Adjustment of Rates and Terms for Preexisting Subscription and Satellite Digital Audio Radio Services, 61585-61588 [E7-21473]
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Federal Register / Vol. 72, No. 210 / Wednesday, October 31, 2007 / Proposed Rules
subject line ‘‘Comment—Kauai Security
Zone.’’
(3) Fax: (808) 541–2101.
All comments will be reviewed as
they are received. Additionally, all
comments submitted will ultimately be
available for viewing on the Federal
eRulemaking Portal at https://
www.regulations.gov.
FOR FURTHER INFORMATION CONTACT:
Lieutenant Sean Fahey, U.S. Coast
Guard District 14 at (808) 541–2106.
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Request for Additional Comments
On October 3, 2007, we published a
notice of proposed rulemaking (NPRM)
entitled ‘‘Security Zone; Nawiliwili
Harbor, Kauai, Hawaii’’ in the Federal
Register (72 FR 56308). The comment
period for the NPRM was originally set
to expire on October 24, 2007. Although
we received many comments on the
subject rule, a few people wishing to
submit comments expressed difficulty
using the Federal eRulemaking Portal,
one of the four methods available to
submit comments on the NPRM.
Recently, the Coast Guard migrated its
online rulemaking docket from the
Docket Management System (DMS) to
the Federal Docket Management System
(FMS) (72 FR 54315, Sept. 24, 2007),
and this migration was accompanied by
transition difficulties and delays in
comments being posted on FDMS. So
we will continue to accept comments on
the propose rule until November 20,
2007. Comments may be submitted in
one of the three methods listed in the
ADDRESSES section of this rule. Based on
the comments we receive, we may
change the rule.
We encourage you to participate in
this rulemaking by submitting
comments and related material. If you
do so, please identify the docket number
for this rulemaking (USCG–2007–
29354), indicate the specific section of
this document to which each comment
applies, and give the reason for each
comment. We recommend that you
include your name, mailing address,
and an e-mail address or other contact
information in the body of your
document to ensure that you can be
identified as the submitter. This also
allows us to contact you in the event
further information is needed or if there
are questions. For example, if we cannot
read your submission due to technical
difficulties and you cannot be
contacted, your submission may not be
considered. Please submit all comments
and related material in an unbound
format, no larger than 81⁄2 by 11 inches,
suitable for copying. If you would like
to know your comments reached us,
please enclose a stamped, self-addressed
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postcard or envelope. We will consider
all comments and material received
during the comment period. We may
change this proposed rule in view of
them.
Temporary Final Rule
Concurrent with this notice to extend
the comment period, the Coast Guard is
also publishing a temporary final rule
for a security zone in Nawiliwili Harbor.
That temporary final rule can be found
elsewhere in this issue of the Federal
Register. The temporary final rule is
being issued on an emergency basis to
ensure that there is a security zone in
place after the current security zone (72
FR 50877, September 5, 2007) expires
on October 31, 2007. That temporary
final rule is of limited duration—it will
be in effect from November 1, 2007,
through November 30, 2007—and is
necessary to ensure the safety and
security of water-based and land-based
obstructers, as well as the passengers
and crew of the Superferry, should the
Superferry transit through Nawiliwili
Harbor.
Public Meeting
During this extended comment
period, you may also submit a request
for a public meeting. Based on the
comments we receive, we may choose to
hold a public meeting. You may submit
a request for a public meeting to
Lieutenant Sean Fahey at U.S. Coast
Guard District 14, PJKK Federal
Building, 300 Ala Moana Blvd.,
Honolulu, Hawaii 96850, explaining
why one would be beneficial. The
deadline for submitting requests is
November 20, 2007.
If we determine that a public meeting
would aid this rulemaking, we will hold
one at a time and place announced by
a later notice in the Federal Register.
Dated: October 24, 2007.
Sally Brice-O’Hara,
Rear Admiral, U.S. Coast Guard, Commander,
Fourteenth Coast Guard District.
[FR Doc. 07–5412 Filed 10–26–07; 2:34 pm]
BILLING CODE 4910–15–P
LIBRARY OF CONGRESS
Copyright Royalty Board
37 CFR Part 382
[Docket No. 2006–1 CRB DSTRA]
Adjustment of Rates and Terms for
Preexisting Subscription and Satellite
Digital Audio Radio Services
Copyright Royalty Board,
Library of Congress.
AGENCY:
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ACTION:
61585
Notice of proposed rulemaking.
SUMMARY: The Copyright Royalty Judges
are publishing for comment proposed
regulations that set the rates and terms
for the use of sound recordings by
preexisting subscription services for the
period January 1, 2008, through
December 31, 2012.
DATES: Comments and objections, if any,
are due no later than November 30,
2007.
ADDRESSES: Comments and objections
may be sent electronically to
crb@loc.gov. In the alternative, send an
original, five copies and an electronic
copy on a CD either by mail or hand
delivery. Please do not use multiple
means of transmission. Comments and
objections may not be delivered by an
overnight delivery service other than the
U.S. Postal Service Express Mail. If by
mail (including overnight delivery),
comments and objections must be
addressed to: Copyright Royalty Board,
P.O. Box 70977, Washington, DC 20024–
0977. If hand delivered by a private
party, comments and objections must be
brought to the Copyright Office Public
Information Office, Library of Congress,
James Madison Memorial Building,
Room LM–401, 101 Independence
Avenue, SE., Washington, DC 20559–
6000. If delivered by a commercial
courier, comments and objections must
be delivered between 8:30 a.m. and 4
p.m. to the Congressional Courier
Acceptance Site located at 2nd and D
Street, NE., Washington, DC, and the
envelope must be addressed to:
Copyright Royalty Board, Library of
Congress, James Madison Memorial
Building, LM–403, 101 Independence
Avenue, SE., Washington, DC 20559–
6000.
FOR FURTHER INFORMATION CONTACT:
Richard Strasser, Senior Attorney, or
Gina Giuffreda, Attorney-Advisor, by
telephone at (202) 707–7658 or e-mail at
crb@loc.gov.
SUPPLEMENTARY INFORMATION:
Background
Section 106(6) of the Copyright Act,
title 17 of the United States Code, gives
a copyright owner of sound recordings
an exclusive right to perform the
copyrighted works publicly by means of
a digital audio transmission. This right
is limited by section 114(d), which
allows certain non-interactive digital
audio services, including preexisting
subscription services, to make digital
transmissions of a sound recording
under a compulsory license, provided
the services pay a reasonable royalty fee
and comply with the terms of the
license. Moreover, these services may
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Federal Register / Vol. 72, No. 210 / Wednesday, October 31, 2007 / Proposed Rules
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make any necessary ephemeral
reproductions to facilitate the digital
transmission of the sound recording
under a second license set forth in
section 112(e) of the Copyright Act. The
terms and rates for this statutory license
have been adjusted periodically by the
Librarian of Congress and appear in 37
CFR Part 260. However, the Copyright
Royalty and Distribution Reform Act of
2004, Pub. L. No. 108–419, transferred
jurisdiction over these rates and terms
to the Copyright Royalty Judges
(‘‘Judges’’). 17 U.S.C. 801(b)(1). The
current rates applicable to preexisting
subscription services expire on
December 31, 2007.
On January 9, 2006, pursuant to 17
U.S.C. 803(b)(1)(A)(i)(V), the Copyright
Royalty Judges published a notice in the
Federal Register announcing
commencement of the proceeding to
determine rates and terms of royalty
payments under sections 114 and 112
for the activities of preexisting
subscription services 1 and requesting
interested parties to submit their
petitions to participate. 71 FR 1455
(January 9, 2006). Petitions to
participate in the proceeding to set these
rates and terms were received from
SoundExchange, Inc. and Music Choice.
The Judges set the schedule for the
proceeding, including the dates for the
filing of written direct statements as
well as the dates for oral testimony.
Subsequent to the filing of their written
direct statements, but prior to the oral
presentation of witnesses,
SoundExchange and Music Choice
informed the Judges that they had
‘‘reached a settlement of all issues
between them in this proceeding,
including the rates and terms for the
statutory license applicable to preexisting subscription services’’ under
sections 114 and 112 of the Copyright
Act for the period from January 1, 2008,
through December 31, 2012. Notice of
Settlement at 1 (filed June 12, 2007).
They also stated that the settlement
agreement would be submitted to the
Judges ‘‘for approval and adoption
pursuant to 17 U.S.C. 801(b)(7)(A).’’ Id.
at 2. The settlement agreement,
1 The Notice also commenced and requested
Petitions to Participate for the proceeding to
determine rates and terms for preexisting satellite
digital audio radio services (‘‘SDARS’’), as required
under section 804(b)(3)(B). Unlike the preexisting
subscription services, the SDARS did not reach a
settlement regarding rates and terms governing their
activities under sections 112 and 114 and
proceeded to a full hearing before the Judges.
Consequently, those rates and terms will be
determined by the Judges and also will be
contained in proposed Part 382. Today’s notice of
proposed rulemaking discusses only the preexisting
subscription services.
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including the proposed rates and terms,
was filed on October 19, 2007.
Section 801(b)(7)(A) allows for the
adoption of rates and terms negotiated
by ‘‘some or all of the participants in a
proceeding at any time during the
proceeding’’ provided they are
submitted to the Copyright Royalty
Judges for approval. This section
provides that in such event:
(i) The Copyright Royalty Judges shall
provide to those that would be bound by the
terms, rates, or other determination set by
any agreement in a proceeding to determine
royalty rates an opportunity to comment on
the agreement and shall provide to
participants in the proceeding under section
803(b)(2) that would be bound by the terms,
rates, or other determination set by the
agreement an opportunity to comment on the
agreement and object to its adoption as a
basis for statutory terms and rates; and
(ii) The Copyright Royalty Judges may
decline to adopt the agreement as a basis for
statutory terms and rates for participants that
are not parties to the agreement, if any
participant described in clause (i) objects to
the agreement and the Copyright Royalty
Judges conclude, based on the record before
them if one exists, that the agreement does
not provide a reasonable basis for setting
statutory terms or rates.
17 U.S.C. 801(b)(7)(A). Rates and terms
adopted pursuant to this provision are
binding on all copyright owners of
sound recordings and preexisting
subscription services performing the
sound recordings for the license period
2008–2012.
As part of this notice of proposed
rulemaking, the Copyright Royalty
Judges are modifying two aspects of the
proposed rates and terms. First, the
submitted proposal placed the rates and
terms in part 260, which is in Chapter
II of 37 CFR. Chapter II contains the
regulations of the Copyright Office, not
the Copyright Royalty Board. Therefore,
we are changing the numbering of the
proposed regulations to reflect their
proper location in Chapter III of 37 CFR.
Second, proposed §§ 260.5(c) and
260.6(c) (now 382.5(c) and 382.6(c),
respectively) require that interested
parties intending to conduct an audit of
a service or of the entity making the
royalty payment, respectively, file with
the Copyright Office a notice of intent
to audit. We are changing these
provisions to require that such notices
of intent to audit be filed with the
Copyright Royalty Board rather than the
Copyright Office.
As discussed above, the public may
comment and object to any or all of the
proposed regulations contained in this
notice of proposed rulemaking. Those
who do comment and object, however,
must be prepared to participate in
further proceedings in this docket to
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establish rates and terms for the
activities of preexisting subscription
services under the sections 112 and 114
licenses.
List of Subjects in 37 CFR Part 382
Copyright, Digital audio
transmissions, Performance right, Sound
recordings.
Proposed Regulations
For the reasons set forth in the
preamble, the Copyright Royalty Judges
propose to add part 382 to Chapter III
of title 37 of the Code of Federal
Regulations to read as follows:
PART 382—RATES AND TERMS FOR
PREEXISTING SUBSCRIPTION
SERVICES’ DIGITAL TRANSMISSIONS
OF SOUND RECORDINGS AND
MAKING OF EPHEMERAL
PHONORECORDS
Sec.
382.1 General.
382.2 Royalty fees for the digital
performance of sound recordings and the
making of ephemeral phonorecords by
preexisting subscription services.
382.3 Terms for making payment of royalty
fees.
382.4 Confidential information and
statements of account.
382.5 Verification of statements of account.
382.6 Verification of royalty payments.
382.7 Unknown copyright owners.
Authority: 17 U.S.C. 112(e), 114, and
801(b)(1).
§ 382.1
General.
(a) This part 382 establishes rates and
terms of royalty payments for the public
performance of sound recordings by
nonexempt preexisting subscription
services in accordance with the
provisions of 17 U.S.C. 114(d)(2), and
the making of ephemeral phonorecords
in connection with the public
performance of sound recordings by
nonexempt preexisting subscription
services in accordance with the
provisions of 17 U.S.C. 112(e).
(b) Upon compliance with 17 U.S.C.
114 and the terms and rates of this part,
nonexempt preexisting subscription
services may engage in the activities set
forth in 17 U.S.C. 114(d)(2).
(c) Upon compliance with 17 U.S.C.
112(e) and the terms and rates of this
part, nonexempt preexisting
subscription services may engage in the
activities set forth in 17 U.S.C. 112(e)
without limit to the number of
ephemeral phonorecords made.
(d) For purposes of this part, Licensee
means any preexisting subscription
service as defined in 17 U.S.C.
114(j)(11).
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§ 382.2 Royalty fees for the digital
performance of sound recordings and the
making of ephemeral phonorecords by
preexisting subscription services.
(a) Commencing January 1, 2008, and
continuing through December 31, 2011,
a Licensee’s monthly royalty fee for the
public performance of sound recordings
pursuant to 17 U.S.C. 114(d)(2) and the
making of any number of ephemeral
phonorecords to facilitate such
performances pursuant to 17 U.S.C.
112(e) shall be 7.25% of such Licensee’s
monthly gross revenues resulting from
residential services in the United States.
(b) Commencing January 1, 2012, and
continuing through December 31, 2012,
a Licensee’s monthly royalty fee for the
public performance of sound recordings
pursuant to 17 U.S.C. 114(d)(2) and the
making of any number of ephemeral
phonorecords to facilitate such
performances pursuant to 17 U.S.C.
112(e) shall be 7.5% of such Licensee’s
monthly gross revenues resulting from
residential services in the United States.
(c) Each Licensee making digital
performances of sound recordings
pursuant to 17 U.S.C. 114(d)(2) and
ephemeral phonorecords pursuant to 17
U.S.C. 112(e) shall make an advance
payment of $100,000 per year, payable
no later than January 20th of each year.
The annual advance payment shall be
nonrefundable, but the royalties due
and payable for a given year or any
month therein under paragraphs (a) and
(b) of this section shall be recoupable
against the annual advance payment for
such year; Provided, however, that any
unused annual advance payment for a
given year shall not carry over into a
subsequent year.
(d) A Licensee shall pay a late fee of
1.5% per month, or the highest lawful
rate, whichever is lower, for any
payment received after the due date.
Late fees shall accrue from the due date
until payment is received.
(e)(1) For purposes of this section,
gross revenues shall mean all monies
derived from the operation of the
programming service of the Licensee
and shall be comprised of the following:
(i) Monies received by Licensee from
Licensee’s carriers and directly from
residential U.S. subscribers for
Licensee’s programming service;
(ii) Licensee’s advertising revenues (as
billed), or other monies received from
sponsors, if any, less advertising agency
commissions not to exceed 15% of those
fees incurred to a recognized advertising
agency not owned or controlled by
Licensee;
(iii) Monies received for the provision
of time on the programming service to
any third party;
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(iv) Monies received from the sale of
time to providers of paid programming
such as infomercials;
(v) Where merchandise, service, or
anything of value is received by
Licensee in lieu of cash consideration
for the use of Licensee’s programming
service, the fair market value thereof or
Licensee’s prevailing published rate,
whichever is less;
(vi) Monies or other consideration
received by Licensee from Licensee’s
carriers, but not including monies
received by Licensee’s carriers from
others and not accounted for by
Licensee’s carriers to Licensee, for the
provision of hardware by anyone and
used in connection with the
programming service;
(vii) Monies or other consideration
received for any references to or
inclusion of any product or service on
the programming service; and
(viii) Bad debts recovered regarding
paragraphs (e)(1)(i) through (vii) of this
section.
(2) Gross revenues shall include such
payments as set forth in paragraphs
(e)(1)(i) through (viii) of this section to
which Licensee is entitled but which are
paid to a parent, subsidiary, division, or
affiliate of Licensee, in lieu of payment
to Licensee but not including payments
to Licensee’s carriers for the
programming service. Licensee shall be
allowed a deduction from ‘‘gross
revenues’’ as defined in paragraph (e)(1)
of this section for affiliate revenue
returned during the reporting period
and for bad debts actually written off
during reporting period.
(f) During any given payment period,
the value of each performance of each
digital sound recording shall be the
same.
§ 382.3 Terms for making payment of
royalty fees.
(a) Payment to Collective. All royalty
payments shall be made to the
Collective designated for the collection
and distribution of royalties for the
2008–2012 time period, which shall be
SoundExchange.
(b) Timing of payment. Payment shall
be made on the forty-fifth day after the
end of each month for that month,
commencing with the month succeeding
the month in which the royalty fees are
set.
(c) Distribution of royalties. (1) The
Collective shall promptly distribute
royalties received from Licensees to
copyright owners and performers, or
their designated agents, that are entitled
to such royalties. The Collective shall
only be responsible for making
distributions to those copyright owners,
performers, or their designated agents
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61587
who provide the Collective with such
information as is necessary to identify
the correct recipient. The Collective
shall distribute royalties on a basis that
values all performances by a Licensee
equally based upon the information
provided under the reports of use
requirements for Licensees contained in
§ 370.2 of this chapter.
(2) If the Collective is unable to locate
a copyright owner or performer entitled
to a distribution of royalties under
paragraph (c)(1) of this section within 3
years from the date of payment by a
Licensee, such distribution may first be
applied to the costs directly attributable
to the administration of that
distribution. The foregoing shall apply
notwithstanding the common law or
statutes of any State.
§ 382.4 Confidential information and
statements of account.
(a) For purposes of this part,
confidential information shall include
statements of account and any
information pertaining to the statements
of account designated as confidential by
the nonexempt preexisting subscription
service filing the statement. Confidential
information shall also include any
information so designated in a
confidentiality agreement which has
been duly executed between a
nonexempt preexisting subscription
service and an interested party, or
between one or more interested parties;
Provided that all such information shall
be made available, for the verification
proceedings provided for in §§ 382.5
and 382.6.
(b) Nonexempt preexisting
subscription services shall submit
monthly statements of account on a
form provided by the Collective and the
monthly royalty payments.
(c) A statement of account shall
include only such information as is
necessary to verify the accompanying
royalty payment. Additional
information beyond that which is
sufficient to verify the calculation of the
royalty fees shall not be included on the
statement of account.
(d) Access to the confidential
information pertaining to the royalty
payments shall be limited to:
(1) Those employees, agents,
consultants and independent
contractors of the Collective, subject to
an appropriate confidentiality
agreement, who are engaged in the
collection and distribution of royalty
payments hereunder and activities
directly related hereto, who are not also
employees or officers of a sound
recording copyright owner or
performing artist, and who, for the
purpose of performing such duties
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Federal Register / Vol. 72, No. 210 / Wednesday, October 31, 2007 / Proposed Rules
during the ordinary course of
employment, require access to the
records; and
(2) An independent and qualified
auditor who is not an employee or
officer of a sound recording copyright
owner or performing artist, but is
authorized to act on behalf of the
interested copyright owners with
respect to the verification of the royalty
payments.
(3) Copyright owners and performers
whose works have been used under the
statutory licenses set forth in 17 U.S.C.
112(e) and 114(f) by the Licensee whose
Confidential Information is being
supplied, or agents thereof, subject to an
appropriate confidentiality agreement,
provided that the sole confidential
information that may be shared
pursuant to this paragraph (d)(3) are the
monthly statements of accounts that
accompany royalty payments.
(e) The Collective or any person
identified in paragraph (d) of this
section shall implement procedures to
safeguard all confidential financial and
business information, including, but not
limited to royalty payments, submitted
as part of the statements of account,
using a reasonable standard of care, but
no less than the same degree of security
used to protect confidential financial
and business information or similarly
sensitive information belonging to the
Collective or such person.
(f) Books and records relating to the
payment of the license fees shall be kept
in accordance with generally accepted
accounting principles for a period of
three years. These records shall include,
but are not limited to, the statements of
account, records documenting an
interested party’s share of the royalty
fees, and the records pertaining to the
administration of the collection process
and the further distribution of the
royalty fees to those interested parties
entitled to receive such fees.
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§ 382.5 Verification of statements of
account.
(a) General. This section prescribes
general rules pertaining to the
verification of the statements of account
by interested parties according to terms
promulgated by the Copyright Royalty
Board.
(b) Frequency of verification.
Interested parties may conduct a single
audit of a nonexempt preexisting
subscription service during any given
calendar year.
(c) Notice of intent to audit. Interested
parties must submit a notice of intent to
audit a particular service with the
Copyright Royalty Board, which shall
publish in the Federal Register a notice
announcing the receipt of the notice of
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intent to audit within 30 days of the
filing of the interested parties’ notice.
Such notification of intent to audit shall
also be served at the same time on the
party to be audited.
(d) Retention of records. The party
requesting the verification procedure
shall retain the report of the verification
for a period of three years.
(e) Acceptable verification procedure.
An audit, including underlying
paperwork, which was performed in the
ordinary course of business according to
generally accepted auditing standards
by an independent auditor, shall serve
as an acceptable verification procedure
for all parties.
(f) Costs of the verification procedure.
The interested parties requesting the
verification procedure shall pay for the
cost of the verification procedure,
unless an independent auditor
concludes that there was an
underpayment of five (5) percent or
more; in which case, the service which
made the underpayment shall bear the
costs of the verification procedure.
(g) Interested parties. For purposes of
this section, interested parties are those
copyright owners who are entitled to
receive royalty fees pursuant to 17
U.S.C. 114(g), their designated agents, or
the Collective.
§ 382.6
Verification of royalty payments.
(a) General. This section prescribes
general rules pertaining to the
verification of the payment of royalty
fees to those parties entitled to receive
such fees, according to terms
promulgated by the Copyright Royalty
Board.
(b) Frequency of verification.
Interested parties may conduct a single
audit of the Collective during any given
calendar year.
(c) Notice of intent to audit. Interested
parties must submit a notice of intent to
audit the entity making the royalty
payment with the Copyright Royalty
Board, which shall publish in the
Federal Register a notice announcing
the receipt of the notice of intent to
audit within 30 days of the filing of the
interested parties’ notice. Such
notification of interest shall also be
served at the same time on the party to
be audited.
(d) Retention of records. The
interested party requesting the
verification procedure shall retain the
report of the verification for a period of
three years.
(e) Acceptable verification procedure.
An audit, including underlying
paperwork, which was performed in the
ordinary course of business according to
generally accepted auditing standards
by an independent auditor, shall serve
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as an acceptable verification procedure
for all interested parties.
(f) Costs of the verification procedure.
The interested parties requesting the
verification procedure shall pay for the
cost of the verification procedure,
unless an independent auditor
concludes that there was an
underpayment of five (5) percent or
more, in which case, the entity which
made the underpayment shall bear the
costs of the verification procedure.
(g) Interested parties. For purposes of
this section, interested parties are those
who are entitled to receive royalty
payments pursuant to 17 U.S.C.
114(g)(2), or their designated agents.
§ 382.7
Unknown copyright owners.
If the Collective is unable to identify
or locate a copyright owner or performer
who is entitled to receive a royalty
distribution under this part, the
Collective shall retain the required
payment in a segregated trust account
for a period of 3 years from the date of
distribution. No claim to such
distribution shall be valid after the
expiration of the 3-year period. After
expiration of this period, the Collective
may apply the unclaimed funds to offset
any costs deductible under 17 U.S.C.
114(g)(3). The foregoing shall apply
notwithstanding the common law or
statutes of any State.
Dated: October 26, 2007.
James Scott Sledge,
Chief Copyright Royalty Judge.
[FR Doc. E7–21473 Filed 10–30–07; 8:45 am]
BILLING CODE 1410–72–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R09–OAR–2007–0459; FRL–8487–7]
Revisions to the California State
Implementation Plan, Great Basin
Unified Air Pollution Control District
and Mojave Desert Air Quality
Management District
Environmental Protection
Agency (EPA).
ACTION: Proposed rule.
AGENCY:
SUMMARY: EPA is proposing to approve
revisions to the Great Basin Unified Air
Pollution Control District (GBUAPCD)
and Mojave Desert Air Quality
Management District (MDAQMD)
portions of the California State
Implementation Plan (SIP). Under
authority of the Clean Air Act as
amended in 1990 (CAA or the Act), we
are proposing to approve local rules that
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31OCP1
Agencies
[Federal Register Volume 72, Number 210 (Wednesday, October 31, 2007)]
[Proposed Rules]
[Pages 61585-61588]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-21473]
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LIBRARY OF CONGRESS
Copyright Royalty Board
37 CFR Part 382
[Docket No. 2006-1 CRB DSTRA]
Adjustment of Rates and Terms for Preexisting Subscription and
Satellite Digital Audio Radio Services
AGENCY: Copyright Royalty Board, Library of Congress.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Copyright Royalty Judges are publishing for comment
proposed regulations that set the rates and terms for the use of sound
recordings by preexisting subscription services for the period January
1, 2008, through December 31, 2012.
DATES: Comments and objections, if any, are due no later than November
30, 2007.
ADDRESSES: Comments and objections may be sent electronically to
crb@loc.gov. In the alternative, send an original, five copies and an
electronic copy on a CD either by mail or hand delivery. Please do not
use multiple means of transmission. Comments and objections may not be
delivered by an overnight delivery service other than the U.S. Postal
Service Express Mail. If by mail (including overnight delivery),
comments and objections must be addressed to: Copyright Royalty Board,
P.O. Box 70977, Washington, DC 20024-0977. If hand delivered by a
private party, comments and objections must be brought to the Copyright
Office Public Information Office, Library of Congress, James Madison
Memorial Building, Room LM-401, 101 Independence Avenue, SE.,
Washington, DC 20559-6000. If delivered by a commercial courier,
comments and objections must be delivered between 8:30 a.m. and 4 p.m.
to the Congressional Courier Acceptance Site located at 2nd and D
Street, NE., Washington, DC, and the envelope must be addressed to:
Copyright Royalty Board, Library of Congress, James Madison Memorial
Building, LM-403, 101 Independence Avenue, SE., Washington, DC 20559-
6000.
FOR FURTHER INFORMATION CONTACT: Richard Strasser, Senior Attorney, or
Gina Giuffreda, Attorney-Advisor, by telephone at (202) 707-7658 or e-
mail at crb@loc.gov.
SUPPLEMENTARY INFORMATION:
Background
Section 106(6) of the Copyright Act, title 17 of the United States
Code, gives a copyright owner of sound recordings an exclusive right to
perform the copyrighted works publicly by means of a digital audio
transmission. This right is limited by section 114(d), which allows
certain non-interactive digital audio services, including preexisting
subscription services, to make digital transmissions of a sound
recording under a compulsory license, provided the services pay a
reasonable royalty fee and comply with the terms of the license.
Moreover, these services may
[[Page 61586]]
make any necessary ephemeral reproductions to facilitate the digital
transmission of the sound recording under a second license set forth in
section 112(e) of the Copyright Act. The terms and rates for this
statutory license have been adjusted periodically by the Librarian of
Congress and appear in 37 CFR Part 260. However, the Copyright Royalty
and Distribution Reform Act of 2004, Pub. L. No. 108-419, transferred
jurisdiction over these rates and terms to the Copyright Royalty Judges
(``Judges''). 17 U.S.C. 801(b)(1). The current rates applicable to
preexisting subscription services expire on December 31, 2007.
On January 9, 2006, pursuant to 17 U.S.C. 803(b)(1)(A)(i)(V), the
Copyright Royalty Judges published a notice in the Federal Register
announcing commencement of the proceeding to determine rates and terms
of royalty payments under sections 114 and 112 for the activities of
preexisting subscription services \1\ and requesting interested parties
to submit their petitions to participate. 71 FR 1455 (January 9, 2006).
Petitions to participate in the proceeding to set these rates and terms
were received from SoundExchange, Inc. and Music Choice.
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\1\ The Notice also commenced and requested Petitions to
Participate for the proceeding to determine rates and terms for
preexisting satellite digital audio radio services (``SDARS''), as
required under section 804(b)(3)(B). Unlike the preexisting
subscription services, the SDARS did not reach a settlement
regarding rates and terms governing their activities under sections
112 and 114 and proceeded to a full hearing before the Judges.
Consequently, those rates and terms will be determined by the Judges
and also will be contained in proposed Part 382. Today's notice of
proposed rulemaking discusses only the preexisting subscription
services.
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The Judges set the schedule for the proceeding, including the dates
for the filing of written direct statements as well as the dates for
oral testimony. Subsequent to the filing of their written direct
statements, but prior to the oral presentation of witnesses,
SoundExchange and Music Choice informed the Judges that they had
``reached a settlement of all issues between them in this proceeding,
including the rates and terms for the statutory license applicable to
pre-existing subscription services'' under sections 114 and 112 of the
Copyright Act for the period from January 1, 2008, through December 31,
2012. Notice of Settlement at 1 (filed June 12, 2007). They also stated
that the settlement agreement would be submitted to the Judges ``for
approval and adoption pursuant to 17 U.S.C. 801(b)(7)(A).'' Id. at 2.
The settlement agreement, including the proposed rates and terms, was
filed on October 19, 2007.
Section 801(b)(7)(A) allows for the adoption of rates and terms
negotiated by ``some or all of the participants in a proceeding at any
time during the proceeding'' provided they are submitted to the
Copyright Royalty Judges for approval. This section provides that in
such event:
(i) The Copyright Royalty Judges shall provide to those that
would be bound by the terms, rates, or other determination set by
any agreement in a proceeding to determine royalty rates an
opportunity to comment on the agreement and shall provide to
participants in the proceeding under section 803(b)(2) that would be
bound by the terms, rates, or other determination set by the
agreement an opportunity to comment on the agreement and object to
its adoption as a basis for statutory terms and rates; and
(ii) The Copyright Royalty Judges may decline to adopt the
agreement as a basis for statutory terms and rates for participants
that are not parties to the agreement, if any participant described
in clause (i) objects to the agreement and the Copyright Royalty
Judges conclude, based on the record before them if one exists, that
the agreement does not provide a reasonable basis for setting
statutory terms or rates.
17 U.S.C. 801(b)(7)(A). Rates and terms adopted pursuant to this
provision are binding on all copyright owners of sound recordings and
preexisting subscription services performing the sound recordings for
the license period 2008-2012.
As part of this notice of proposed rulemaking, the Copyright
Royalty Judges are modifying two aspects of the proposed rates and
terms. First, the submitted proposal placed the rates and terms in part
260, which is in Chapter II of 37 CFR. Chapter II contains the
regulations of the Copyright Office, not the Copyright Royalty Board.
Therefore, we are changing the numbering of the proposed regulations to
reflect their proper location in Chapter III of 37 CFR.
Second, proposed Sec. Sec. 260.5(c) and 260.6(c) (now 382.5(c) and
382.6(c), respectively) require that interested parties intending to
conduct an audit of a service or of the entity making the royalty
payment, respectively, file with the Copyright Office a notice of
intent to audit. We are changing these provisions to require that such
notices of intent to audit be filed with the Copyright Royalty Board
rather than the Copyright Office.
As discussed above, the public may comment and object to any or all
of the proposed regulations contained in this notice of proposed
rulemaking. Those who do comment and object, however, must be prepared
to participate in further proceedings in this docket to establish rates
and terms for the activities of preexisting subscription services under
the sections 112 and 114 licenses.
List of Subjects in 37 CFR Part 382
Copyright, Digital audio transmissions, Performance right, Sound
recordings.
Proposed Regulations
For the reasons set forth in the preamble, the Copyright Royalty
Judges propose to add part 382 to Chapter III of title 37 of the Code
of Federal Regulations to read as follows:
PART 382--RATES AND TERMS FOR PREEXISTING SUBSCRIPTION SERVICES'
DIGITAL TRANSMISSIONS OF SOUND RECORDINGS AND MAKING OF EPHEMERAL
PHONORECORDS
Sec.
382.1 General.
382.2 Royalty fees for the digital performance of sound recordings
and the making of ephemeral phonorecords by preexisting subscription
services.
382.3 Terms for making payment of royalty fees.
382.4 Confidential information and statements of account.
382.5 Verification of statements of account.
382.6 Verification of royalty payments.
382.7 Unknown copyright owners.
Authority: 17 U.S.C. 112(e), 114, and 801(b)(1).
Sec. 382.1 General.
(a) This part 382 establishes rates and terms of royalty payments
for the public performance of sound recordings by nonexempt preexisting
subscription services in accordance with the provisions of 17 U.S.C.
114(d)(2), and the making of ephemeral phonorecords in connection with
the public performance of sound recordings by nonexempt preexisting
subscription services in accordance with the provisions of 17 U.S.C.
112(e).
(b) Upon compliance with 17 U.S.C. 114 and the terms and rates of
this part, nonexempt preexisting subscription services may engage in
the activities set forth in 17 U.S.C. 114(d)(2).
(c) Upon compliance with 17 U.S.C. 112(e) and the terms and rates
of this part, nonexempt preexisting subscription services may engage in
the activities set forth in 17 U.S.C. 112(e) without limit to the
number of ephemeral phonorecords made.
(d) For purposes of this part, Licensee means any preexisting
subscription service as defined in 17 U.S.C. 114(j)(11).
[[Page 61587]]
Sec. 382.2 Royalty fees for the digital performance of sound
recordings and the making of ephemeral phonorecords by preexisting
subscription services.
(a) Commencing January 1, 2008, and continuing through December 31,
2011, a Licensee's monthly royalty fee for the public performance of
sound recordings pursuant to 17 U.S.C. 114(d)(2) and the making of any
number of ephemeral phonorecords to facilitate such performances
pursuant to 17 U.S.C. 112(e) shall be 7.25% of such Licensee's monthly
gross revenues resulting from residential services in the United
States.
(b) Commencing January 1, 2012, and continuing through December 31,
2012, a Licensee's monthly royalty fee for the public performance of
sound recordings pursuant to 17 U.S.C. 114(d)(2) and the making of any
number of ephemeral phonorecords to facilitate such performances
pursuant to 17 U.S.C. 112(e) shall be 7.5% of such Licensee's monthly
gross revenues resulting from residential services in the United
States.
(c) Each Licensee making digital performances of sound recordings
pursuant to 17 U.S.C. 114(d)(2) and ephemeral phonorecords pursuant to
17 U.S.C. 112(e) shall make an advance payment of $100,000 per year,
payable no later than January 20th of each year. The annual advance
payment shall be nonrefundable, but the royalties due and payable for a
given year or any month therein under paragraphs (a) and (b) of this
section shall be recoupable against the annual advance payment for such
year; Provided, however, that any unused annual advance payment for a
given year shall not carry over into a subsequent year.
(d) A Licensee shall pay a late fee of 1.5% per month, or the
highest lawful rate, whichever is lower, for any payment received after
the due date. Late fees shall accrue from the due date until payment is
received.
(e)(1) For purposes of this section, gross revenues shall mean all
monies derived from the operation of the programming service of the
Licensee and shall be comprised of the following:
(i) Monies received by Licensee from Licensee's carriers and
directly from residential U.S. subscribers for Licensee's programming
service;
(ii) Licensee's advertising revenues (as billed), or other monies
received from sponsors, if any, less advertising agency commissions not
to exceed 15% of those fees incurred to a recognized advertising agency
not owned or controlled by Licensee;
(iii) Monies received for the provision of time on the programming
service to any third party;
(iv) Monies received from the sale of time to providers of paid
programming such as infomercials;
(v) Where merchandise, service, or anything of value is received by
Licensee in lieu of cash consideration for the use of Licensee's
programming service, the fair market value thereof or Licensee's
prevailing published rate, whichever is less;
(vi) Monies or other consideration received by Licensee from
Licensee's carriers, but not including monies received by Licensee's
carriers from others and not accounted for by Licensee's carriers to
Licensee, for the provision of hardware by anyone and used in
connection with the programming service;
(vii) Monies or other consideration received for any references to
or inclusion of any product or service on the programming service; and
(viii) Bad debts recovered regarding paragraphs (e)(1)(i) through
(vii) of this section.
(2) Gross revenues shall include such payments as set forth in
paragraphs (e)(1)(i) through (viii) of this section to which Licensee
is entitled but which are paid to a parent, subsidiary, division, or
affiliate of Licensee, in lieu of payment to Licensee but not including
payments to Licensee's carriers for the programming service. Licensee
shall be allowed a deduction from ``gross revenues'' as defined in
paragraph (e)(1) of this section for affiliate revenue returned during
the reporting period and for bad debts actually written off during
reporting period.
(f) During any given payment period, the value of each performance
of each digital sound recording shall be the same.
Sec. 382.3 Terms for making payment of royalty fees.
(a) Payment to Collective. All royalty payments shall be made to
the Collective designated for the collection and distribution of
royalties for the 2008-2012 time period, which shall be SoundExchange.
(b) Timing of payment. Payment shall be made on the forty-fifth day
after the end of each month for that month, commencing with the month
succeeding the month in which the royalty fees are set.
(c) Distribution of royalties. (1) The Collective shall promptly
distribute royalties received from Licensees to copyright owners and
performers, or their designated agents, that are entitled to such
royalties. The Collective shall only be responsible for making
distributions to those copyright owners, performers, or their
designated agents who provide the Collective with such information as
is necessary to identify the correct recipient. The Collective shall
distribute royalties on a basis that values all performances by a
Licensee equally based upon the information provided under the reports
of use requirements for Licensees contained in Sec. 370.2 of this
chapter.
(2) If the Collective is unable to locate a copyright owner or
performer entitled to a distribution of royalties under paragraph
(c)(1) of this section within 3 years from the date of payment by a
Licensee, such distribution may first be applied to the costs directly
attributable to the administration of that distribution. The foregoing
shall apply notwithstanding the common law or statutes of any State.
Sec. 382.4 Confidential information and statements of account.
(a) For purposes of this part, confidential information shall
include statements of account and any information pertaining to the
statements of account designated as confidential by the nonexempt
preexisting subscription service filing the statement. Confidential
information shall also include any information so designated in a
confidentiality agreement which has been duly executed between a
nonexempt preexisting subscription service and an interested party, or
between one or more interested parties; Provided that all such
information shall be made available, for the verification proceedings
provided for in Sec. Sec. 382.5 and 382.6.
(b) Nonexempt preexisting subscription services shall submit
monthly statements of account on a form provided by the Collective and
the monthly royalty payments.
(c) A statement of account shall include only such information as
is necessary to verify the accompanying royalty payment. Additional
information beyond that which is sufficient to verify the calculation
of the royalty fees shall not be included on the statement of account.
(d) Access to the confidential information pertaining to the
royalty payments shall be limited to:
(1) Those employees, agents, consultants and independent
contractors of the Collective, subject to an appropriate
confidentiality agreement, who are engaged in the collection and
distribution of royalty payments hereunder and activities directly
related hereto, who are not also employees or officers of a sound
recording copyright owner or performing artist, and who, for the
purpose of performing such duties
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during the ordinary course of employment, require access to the
records; and
(2) An independent and qualified auditor who is not an employee or
officer of a sound recording copyright owner or performing artist, but
is authorized to act on behalf of the interested copyright owners with
respect to the verification of the royalty payments.
(3) Copyright owners and performers whose works have been used
under the statutory licenses set forth in 17 U.S.C. 112(e) and 114(f)
by the Licensee whose Confidential Information is being supplied, or
agents thereof, subject to an appropriate confidentiality agreement,
provided that the sole confidential information that may be shared
pursuant to this paragraph (d)(3) are the monthly statements of
accounts that accompany royalty payments.
(e) The Collective or any person identified in paragraph (d) of
this section shall implement procedures to safeguard all confidential
financial and business information, including, but not limited to
royalty payments, submitted as part of the statements of account, using
a reasonable standard of care, but no less than the same degree of
security used to protect confidential financial and business
information or similarly sensitive information belonging to the
Collective or such person.
(f) Books and records relating to the payment of the license fees
shall be kept in accordance with generally accepted accounting
principles for a period of three years. These records shall include,
but are not limited to, the statements of account, records documenting
an interested party's share of the royalty fees, and the records
pertaining to the administration of the collection process and the
further distribution of the royalty fees to those interested parties
entitled to receive such fees.
Sec. 382.5 Verification of statements of account.
(a) General. This section prescribes general rules pertaining to
the verification of the statements of account by interested parties
according to terms promulgated by the Copyright Royalty Board.
(b) Frequency of verification. Interested parties may conduct a
single audit of a nonexempt preexisting subscription service during any
given calendar year.
(c) Notice of intent to audit. Interested parties must submit a
notice of intent to audit a particular service with the Copyright
Royalty Board, which shall publish in the Federal Register a notice
announcing the receipt of the notice of intent to audit within 30 days
of the filing of the interested parties' notice. Such notification of
intent to audit shall also be served at the same time on the party to
be audited.
(d) Retention of records. The party requesting the verification
procedure shall retain the report of the verification for a period of
three years.
(e) Acceptable verification procedure. An audit, including
underlying paperwork, which was performed in the ordinary course of
business according to generally accepted auditing standards by an
independent auditor, shall serve as an acceptable verification
procedure for all parties.
(f) Costs of the verification procedure. The interested parties
requesting the verification procedure shall pay for the cost of the
verification procedure, unless an independent auditor concludes that
there was an underpayment of five (5) percent or more; in which case,
the service which made the underpayment shall bear the costs of the
verification procedure.
(g) Interested parties. For purposes of this section, interested
parties are those copyright owners who are entitled to receive royalty
fees pursuant to 17 U.S.C. 114(g), their designated agents, or the
Collective.
Sec. 382.6 Verification of royalty payments.
(a) General. This section prescribes general rules pertaining to
the verification of the payment of royalty fees to those parties
entitled to receive such fees, according to terms promulgated by the
Copyright Royalty Board.
(b) Frequency of verification. Interested parties may conduct a
single audit of the Collective during any given calendar year.
(c) Notice of intent to audit. Interested parties must submit a
notice of intent to audit the entity making the royalty payment with
the Copyright Royalty Board, which shall publish in the Federal
Register a notice announcing the receipt of the notice of intent to
audit within 30 days of the filing of the interested parties' notice.
Such notification of interest shall also be served at the same time on
the party to be audited.
(d) Retention of records. The interested party requesting the
verification procedure shall retain the report of the verification for
a period of three years.
(e) Acceptable verification procedure. An audit, including
underlying paperwork, which was performed in the ordinary course of
business according to generally accepted auditing standards by an
independent auditor, shall serve as an acceptable verification
procedure for all interested parties.
(f) Costs of the verification procedure. The interested parties
requesting the verification procedure shall pay for the cost of the
verification procedure, unless an independent auditor concludes that
there was an underpayment of five (5) percent or more, in which case,
the entity which made the underpayment shall bear the costs of the
verification procedure.
(g) Interested parties. For purposes of this section, interested
parties are those who are entitled to receive royalty payments pursuant
to 17 U.S.C. 114(g)(2), or their designated agents.
Sec. 382.7 Unknown copyright owners.
If the Collective is unable to identify or locate a copyright owner
or performer who is entitled to receive a royalty distribution under
this part, the Collective shall retain the required payment in a
segregated trust account for a period of 3 years from the date of
distribution. No claim to such distribution shall be valid after the
expiration of the 3-year period. After expiration of this period, the
Collective may apply the unclaimed funds to offset any costs deductible
under 17 U.S.C. 114(g)(3). The foregoing shall apply notwithstanding
the common law or statutes of any State.
Dated: October 26, 2007.
James Scott Sledge,
Chief Copyright Royalty Judge.
[FR Doc. E7-21473 Filed 10-30-07; 8:45 am]
BILLING CODE 1410-72-P