[Federal Register Volume 74, Number 66 (Wednesday, April 8, 2009)]
[Proposed Rules]
[Pages 15901-15904]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-7950]


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LIBRARY OF CONGRESS

Copyright Royalty Board

37 CFR Part 370

[Docket No. RM 2008-7]


Notice and Recordkeeping for Use of Sound Recordings Under 
Statutory License

AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Notice of inquiry.

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SUMMARY: The Copyright Royalty Judges are seeking written comments from 
interested parties to questions relating to the costs of census versus 
sample reporting to assist the Judges in the revision of the interim 
regulations for filing notices of use and the delivery of records of 
use of sound recordings under two statutory licenses of the Copyright 
Act.

DATES: Comments are due no later than May 26, 2009. Reply comments are 
due no later than June 8, 2009.

ADDRESSES: Comments and reply comments may be sent electronically to 
<a href="/cdn-cgi/l/email-protection#47243525072b282469202831"><span class="__cf_email__" data-cfemail="23405141634f4c400d444c55">[email protected]</span></a>. In the alternative, send an original, five copies, and an 
electronic copy on a CD either by mail or hand delivery. Please do not 
use multiple means of transmission. Comments and reply comments may not 
be delivered by an overnight delivery service other than the U.S. 
Postal Service Express

[[Page 15902]]

Mail. If by mail (including overnight delivery), comments and reply 
comments must be addressed to: Copyright Royalty Board, P.O. Box 70977, 
Washington, DC 20024-0977. If hand delivered by a private party, 
comments and reply comments must be brought to the Copyright Office 
Public Information Office, Library of Congress, James Madison Memorial 
Building, Room LM-401, 101 Independence Avenue, SE., Washington, DC 
20559-6000. If delivered by commercial courier, comments and reply 
comments must be delivered between 8:30 a.m. and 4 p.m. to the 
Congressional Courier Acceptance Site located at 2nd and D Street, NE., 
Washington, DC, and the envelope must be addressed to: Copyright 
Royalty Board, Library of Congress, James Madison Memorial Building, 
LM-403, 101 Independence Avenue, SE., Washington, DC 20559-6000.

FOR FURTHER INFORMATION CONTACT: Richard Strasser, Senior Attorney, or 
Gina Giuffreda, Attorney Advisor, by telephone at (202) 707-7658 or e-
mail at <a href="/cdn-cgi/l/email-protection#60031202200c0f034e070f16"><span class="__cf_email__" data-cfemail="8be8f9e9cbe7e4e8a5ece4fd">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 

Background

    On December 30, 2008, the Copyright Royalty Judges (``Judges'') 
published a notice of proposed rulemaking (``NPRM'') setting forth 
proposed revisions to the interim regulations adopted in October 2006 
for filing notice of use and the delivery of sound recordings under 
sections 114 and 112 of the Copyright Act, title 17 of the United 
States Code. 73 FR 79727. Specifically, the Judges proposed eliminating 
obsolete provisions of the interim regulations and placing definitions 
that were duplicated in various sections of the interim regulations 
into a new single definition section applicable throughout Part 370 
unless otherwise defined in a specific section. Id. The more 
significant revision proposed by the Judges was to expand the reporting 
period to implement year-round census reporting. Consequently, the 
Judges proposed eliminating for nonsubscription services the aggregate 
tuning hours (``ATH'') approach previously available and requiring that 
such services now report actual total performances. Conversely, the 
Judges proposed allowing preexisting satellite digital audio radio 
services, new subscription services and business establishment services 
to achieve census reporting by using the ATH option if technological 
impediments existed which thwarted the measurement of actual 
listenership. Finally, the Judges also solicited comments on 
technological developments which may warrant additional revisions to 
rules governing the method of reporting specific data elements and/or 
the delivery mechanism employed for reporting.

Discussion of Comments Received

    In response to the NPRM, the Judges received 43 comments from 
various categories of interested parties: (1) Representatives of 
copyright owners and performers, including SoundExchange, the 
Collective charged with collecting and distributing royalties; (2) 
copyright users and/or their representatives, educational radio 
broadcasters, a noncommercial religious broadcaster, and an operator of 
radio and Internet stations featuring Christian programming; (3) an 
Internet service that simulcasts the over-the-air and Internet-only 
broadcasts of primarily noncommercial terrestrial radio stations; and 
(4) software providers of recordkeeping solutions to radio stations and 
webcasters.
    SoundExchange and Frederick Wilhelms III, who works for recording 
artists and songwriters, support the Judges' proposal to require census 
reporting. They contend that the current sample reporting results in 
underpayments or non-payments to some copyright owners and performers. 
Comments of SoundExchange at 4; Comments of Wilhelms at 1. According to 
SoundExchange, requiring all services to provide census reporting would 
eliminate this shortcoming and allow SoundExchange to ``distribute 
funds on a fully accurate basis to all copyright owners and 
performers.'' Comments of SoundExchange at 3 (footnote omitted). 
SoundExchange notes that ``many services already provide SoundExchange 
with year-round census reporting,'' Id. at 5, and estimates that ``over 
75% of the royalties it receives from licensees are associated with 
reports of use that are made using year-round census reporting.'' Id. 
at 6.
    Commenters representing certain educational and commercial radio 
broadcasters opposed the proposed census reporting requirement. The 
educational radio broadcasters who filed comments stated that they 
currently do not pay more than the $500 minimum fee and do not exceed 
the minimum ATH threshold. See, e.g., Comments of WONB Radio, Comments 
of WESS Radio. See also Comments of College Broadcasters Inc. These 
commenters argued that compliance with such requirements would be 
unduly burdensome, if not impossible, for them because they lack the 
finances, the staff, and the technology to do so. Consequently, they 
conclude that application of the proposed revisions would force many of 
them to cease their operations due to their inability to comply with 
the revised regulations. See Comments of WPTS, KWSC-FM, and Blaze 
Radio. Moreover, some commenters note that complying with the proposed 
provision regarding census reporting would be difficult because many 
educational radio broadcasters do not have automated playlists but 
rather their playlists are created manually by disc jockeys as they 
play the music. See, e.g., Comments of WSOU-FM at 1-2. Consequently, 
they urge the Judges to exempt from more stringent reporting 
requirements those educational radio broadcasters currently paying only 
the $500 minimum fee and not exceeding the ATH threshold and allow them 
to continue to report under the current interim regulations.
    The National Association of Broadcasters' (``NAB'') comment echoes 
the educational radio broadcasters' contention that the proposed move 
to census reporting and the elimination of the ATH option would place 
an undue burden on broadcasters that is not required by the statute. 
Comments of NAB at 4. NAB argues that there has been no showing that 
``the sampling methodology currently utilized by SoundExchange is 
inefficient, or results in significant misallocation of royalty 
payments.'' Id. at 3.
    With respect to the elimination of the ATH option, NAB contends 
that this option is ``critical'' for some broadcasters. Id. NAB asserts 
that payment of royalties on the basis of actual performances is far 
different from reporting performances of any given recording on an 
actual performance basis. NAB states that the latter requires the 
matching of the identity of the song with the number of listeners while 
the former does not. According to NAB, to accomplish the reporting 
proposed by the Judges, broadcasters would have to merge internal song 
identification and automation software. NAB argues that often these 
systems are incapable of communicating with each other and are not 
operated by the same entities. Id.
    Two recordkeeping and reporting vendors also opposed the proposed 
census reporting requirement, citing concerns about costs and the 
technological difficulties in calculating actual total performances 
accurately. Comments of RadioActivity.Fm and Tom Worster/Spinitron.

Request for Additional Information

    The current proposal is intended to fulfill the Judges' obligations 
under the

[[Page 15903]]

Copyright Act to establish requirements by which copyright owners may 
receive reasonable notice of the use of their sound recordings and 
under which records of use shall be kept and made available by entities 
performing sound recordings. See, e.g., 17 U.S.C. 114(f)(4)(A). The 
Judges have determined preliminarily that such reasonable notice of use 
requires the type of census reporting that this proposal mandates. 
However, the Judges are mindful of the concerns expressed by some 
commenters that any reporting requirements that the Judges adopt should 
not unduly burden the services required to file reports of use. 
Therefore, the Judges seek additional information to gain a fuller 
understanding of the likely costs and benefits that will be derived if 
the proposed census reporting provision is adopted and to consider any 
alternatives to the proposal that might accomplish the same goals as 
the proposal in a less burdensome way, particularly with respect to 
small entities.

Consideration of Impact on Small Entities

    Some commenters have stated that the proposed census reporting 
requirement would adversely impact small entities. The Judges are 
mindful of any impact that the current proposal may have on small 
entities. Therefore, the Judges seek comment on the approximate number 
of small entities that would be impacted by the proposed rulemaking, 
and in particular, by the proposed census reporting requirement.
    To help mitigate possible impact on small entities, the Judges also 
seek possible alternatives to the proposed census provision. In 
considering the proposed census reporting requirement, the Judges 
considered, as possible alternatives, maintaining the current reporting 
requirement, which requires services to provide the total number of 
performances of each sound recording during the relevant reporting 
period, which is currently limited to two periods of seven consecutive 
days for each calendar quarter of the year. Moreover, with respect to 
certain services, the proposal includes an ATH alternative to measuring 
performances to the extent that technological impediments hamper such a 
service's ability to measure actual listenership. The Judges also 
considered exempting from the proposed census reporting requirements 
certain categories of services that might lack the resources or the 
technological sophistication to comply with the proposed census 
reporting requirement. Preliminarily, the Judges believe that the 
alternatives discussed above could result in an unfair allocation of 
royalty fees by under-compensating certain copyright owners who were 
not accurately represented through the current sample reporting and by 
over-compensating copyright owners whose works are over-represented in 
the sample period. Nevertheless, the Judges seek comment on the 
alternatives discussed above, as well as others that the Judges should 
consider and whether those alternatives would be preferable to the 
current proposal in terms of accurately representing the actual 
listenership information and any cost savings that might be realized 
should the Judges adopt an alternative rather than the current proposed 
census reporting provision.
    In this regard, the Judges seek detailed information from 
SoundExchange about the way in which the proposed census reporting 
requirement would enhance its ability to more accurately and 
efficiently distribute royalties to copyright owners. In particular, 
the Judges seek information from SoundExchange that discusses the 
current methodology SoundExchange uses to allocate royalties as well as 
a discussion about how that methodology would change if the proposed 
census provision is adopted. Currently, SoundExchange is receiving some 
reports based on ATH rather than on the measurement of the actual total 
performances of a sound recording during the reporting period. How is 
SoundExchange currently allocating payments among the specific songs 
performed in ATH-based reports? What proportion of the total number of 
songs performed in the first quarter of 2008 was reported on an 
``actual total performance basis'' as compared to an ATH basis? What 
proportion of revenues received for songs performed in the first 
quarter of 2008 have been distributed to date? For the same period, 
what proportion of the revenues distributed were revenues attributed to 
song performance as measured by actual total performance as compared to 
by ATH? What metrics does SoundExchange currently employ to measure its 
effectiveness in receiving and distributing performance revenues?
    We seek estimates from SoundExchange (and others) detailing the 
cost savings or additional burdens, if any, that copyright owners might 
expect if the census reporting provision were adopted. As discussed 
above, SoundExchange has stated that ``over 75% of the royalties it 
receives from licensees are associated with reports of use that are 
made using year-round census reporting.'' Comments of SoundExchange at 
6. The Judges seek additional information on how SoundExchange derived 
this estimate. For example, what percentage of reporting entities 
currently uses year-round census reporting? What percentage of songs 
for which SoundExchange is the Collective are reported based on year-
round census reporting? What is the nature of those entities that do 
not currently use year-round census reporting? For example, what 
percentage of entities that do not use year-round reporting are small 
entities? \1\ What percentage are not-for-profit entities?
    If the Judges were to exempt certain classes of entities from the 
proposed year-round reporting provision, what would be appropriate 
criteria for such an exemption? In providing your comment, please 
consider which entities would be least likely to have the resources or 
technological sophistication to comply with the proposed census 
provision. For example, would a revenue-based cut-off be the most 
appropriate method for developing an exemption? If so, what would be an 
appropriate revenue level to qualify for an exemption? In the 
alternative, would it be more appropriate to exempt from the proposed 
census reporting provision those entities that qualify for the minimum 
$500 per channel or per station performance royalty set forth in 37 CFR 
380.3(a)(2)? If so, should the exemption be limited to noncommercial 
entities or should commercial entities qualify for the exemption also? 
Are there other criteria that would be preferable in formulating an 
exemption (e.g., number of employees, profit versus not-for-profit 
organizational structure)?
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    \1\ Please consider an entity as small if it is independently 
owned and operated and is not dominant in its field of operation.
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    Has SoundExchange considered adding any additional open-source 
licensed spreadsheet programs to the Microsoft Excel and Corel Quattro 
Pro spreadsheet programs it currently supports to facilitate the 
submission of Reports of Use? What are the potential benefits and 
difficulties associated with adding such programs? (Any costs cited 
should be specific dollar amounts). Which Services have examined the 
use of such open source software? How many would adopt it if it were 
available as an option? What is the specific dollar amount of any cost-
savings envisioned by Services specifically attributable to the use of 
such open-source spreadsheet software?
    As discussed above, some commenters state that complying with

[[Page 15904]]

the proposed provision regarding census reporting would be difficult 
because many educational radio broadcasters do not have automated 
playlists but rather their playlists are created manually by disc 
jockeys as they play the music. See, e.g., Comments of WSOU-FM at 1-2. 
The Judges seek comment on the percentage of broadcasters that do not 
use automated playlists. Assuming playlists are completely automated, 
is the cost of preparing a Report of Use likely to rise for a Service 
which moves from the current 2-weeks per quarter sampling period to 
full census? If so, by how much will such costs rise? What specifically 
accounts for any such increase?
    For those entities that do not use automated playlists, what means 
do they use for complying with current reporting requirements? Is all 
programming on college and other educational stations done manually? Do 
such stations currently have automated playlist capabilities in place? 
In other words, does manual programming occur simply as a matter of 
creative choice? Where a college radio station does not currently have 
an automated playlist capability, what is the cost of obtaining such a 
capability? What technologies, if any, are currently employed in 
complying with the current requirements? Which companies offer them and 
at what cost? What changes, if any, would be required to comply with 
the proposed census reporting requirement? What are the likely costs 
that would be required to move from the current reporting methodology 
to one that would be required under the proposal? Is technology 
currently available that would permit entities that do not use 
automated playlists to comply with the proposed census provision? If 
so, what companies provide such capabilities and at what cost? If such 
technology is not currently available, what would be the costs of 
developing it?

     Dated: April 3, 2009.
James Scott Sledge,
Chief, U.S. Copyright Royalty Judge.
[FR Doc. E9-7950 Filed 4-7-09; 8:45 am]
BILLING CODE 1410-72-P


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