 

copyright owner requests otherwise. 

The question is whether this proposal 

is permissible under the statute. The 

statute states that ‘‘royalty payments 

shall be made on or before the 20th of 

each month and shall include all 

royalties for the month next 

proceeding’’ 17 U.S.C. 115(c)(5). This 

language seems to preclude setting a 

minimum amount for payment, and to 

date the Office has not adopted 

regulations to defer de minimis payment 

nor has any party raised this issue. 

Interest, however, does exist today to 

consider regulations that would defer 

payment of royalties until the amount 

owed reached an established level as a 

way to avoid overly burdensome costs 

for making payments valued at less than 

the cost of making the payment. The 

Copyright Office requests comments on 

whether it has authority to adopt such 

a regulation and whether (and if so, why 

and how) the minimum payment issue 

should be addressed. 

3. Issues Presented Involving Reporting 

on Statements of Account 

A. Promotional Digital Phonorecord 

Deliveries 

Promotional Digital Phonorecord 

Deliveries are often an important tool 

for record labels and services to attract 

new listeners, create awareness about a 

particular artist, and increase plays. The 

regulation adopted by the Copyright 

Royalty Judges in 37 CFR 385.14 

establishes a royalty rate of zero for 

certain promotional digital phonorecord 

deliveries when they are offered for free 

trial periods to promote the sale or other 

paid use of sound recordings. Also see 

proposed 37 CFR 385.24, Free Trial 

Periods. Even though no royalty is owed 

in these circumstances, it is unclear 

whether licensees should give a full 

accounting of all the phonorecords 

made under the license in the Statement 

of Account. The Stakeholders feel that 

it is unnecessary to report promotional 

digital phonorecord deliveries in the 

Statements of Account. 

Nevertheless, the proposed 

regulations require a licensee to report 

all phonorecords made and distributed 

under the section 115 license including 

digital promotional deliveries. This 

requirement would not seem to be a 

hardship on the licensees in light of the 

proposed recordkeeping requirement for 

the new trial periods applicable to 

limited offerings, mixed service 

bundles, music bundles, paid locker 

services and purchased content locker 

services which requires retention of 

complete and accurate records of the 

relevant authorization, identification of 

each sound recording of a musical work 

made available through the free trial 

period, the activity involved, and the 

number of plays and downloads for 

each recording. See 77 FR 29259, 29269 

(May 17, 2012) (proposing new 37 CFR 

385.24(a)(4)(i), (b) and (c). 

The Copyright Office asks for 

comments on whether the statute 

requires that Statements of Account 

contain play information on 

promotional digital phonorecord 

deliveries. Specifically, the Office asks 

for comments that address the Register’s 

conclusion that ‘‘[t]here is no statutory 

authority for an exception to [the 

section 115(c)(5)] requirement for 

certain types of ‘phonorecords.’ ’’ 

Review of Copyright Royalty Judges 

Determination 74 FR 4537, 4543 

(January 26, 2009). If the conclusion is 

that there is no statutory requirement, 

comments should address whether 

digital phonorecords offered at a 

promotional rate or for a free trial period 

should be reported and with what 

frequency, e.g., monthly or annually. 

B. Reporting the Identification of Third 

Party Licensees 

While the Statement of Account 

provisions require detailed information 

as to the number of plays, neither the 

current Statement of Account provisions 

nor the proposed regulations require 

licensees to account for the location of 

the place of origin of the plays. The 

Copyright Office is aware that in many 

instances third parties make and 

distribute the phonorecords under the 

authority of the licensee and that 

different opinions exist as to whether 

the regulations should require the 

identification of these parties. 

Copyright Owner stakeholders favor 

amending the regulations to require 

compulsory licensees to report on the 

number of Digital Phonorecord 

Deliveries made by each third party 

service operating under their authority. 

They believe that this information is 

necessarily available to compulsory 

licensees who need to rely on this 

information in order to assess whether 

their accounting statements are 

accurate. Copyright owners assert that 


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such information should not be kept 

from them and that they should be able 

to use the information to assess the 

usage and payment for their works. 

Furthermore, since Digital Phonorecord 

Deliveries are tracked electronically, 

they feel it is reasonable and feasible for 

record companies to provide this 

information, and believe it will ensure 

transparency in the digital environment. 

Licensee stakeholders have a different 

view. They note that identifying 

distributors has never been required, 

and nothing in the Copyright Royalty 

Judges’ determination requires imposing 

such new requirements for Digital 

Phonorecord Delivery configurations 

other than interactive streams and 

limited downloads. Moreover, they 

maintain that the regulations should not 

be amended to require this information 

because it would impose substantial 

costs on the licensees to provide 

unnecessary information since the 

Statement of Account provisions require 

an annual audit by a CPA to ensure 

reliability. 

MRI, an independent licensing agent, 

has informed the Office that it has the 

ability to report the identification of the 

distributor, except where licensees are 

unable to supply the information to 

them and would support an agreement 

among the Stakeholders requiring the 

identification of third party distributors 

on statements when those statements 

are prepared by common agents. It did, 

however, have some reservations about 

an absolute requirement and suggested 

that where its principals may be unable 

to provide this information, some 

leniency should be given. This may be 

the case where distribution statements 

through third party distributors/ 

aggregators fail to provide information 

to the record companies, or due to other 

bona fide technological limitations. 

The Copyright Office would like 

comments concerning the views set 

forth above and how the alternatives 

could potentially affect copyright 

owners and licensees. To what degree 

would these requirements burden or 

benefit licensees and copyright owners? 

C. Certification Language 

The certification statement in 37 CFR 

201.19 is meant to provide additional 

assurance to the copyright owner that 

the Statements of Account are reliable 

and truthful. ‘‘The Register shall also 

prescribe regulations under which 

detailed cumulative Annual Statements 

of Account, certified by a certified 

public accountant, shall be filed for 

every compulsory license under this 

section.’’ 17 U.S.C. 115(c)(5). When 17 

U.S.C. 115 was first implemented by 

Congress, the CPA requirement was 

included with the intention of ensuring 

accurate payment to copyright owners. 

Congress, however, recognized that a 

balance was necessary. ‘‘Neither the 

record-keeping nor the CPA audit 

requirements should be so burdensome 

or expensive as to undermine the 

Congressional intention by putting 

compulsory licensing out of the reach of 

record companies.’’ 45 FR at 79039. 

The Office has previously been urged 

to provide that the language of the CPA 

certification required in Annual 

Statements of Account is ‘‘illustrative’’ 

rather than required. The Office 

declined such a course and instead 

required adherence to the existing clear 

and unambiguous statement, which 

fulfills Congress’s purpose in requiring 

certification of the Annual Statement. 

43 FR at 44515–44516. For purposes of 

this proposed rulemaking proceeding, 

the Office has retained the current 

regulations for certifying a Statement of 

Account. Nevertheless, the Copyright 

Office is aware that licensees have 

expressed interest in adopting 

alternative methods of certifying the 

Statement of Account to accommodate 

large volumes of statements and 

welcomes suggestions on modifications 

to the process provided that any 

proposed alternative form of 

certification fits within the statutory 

requirements and complies with the 

original intentions of the CPA 

requirement. The CPA requirement 

should assure that copyright owners 

receive the royalties to which they are 

entitled, but the requirement should not 

burden the licensee to the point that it 

would prevent the compulsory license 

from being a practical option for record 

companies or services. Are there 

alternative certification methods that 

satisfy both goals and should be 

considered by the Office? 

D. Adjustment of Timetables for 

Reporting 

The accounting methodology and 

timetables for reporting overpayments 

or underpayments were originally set 

forth to accommodate the penny rate 

royalty for section 115. Given the 

increased complexity of calculating 

royalties for interactive streaming, 

limited downloads and the proposed 

new services in the Annual Statement of 

Account, an extension for statutory 

licensees to file their Statements of 

Account appears to be reasonable. 

The Stakeholders’ preliminary input 

indicates a general agreement that an 

extension for the deadline of the Annual 

Statement of Account would be 

appropriate because the calculation of 

interactive streaming/limited download 

royalties, for example, has increased the 

complexity of compiling the statement. 

The Stakeholders suggest extending the 

deadline from three months after the 

close of the licensee’s fiscal year to six 

months after the close of the licensee’s 

fiscal year. See 37 CFR 201.19(f)(7)(i). 

Based on these early discussions, the 

Office proposes amending its 

regulations and adopting the later 

deadline for filing the Annual Statement 

of Account. The Office requests 

comments from the relevant parties as to 

whether this additional time is required 

to create an accurate Statement of 

Account for annual statements. 

E. Service of Statements of Account for 

Periods Prior to Enactment of New 

Regulations 

Pursuant to section 115(c)(5), the 

Office’s existing regulations require 

licensees to serve Monthly and Annual 

Statements of Account for the making 

and distribution of phonorecords. As 

explained in the introduction, the 

current regulations in § 201.19 are an ill 

fit for reporting royalties for the new 

digital phonorecord delivery 

configurations identified in 37 CFR 

subpart B and proposed new Subpart C 

of Part 385 because of the change in the 

rate structure. Nevertheless, the Office is 

required to establish regulations to 

cover these new types of phonorecords, 

including the establishment of dates for 

filing the Statements of Account to 

cover all past reporting periods since 

the establishment of the new rates set 

according to regulations, which took 

effect on March 1, 2009. For that reason, 

the Office is proposing a new regulation 

to address the reporting periods prior to 

the effective date of these regulations. 

Specifically, the proposed regulations 

require that Statements of Account for 

any prior accounting period shall be due 

180 days after the date the regulations 

become effective. This should not be an 

undue burden on the licensees, since as 

a matter of good business practice, 

licensees should have retained the 

necessary records to make these filings 

in accordance with the records retention 

provision the current regulations in 

§ 201.19. 

F. Retention of Records (AKA 

Documentation) 

The existing regulations require 

licensees to keep and retain in their 

possession all records and documents 

necessary and appropriate to support 

fully the information set forth in the 

Annual Statement of Account and in the 

Monthly Statements of Accounts for 

three years from the date of service of 

such statements. The Stakeholders have 

agreed in principle that it would be 

appropriate to extend the general record 


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1When the Copyright Royalty Judges published 

proposed regulations offered by the parties in the 

ongoing proceeding to set new rates and terms for 

use of the section 115 compulsory license, they 

noted that two proposed provisions appeared to 

exceed the scope of the requirements in the 

regulations governing Statements of Account and 

issued under the authority of the Register of 

Copyrights. 77 FR 29259 (May 17, 2012). They 

further noted that authority to issue regulations on 

Statements of Account is ‘‘the exclusive domain of 

the Register.’’ 77 FR at 29261, citing to Division of 

Authority Between the Copyright Royalty Judges 

and the Register of Copyrights under the Section 

115 Statutory License, Final order, Docket No. 

2008–1, 73 FR 48396, 48398 (January 26, 2009). The 

Copyright Office agrees. While the Copyright 

Royalty Judges do not have authority to alter the 

regulations governing the Statement of Accounts, 

the Register recognizes the Stakeholders’ interest in 

making the statements confidential and addresses 

the issue here. Moreover, these proposed 

Statements of Account regulations would require 

the licensees to include all calculations on the 

Statements of Account, as proposed in the rate 

setting regulations published by the Copyright 

Office Judges on May 17, 2012 for public comment. 

retention period from three to five years 

after service of Statements of Account. 

In light of this agreement among the 

Stakeholders, the proposed regulations 

require retention of supporting records 

for five years after service of Statements 

of Account. The proposed amendment 

to this section also addresses situations 

in which it may be necessary to retain 

records even longer in the case where 

public performance rates have not been 

set at the time of filing the Statements 

of Account. To that end, the proposed 

regulation requires retention of records 

for a period of at least five years from 

the date of service of an Annual 

Statement of Account or for a period of 

at least three years from the date the 

relevant public performance royalty fees 

have been set, whichever is longer. 

Comment on this approach is requested. 

G. Harmless Error Provision 

Section 201.19 of the Office’s 

regulations provides detailed 

requirements on how to prepare and file 

a Statement of Account, along with 

specific elements that are to be 

included. This information allows the 

copyright owner to evaluate the 

Statements of Account efficiently and 

aids in ensuring reliability and 

accuracy. Because of the detailed 

requirements in the regulations, 

licensees’ accounting statements may 

contain inadvertent errors. 

In the past, harmless error provisions 

have been adopted in an attempt to 

protect licensees from infringement 

liability and loss of their license for 

inconsequential mistakes. For this 

reason, a harmless error provision was 

included in the 2004 Final Rule on 

Compulsory License for Making and 

Distributing Phonorecords, Including 

Digital Phonorecord Deliveries, 69 FR 

34578, which amended 37 CFR 201.18 

setting forth the requirements for filing 

a Notice of Intention to obtain a 

compulsory license. The intent of the 

harmless error provision with respect to 

a Notice of Intention was to prevent 

licensees from losing the right to use the 

license for errors that did not affect the 

legal sufficiency of the Notice. 66 FR 

45241, 45243. For the Notice of 

Intention provision, the Office further 

observed that it would not have any role 

in resolving the disputes as to whether 

or not an error was actually harmless, 

and instead left these disputes to be 

adjudicated in the courts. Id. 

Interested parties representing both 

copyright owners and licensees have 

suggested that a harmless error 

provision should be included in the 

section 115 regulations. The Copyright 

Office has reached no preliminary 

determination on this point and the 

proposed regulations do not include a 

harmless error provision. However, the 

Copyright Office asks for comments on 

the Office’s authority to include a 

harmless error provision and whether 

such a provision in Statement of 

Account regulations would be useful as 

a way to protect licensees from 

inadvertent errors that do not materially 

affect the adequacy of the information 

provided on the Statement of Account. 

H. Confidentiality Provision 

The Copyright Office observes that the 

Stakeholders’ newly proposed rates for 

the compulsory license included 

provisions requiring that Statements of 

Account submitted to copyright owners 

must be kept confidential. While the 

proposed term illustrates a general 

desire among licensees and licensors for 

maintaining confidentiality of 

information contained in Statements of 

Account, the Copyright Office questions 

the need for the broadly framed 

confidentiality provision in the 

Proposed rule, Adjustment of 

Determination of Compulsory License 

Rates for Mechanical and Digital 

Phonorecords (77 FR 29259, 29262, May 

17, 2012, proposing 37 CFR 385.12(f)).1

The Office notes that the confidentiality 

provision negotiated by the participants 

in the rate proceeding does not, for 

example, accommodate a copyright 

owner’s disclosure in litigation of 

information provided by a licensee. 

Therefore, the Copyright Office asks 

for comments as to what would be the 

appropriate limits to such a 

requirement, as well as on its authority 

to require copyright owners to keep 

information contained in Statements of 

Account confidential. 

Conclusion 

The section 115 compulsory license 

for incidental digital phonorecord 

delivery and interactive streaming 

provides a useful tool for record 

companies and services to further create 

and distribute content through new 

technology. The Office is proposing 

modifications to its regulations that will 

allow copyright owners to receive a full 

and accurate accounting of the various 

types of digital phonorecord deliveries 

that are made under the section 115 

license which are subject to the rates 

and terms adopted under 17 U.S.C. 

Chapter 8. Further comments are invited 

regarding issues relating to this subject 

that have been not addressed today, but 

may be relevant to ensure a better 

system of accounting. 

List of Subjects 

37 CFR Part 201 

Copyright. 

37 CFR Part 210 

Copyright, Phonorecords, Recordings. 

Proposed Regulations 

For the reasons set forth in the 

preamble, the Copyright Office proposes 

amending part 201 and adding part 210 

to Chapter II of Title 37 of the Code of 

Federal Regulations as follows: 

PART 201—GENERAL PROVISIONS 

1. The authority citation for part 201 

continues to read as follows: 

Authority: 17 U.S.C. 702. 

§ 201.19 [Removed and reserved] 

2. Remove and reserve § 201.19. 

3. Add new part 210 to read as 

follows: 

PART 210—COMPULSORY LICENSE 

FOR MAKING AND DISTRIBUTING 

PHYSICAL AND DIGITAL 

PHONORECORDS OF NONDRAMATIC 

MUSICAL WORKS 

Subpart A—[Reserved] 

Sec. 

210.1–210.10 [Reserved] 

Subpart B—Royalties and Statements of 

Account Under Compulsory License for 

Physical Phonorecord Deliveries, 

Permanent Digital Downloads and 

Ringtones 

210.11 General. 

210.12 Definitions. 

210.13 Accounting requirements where 

sales revenue is ‘‘recognized.’’ 

210.14 Accounting requirements for 

offsetting phonorecord reserves with 

returned phonorecords. 

210.15 Situations in which a compulsory 

licensee is barred from maintaining 

reserves. 


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210.16 Monthly statements of account. 

210.17 Annual statements of account. 

210.18 Documentation. 

210.19 Timing of filing statements of 

account. 

Subpart C—Royalties and Statements of 

Account Under Compulsory License for 

Interactive Streaming, Limited Downloads 

and Other Digital Phonorecord Delivery 

Services 

210.21 General. 

210.22 Definitions. 

210.23 Monthly statements of account. 

210.24 Annual statements of account. 

210.25 Amended annual statements of 

account. 

210.26 Documentation. 

210.27 Timing of filing statements of 

account. 

Authority: 17 U.S.C. 115, 702. 

Subpart A–[Reserved] 

§§ 210.1–210.10 [Reserved] 

Subpart B—Royalties and Statements 

of Account Under Compulsory License 

for Physical Phonorecord Deliveries, 

Permanent Digital Downloads and 

Ringtones 

§ 210.11 General. 

This subpart prescribes the rules 

pertaining to the preparation and 

service of Statements of Account 

covering compulsory licenses for the 

making and distribution of 

phonorecords, including by means of a 

digital phonorecord delivery, pursuant 

to 17 U.S.C. 115 and the regulations in 

37 CFR part 385 governing rates and 

terms for use of musical works under 

compulsory license for the making and 

distribution of phonorecords. 

§ 210.12 Definitions. 

As used in this subpart: 

(a) A Monthly Statement of Account is 

a statement accompanying monthly 

royalty payments identified in 17 U.S.C. 

115(c)(5), as amended by Public Law 

94–553, and required by that section to 

be made under the compulsory license 

to make and distribute phonorecords of 

nondramatic musical works, including 

by means of a digital phonorecord 

delivery. 

(b) An Annual Statement of Account 

is a statement identified in 17 U.S.C 

115(c)(5), as amended by Public Law 

94–553, and required by that section to 

be filed for every compulsory license to 

make and distribute phonorecords of 

nondramatic musical works. 

(c) A ‘‘digital phonorecord delivery’’ 

is each individual delivery of a 

phonorecord by digital transmission of 

a sound recording which results in a 

specifically identifiable reproduction by 

or for any transmission recipient of a 

phonorecord of that sound recording, 

regardless of whether the digital 

transmission is also a public 

performance of the sound recording or 

any nondramatic musical work 

embodied therein. The reproduction of 

the phonorecord must be sufficiently 

permanent or stable to permit it to be 

perceived, reproduced, or otherwise 

communicated for a period of more than 

transitory duration. Such a phonorecord 

may be permanent or it may be made 

available to the transmission recipient 

for a limited period of time or for a 

specified number of performances. A 

digital phonorecord delivery includes 

all phonorecords that are made for the 

purpose of making the digital 

phonorecord delivery. 

(d) A ‘‘ringtone’’ means a 

phonorecord of a partial musical work 

distributed as a digital phonorecord 

delivery in a format to be made resident 

on a telecommunications device for use 

to announce the reception of an 

incoming telephone call or other 

communications or message or to alert 

the receiver to the fact that there is a 

communication or message. 

(e) The term copyright owner, in the 

case of any work having more than one 

copyright owner, means any one of the 

co-owners. 

(f) The service of a Statement of 

Account on a copyright owner under 

this subpart may be accomplished by 

means of service on either the copyright 

owner or an agent of the copyright 

owner with authority to receive 

Statements of Account on behalf of the 

copyright owner. In the case where the 

work has more than one copyright 

owner, the service of the Statement of 

Account on one co-owner or upon an 

agent of one of the co-owners shall be 

sufficient with respect to all co-owners. 

(g) A compulsory licensee is a person 

or entity exercising the compulsory 

license to make and distribute 

phonorecords of nondramatic musical 

works as provided under 17 U.S.C. 115, 

including by means of a digital 

phonorecord delivery. 

(h) A digital phonorecord delivery 

shall be treated as a type of phonorecord 

configuration, and a digital phonorecord 

delivery shall be treated as a 

phonorecord, with the following 

clarifications: 

(1) A digital phonorecord delivery 

shall be treated as a phonorecord made 

and distributed on the date the 

phonorecord is digitally transmitted; 

and 

(2) A digital phonorecord delivery 

shall be treated as having been 

voluntarily distributed and relinquished 

from possession, and a compulsory 

licensee shall be treated as having 

permanently parted with possession of a 

digital phonorecord delivery, on the 

date that the phonorecord is digitally 

transmitted. 

(i) Except as provided in paragraph 

(h) of this section, a phonorecord is 

considered voluntarily distributed if the 

compulsory licensee has voluntarily and 

permanently parted with possession of 

the phonorecord. For this purpose, and 

subject to the provisions of paragraph 

(d) of this section, a compulsory 

licensee shall be considered to have 

‘‘permanently parted with possession’’ 

of a phonorecord made under the 

license: 

(1) In the case of phonorecords 

relinquished from possession for 

purposes other than sale, at the time at 

which the compulsory licensee actually 

first parts with possession; 

(2) In the case of phonorecords 

relinquished from possession for 

purposes of sale without a privilege of 

returning unsold phonorecords for 

credit or exchange, at the time at which 

the compulsory licensee actually first 

parts with possession; 

(3) In the case of phonorecords 

relinquished from possession for 

purposes of sale accompanied by a 

privilege of returning unsold 

phonorecords for credit or exchange: 

(i) At the time when revenue from a 

sale of the phonorecord is ‘‘recognized’’ 

by the compulsory licensee; or 

(ii) Nine months from the month in 

which the compulsory licensee actually 

first parted with possession, whichever 

occurs first. For these purposes, a 

compulsory licensee shall be considered 

to ‘‘recognize’’ revenue from the sale of 

a phonorecord when sales revenue 

would be recognized in accordance with 

generally accepted accounting 

principles as expressed by the American 

Institute of Certified Public Accountants 

or the Financial Accounting Standards 

Board, whichever would cause sales 

revenue to be recognized first. 

(j) To the extent that the terms reserve, 

credit and return appear in this section, 

such provisions shall not apply to 

digital phonorecord deliveries. 

(k) A phonorecord reserve comprises 

the number of phonorecords, if any, that 

have been relinquished from possession 

for purposes of sale in a given month 

accompanied by a privilege of return, as 

described in paragraph (i)(3) of this 

section, and that have not been 

considered voluntarily distributed 

during the month in which the 

compulsory licensee actually first 

parted with their possession. The initial 

number of phonorecords comprising a 

phonorecord reserve shall be 

determined in accordance with 

generally accepted accounting 

principles as expressed by the American 


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Institute of Certified Public Accountants 

or the Financial Accounting Standards 

Board. 

(l) A negative reserve balance 

comprises the aggregate number of 

phonorecords, if any, that have been 

relinquished from possession for 

purposes of sale accompanied by a 

privilege of return, as described in 

paragraph (i)(3) of this section, and that 

have been returned to the compulsory 

licensee, but because all available 

phonorecord reserves have been 

eliminated, have not been used to 

reduce a phonorecord reserve. 

(m) An incomplete transmission is 

any digital transmission of a sound 

recording which, as determined by 

means within the sole control of the 

distributor, does not result in a 

specifically identifiable reproduction of 

the entire sound recording by or for any 

transmission recipient. 

(n) A retransmission is a subsequent 

digital transmission of the same sound 

recording initially transmitted to an 

identified recipient for the purpose of 

completing the delivery of a complete 

and usable reproduction of that sound 

recording to that recipient. 

§ 210.13 Accounting requirements where 

sales revenue is ‘‘recognized.’’ 

Where under § 210.12(i)(3)(i), revenue 

from the sale of phonorecords is 

‘‘recognized’’ during any month after 

the month in which the compulsory 

licensee actually first parted with their 

possession, said compulsory licensee 

shall reduce particular phonorecord 

reserves by the number of phonorecords 

for which revenue is being 

‘‘recognized,’’ as follows: 

(a) If the number of phonorecords for 

which revenue is being ‘‘recognized’’ is 

smaller than the number of 

phonorecords comprising the earliest 

eligible phonorecord reserve, this 

phonorecord reserve shall be reduced by 

the number of phonorecords for which 

revenue is being ‘‘recognized.’’ Subject 

to the time limitations of 

§ 210.12(i)(3)(ii), the number of 

phonorecords remaining in this reserve 

shall be available for use in subsequent 

months. 

(b) If the number of phonorecords for 

which revenue is being ‘‘recognized’’ is 

greater than the number of 

phonorecords comprising the earliest 

eligible phonorecord reserve but less 

than the total number of phonorecords 

comprising all eligible phonorecord 

reserves, the compulsory licensee shall 

first eliminate those phonorecord 

reserves, beginning with the earliest 

eligible phonorecord reserve and 

continuing to the next succeeding 

phonorecord reserves, that are 

completely offset by phonorecords for 

which revenue is being ‘‘recognized.’’ 

Said licensee shall then reduce the next 

succeeding phonorecord reserve by the 

number of phonorecords for which 

revenue is being ‘‘recognized’’ that have 

not been used to eliminate a 

phonorecord reserve. Subject to the time 

limitations of § 210.12(i)(3)(ii), the 

number of phonorecords remaining in 

this reserve shall be available for use in 

subsequent months. 

(c) If the number of phonorecords for 

which revenue is being ‘‘recognized’’ 

equals the number of phonorecords 

comprising all eligible phonorecord 

reserves, the person or entity exercising 

the compulsory license shall eliminate 

all of the phonorecord reserves. 

§ 210.14 Accounting requirements for 

offsetting phonorecord reserves with 

returned phonorecords. 

(a) In the case of a phonorecord that 

has been relinquished from possession 

for purposes of sale accompanied by a 

privilege of return, as described in 

§ 210.12(i)(3), where the phonorecord is 

returned to the compulsory licensee for 

credit or exchange before said 

compulsory licensee is considered to 

have ‘‘permanently parted with 

possession’’ of the phonorecord under 

§ 210.12(i), the compulsory licensee 

may use such phonorecord to reduce a 

‘‘phonorecord reserve,’’ as defined in 

§ 210.12(k). 

(b) In such cases, the compulsory 

licensee shall reduce particular 

phonorecord reserves by the number of 

phonorecords that are returned during 

the month covered by the Monthly 

Statement of Account in the following 

manner: 

(1) If the number of phonorecords that 

are returned during the month covered 

by the Monthly Statement is smaller 

than the number comprising the earliest 

eligible phonorecord reserve, the 

compulsory licensee shall reduce this 

phonorecord reserve by the total 

number of returned phonorecords. 

Subject to the time limitations of 

§ 210.12(i)(3), the number of 

phonorecords remaining in this reserve 

shall be available for use in subsequent 

months. 

(2) If the number of phonorecords that 

are returned during the month covered 

by the Monthly Statement is greater 

than the number of phonorecords 

comprising the earliest eligible 

phonorecord reserve but less than the 

total number of phonorecords 

comprising all eligible phonorecord 

reserves, the compulsory licensee shall 

first eliminate those phonorecord 

reserves, beginning with the earliest 

eligible phonorecord reserve, and 

continuing to the next succeeding 

phonorecord reserves, that are 

completely offset by returned 

phonorecords. Said licensee shall then 

reduce the next succeeding phonorecord 

reserve by the number of returned 

phonorecords that have not been used to 

eliminate a phonorecord reserve. 

Subject to the time limitations of 

§ 210.12(i)(3)(ii), the number of 

phonorecords remaining in this reserve 

shall be available for use in subsequent 

months. 

(3) If the number of phonorecords that 

are returned during the month covered 

by the Monthly Statement is equal to or 

is greater than the total number of 

phonorecords comprising all eligible 

phonorecord reserves, the compulsory 

licensee shall eliminate all eligible 

phonorecord reserves. Where said 

number is greater than the total number 

of phonorecords comprising all eligible 

phonorecord reserves, said compulsory 

licensee shall establish a ‘‘negative 

reserve balance,’’ as defined in 

§ 210.12(l). 

(c) Except where a negative reserve 

balance exists, a separate and distinct 

phonorecord reserve shall be 

established for each month during 

which the compulsory licensee 

relinquishes phonorecords from 

possession for purposes of sale 

accompanied by a privilege of return, as 

described in § 210.12(i)(3) of this 

section. In accordance with paragraph 

(ii) of § 210.12(i)(3), any phonorecord 

remaining in a particular phonorecord 

reserve nine months from the month in 

which the particular reserve was 

established shall be considered 

‘‘voluntarily distributed’’; at that point, 

the particular monthly phonorecord 

reserve shall lapse and royalties for the 

phonorecords remaining in it shall be 

paid as provided in § 210.16(d). 

(d) Where a negative reserve balance 

exists, the aggregate total of 

phonorecords comprising it shall be 

accumulated into a single balance rather 

than being separated into distinct 

monthly balances. Following the 

establishment of a negative reserve 

balance, any phonorecords relinquished 

from possession by the compulsory 

licensee for purposes of sale or 

otherwise, shall be credited against such 

negative balance, and the negative 

reserve balance shall be reduced 

accordingly. The nine-month limit 

provided by § 210.12(i)(3)(ii) shall have 

no effect upon a negative reserve 

balance; where a negative reserve 

balance exists, relinquishment from 

possession of a phonorecord by the 

compulsory licensee at any time shall be 

used to reduce such balance, and shall 

not be considered a ‘‘voluntary 


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distribution’’ within the meaning of 

§ 210.12(i). 

(e) In no case shall a phonorecord 

reserve be established while a negative 

reserve balance is in existence; 

conversely, in no case shall a negative 

reserve balance be established before all 

available phonorecord reserves have 

been eliminated. 

§ 210.15 Situations in which a compulsory 

licensee is barred from maintaining 

reserves. 

Notwithstanding any other provisions 

of this section, in any case where, 

within three years before the 

phonorecord was relinquished from 

possession, the compulsory licensee has 

had final judgment entered against it for 

failure to pay royalties for the 

reproduction of copyrighted music on 

phonorecords, or within such period 

has been definitively found in any 

proceeding involving bankruptcy, 

insolvency, receivership, assignment for 

the benefit of creditors, or similar 

action, to have failed to pay such 

royalties, that compulsory licensee shall 

be considered to have ‘‘Permanently 

parted with possession’’ of a 

phonorecord made under the license at 

the time at which that licensee actually 

first parts with possession. For these 

purposes the ‘‘compulsory licensee,’’ as 

defined in § 210.12(g), shall include: 

(a) In the case of any corporation, the 

corporation or any director, officer, or 

beneficial owner of twenty-five percent 

(25%) or more of the outstanding 

securities of the corporation; 

(b) In all other cases, any entity or 

individual owning a beneficial interest 

of twenty-five percent (25%) or more in 

the entity exercising the compulsory 

license. 

§ 210.16 Monthly statements of account. 

(a) Forms. The Copyright Office does 

not provide printed forms for the use of 

persons serving Monthly Statements of 

Account. 

(b) General content. A Monthly 

Statement of Account shall be clearly 

and prominently identified as a 

‘‘Monthly Statement of Account Under 

Compulsory License for Making and 

Distributing Phonorecords,’’ and shall 

include a clear statement of the 

following information: 

(1) The period (month and year) 

covered by the Monthly Statement; 

(2) The full legal name of the 

compulsory licensee, together with all 

fictitious or assumed names used by 

such person or entity for the purpose of 

conducting the business of making and 

distributing phonorecords; 

(3) The full address, including a 

specific number and street name or rural 

route, of the place of business of the 

compulsory licensee. A post office box 

or similar designation will not be 

sufficient for this purpose, except where 

it is the only address that can be used 

in that geographic location; 

(4) The title or titles of the 

nondramatic musical work or works 

embodied in phonorecords made under 

the compulsory license and owned by 

the copyright owner being served with 

the Monthly Statement and the name of 

the author or authors of such work or 

works, if known; 

(5) For each nondramatic musical 

work that is owned by the same 

copyright owner being served with the 

Monthly Statement and that is 

embodied in phonorecords covered by 

the compulsory license, a detailed 

statement of all of the information 

called for in paragraph (c) of this 

section; 

(6) The total royalty payable for the 

month covered by the Monthly 

Statement, computed in accordance 

with the requirements of this section 

and the formula specified in paragraph 

(d) of this section, together with a 

Statement of Account showing in detail 

how the royalty was computed; and 

(7) In any case where the compulsory 

licensee falls within the provisions of 

§ 210.15, a clear description of the 

action or proceeding involved, 

including the date of the final judgment 

or definitive finding described in that 

paragraph. 

(c) Specific content of monthly 

statements: Identification and 

accounting of phonorecords. (1) The 

information called for by paragraph 

(b)(5) of this section shall, with respect 

to each nondramatic musical work, 

include a separate listing of each of the 

following items of information: 

(i) The number of phonorecords, 

including digital phonorecord 

deliveries, made during the month 

covered by the Monthly Statement; 

(ii) The number of phonorecords that, 

during the month covered by the 

Monthly Statement and regardless of 

when made, were either: 

(A) Relinquished from possession for 

purposes other than sale; 

(B) Relinquished from possession for 

purposes of sale without any privilege 

of returning unsold phonorecords for 

credit or exchange; 

(C) Relinquished from possession for 

purposes of sale accompanied by a 

privilege of returning unsold 

phonorecords for credit or exchange; 

(D) Returned to the compulsory 

licensee for credit or exchange; 

(E) Placed in a phonorecord reserve 

(except that if a negative reserve balance 

exists give either the number of 

phonorecords added to the negative 

reserve balance, or the number of 

phonorecords relinquished from 

possession that have been used to 

reduce the negative reserve balance); 

(F) Never delivered due to a failed 

transmission; or 

(G) Digitally retransmitted in order to 

complete a digital phonorecord 

delivery. 

(iii) The number of phonorecords, 

regardless of when made, that were 

relinquished from possession during a 

month earlier than the month covered 

by the Monthly Statement but that, 

during the month covered by the 

Monthly Statement either have had 

revenue from their sale ‘‘recognized’’ 

under § 210.12(i)(3)(i), or were 

comprised in a phonorecord reserve that 

lapsed after nine months under 

§ 210.12(i)(3)(ii). 

(2) Each of the items of information 

called for by paragraph (c)(1) of this 

section shall also include, and if 

necessary shall be broken down to 

identify separately, the following: 

(i) The catalog number or numbers 

and label name or names, used on the 

phonorecords; 

(ii) The names of the principal 

recording artist or group engaged in 

rendering the performances fixed on the 

phonorecords; 

(iii) The playing time on the 

phonorecords of each nondramatic 

musical work covered by the statement; 

and 

(iv) Each phonorecord configuration 

involved (for example: single disk, longplaying disk, cartridge, cassette, reel-toreel, digital phonorecord delivery, or a 

combination of them). 

(v) The date of and a reason for each 

incomplete transmission. 

(d) Royalty payment and accounting. 

(1) The total royalty called for by 

paragraph (b)(6) of this section shall be 

payable for every phonorecord 

‘‘voluntarily distributed’’ during the 

month covered by the Monthly 

Statement. 

(2) The amount of the royalty 

payment shall be calculated in 

accordance with the following formula: 

(i) Step 1: Compute the number of 

phonorecords shipped for sale with a 

privilege of return. This is the total of 

phonorecords that, during the month 

covered by the Monthly Statement, were 

relinquished from possession by the 

compulsory licensee, accompanied by 

the privilege of returning unsold 

phonorecords to the compulsory 

licensee for credit or exchange. This 

total does not include: 

(A) Any phonorecords relinquished 

from possession by the compulsory 


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licensee for purposes of sale without the 

privilege of return; and 

(B) Any phonorecords relinquished 

from possession for purposes other than 

sale. 

(ii) Step 2: Subtract the number of 

phonorecords reserved. This involves 

deducting, from the subtotal arrived at 

in Step 1, the number of phonorecords 

that have been placed in the 

phonorecord reserve for the month 

covered by the Monthly Statement. The 

number of phonorecords reserved is 

determined by multiplying the subtotal 

from Step 1 by the percentage reserve 

level established under Generally 

Accepted Accounting Practices. This 

step should be skipped by a compulsory 

licensee barred from maintaining 

reserves under § 210.15. 

(iii) Step 3: Add the total of all 

phonorecords that were shipped during 

the month and were not counted in Step 

1. This total is the sum of two figures: 

(1) The number of phonorecords that, 

during the month covered by the 

Monthly Statement, were relinquished 

from possession by the compulsory 

licensee for purposes of sale, without 

the privilege of returning unsold 

phonorecords to the compulsory 

licensee for credit or exchange; and 

(2) The number of phonorecords 

relinquished from possession by the 

compulsory licensee, during the month 

covered by the Monthly Statement, for 

purposes other than sale. 

(iv) Step 4: Make any necessary 

adjustments for sales revenue 

‘‘recognized,’’ lapsed reserves, or 

reduction of negative reserve balance 

during the month. If necessary, this step 

involves adding to or subtracting from 

the subtotal arrived at in Step 3 on the 

basis of three possible types of 

adjustments: 

(A) Sales revenue ‘‘recognized.’’ If, in 

the month covered by the Monthly 

Statement, the compulsory licensee 

‘‘recognized’’ revenue from the sale of 

phonorecords that had been 

relinquished from possession in an 

earlier month, the number of such 

phonorecords is added to the Step 3 

subtotal; 

(B) Lapsed reserves. If, in the month 

covered by the Monthly Statement, 

there are any phonorecords remaining 

in the phonorecord reserve for the ninth 

previous month (that is, any 

phonorecord reserves from the ninth 

previous month that have not been 

offset under FOFI, the first-out-first-in 

accounting convention, by actual 

returns during the intervening months), 

the reserve lapses and the number of 

phonorecords in it is added to the Step 

3 subtotal. 

(C) Reduction of negative reserve 

balance. If, in the month covered by the 

Monthly Statement, the aggregate 

reserve balance for all previous months 

is a negative amount, the number of 

phonorecords relinquished from 

possession by the compulsory licensee 

during that month and used to reduce 

the negative reserve balance is 

subtracted from the Step 3 subtotal. 

(D) Incomplete transmissions. If, in 

the month covered by the Monthly 

Statement, there are any digital 

transmissions of a sound recording 

which do not result in specifically 

identifiable reproductions of the entire 

sound recording by or for any 

transmission recipient, as determined 

by means within the sole control of the 

distributor, the number of such 

phonorecords is subtracted from the 

Step 3 subtotal. 

(E) Retransmitted digital 

phonorecords. If, in the month covered 

by the Monthly Statement, there are 

retransmissions of a digital phonorecord 

to a recipient who did not receive a 

complete and usable phonorecord 

during an initial transmission, and such 

transmissions are made for the sole 

purpose of delivering a complete and 

usable reproduction of the initially 

requested sound recording to that 

recipient, the number of such 

retransmitted digital phonorecords is 

subtracted from the Step 3 subtotal. 

(v) Step 5: Multiply by the statutory 

royalty rate. The total monthly royalty 

payment is obtained by multiplying the 

subtotal from Step 3, as adjusted if 

necessary by Step 4, by the statutory 

royalty rate of 9.1 cents or 1.75 cents per 

minute or fraction of playing time, 

whichever is larger for every physical 

phonorecord delivery and permanent 

digital download, and by the statutory 

royalty rate of 24.0 cents for every 

ringtone made and distributed. 

(3) Each step in computing the 

monthly payment, including the 

arithmetical calculations involved in 

each step, shall be set out in detail in 

the Monthly Statement. 

(e) Clear statements. The information 

required by paragraphs (b) and (c) of 

this section requires intelligible, legible, 

and unambiguous statements in the 

Monthly Statements of Account without 

incorporation of facts or information 

contained in other documents or 

records. 

(f) Certification. (1) Each Monthly 

Statement of Account shall be 

accompanied by: 

(i) The printed or typewritten name of 

the person who is the licensee certifying 

the Monthly Statement of Account; 

(ii) If the compulsory licensee is a 

partnership or a corporation, by the title 

or official position held in the 

partnership or corporation by the person 

certifying the Monthly Statement of 

Account; 

(iii) The date of certification; 

(iv) A statement of the capacity of the 

person making the certification; and 

(v) The following statement: 

I certify that I have examined this Monthly 

Statement of Account and that all statements 

of fact contained herein are true, complete, 

and correct to the best of my knowledge, 

information, and belief, and are made in good 

faith. 

(2) If the Monthly Statement of 

Account is served by mail or by 

reputable courier service, certification of 

the Monthly Statement of Account by 

the licensee shall be made by 

handwritten signature. If the 

compulsory licensee is a corporation, 

the signature shall be that of a duly 

authorized officer of the corporation; if 

the compulsory licensee is a 

partnership, the signature shall be that 

of a partner. 

(3) If the Monthly Statement of 

Account is served electronically, the 

licensee and the copyright owner shall 

establish a procedure to verify that the 

certification of the Monthly Statement 

of Account by the licensee is made upon 

proper authority. 

(g) Service. (1) Each Monthly 

Statement of Account shall be served on 

the copyright owner or the agent with 

authority to receive Monthly Statements 

of Account on behalf of the copyright 

owner to whom or which it is directed, 

together with the total royalty for the 

month covered by the Monthly 

Statement, by mail or by reputable 

courier service on or before the 20th day 

of the immediately succeeding month. 

However, in the case where the licensee 

has served its Notice of Intention upon 

an agent of the copyright owner 

pursuant to § 201.18 of this chapter, the 

licensee is not required to serve 

Monthly Statements of Account or make 

any royalty payments until the licensee 

receives from the agent with authority to 

receive the Notice of Intention notice of 

the name and address of the copyright 

owner or its agent upon whom the 

licensee shall serve Monthly Statements 

of Account and the monthly royalty 

fees. Upon receipt of this information, 

the licensee shall serve Monthly 

Statements of Account and all royalty 

fees covering the intervening period 

upon the person or entity identified by 

the agent with authority to receive the 

Notice of Intention by or before the 20th 

day of the month following receipt of 

the notification. It shall not be necessary 

to file a copy of the Monthly Statement 

in the Copyright Office. 


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(2)(i) In any case where a Monthly 

Statement of Account is sent by mail or 

reputable courier service and the 

Monthly Statement of Account is 

returned to the sender because the 

copyright owner or agent is no longer 

located at that address or has refused to 

accept delivery, or in any case where an 

address for the copyright owner is not 

known, the Monthly Statement of 

Account, together with any evidence of 

mailing or attempted delivery by courier 

service, may be filed in the Licensing 

Division of the Copyright Office. Any 

Monthly Statement of Account 

submitted for filing in the Copyright 

Office shall be accompanied by a brief 

statement of the reason why it was not 

served on the copyright owner. A 

written acknowledgment of receipt and 

filing will be provided to the sender. 

(ii) The Copyright Office will not 

accept any royalty fees submitted with 

Monthly Statements of Account under 

this section. 

(iii) Neither the filing of a Monthly 

Statement of Account in the Copyright 

Office, nor the failure to file such 

Monthly Statement, shall have effect 

other than that which may be attributed 

to it by a court of competent 

jurisdiction. 

(iv) No filing fee will be required in 

the case of Monthly Statements of 

Account submitted to the Copyright 

Office under this section. Upon request 

and payment of the fee specified in 

§ 201.3(e) of this chapter, a Certificate of 

Filing will be provided to the sender. 

(3) A separate Monthly Statement of 

Account shall be served for each month 

during which there is any activity 

relevant to the payment of royalties 

under 17 U.S.C. 115, and under this 

subpart. The Annual Statement of 

Account identified in § 210.17 of this 

subpart does not replace any Monthly 

Statement of Account. 

(4) If a Monthly Statement of Account 

is sent by certified mail or registered 

mail, a mailing receipt shall be 

sufficient to prove that service was 

timely. If a Monthly Statement of 

Account is delivered by a reputable 

courier, documentation from the courier 

showing the first date of attempted 

delivery shall also be sufficient to prove 

that service was timely. In the absence 

of a receipt from the United States 

Postal Service showing the date of 

delivery or documentation showing the 

first date of attempted delivery by a 

reputable courier, the compulsory 

licensee shall bear the burden of 

proving that the Monthly Statement of 

Account was served in a timely manner. 

(5) If a Monthly Statement of Account 

covers reporting for more than 50 works 

that are embodied in phonorecords 

made under the compulsory license, the 

copyright owner or the authorized agent 

may send the licensee a demand that the 

Monthly Statement of Account be 

resubmitted in an electronic format and 

that future Statements of Account be 

submitted in an electronic format. The 

statement may be submitted on a data 

storage medium widely used at the time 

for electronic storage of data, in the form 

of a flat file, word processing document 

or spreadsheet readable with computer 

software in wide use at such time, with 

the required information identified and/ 

or delimited so as to be readily 

discernible. The Statement of Account 

may be submitted by means of 

electronic transmission (such as email) 

if the demand from the copyright owner 

or authorized agent states that such 

submission will be accepted. As 

provided in paragraph (f) of this section, 

the licensee and the copyright owner 

shall establish a procedure to verify that 

the certification portion of the statement 

is made upon the authority of the 

licensee. 

(6) The copyright owner and the 

licensee or authorized agent may agree 

upon alternative methods of payment, 

provided that when the Monthly 

Statement of Account and payment are 

not sent together by mail or courier 

service, they shall be sent 

contemporaneously. Monthly 

Statements of Account shall be sent and 

payment shall be made on or before the 

20th day of each month and shall 

include all royalties for the month next 

proceeding. Any Monthly Statement of 

Account or payment provided in 

accordance with such policy shall not 

be rendered invalid for failing to comply 

with the specific requirements of 

paragraph (g)(1) of this section regarding 

service by mail or by reputable courier 

service of the Monthly Statements of 

Account together with the total royalty 

for the month covered by the Monthly 

Statement. 

(7) For purposes of this section, a 

copyright owner or an agent of a 

copyright owner with authority to 

receive a Monthly Statement of Account 

may make public a written policy that 

it will accept a Monthly Statement of 

Account by means of electronic 

transmission and include in that written 

policy procedures for making royalty 

payments. When the Monthly Statement 

of Account and payment are not sent 

together by mail or courier service, they 

shall be sent contemporaneously. 

Monthly Statements of Account shall be 

sent and payment shall be made on or 

before the 20th day of each month and 

shall include all royalties for the month 

next proceeding. Any Monthly 

Statement of Account or payment 

provided in accordance with such 

policy shall not be rendered invalid for 

failing to comply with the specific 

requirements of paragraph (g)(1) of this 

section regarding service by mail or by 

reputable courier service of the Monthly 

Statements of Account together with the 

total royalty for the month covered by 

the Monthly Statement. 

§ 210.17 Annual statements of account. 

(a) Forms. The Copyright Office does 

not provide printed forms for the use of 

persons serving Annual Statements of 

Account. 

(b) Annual period. Any Annual 

Statement of Account shall cover the 

full fiscal year of the compulsory 

licensee. 

(c) General content. An Annual 

Statement of Account shall be clearly 

and prominently identified as an 

‘‘Annual Statement of Account Under 

Compulsory License for Making and 

Distributing Phonorecords,’’ and shall 

include a clear statement of the 

following information: 

(1) The fiscal year covered by the 

Annual Statement; 

(2) The full legal name of the 

compulsory licensee, together with all 

fictitious or assumed names used by 

such person or entity for the purpose of 

conducting the business of making and 

distributing phonorecords; 

(3) If the compulsory licensee is a 

business organization, the name and 

title of the chief executive officer, 

managing partner, sole proprietor or 

other person similarly responsible for 

the management of such entity. 

(4) The full address, including a 

specific number and street name or rural 

route, or the place of business of the 

compulsory licensee. A post office box 

or similar designation will not be 

sufficient for this purpose except where 

it is the only address that can be used 

in that geographic location; 

(5) The title or titles of the 

nondramatic musical work or works 

embodied in phonorecords made under 

the compulsory license and owned by 

the copyright owner being served with 

the Annual Statement and the name of 

the author or authors of such work or 

works, if known; 

(6) The playing time of each 

nondramatic musical work on such 

phonorecords; 

(7) For each nondramatic musical 

work that is owned by the same 

copyright owner being served with the 

Annual Statement and that is embodied 

in phonorecords covered by the 

compulsory license, a detailed 

statement of all of the information 

called for in paragraph (d) of this 

section; 


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(8) The total royalty payable for the 

fiscal year covered by the Annual 

Statement computed in accordance with 

the requirements of this section, 

together with a statement of account 

showing in detail how the royalty was 

computed. For these purposes, the 

applicable royalty as specified in § 385.3 

shall be payable for every phonorecord 

‘‘voluntarily distributed’’ during the 

fiscal year covered by the Annual 

Statement; 

(9) The total sum paid under Monthly 

Statements of Account by the 

compulsory licensee to the copyright 

owner being served with the Annual 

Statement during the fiscal year covered 

by the Annual Statement; and 

(10) In any case where the 

compulsory license falls within the 

provisions of § 210.15, a clear 

description of the action or proceeding 

involved, including the date of the final 

judgment or definitive finding described 

in that paragraph. 

(d) Specific content of annual 

statements: Identification and 

accounting of phonorecords. (1) The 

information called for by paragraph 

(c)(7) of this section shall, with respect 

to each nondramatic musical work, 

include a separate listing of each of the 

following items of information 

separately stated and identified for each 

phonorecord configuration (for example, 

single disk, long playing disk, cartridge, 

cassette, or reel-to-reel) made: 

(i) The number of phonorecords made 

through the end of the fiscal year 

covered by the Annual Statement, 

including any made during earlier years; 

(ii) The number of phonorecords 

which have never been relinquished 

from possession of the compulsory 

licensee through the end of the fiscal 

year covered by the Annual Statement; 

(iii) The number of phonorecords 

involuntarily relinquished from 

possession (as through fire or theft) of 

the compulsory licensee during the 

fiscal year covered by the Annual 

Statement and any earlier years, 

together with a description of the facts 

of such involuntary relinquishment; 

(iv) The number of phonorecords 

‘‘voluntarily distributed’’ by the 

compulsory licensee during all years 

before the fiscal year covered by the 

Annual Statement; 

(v) The number of phonorecords 

relinquished from possession of the 

compulsory licensee for purposes of sale 

during the fiscal year covered by the 

Annual Statement accompanied by a 

privilege of returning unsold records for 

credit or exchange, but not ‘‘voluntarily 

distributed’’ by the end of that year; 

(vi) The number of phonorecords 

‘‘voluntarily distributed’’ by the 

compulsory licensee during the fiscal 

year covered by the Annual Statement, 

together with: 

(A) The catalog number or numbers, 

and label name or names, used on such 

phonorecords; and 

(B) The names of the principal 

recording artists or groups engaged in 

rendering the performances fixed on 

such phonorecords. 

(2) If the information given under 

paragraph (d)(1)(i) through (vi) of this 

section does not reconcile, the Annual 

Statement shall also include a clear and 

detailed explanation of the difference. 

For these purposes, the information 

given under such paragraphs shall be 

considered not to reconcile if, after the 

number of phonorecords given under 

paragraphs (d)(1)(ii), (iii), (iv) and (v) of 

this section are added together and that 

sum is deducted from the number of 

phonorecords given under paragraph 

(d)(1)(i), the result is different from the 

amount given under paragraph 

(d)(1)(vi). 

(e) Clear statement. The information 

required by paragraph (c) of this section 

requires intelligible, legible, and 

unambiguous statements in the Annual 

Statement of Account without 

incorporation by reference of facts or 

information contained in other 

documents or records. 

(f) Certification. (1) Each Annual 

Statement of Account shall be 

accompanied by: 

(i) The printed or typewritten name of 

the person who is the licensee certifying 

the Annual Statement of Account; 

(ii) The date of certification; 

(iii) If the compulsory licensee is a 

partnership or a corporation, the title or 

official position held in the partnership 

or corporation who is making the 

certification; 

(iv) A statement of the capacity of the 

person making the certification; and 

(v) The following statement: 

I certify that I have examined this Annual 

Statement of Account and that all statements 

of fact contained herein are true, complete, 

and correct to the best of my knowledge, 

information, and belief, and are made in good 

faith. 

(2)(i) Each Annual Statement of 

Account shall also be certified by a 

licensed Certified Public Accountant. 

Such certification shall consist of the 

following statement. 

We have examined the attached ‘‘Annual 

Statement of Account Under Compulsory 

License For Making and Distributing 

Phonorecords’’ for the fiscal year ended 

(date) of (name of the compulsory licensee) 

applicable to phonorecords embodying (title 

or titles of nondramatic musical works 

embodied in phonorecords made under the 

compulsory license) made under the 

provisions of 17 U.S.C. 115, as amended by 

Public Law 94–553, and applicable 

regulations of the United States Copyright 

Office. Our examination was made in 

accordance with generally accepted auditing 

standards and accordingly, included tests of 

the accounting records and such other 

auditing procedures as we considered 

necessary in the circumstances. 

In our opinion the Annual Statement of 

Account referred to above presents fairly the 

number of phonorecords embodying each of 

the above-identified nondramatic musical 

works made under compulsory license and 

voluntarily distributed by (name of the 

compulsory licensee) during the fiscal year 

ending (date), and the amount of royalties 

applicable thereto under such compulsory 

license, on a consistent basis and in 

accordance with the above cited law and 

applicable regulations published thereunder. 

lllllllllllllllllll

(City and State of Execution) 

lllllllllllllllllll

(Signature of Certified Public 

Accountant or CPA Firm) 

lllllllllllllllllll

Certificate Number 

lllllllllllllllllll

Jurisdiction of Certificate 

lllllllllllllllllll

(Date of Opinion) 

(ii) The certificate shall be signed by 

an individual, or in the name of a 

partnership or a professional 

corporation with two or more 

shareholders. The certificate number 

and jurisdiction are not required if the 

certificate is signed in the name of a 

partnership or a professional 

corporation with two or more 

shareholders. 

(3) If the Annual Statement of 

Account is served by mail or by 

reputable courier service, the 

certification of the Annual Statement of 

Account by the licensee shall be made 

by handwritten signature. If the 

compulsory licensee is a corporation, 

the signature shall be that of a duly 

authorized officer of the corporation; if 

that compulsory licensee is a 

partnership, the signature shall be that 

of a partner. 

(4) If the Annual Statement of 

Account is served electronically, the 

licensee may serve an electronic 

facsimile of the original certification of 

the Annual Statement of Account signed 

by the licensed Certified Public 

Accountant. The licensee shall retain 

the original certification of the Annual 

Statement of Account signed by the 

licensed Certified Public Accountant, 

which shall be made available to the 

copyright owner upon demand. 

(5) If the Annual Statement of 

Account is served electronically, the 

licensee and the copyright owner shall 


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establish a procedure to verify that the 

certification of the Annual Statement of 

Account by the licensee is made upon 

proper authority. 

(g) Service. (1) Each Annual Statement 

of Account shall be served on the 

copyright owner or the agent with 

authority to receive Annual Statements 

of Account on behalf of the copyright 

owner to whom or which it is directed 

by mail or by reputable courier service 

on or before the 20th day of the sixth 

month following the end of the fiscal 

year covered by the Annual Statement. 

It shall not be necessary to file a copy 

of the Annual Statement in the 

Copyright Office. An Annual Statement 

of Account shall be served for each 

fiscal year during which at least one 

Monthly Statement of Account was 

required to have been served under 

§ 210.16(g). 

(2) In any case where the amount 

required to be stated in the Annual 

Statement of Account under paragraph 

(c)(8) of this section is greater than the 

amount stated in that Annual Statement 

under paragraph (c)(9) of this section, 

the difference between such amounts 

shall be delivered to the copyright 

owner together with the service of the 

Annual Statement. The delivery of such 

sum does not require the copyright 

owner to accept such sum, or to forego 

any right, relief, or remedy which may 

be available under law. 

(3)(i) In any case where an Annual 

Statement of Account is sent by mail or 

by reputable courier service and is 

returned to the sender because the 

copyright owner or agent is not located 

at that address or has refused to accept 

delivery, or in any case where an 

address for the copyright owner is not 

known, the Annual Statement of 

Account, together with any evidence of 

mailing or attempted delivery by courier 

service, may be filed in the Licensing 

Division of the Copyright Office. Any 

Annual Statement of Account submitted 

for filing shall be accompanied by a 

brief statement of the reason why it was 

not served on the copyright owner. A 

written acknowledgment of receipt and 

filing will be provided to the sender. 

(ii) The Copyright Office will not 

accept any royalty fees submitted with 

Annual Statements of Account under 

this paragraph (g)(3). 

(iii) Neither the filing of an Annual 

Statement of Account in the Copyright 

Office, nor the failure to file such 

Annual Statement, shall have any effect 

other than that which may be attributed 

to it by a court of competent 

jurisdiction. 

(iv) No filing fee will be required in 

the case of Annual Statements of 

Account submitted to the Copyright 

Office under this paragraph (g)(3). Upon 

request and payment of the fee specified 

in § 201.3(e) of this chapter, a Certificate 

of Filing will be provided to the sender. 

(4) If an Annual Statement of Account 

is sent by certified mail or registered 

mail, a mailing receipt shall be 

sufficient to prove that service was 

timely. If an Annual Statement of 

Account is delivered by a reputable 

courier, documentation from the courier 

showing the first date of attempted 

delivery shall also be sufficient to prove 

that service was timely. In the absence 

of a receipt from the United States 

Postal Service showing the date of 

delivery or documentation showing the 

first date of attempted delivery by a 

reputable courier, the compulsory 

licensee shall bear the burden of 

proving that the Annual Statement of 

Account was served in a timely manner. 

(5) If an Annual Statement of Account 

covers reporting for more than 50 works 

that are embodied in phonorecords 

made under the compulsory license, the 

copyright owner or the authorized agent 

may send the licensee a demand that the 

Annual Statement of Account be 

resubmitted in an electronic format and 

that future Annual Statements of 

Account be submitted in an electronic 

format. The statement may be submitted 

on a data storage medium widely used 

at the time for electronic storage of data, 

in the form of a flat file, word 

processing document or spreadsheet 

readable with computer software in 

wide use at such time, with the required 

information identified and/or delimited 

so as to be readily discernible. The 

Statement of Account may be submitted 

by means of electronic transmission 

(such as email) if the copyright owner 

or authorized agent states that such 

submission will be accepted. As 

provided in paragraph (f) of this section, 

the licensee and the copyright owner 

shall establish a procedure to verify that 

the certification portion of the statement 

is made upon the authority of the 

licensee. 

(6) The copyright owner and the 

licensee or authorized agent may agree 

upon alternative methods of payment, 

provided that when the Statement of 

Account and payment are not sent 

together by mail or courier service, they 

shall be sent contemporaneously. 

Annual Statements of Account shall be 

sent and any additional payment shall 

be made on or before the 20th day of the 

sixth month following the end of the 

fiscal year covered by the Annual 

Statement. Any Annual Statement of 

Account or payment provided in 

accordance with such policy shall not 

be rendered invalid for failing to comply 

with the specific requirements of 

paragraph (g) of this section regarding 

service by mail or by reputable courier 

service of the Annual Statements of 

Account together with the total 

additional royalty covered by the 

Annual Statement. 

(7) For purposes of this section, a 

copyright owner or an agent of a 

copyright owner with authority to 

receive an Annual Statement of Account 

may make public a written policy that 

it will accept an Annual Statement of 

Account by means of electronic 

transmission and include in that written 

policy procedures for making any 

additional royalty payments. When the 

Annual Statement of Account and any 

additional payment are not sent together 

by mail or courier service, they shall be 

sent contemporaneously. Annual 

Statements of Account shall be sent and 

payment shall be made on or before the 

20th day of the sixth month following 

the end of the fiscal year covered by the 

Annual Statement. Any Annual 

Statement of Account provided in 

accordance with such policy shall not 

be rendered invalid for failing to comply 

with the specific requirements of this 

paragraph (g) regarding service by mail 

or by reputable courier service of the 

Annual Statement of Account together 

with any additional royalty payment. 

§ 210.18 Documentation. 

All compulsory licensees shall, for a 

period of at least five years from the 

date of service of an Annual Statement 

of Account, keep and retain in their 

possession all records and documents 

necessary and appropriate to support 

fully the information set forth in such 

Annual Statement and in Monthly 

Statements served during the fiscal year 

covered by such Annual Statement. 

§ 210.19 Timing of statements of account. 

Statements of Accounts for an 

accounting period which closes after the 

effective date of this regulation shall be 

due as provided in §§ 210.16(g)(1) and 

210.17(g)(1). Statements of Account for 

any prior reporting period shall be due 

180 days after the effective date of this 

regulation. 

Subpart C—Royalties and Statements 

of Account Under Compulsory License 

for Interactive Streaming, Limited 

Downloads and Other Digital 

Phonorecord Delivery Services 

§ 210.21 General. 

This subpart prescribes the rules 

pertaining to the preparation and 

service of Statements of Account 

covering compulsory licenses for the 

making and distribution of 

phonorecords, by certain services which 


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offer digital phonorecord deliveries, 

pursuant to 17 U.S.C. 115 and the 

regulations in 37 CFR part 385 

governing rates and terms for use of 

musical works under compulsory 

license for the making and distribution 

of phonorecords. 

§ 210.22 Definitions. 

As used in this subpart: 

(a) A Monthly Statement of Account is 

a statement accompanying monthly 

royalty payments identified in 17 U.S.C. 

115(c)(5), as amended by Public Law 

94–553, and required by that section to 

be made under the compulsory license 

to make and distribute phonorecords of 

nondramatic musical works, including 

by means of a digital phonorecord 

delivery. 

(b) An Annual Statement of Account 

is a statement identified in 17 U.S.C. 

115(c)(5), as amended by Public Law 

94–553, and required by that section to 

be filed for every compulsory license to 

make and distribute phonorecords of 

nondramatic musical works. 

(c) A ‘‘digital phonorecord delivery’’ 

is each individual delivery of a 

phonorecord by digital transmission of 

a sound recording which results in a 

specifically identifiable reproduction by 

or for any transmission recipient of a 

phonorecord of that sound recording, 

regardless of whether the digital 

transmission is also a public 

performance of the sound recording or 

any nondramatic musical work 

embodied therein. The reproduction of 

the phonorecord must be sufficiently 

permanent or stable to permit it to be 

perceived, reproduced, or otherwise 

communicated for a period of more than 

transitory duration. Such a phonorecord 

may be permanent or it may be made 

available to the transmission recipient 

for a limited period of time or for a 

specified number of performances. A 

digital phonorecord delivery includes 

all phonorecords that are made for the 

purpose of making the digital 

phonorecord delivery. 

(d) A limited download means a 

digital transmission of a sound 

recording of a musical work to an end 

user, other than a stream, that results in 

a specifically identifiable reproduction 

of that sound recording that is only 

accessible for listening if— 

(1) An amount of time not to exceed 

1 month from the time of the 

transmission (unless the service, in lieu 

of retransmitting the same sound 

recording as another limited download, 

separately and upon specific request of 

the end user made through a live 

network connection, reauthorizes use 

for another time period not to exceed 1 

month), or in the case of a subscription 

transmission, a period of time following 

the end of the applicable subscription 

no longer than a subscription renewal 

period or 3 months, whichever is 

shorter; or 

(2) A specified number of times not to 

exceed 12 (unless the service, in lieu of 

retransmitting the same sound recording 

as another limited download, separately 

and upon specific request of the end 

user made through a live network 

connection, reauthorizes use of another 

series of 12 or fewer plays), or in the 

case of a subscription transmission, 12 

times after the end of the applicable 

subscription. 

(3) A limited download is a general 

digital phonorecord delivery as defined 

in this section. 

(e) An interactive stream means a 

stream of a sound recording of a musical 

work, where the performance of the 

sound recording by means of a stream 

is not exempt under 17 U.S.C. 114(d)(1) 

and does not in itself or as a result of 

a program in which it is included 

qualify for statutory licensing under 17 

U.S.C. 114(d)(2). 

(f) A phonorecord is used as a general 

term in this subpart to refer to all 

configurations of a phonorecord made 

and distributed under 17 U.S.C. 115, 

including a limited download, an 

incidental digital phonorecord delivery, 

and an interactive stream. 

(g) The term copyright owner, in the 

case of any work having more than one 

copyright owner, means any one of the 

co-owners. 

(h) The service of a Statement of 

Account on a copyright owner under 

this subpart may be accomplished by 

means of service on either the copyright 

owner or an agent of the copyright 

owner with authority to receive 

Statements of Account on behalf of the 

copyright owner. In the case where the 

work has more than one copyright 

owner, the service of the Statement of 

Account on one co-owner or upon an 

agent of one of the co-owners shall be 

sufficient with respect to all co-owners. 

(i) A compulsory licensee is a person 

or entity exercising the compulsory 

license to make and distribute 

phonorecords of nondramatic musical 

works as provided under 17 U.S.C. 115, 

including by means of a digital 

phonorecord delivery. 

(j) A limited download, an incidental 

digital phonorecord delivery, and an 

interactive stream shall be treated as a 

type of phonorecord configuration: 

(1) Distributed on the date the 

phonorecord is digitally transmitted; 

and 

(2) As having been voluntarily 

distributed and relinquished from 

possession on the date that the 

phonorecord is digitally transmitted. 

(k) An incomplete transmission is any 

digital transmission of a sound 

recording which, as determined by 

means within the sole control of the 

distributor, does not result in a 

specifically identifiable reproduction of 

the entire sound recording by or for any 

transmission recipient. 

(l) A retransmission is a subsequent 

digital transmission of the same sound 

recording initially transmitted to an 

identified recipient for the purpose of 

completing the delivery of a complete 

and usable reproduction of that sound 

recording to that recipient. 

§ 210.23 Monthly statements of accounts. 

(a) Forms. The Copyright Office does 

not provide printed forms for the use of 

persons serving Monthly Statements of 

Account. 

(b) General content. A Monthly 

Statement of Account shall be clearly 

and prominently identified as a 

‘‘Monthly Statement of Account Under 

Compulsory License for Making and 

Distributing Phonorecords,’’ and shall 

include a clear statement of the 

following information: 

(1) The period (month and year) 

covered by the Monthly Statement; 

(2) The full legal name of the 

compulsory licensee, together with all 

fictitious or assumed names used by 

such person or entity for the purpose of 

conducting the business of making and 

distributing phonorecords. 

(3) The full address, including a 

specific number and street name or rural 

route, of the place of business of the 

compulsory licensee. A post office box 

or similar designation will not be 

sufficient for this purpose, except where 

it is the only address that can be used 

in that geographic location; 

(4) The title or titles of the 

nondramatic musical work or works 

embodied in phonorecords made under 

the compulsory license and owned by 

the copyright owner being served with 

the Monthly Statement and the name of 

the author or authors of such work or 

works, if known; 

(5) For each nondramatic musical 

work that is owned by the same 

copyright owner being served with the 

Monthly Statement and that is 

embodied in phonorecords covered by 

the compulsory license, a detailed 

statement of all of the information 

called for in paragraph (c) of this 

section; 

(6) The total royalty payable for the 

month covered by the Monthly 

Statement, computed in accordance 

with the requirements of this section 

specified in paragraph (d) of this 


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section, together with a Statement of 

account showing in detail how the 

royalty was computed; and 

(c) Specific content of monthly 

statements: Identification and 

accounting of phonorecords. (1) The 

information called for by paragraph 

(b)(5) of this section shall, with respect 

to each each nondramatic musical work, 

include a separate listing of each of the 

following items of information: 

(i) The number of phonorecords 

accounted for in this subpart, including 

the number of limited downloads, 

incidental digital phonorecord 

deliveries, and interactive streams made 

during the month covered by the 

Monthly Statement; 

(ii) The number of promotional 

interactive streams and promotional 

promotional limited downloads; and 

(iii) The number of phonorecords that 

were never delivered due to a failed 

transmission; or digitally retransmitted 

in order to complete a digital 

phonorecord delivery. 

(2) Each of the items of information 

called for by paragraph (c)(1) of this 

section shall also include, and if 

necessary shall be broken down to 

identify separately, the following: 

(i) The catalog number or numbers 

and label name or names, used on the 

phonorecords; 

(ii) The names of the principal 

recording artist or group engaged in 

rendering the performances fixed on the 

phonorecords; 

(iii) The playing time on the 

phonorecords of each nondramatic 

musical work covered by the statement; 

and 

(iv) Each phonorecord configuration 

involved (for example, a limited 

download, an incidental digital 

phonorecord delivery, an interactive 

stream or a combination of these 

configurations). 

(v) The date of and a reason for each 

incomplete transmission. 

(d) Royalty payment and accounting. 

(1) The total royalty called for by 

paragraph (b)(6) of this section shall be 

payable for every phonorecord 

‘‘voluntarily distributed’’ during the 

month covered by the Monthly 

Statement. 

(2) The amount of the royalty 

payment for each offering, e.g., a limited 

download or an interactive stream, shall 

be calculated separately: 

(i) In accordance with the 

methodology specified in §§ 385.12 

through 385.14, for each standalone 

non-portable subscription—streaming 

only service; standalone non-portable 

subscription—mixed service; standalone 

portable subscription service; bundled 

subscription service; and free 

nonsubscription/ad-supported service, 

and 

(ii) In accordance with the 

methodology specified in §§ 385.22 

through 385.24, for each limited 

offering, mixed service bundle, music 

bundle, paid locker service, and 

purchased music content locker service. 

(3) Each Statement of Account shall 

include each step of its calculations 

with sufficient information to allow the 

copyright owner to assess the accuracy 

and manner in which the licensee 

determined the payable royalty pool and 

per-play allocations (including 

information sufficient to demonstrate 

whether and how a minimum royalty or 

subscriber-based royalty floor pursuant 

to § 385.13 and § 385.23 does or does 

not apply). 

(4) In computing royalty payment 

pursuant to paragraph (d)(2) of this 

section, a licensee may, in cases where 

the final public performance royalty has 

not yet been determined, compute the 

public performance royalty component 

based on the interim rate, if established; 

or alternatively, on a reasonable 

estimation of the expected royalties to 

be paid made in accordance with U.S. 

Generally Accepted Accounting 

Principles (GAAP). Royalty payments 

based on anticipated payments or 

interim public performance royalty rates 

must be reconciled on the Annual 

Statement of Account or, if the final 

public performance royalty rate is 

determined after the filing of the Annual 

Statement of Account, within six 

months of obtaining the information 

concerning the amount of public 

performance royalties actually paid 

during the relevant accounting period 

by filing an Amended Annual Statement 

of Account for this purpose. 

(e) Clear statements. The information 

required by paragraphs (b) and (c) of 

this section requires intelligible, legible, 

and unambiguous statements in the 

Monthly Statements of Account without 

incorporation of facts or information 

contained in other documents or 

records, except in the case of 

promotional interactive streaming 

activities, certain promotional limited 

downloads and free trial periods. 

Information concerning promotional 

activities and free trial periods shall be 

maintained and made available as 

prescribed in § 385.14 and § 385.24. 

(f) Certification. (1) Each Monthly 

Statement of Account shall be 

accompanied by: 

(i) The printed or typewritten name of 

the person who is the licensee certifying 

the Monthly Statement of Account; 

(ii) If the compulsory licensee is a 

partnership or a corporation, by the title 

or official position held in the 

partnership or corporation by the person 

certifying the Monthly Statement of 

Account; 

(iii) The date of certification; 

(iv) A statement of the capacity of the 

person making the certification; and 

(v) The following statement: 

I certify that I have examined this Monthly 

Statement of Account and that all statements 

of fact contained herein are true, complete, 

and correct to the best of my knowledge, 

information, and belief, and are made in good 

faith. 

(2) If the Monthly Statement of 

Account is served by mail or by 

reputable courier service, certification of 

the Monthly Statement of Account by 

the licensee shall be made by 

handwritten signature. If the 

compulsory licensee is a corporation, 

the signature shall be that of a duly 

authorized officer of the corporation; if 

the compulsory licensee is a 

partnership, the signature shall be that 

of a partner. 

(3) If the Monthly Statement of 

Account is served electronically, the 

licensee and the copyright owner shall 

establish a procedure to verify that the 

certification of the Monthly Statement 

of Account by the licensee is made upon 

proper authority. 

(g) Service. (1) Each Monthly 

Statement of Account shall be served on 

the copyright owner or the agent with 

authority to receive Monthly Statements 

of Account on behalf of the copyright 

owner to whom or which it is directed, 

together with the total royalty for the 

month covered by the Monthly 

Statement, by mail or by reputable 

courier service on or before the 20th day 

of the immediately succeeding month. 

However, in the case where the licensee 

has served its Notice of Intention upon 

an agent of the copyright owner 

pursuant to § 201.18 of this chapter, the 

licensee is not required to serve 

Monthly Statements of Account or make 

any royalty payments until the licensee 

receives from the agent with authority to 

receive the Notice of Intention notice of 

the name and address of the copyright 

owner or its agent upon whom the 

licensee shall serve Monthly Statements 

of Account and the monthly royalty 

fees. Upon receipt of this information, 

the licensee shall serve Monthly 

Statements of Account and all royalty 

fees covering the intervening period 

upon the person or entity identified by 

the agent with authority to receive the 

Notice of Intention by or before the 20th 

day of the month following receipt of 

the notification. It shall not be necessary 

to file a copy of the Monthly Statement 

in the Copyright Office. 

(2)(i) In any case where a Monthly 

Statement of Account is sent by mail or 


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reputable courier service and the 

Monthly Statement of Account is 

returned to the sender because the 

copyright owner or agent is no longer 

located at that address or has refused to 

accept delivery, or in any case where an 

address for the copyright owner is not 

known, the Monthly Statement of 

Account, together with any evidence of 

mailing or attempted delivery by courier 

service, may be filed in the Licensing 

Division of the Copyright Office. Any 

Monthly Statement of Account 

submitted for filing in the Copyright 

Office shall be accompanied by a brief 

statement of the reason why it was not 

served on the copyright owner. A 

written acknowledgment of receipt and 

filing will be provided to the sender. 

(ii) The Copyright Office will not 

accept any royalty fees submitted with 

Monthly Statements of Account under 

this section. 

(iii) Neither the filing of a Monthly 

Statement of Account in the Copyright 

Office, nor the failure to file such 

Monthly Statement, shall have effect 

other than that which may be attributed 

to it by a court of competent 

jurisdiction. 

(iv) No filing fee will be required in 

the case of Monthly Statements of 

Account submitted to the Copyright 

Office under this section. Upon request 

and payment of the fee specified in 

§ 201.3(e) of this chapter, a Certificate of 

Filing will be provided to the sender. 

(3) A separate Monthly Statement of 

Account shall be served for each month 

during which there is any activity 

relevant to the payment of royalties 

under 17 U.S.C. 115, and under this 

section. The Annual Statement of 

Account identified in § 210.24 of this 

subpart does not replace any Monthly 

Statement of Account. 

(4) If a Monthly Statement of Account 

is sent by certified mail or registered 

mail, a mailing receipt shall be 

sufficient to prove that service was 

timely. If a Monthly Statement of 

Account is delivered by a reputable 

courier, documentation from the courier 

showing the first date of attempted 

delivery shall also be sufficient to prove 

that service was timely. In the absence 

of a receipt from the United States 

Postal Service showing the date of 

delivery or documentation showing the 

first date of attempted delivery by a 

reputable courier, the compulsory 

licensee shall bear the burden of 

proving that the Monthly Statement of 

Account was served in a timely manner. 

(5) If a Monthly Statement of Account 

covers reporting for more than 50 works 

that are embodied in phonorecords 

made under the compulsory license, the 

copyright owner or the authorized agent 

may send the licensee a demand that the 

Monthly Statement of Account be 

resubmitted in an electronic format and 

that future Statements of Account be 

submitted in an electronic format. The 

statement may be submitted on a data 

storage medium widely used at the time 

for electronic storage of data, in the form 

of a flat file, word processing document 

or spreadsheet readable with computer 

software in wide use at such time, with 

the required information identified and/ 

or delimited so as to be readily 

discernible. The Statement of Account 

may be submitted by means of 

electronic transmission (such as email) 

if the demand from the copyright owner 

or authorized agent states that such 

submission will be accepted. As 

provided in paragraph (f) of this section, 

the licensee and the copyright owner 

shall establish a procedure to verify that 

the certification portion of the statement 

is made upon the authority of the 

licensee. 

(6) The copyright owner and the 

licensee or authorized agent may agree 

upon alternative methods of payment, 

provided that when the Monthly 

Statement of Account and payment are 

not sent together by mail or courier 

service, they shall be sent 

contemporaneously. Monthly 

Statements of Account shall be sent and 

payment shall be made on or before the 

20th day of each month and shall 

include all royalties for the month next 

proceeding. Any Monthly Statement of 

Account or payment provided in 

accordance with such policy shall not 

be rendered invalid for failing to comply 

with the specific requirements of 

paragraph (g)(1) of this section regarding 

service by mail or by reputable courier 

service of the Monthly Statements of 

Account together with the total royalty 

for the month covered by the Monthly 

Statement. 

(7) For purposes of this section, a 

copyright owner or an agent of a 

copyright owner with authority to 

receive a Monthly Statement of Account 

may make public a written policy that 

it will accept a Monthly Statement of 

Account by means of electronic 

transmission and include in that written 

policy procedures for making royalty 

payments. When the Monthly Statement 

of Account and payment are not sent 

together by mail or courier service, they 

shall be sent contemporaneously. 

Monthly Statements of Account shall be 

sent and payment shall be made on or 

before the 20th day of each month and 

shall include all royalties for the month 

next proceeding. Any Monthly 

Statement of Account or payment 

provided in accordance with such 

policy shall not be rendered invalid for 

failing to comply with the specific 

requirements of paragraph (g)(1) of this 

section regarding service by mail or by 

reputable courier service of the Monthly 

Statements of Account together with the 

total royalty for the month covered by 

the Monthly Statement. 

§ 210.24 Annual statements of accounts. 

(a) Forms. The Copyright Office does 

not provide printed forms for the use of 

persons serving Annual Statements of 

Account. 

(b) Annual period. Any Annual 

Statement of Account shall cover the 

full fiscal year of the compulsory 

licensee. 

(c) General content. An Annual 

Statement of Account shall be clearly 

and prominently identified as an 

‘‘Annual Statement of Account under 

Compulsory License for Making and 

Distributing Phonorecords,’’ and shall 

include a clear statement of the 

following information: 

(1) The fiscal year covered by the 

Annual Statement; 

(2) The full legal name of the 

compulsory licensee, together with all 

fictitious or assumed names used by 

such person or entity for the purpose of 

conducting the business of making and 

distributing phonorecords; 

(3) If the compulsory licensee is a 

business organization, the name and 

title of the chief executive officer, 

managing partner, sole proprietor or 

other person similarly responsible for 

the management of such entity. 

(4) The full address, including a 

specific number and street name or rural 

route, or the place of business of the 

compulsory licensee. A post office box 

or similar designation will not be 

sufficient for this purpose except where 

it is the only address that can be used 

in that geographic location; 

(5) The title or titles of the 

nondramatic musical work or works 

embodied in phonorecords made under 

the compulsory license and owned by 

the copyright owner being served with 

the Annual Statement and the name of 

the author or authors of such work or 

works, if known; 

(6) The playing time of each 

nondramatic musical work on such 

phonorecords; 

(7) For each nondramatic musical 

work that is owned by the same 

copyright owner being served with the 

Annual Statement and that is embodied 

in phonorecords covered by the 

compulsory license, a detailed 

statement of all of the information 

called for in paragraph (d) of this 

section; 

(8) The total royalty payable for the 

fiscal year covered by the Annual 


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Statement computed in accordance with 

the requirements of this section, 

together with a statement of account 

showing in detail how the royalty was 

computed. For these purposes, the 

applicable royalty as specified in 

§§ 385.12 through 385.14 and §§ 385.22 

through 385.24, shall be payable for 

every phonorecord ‘‘voluntarily 

distributed’’ during the fiscal year 

covered by the Annual Statement; 

(9) The total sum paid under Monthly 

Statements of Account in accordance 

with the requirements of this section by 

the compulsory licensee to the 

copyright owner being served with the 

Annual Statement during the fiscal year 

covered by the Annual Statement; and 

(10) Any adjustments for public 

performance royalties deducted from 

the monthly royalty payments made 

during the fiscal year covered by the 

Annual Statement. 

(d) Specific content of annual 

statements: Identification and 

accounting of phonorecords. (1) The 

information called for by paragraph 

(c)(7) of this section shall, with respect 

to each nondramatic musical work, 

include a separate listing for each 

phonorecord configuration (for example, 

limited download, an incidental digital 

phonorecord delivery, and an 

interactive stream) made the number of 

phonorecords made and voluntarily 

distributed’’ by the compulsory licensee 

through the end of the fiscal year 

covered by the Annual Statement, 

together with: 

(i) The catalog number or numbers, 

and label name or names, used on such 

phonorecords; and 

(ii) The names of the principal 

recording artists or groups engaged in 

rendering the performances fixed on 

such phonorecords. 

(2) If the information given under 

paragraphs (d)(1) and (c)(8) of this 

section does not reconcile, the Annual 

Statement shall also include a clear and 

detailed explanation of the difference. 

For these purposes, the information 

given under these paragraphs shall be 

considered not to reconcile if the 

number of phonorecords and royalties 

reported under these paragraphs are 

different from the sum of these amounts 

reported on the Monthly Statements of 

Account covered by the Statement of 

Account. 

(e) Clear statement. The information 

required by paragraph (c) of this section 

involves intelligible, legible, and 

unambiguous statements in the Annual 

Statement of Account itself and without 

incorporation by reference of facts or 

information contained in other 

documents or records, except in the case 

of promotional interactive streaming 

activities, certain promotional limited 

downloads and free trial periods. 

Information concerning promotional 

activities and free trial periods shall be 

maintained and made available as 

prescribed in § 385.14 and § 385.24. 

(f) Certification. (1) Each Annual 

Statement of Account shall be 

accompanied by: 

(i) The printed or typewritten name of 

the person who is the licensee certifying 

the Annual Statement of Account; 

(ii) The date of certification; 

(iii) If the compulsory licensee is a 

partnership or a corporation, the title or 

official position held in the partnership 

or corporation who is making the 

certification; 

(iv) A statement of the capacity of the 

person making the certification; and 

(v) The following statement: 

I certify that I have examined this Annual 

Statement of Account and that all statements 

of fact contained herein are true, complete, 

and correct to the best of my knowledge, 

information, and belief, and are made in good 

faith. 

(2)(i) Each Annual Statement of 

Account shall also be certified by a 

licensed Certified Public Accountant. 

Such certification shall consist of the 

following statement. 

We have examined the attached ‘‘Annual 

Statement of Account Under Compulsory 

License For Making and Distributing 

Phonorecords’’ for the fiscal year ended 

(date) of (name of the compulsory licensee) 

applicable to phonorecords embodying (title 

or titles of nondramatic musical works 

embodied in phonorecords made under the 

compulsory license) made under the 

provisions of 17 U.S.C. 115, as amended by 

Public Law 94–553, and applicable 

regulations of the United States Copyright 

Office. Our examination was made in 

accordance with generally accepted auditing 

standards and accordingly, included tests of 

the accounting records and such other 

auditing procedures as we considered 

necessary in the circumstances. 

In our opinion the Annual Statement of 

Account referred to above presents fairly the 

number of phonorecords embodying each of 

the above-identified nondramatic musical 

works made under compulsory license and 

voluntarily distributed by (name of the 

compulsory licensee) during the fiscal year 

ending (date), and the amount of royalties 

applicable thereto under such compulsory 

license, on a consistent basis and in 

accordance with the above cited law and 

applicable regulations published thereunder. 

lllllllllllllllllll

(City and State of Execution) 

lllllllllllllllllll

(Signature of Certified Public 

Accountant or CPA Firm) 

lllllllllllllllllll

Certificate Number 

lllllllllllllllllll

Jurisdiction of Certificate 

lllllllllllllllllll

(Date of Opinion) 

(ii) The certificate shall be signed by 

an individual, or in the name of a 

partnership or a professional 

corporation with two or more 

shareholders. The certificate number 

and jurisdiction are not required if the 

certificate is signed in the name of a 

partnership or a professional 

corporation with two or more 

shareholders. 

(3) If the Annual Statement of 

Account is served by mail or by 

reputable courier service, the 

certification of the Annual Statement of 

Account by the licensee shall be made 

by handwritten signature. If the 

compulsory licensee is a corporation, 

the signature shall be that of a duly 

authorized officer of the corporation; if 

that compulsory licensee is a 

partnership, the signature shall be that 

of a partner. 

(4) If the Annual Statement of 

Account is served electronically, the 

licensee may serve an electronic 

facsimile of the original certification of 

the Annual Statement of Account signed 

by the licensed Certified Public 

Accountant. The licensee shall retain 

the original certification of the Annual 

Statement of Account signed by the 

licensed Certified Public Accountant, 

which shall be made available to the 

copyright owner upon demand. 

(5) If the Annual Statement of 

Account is served electronically, the 

licensee and the copyright owner shall 

establish a procedure to verify that the 

certification of the Annual Statement of 

Account by the licensee is made upon 

proper authority. 

(g) Service. (1) Each Annual Statement 

of Account shall be served on the 

copyright owner or the agent with 

authority to receive Annual Statements 

of Account on behalf of the copyright 

owner to whom or which it is directed 

by mail or by reputable courier service 

on or before the 20th day of the sixth 

month following the end of the fiscal 

year covered by the Annual Statement. 

It shall not be necessary to file a copy 

of the Annual Statement in the 

Copyright Office. An Annual Statement 

of Account shall be served for each 

fiscal year during which at least one 

Monthly Statement of Account was 

required to have been served under 

§ 210.23(g). 

(2) In any case where the amount 

required to be stated in the Annual 

Statement of Account under paragraph 

(c)(8) of this section is greater than the 


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amount stated in that Annual Statement 

under paragraph (c)(9) of this section, 

the difference between such amounts 

shall be delivered to the copyright 

owner together with the service of the 

Annual Statement. The delivery of such 

sum does not require the copyright 

owner to accept such sum, or to forego 

any right, relief, or remedy which may 

be available under law. 

(3)(i) In any case where an Annual 

Statement of Account is sent by mail or 

by reputable courier service and is 

returned to the sender because the 

copyright owner or agent is not located 

at that address or has refused to accept 

delivery, or in any case where an 

address for the copyright owner is not 

known, the Annual Statement of 

Account, together with any evidence of 

mailing or attempted delivery by courier 

service, may be filed in the Licensing 

Division of the Copyright Office. Any 

Annual Statement of Account submitted 

for filing shall be accompanied by a 

brief statement of the reason why it was 

not served on the copyright owner. A 

written acknowledgment of receipt and 

filing will be provided to the sender. 

(ii) The Copyright Office will not 

accept any royalty fees submitted with 

Annual Statements of Account under 

this paragraph (g)(3). 

(iii) Neither the filing of an Annual 

Statement of Account in the Copyright 

Office, nor the failure to file such 

Annual Statement, shall have any effect 

other than that which may be attributed 

to it by a court of competent 

jurisdiction. 

(iv) No filing fee will be required in 

the case of Annual Statements of 

Account submitted to the Copyright 

Office under this paragraph (g)(3). Upon 

request and payment of the fee specified 

in § 201.3(e) of this chapter, a Certificate 

of Filing will be provided to the sender. 

(4) If an Annual Statement of Account 

is sent by certified mail or registered 

mail, a mailing receipt shall be 

sufficient to prove that service was 

timely. If an Annual Statement of 

Account is delivered by a reputable 

courier, documentation from the courier 

showing the first date of attempted 

delivery shall also be sufficient to prove 

that service was timely. In the absence 

of a receipt from the United States 

Postal Service showing the date of 

delivery or documentation showing the 

first date of attempted delivery by a 

reputable courier, the compulsory 

licensee shall bear the burden of 

proving that the Annual Statement of 

Account was served in a timely manner. 

(5) If an Annual Statement of Account 

covers reporting for more than 50 works 

that are embodied in phonorecords 

made under the compulsory license, the 

copyright owner or the authorized agent 

may send the licensee a demand that the 

Annual Statement of Account be 

resubmitted in an electronic format and 

that future Annual Statements of 

Account be submitted in an electronic 

format. The statement may be submitted 

on a data storage medium widely used 

at the time for electronic storage of data, 

in the form of a flat file, word 

processing document or spreadsheet 

readable with computer software in 

wide use at such time, with the required 

information identified and/or delimited 

so as to be readily discernible. The 

Statement of Account may be submitted 

by means of electronic transmission 

(such as email) if the copyright owner 

or authorized agent states that such 

submission will be accepted. As 

provided in paragraph (f) of this section, 

the licensee and the copyright owner 

shall establish a procedure to verify that 

the certification portion of the statement 

is made upon the authority of the 

licensee. 

(6) The copyright owner and the 

licensee or authorized agent may agree 

upon alternative methods of payment, 

provided that when the Statement of 

Account and payment are not sent 

together by mail or courier service, they 

shall be sent contemporaneously. 

Annual Statements of Account shall be 

sent and any addition payment shall be 

made on or before the 20th day of the 

sixth month following the end of the 

fiscal year covered by the Annual 

Statement. Any Annual Statement of 

Account or payment provided in 

accordance with such policy shall not 

be rendered invalid for failing to comply 

with the specific requirements of 

paragraph (g) of this section regarding 

service by mail or by reputable courier 

service of the Annual Statements of 

Account together with the total 

additional royalty covered by the 

Annual Statement. 

(7) For purposes of this section, a 

copyright owner or an agent of a 

copyright owner with authority to 

receive an Annual Statement of Account 

may make public a written policy that 

it will accept an Annual Statement of 

Account by means of electronic 

transmission and include in that written 

policy procedures for making any 

additional royalty payments. When the 

Annual Statement of Account and any 

additional payment are not sent together 

by mail or courier service, they shall be 

sent contemporaneously. Annual 

Statements of Account shall be sent and 

payment shall be made on or before the 

20th day of the sixth month following 

the end of the fiscal year covered by the 

Annual Statement. Any Annual 

Statement of Account provided in 

accordance with such policy shall not 

be rendered invalid for failing to comply 

with the specific requirements of this 

paragraph (g) regarding service by mail 

or by reputable courier service of the 

Annual Statement of Account together 

with any additional royalty payment. 

§ 210.25 Amended annual statements of 

account. 

In any case where an Annual 

Statement of Account has been served 

prior to the final determination of 

public performance royalties for the 

reported musical works, all compulsory 

licensees shall serve Amended Annual 

Statement of Accounts within six 

months from the date final rates for 

public performance royalties for the 

reported musical works have been 

established. The Amended Annual 

Statements of Account shall recalculate 

the royalty fees reported on the relevant 

Annual Statements of Account to adjust 

for any change to the public 

performance rate used to calculate the 

royalties reported pursuant to § 210.24. 

Service shall be made in accordance 

with § 210.24(g) of this subpart. 

§ 210.26 Documentation. 

All compulsory licensees shall, for a 

period of at least five years from the 

date of service of an Annual Statement 

of Account or for a period of at least 

three years from the date the relevant 

public performance royalty fees have 

been set, whichever is longer, keep and 

retain in their possession all records and 

documents necessary and appropriate to 

support fully the information set forth 

in such Annual Statement and in 

Monthly Statements served during the 

fiscal year covered by such Annual 

Statement. 

§ 210.27 Timing of statements of account. 

Statements of Accounts for any 

accounting period which closes after the 

effective date of this regulation shall be 

due as provided in §§ 210.23(g)(1) and 

210.24(g)(1). Statements of Account for 

any prior reporting period shall be due 

180 days after the effective date of this 

regulation. 

Dated: July 23, 2012. 

Tanya M. Sandros, 

Deputy General Counsel. 

[FR Doc. 2012–18275 Filed 7–26–12; 8:45 am] 

BILLING CODE 1410–30–P 


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