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###### Library of Congress

###### Copyright Royalty Board

          - 37 CFR Part 383
          - [Docket No. 23-CRB-0013-NSR (2026-2030)]

# ACTION:

Proposed rule.

# SUMMARY:

The Copyright Royalty Judges are publishing for comment proposed regulations governing the rates and terms for the digital performances of sound recordings by new subscription services and for the making of ephemeral recordings necessary to facilitate those transmissions for the period commencing January 1, 2026, and ending on December 31, 2030.

# DATES:

Comments and objections, if any, are due no later than January 21, 2025.

# ADDRESSES:

                        You may submit comments using eCRB, the Copyright Royalty Board's online electronic filing application, at                         *https://app.crb.gov/​.*

*Instructions:*                         To send your comment through eCRB, if you don't have a user account, you will first need to register for an account and wait for your registration to be approved. Approval of user accounts is only available during business hours. Once you have an approved account, you can only sign in and file your comment after setting up multi-factor authentication, which can be done at any time of day. All comments must include the Copyright Royalty Board name and the docket number for this proposed rule (23-CRB-0013-NSR (2026-2030)). All properly filed comments will appear without change in eCRB at                         *https://app.crb.gov,*                         including any personal information provided.                    

*Docket:*                         For access to the docket, go to eCRB, the Copyright Royalty Board's electronic filing and case management system, at                         *https://app.crb.gov/​,*                         and search for docket number 23-CRB-0013-NSR (2026-2030).                    

# FOR FURTHER INFORMATION CONTACT:

                        Anita Brown, CRB Program Specialist, at (202) 707-7658 or                         *crb@loc.gov.*

# SUPPLEMENTARY INFORMATION:

## Background

                    Section 114 of the Copyright Act, title 17 of the United States Code, provides a statutory license that allows for the public performance of sound recordings                           ( print page 103723)                        by means of a digital audio transmission by, among others, new subscription services. 17 U.S.C. 114(f). For purposes of the section 114 license, a “new subscription service” is a “service that performs sound recordings by means of noninteractive subscription digital audio transmissions and that is not a preexisting subscription or preexisting satellite digital audio radio service.” 17 U.S.C. 114(j)(8).                

Services using the section 114 license may need to make one or more temporary or “ephemeral” copies of a sound recording to facilitate the transmission of that recording. The section 112 statutory license allows for the making of these ephemeral reproductions. 17 U.S.C. 112(e).

                    Chapter 8 of the Copyright Act requires the Judges to conduct proceedings every five years to determine the rates and terms for the sections 114 and 112 statutory licenses. 17 U.S.C. 801(b)(1), 804(b)(3)(A). The current proceeding commenced in January 2024 for rates and terms that will become effective on January 1, 2026, and end on December 31, 2030. Pursuant to section 804(b)(3)(A), the Judges published in the                     **Federal Register**                     a notice commencing the proceeding and requesting that interested parties submit their petitions to participate. 89 FR 810 (Jan. 5, 2024). SoundExchange, Inc. (“SoundExchange”), Sirius XM Radio Inc. (“Sirius XM”), and Stingray Music USA Inc. (“Stingray”), each filed Petitions to Participate.                

                    The Judges gave notice to all participants of the three-month negotiation period required by 17 U.S.C. 803(b)(3) and directed that, if the participants were unable to negotiate a settlement, they should submit Written Direct Statements no later than September 13, 2024. On September 9, 2024, the Copyright Royalty Judges (Judges) received a joint motion from SoundExchange, Sirius XM, and Stingray to adopt a settlement of their interests regarding the rates and terms for 2026-2030 for certain new subscription services (NSS). The parties request that the Judges adopt the settlement in its entirety as a settlement of rates and terms under sections 112(e) and 114 of the Copyright Act for new subscription services of the type at issue in the captioned proceeding,                     *i.e.,*                     music services provided to residential subscribers as part of a cable or satellite television bundle subject to royalty rates and terms in 37 CFR part 383. Joint Motion to Adopt Partial Settlement at 1 (Joint Motion). SoundExchange represents sound recording copyright owners and performers. Sirius XM and Stingray rely on the royalty rates and terms in 37 CFR part 383. Joint Motion at 2. The Judges hereby publish the settlement and request comments.                

## Statutory Timing of Adoption of Rates and Terms

                    Section 801(b)(7)(A) of the Copyright Act authorizes the Judges to adopt royalty rates and terms negotiated by “some or all of the participants in a proceeding at any time during the proceeding” provided they are submitted to the Judges for approval. The Judges must provide “an opportunity to comment on the agreement” to participants and non-participants in the rate proceeding who “would be bound by the terms, rates, or other determination set by any agreement. . . .” 17 U.S.C. 801(b)(7)(A)(i). Participants in the proceeding may also “object to [the agreement's] adoption as a basis for statutory terms and rates.”                     *Id.*

                    The Judges “may decline to adopt the agreement as a basis for statutory terms and rates for participants that are not parties to the agreement,” only “if any participant [in the proceeding] objects to the agreement and the [Judges] conclude, based on the record before them if one exists, that the agreement does not provide a reasonable basis for setting statutory terms or rates,” 17 U.S.C. 801(b)(7)(A)(ii), or where the negotiated agreement includes provisions that are contrary to the provisions of the applicable license(s) or otherwise contrary to statutory law.                     *See*                     Scope of the Copyright Royalty Judges Authority to Adopt Confidentiality Requirements upon Copyright Owners within a Voluntarily Negotiated License Agreement, 78 FR 47421, 47422 (Aug. 5, 2013), citing 74 FR 4537, 4540 (Jan. 26, 2009).                

## Proposed Adjustments to Rates and Terms

According to SoundExchange, Sirius XM, and Stingray, the settlement incorporates the same royalty rate structure presently set forth in 37 CFR part 383 except that annual increases in the per-subscriber fees are to be based on changes in the Consumer Price Index for All Urban Consumers, rather than being pre-negotiated as during the current rate period. Thus, the statutory royalty rates for 2026 are to be based on an inflation adjustment to the 2025 rates currently provided in § 383.3(a), and the rates for each subsequent year of the royalty period are to be determined by a similar adjustment.

                    The Parties have also agreed that the applicable terms used in part 383 should be those finally determined in the                     *Web VI*                     proceeding (Docket No. 23-CRB-0012-WR (2026-2030)), except for (1) the provisions concerning auditing of payments and distributions, which are substantively the same as those currently in effect for new subscription services of the type at issue in the proceeding, and (2) a provision addressing distribution of royalties, which includes language based on that in 37 CFR 384.4(i)(1) and 370.4(f) permitting SoundExchange to use proxy data to distribute royalties when it is not able to obtain a usable report of use from a Licensee. In other respects, the Settlement preserves the existing provisions of part 383 with only minor updating. Joint Motion at 2-3.                

                    The fact that the Settlement incorporates terms that have not yet been established in the                     *Web VI*                     proceeding may raise concern as to whether participants and non-participants in the rate proceeding who would be bound by the terms, rates, or other determination set by any agreement are properly afforded the aforementioned statutory opportunities to object or comment on the agreement. However, the Judges take notice that it is not inappropriate for agreements to incorporate and/or rely in part on events, facts or determinations that have not yet been established,                     *e.g.,*                     references to adjustments based on yet to be determined consumer price index measurements. The Judges are also mindful that Congress intended to facilitate and encourage settlement agreements.                     *See,*                     H.R. Rep. No. 108-408, at 24 and 30 (2002). Accordingly, objectors and commenters may knowingly and willingly choose to accept some uncertainty as to future settlement terms and a reference to an outside method for resolving the uncertain issues. The Judges do not express an opinion as to the extent to which any persons or entities who would otherwise be bound by this settlement may have a subsequent right to challenge the applicability of as yet non-existent terms.                

Therefore, the Judges publish the Settlement with the current understanding that doing so is in compliance with the statutory opportunities to object or comment on the agreement.

                    Those who would be bound by the terms, rates, or other determination set by the agreement may comment and proceeding participants may object to any or all of the proposed regulations contained in this document.[1]                                          Such                           ( print page 103724)                        comments and objections must be submitted no later than January 21, 2025.                

# List of Subjects in 37 CFR Part 383

      - Copyright
      - Sound recordings
      - Webcasters

For the reasons set forth in the preamble, the Copyright Royalty Judges propose to revise 37 CFR part 383 to read as follows:

# PART 383—RATES AND TERMS FOR SUBSCRIPTION TRANSMISSIONS AND THE REPRODUCTION OF EMPHEMERAL RECORDINGS BY CERTAIN NEW SUBSCRIPTION SERVICES

        - 383.1
        - General.
        - 383.2
        - Definitions.
        - 383.3
        - Royalty fees for public performances of sound recordings and the making of ephemeral recordings.
        - 383.4
        - Distribution of royalties.
        - 383.5
        - Auditing payments and distributions.
        - 383.6
        - Terms for making payment of royalty fees.

Authority: 17 U.S.C. 112(e), 114, and 801(b)(1).

§ 383.1

                            (a)                             *Scope.*                             This part establishes rates and terms of royalty payments for the public performance of sound recordings in certain digital transmissions by Licensees in accordance with the provisions of 17 U.S.C. 114, and the making of certain ephemeral recordings by Licensees in accordance with the provisions of 17 U.S.C. 112(e), during the period commencing January 1, 2026, and continuing through December 31, 2030.                        

                            (b)                             *Legal compliance.*                             Licensees relying upon the statutory licenses set forth in 17 U.S.C. 112(e) and 114 shall comply with the requirements of those sections and the rates and terms of this part.                        

                            (c)                             *Relationship to voluntary agreements.*                             Notwithstanding the royalty rates and terms established in this part, the rates and terms of any voluntary license agreements entered into by Copyright Owners and Licensees shall apply in lieu of the rates and terms of this part to transmissions with the scope of such agreements.                        

§ 383.2

For purposes of this part, the following definitions shall apply:

                            (a)                             *Bundled Contracts*                             means contracts between the Licensee and a Provider in which the Service is not the only content licensed by the Licensee to the Provider.                        

                            (b)                             *Collective*                             means the collection and distribution organization that is designated by the Copyright Royalty Judges, and which, for the current rate period, is SoundExchange, Inc.                        

                            (c)                             *Copyright Owner*                             means a sound recording copyright owner, or a rights owner under 17 U.S.C. 1401(l)(2), who is entitled to receive royalty payments made under this part pursuant to the statutory licenses under 17 U.S.C. 112(e) and 114.                        

                            (d)                             *License Period*                             means the period commencing January 1, 2026, and continuing through December 31, 2030.                        

                            (e)                             *Licensee*                             is a person that has obtained statutory licenses under 17 U.S.C. 112(e) and 114, and the implementing regulations in this part, to make digital audio transmissions as part of a Service (as defined in this section), and ephemeral recordings for use in facilitating such transmissions.                        

                            (f)                             *Payor*                             means the entity required to make royalty payments to the Collective or the entity required to distribute royalty fees collected, depending on context. The Payor is:                        

(1) A Licensee, in relation to the Collective; and

(2) The Collective in relation to a Copyright Owner or Performer.

                            (g)                             *Performers*                             means the independent administrators identified in 17 U.S.C. 114(g)(2)(B) and (C) and the parties identified in 17 U.S.C. 114(g)(2)(D).                        

                            (h)                             *Provider*                             means a “multichannel video programming distributor” as that term is defined in 47 CFR 76.1000(e); notwithstanding such definition, for purposes of this part, a Provider shall include only a distributor of programming to televisions, such as a cable or satellite television provider.                        

                            (i)                             *Qualified auditor*                             means a Certified Public Accountant independent within the meaning of the American Institute of Certified Public Accountants Code of Professional Conduct.                        

                            (j)                             *Service*                             is a non-interactive (consistent with the definition of “interactive service” in 17 U.S.C. 114(j)(7)) audio-only subscription service (including accompanying information and graphics related to the audio) that is transmitted to residential subscribers of a television service through a Provider which is marketed as and is in fact primarily a video service where:                        

(1) Subscribers do not pay a separate fee for audio channels.

(2) The audio channels are delivered by digital audio transmissions through a technology that is incapable of tracking the individual sound recordings received by any particular consumer.

(3) However, paragraph (j)(2) of this section shall not apply to the Licensee's current contracts with Providers that are in effect as of the effective date of this part if such Providers become capable in the future of tracking the individual sound recordings received by any particular consumer, provided that the audio channels continued to be delivered to Subscribers by digital audio transmissions and the Licensee remains incapable of tracking the individual sound recordings received by any particular consumer.

                            (k)                             *Subscriber*                             means every residential subscriber to the underlying service of the Provider who receives Licensee's Service in the United States for all or any part of a month; provided, however, that for any Licensee that is not able to track the number of subscribers on a per-day basis, “Subscribers” shall be calculated based on the average of the number of subscribers on the last day of the preceding month and the last day of the applicable month, unless the Service is paid by the Provider based on end-of-month numbers, in which event “Subscribers” shall be counted based on end-of-month data.                        

                            (l)                             *Stand-Alone Contracts*                             means contracts between the Licensee and a Provider in which the only content licensed to the Provider is the Service.                        

§ 383.3

                            (a)                             *Royalty rates.*                             Royalty rates for the public performance of sound recordings by eligible digital transmissions made over a Service pursuant to 17 U.S.C. 114, and for ephemeral recordings of sound recordings made pursuant to 17 U.S.C. 112(e) to facilitate such transmissions during the License Period, are as follows. For 2026, each Licensee will pay, with respect to content covered by the License that is provided via the Service of each such Licensee:                        

(1) For Stand-Alone Contracts, a monthly payment of [amount to be calculated in November 2025 and published in December 2025 in the final rule] per Subscriber to the Service of such Licensee, which is equivalent to the 2025 royalty rate of $0.0234, as adjusted by the annual royalty fee adjustment in paragraph (b) of this section.

                            (2) For Bundled Contracts, a monthly payment of [amount to be calculated in November 2025 and published in December 2025 in the final rule] per Subscriber to the Service of such                                   ( print page 103725)                                Licensee, which is equivalent to the 2025 royalty rate of $0.0390, as adjusted by the annual royalty fee adjustment in paragraph (b) of this section.                        

                            (b)                             *Annual royalty fee adjustment.*                             (1) The Copyright Royalty Judges shall adjust the royalty fees each year, as described in paragraph (b)(2) of this section, beginning with the fees for 2026, to reflect any changes occurring in the cost of living as determined by the most recent Consumer Price Index for All Urban Consumers (U.S. City Average, all items) (CPI-U) published by the Secretary of Labor before December 1 of the preceding year.                        

(2)(i) The calculation of the rate for each year shall be cumulative based on a calculation of the percentage increase in the CPI-U from the CPI-U published in November, 2024 (CPI-U%) and shall be made according to the following formulas:

                            (A) For Stand-Alone Contracts, (1 + (Cy                            −315.664/315.664) × $0.0234; and                        

                            (B) For Bundled Contracts, (1 + (Cy                            −315.664/315.664) × $0.0390; and                        

                            (ii) For both formulas Cy                             is the CPI-U published by the Secretary of Labor before December 1 of the preceding year. The adjusted rate shall be rounded to the nearest fourth decimal place.                        

                            (3) The Judges shall publish notice of the adjusted fees in the                             **Federal Register**                             at least 25 days before January 1 of each year of the License Period. The adjusted fees shall be effective on January 1 of each year of the License Period for such year.                        

                            (c)                             *Minimum fee.*                             Each Licensee will pay an annual, non-refundable minimum fee of one hundred thousand dollars ($100,000), payable on January 31 of each calendar year in which the Service is provided pursuant to statutory licenses under 17 U.S.C. 112(e) and 114. Such fee shall be recoupable and credited against royalties due in the calendar year for which the payment is made.                        

                            (d)                             *Allocation between ephemeral recordings fees and performance royalty fees.*                             The Collective must credit 5% of all royalty payments as royalty payment for Ephemeral Recordings and credit the remaining 95% to royalties under 17 U.S.C. 114. All Ephemeral Recordings that a Licensee makes which are necessary and commercially reasonable for making noninteractive digital transmissions through a Service are included in the 5%.                        

§ 383.4

The Collective must promptly distribute royalties received from Licensees to Copyright Owners and Performers that are entitled thereto, or to their designated agents. The Collective shall only be responsible for making distributions to those who provide the Collective with information as is necessary to identify and pay the correct recipient. The Collective must distribute royalties on a basis that values all usage by a Licensee equally based upon the information provided under the Reports of Use requirements for Licensees pursuant to § 370.4 of this chapter and this part. However, in any case in which a Licensee has not provided a compliant Report of Use, whether for the License Period or otherwise, and the board of directors of the Collective determines that further efforts to seek the missing Report of Use from the Licensee would not be warranted, the Collective may distribute the royalties associated with the Licensee's missing Report of Use on the basis of Reports of Use for the corresponding calendar year filed by other Licensees.

§ 383.5

                            (a)                             *General.*                             This section prescribes procedures by which any entity entitled to receive payment or distribution of royalties may verify payments or distributions by auditing the Payor. The Collective may audit a Licensee's payments of royalties to the Collective, and a Copyright Owner or Performer may audit the Collective's distributions of royalties to the Copyright Owner or Performer. Nothing in this section shall preclude a verifying entity and the Payor from agreeing to verification methods in addition to or different from those set forth in this section.                        

                            (b)                             *Frequency of auditing.*                             The verifying entity may conduct an audit of each Licensee only once a year for any or all of the prior three calendar years. A verifying entity may not audit records for any calendar year more than once.                        

                            (c)                             *Notice of intent to audit.*                             The verifying entity must file with the Copyright Royalty Judges a notice of intent to audit the Payor, which notice the Judges must publish in the                             **Federal Register**                             within 30 days of the filing of the notice. Simultaneously with the filing of the notice, the verifying entity must deliver a copy to the Payor.                        

                            (d)                             *The audit.*                             The audit must be conducted during regular business hours by a qualified auditor who is not retained on a contingency fee basis and is identified in the notice. The auditor shall determine the accuracy of royalty payments or distributions, including whether an underpayment or overpayment of royalties was made. An audit of books and records, including underlying paperwork, performed in the ordinary course of business according to generally accepted auditing standards by a qualified auditor, shall serve as an acceptable verification procedure for all parties with respect to the information that is within the scope of the audit.                        

                            (e)                             *Access to third-party records for audit purposes.*                             The Payor must use commercially reasonable efforts to obtain or to provide access to any relevant books and records maintained by third parties for the purpose of the audit.                        

                            (f)                             *Duty of auditor to consult.*                             The auditor must produce a written report to the verifying entity. Before rendering the report, unless the auditor has a reasonable basis to suspect fraud on the part of the Payor, the disclosure of which would, in the reasonable opinion of the auditor, prejudice any investigation of the suspected fraud, the auditor must review tentative written findings of the audit with the appropriate agent or employee of the Payor in order to remedy any factual errors and clarify any issues relating to the audit; provided that an appropriate agent or employee of the Payor reasonably cooperates with the auditor to remedy promptly any factual errors or clarify any issues raised by the audit. The auditor must include in the written report information concerning the cooperation or the lack thereof of the employee or agent.                        

                            (g)                             *Audit results; underpayment or overpayment of royalties.*                             If the auditor determines the Payor underpaid royalties, the Payor shall remit the amount of any underpayment determined by the auditor to the verifying entity, together with interest at the rate specified in § 380.2(d) of this chapter. In the absence of mutually agreed payment terms, which may, but need not, include installment payments, the Payor shall remit promptly to the verifying entity the entire amount of the underpayment determined by the auditor. If the auditor determines the Payor overpaid royalties, however, the verifying entity shall not be required to remit the amount of any overpayment to the Payor, and the Payor shall not seek by any means to recoup, offset, or take a credit for the overpayment, unless the Payor and the verifying entity have agreed otherwise.                        

                            (h)                             *Paying the costs of the audit.*                             The verifying entity must pay the cost of the verification procedure, unless the auditor determines that there was a net underpayment (                            *i.e.,*                             underpayments less any overpayments) of 10% or more, in which case the Payor must bear the reasonable costs of the verification procedure, in addition to paying or distributing the amount of any underpayment.                                  ( print page 103726)    

                            (i)                             *Retention of audit report.*                             The verifying party must retain the report of the audit for a period of not less than three years from the date of issuance.                        

§ 383.6

                            (a)                             *Terms in general.*                             Subject to the provisions of this section, terms governing timing and due dates of royalty payments to the Collective, late fees, statements of account, audit and verification of royalty payments and distributions, retention of records requirements, treatment of Licensees' confidential information, distribution of royalties by the Collective, unclaimed funds, designation of the Collective, and any definitions for applicable terms not defined in this part and not otherwise inapplicable shall be those adopted by the Copyright Royalty Judges for digital audio transmission and the reproduction of ephemeral recordings by Commercial Webcasters in part 380, subpart A, of this chapter, for the License Period. For purposes of this part, the term “Collective” refers to the collection and distribution organization that is designated by the Copyright Royalty Judges. For the License Period, the sole Collective is SoundExchange, Inc.                        

                            (b)                             *Reporting of performances.*                             Without prejudice to any applicable notice and recordkeeping provisions, statements of account shall not require reports of performances.                        

                            (c)                             *Applicable regulations.*                             To the extent not inconsistent with this part, all applicable regulations, including part 370 of this chapter, shall apply to activities subject to this part.                        

Dated: December 10, 2024.

David P. Shaw,

Chief Copyright Royalty Judge. 

# Footnotes

1.                             The parties represent that SoundExchange, Sirius XM, and Stingray, all of which have joined                                                 in the Joint Motion, are the only parties that have filed petitions to participate in this proceeding and, therefore, “there is no basis for the Judges not to adopt the Settlement as the statutory terms and rates under [s]ection 112(e) and 114 for services relying on the royalty rates and terms in 37 CFR [p]art 383.” Joint Motion at 3.                    
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[FR Doc. 2024-29384 Filed 12-18-24; 8:45 am]

BILLING CODE 1410-72-P