Digital Performance Right in Sound Recordings and Ephemeral Recordings, 56873-56875 [2010-23264]
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Federal Register / Vol. 75, No. 180 / Friday, September 17, 2010 / Rules and Regulations
‘‘simulcasts’’ (i.e., duplicates) a primary
stream or another multicast stream of
the same station that the cable system is
carrying. However, simulcast streams
must be reported on the Statement of
Accounts.
(4) Multicast streams of digital
broadcast programming shall not be
subject to the 3.75% fee or the
syndicated exclusivity surcharge.
*
*
*
*
*
Dated: August 10,2010
Marybeth Peters,
Register of Copyrights.
Dated: August 10, 2010
James H. Billington,
The Librarian of Congress.
[FR Doc. 2010–22814 Filed 9–16–10; 8:45 am]
BILLING CODE 1410–30–S
LIBRARY OF CONGRESS
Copyright Royalty Board
37 CFR Part 380
[Docket No. 2005–1 CRB DTRA]
Digital Performance Right in Sound
Recordings and Ephemeral
Recordings
Copyright Royalty Board,
Library of Congress.
ACTION: Remand order.
AGENCY:
The Copyright Royalty Judges
are announcing their determination
regarding the minimum fee to be paid
by Noncommercial Webcasters under
two statutory licenses, permitting
certain digital performances of sound
recordings and the making of ephemeral
recordings, in response to an order of
remand by the United States Court of
Appeals for the District of Columbia
Circuit.
SUMMARY:
Effective September 17, 2010.
The remand order also is
published on the Copyright Royalty
Board Web site at https://www.loc.gov/
crb/orders/2010/amendment-remandorder-6–30–10.pdf.
FOR FURTHER INFORMATION CONTACT:
Richard Strasser, Senior Attorney, or
Gina Giuffreda, Attorney Advisor, by
telephone at (202) 707–7658 or by
e-mail at crb@loc.gov.
SUPPLEMENTARY INFORMATION: On May 1,
2007, the Copyright Royalty Judges
(‘‘Judges’’) published in the Federal
Register their determination of royalty
rates and terms under the statutory
licenses under Sections 112(e) and 114
of the Copyright Act, title 17 of the
United States Code, for the period 2006
through 2010 for the digital public
DATES:
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performance of sound recordings by
means of eligible nonsubscription
transmission or a transmission by a new
subscription service. 72 FR 24084. In
Intercollegiate Broadcast System, Inc. v.
Copyright Royalty Board, 574 F.3d 748
(DC Cir. 2009), the United States Court
of Appeals for the District of Columbia
Circuit (‘‘DC Circuit’’) affirmed the
Judges’ determination in the main but
remanded to the Judges the matter of
setting the minimum fee to be paid by
both Commercial Webcasters and
Noncommercial Webcasters under
Sections 112(e) and 114 of the Copyright
Act. Id. at 762, 767. No rules or
procedures applied to a proceeding that
is remanded, and the Judges adopted an
Interim Final Rule to govern. 37 CFR
351.15. Pursuant to this Rule,
Intercollegiate Broadcasting System, Inc.
(‘‘IBS’’) and SoundExchange, Inc.
(‘‘SoundExchange’’) presented proposals
for the conduct and schedule of the
remand proceeding, including
settlement negotiations, written direct
statements with proposed rates,
discovery and an evidentiary hearing.
By order dated October 23, 2009, the
Judges established a period commencing
November 2, 2009, and concluding on
December 2, 2009, for the parties to
negotiate and submit a settlement of the
minimum fee issue that is the subject of
the remand. Absent settlement, the
parties were directed to file written
direct statements by January 11, 2010.
On December 2, 2009,
SoundExchange, Inc. and the Digital
Media Association (‘‘DiMA’’) submitted
a settlement regarding the statutory
minimum fee to be paid by Commercial
Webcasters. Subsequently, the Judges
published for comment the proposed
change in the rule necessary to
implement that settlement pursuant to
the order of remand from the DC Circuit.
74 FR 68214 (December 23, 2009). The
Judges received one comment from IBS.
The Final Rule for the minimum fee to
be paid by Commercial Webcasters was
published. 75 FR 6097 (February 8,
2010).
Following the filing of Written Direct
Statements by IBS and SoundExchange,
on January 20, 2010, the Judges
established the discovery schedule on
the remaining issue of the minimum fee
for Noncommercial Webcasters.
Following discovery, the hearing was
held May 18, 2010. SoundExchange
presented the testimony of W. Tucker
McCrady, associate counsel, digital legal
affairs, Warner Music Group (‘‘WMG’’),
and Barrie Kessler, chief operating
officer, SoundExchange. It also offered
Webcaster Settlement Acts of 2008 and
2009 agreements between
SoundExchange and College
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Broadcasters, Inc. (‘‘CBI’’) for
noncommercial educational webcasters,
National Association of Broadcasters
(‘‘NAB’’) for broadcasters, Sirius XM
Radio, Inc. (‘‘Sirius XM’’) for satellite
services and DiMA for commercial
webcasters. 5/18/10 Tr. at 13 (McCrady).
IBS presented the testimony of
Frederick J. Kass, Jr., John E. Murphy
and Benjamin Shaiken. 5/18/10 Tr. at 62
and 67 (Kass). The testimony of Mr.
Kass was that IBS supported a different
rate proposal than the one filed. When
this different rate proposal was not
timely filed, the Judges ordered that it
be filed by June 1, 2010. 5/18/10 Tr. at
98 (Kass). The IBS’ Restated Rate
Proposal was filed June 1, 2010.
Mr. McCrady testified that WMG
enters voluntary licenses for commercial
webcasters. A negotiated license for the
full catalogue must generate at least
payments of $25,000. 5/18/10 Tr. at 25
(McCrady). The lowest commercial
minimum fee is 20% of revenue. A
smaller revenue stream would not
justify the time and resources WMG
would need to devote to evaluating,
negotiating, implementing and
monitoring an agreement. 5/18/10 Tr. at
20 (McCrady). Noncommercial
Webcasters use the statutory license,
because they do not generate enough
revenue to WMG to support negotiating
a license. SX Remand Trial Ex. 1 at 6
(McCrady).
The CBI agreement has the rates and
terms for noncommercial educational
webcasters, the same group that IBS
represents in this proceeding. 5/18/10
Tr. at 71 (Kass). It has a minimum fee
of $500 per year per station or channel
and a usage rate of $500 per channel for
streaming a noncommercial educational
service up to 159,400 aggregate tuning
hours (‘‘ATH’’). 5/18/10 Tr. at 14
(McCrady). The SoundExchange
proposed minimum fee is $500 per
station or channel. 5/18/10 Tr. at 14
(McCrady). The proposed minimum fee
is fully recoupable against royalty fees
owed and this feature reduces
transaction costs for both parties. 5/18/
10 Tr. at 21, 22 (McCrady). IBS says the
average annual revenue of its member
stations is $9,000. 5/18/10 Tr. at 20
(McCrady) and 5/18/10 Tr. at 71 (Kass).
So, the proposed fee is 6% of revenue,
a large discount for Noncommercial
Webcasters off the negotiated license
agreements for commercial webcasters.
5/18/10 Tr. at 20 (McCrady). All users
of sound recordings should be licensed
and pay something. It is an important
educational message for students to
learn the value of recorded music and
to pay for it. 5/18/10 Tr. at 23
(McCrady). From the first webcasting
proceeding, the standard minimum fee
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Federal Register / Vol. 75, No. 180 / Friday, September 17, 2010 / Rules and Regulations
for statutory licenses has been $500, on
the theory that the minimum fee should
be sufficient to cover at least the costs
of administering the license. SX
Remand Trial Ex. 1 at 7 (McCrady).
Ms. Kessler testified about
administering the royalties paid under
the statutory license. Of the
approximately 730 webcasting services
paying royalties in 2009, 363 are
noncommercial. The noncommercial
royalties are less than 1% of the total
webcasting royalties paid for 2009. 5/
18/10 Tr. at 34 (Kessler). Of the
noncommercial services, 305 paid only
the minimum fee of $500, and the
remaining 58 paid more for exceeding
the ATH cap or streaming multiple
channels or stations. These payments
are pursuant to the royalty minimum fee
that is the subject of this remand
proceeding, 5/18/10 Tr. at 42 (Kessler),
and they demonstrate that
noncommercial services are able and
willing to pay the minimum fee. 5/18/
10 Tr. at 33 (Kessler). SoundExchange
does not regularly track the
administrative costs on a licensee,
station or channel basis. Such costs vary
widely based on the quality of the data
provided by the service. For this
proceeding, SoundExchange estimated
its administrative costs. The average per
channel or station cost for webcasters
for 2008 is $803. 5/18/10 Tr. at 36
(Kessler). The cost of administering the
statutory license is greater than the
revenue from noncommercial
webcasters. 5/18/10 Tr. at 34 (Kessler).
The CBI agreement for noncommercial
educational webcasters, together with
the NAB agreement, the Sirius XM
agreement and the DiMA agreement all
provide a similar minimum fee of $500,
as SoundExchange proposes in this
proceeding. All of these agreements
were filed under the Webcaster
Settlement Acts of 2008 and 2009,
which permit agreements on the royalty
rates under the statutory licenses. 5/18/
10 Tr. at 13 (McCrady).
On June 1, 2010, IBS filed the restated
rate proposal that Mr. Kass had
supported in his testimony. The general
principle of the proposal is that small
noncommercial webcasters should pay
only for the performances of music
subject to the statutory license that they
actually webcast. This principle is the
same as the Judges used in the Final
Determination to support the per
performance metric for royalty rates,
being more directly tied to the nature of
the right being licensed. See
Intercollegiate Broadcast System, Inc. v.
Copyright Royalty Board, 574 F.3d 748,
760–61 (DC Cir. 2009). But contrary to
this principle, the proposal then
provides for a flat royalty rate and an
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exemption from recordkeeping and
reporting requirements. Both the flat
rate and the exemptions are inconsistent
with a per performance royalty, which
is based on the number of performances
times the rate for each performance. The
proposal was for the royalty rates to be
paid by Noncommercial Webcasters (set
by 37 CFR 380.3(a)(2)(i)) and not for the
minimum fee, which is the subject of
this remand proceeding. The proposed
rate is $20 to $50 per annum, based on
the number of aggregate tuning hours.
The proposal did not include a
minimum fee. 5/18/10 Tr. at 76, 83–85
(Kass). Mr. Kass said no minimum fee
should be paid. He said this discount is
justified, because the small
noncommercial educational webcasters
are teaching students. IBS Remand Trial
Ex. 1 at 2. The CBI agreement is
available for use by IBS members and
some of those members have joined the
CBI agreement. 5/18/10 Tr. at 104, 105
(Kass). It proposes the $500 minimum
fee per channel or station. 5/18/10 Tr.
at 14 (McCrady).
Noncommercial Minimum Fee
The Final Determination discussed in
Section IV.C.2 that most
Noncommercial Webcasters qualified
for a distinct segment of the marketplace
that justified royalties lower than those
paid by Commercial Webcasters.
However, the Judges found that:
the bare minimum that such services should
have to pay is the administrative cost of
administering the license. There is no
evidence in the record to suggest that the
submarket in which a Noncommercial
Webcaster may reside would yield a different
administrative cost for SoundExchange as
compared to the administrative costs
associated with Commercial Webcasters and
SoundExchange, notably, makes no
distinction between webcasters with respect
to the $500 minimum fee. Webcaster I
affirmed the notion that all webcasters–all
Noncommercial Webcasters as well as all
Commercial Webcasters–should pay the same
minimum fee for the same license. 67 FR
45259 (July 8, 2002). We also find no basis
in the record for distinguishing between
Commercial Webcasters and Noncommercial
Webcasters with respect to the administrative
cost of administering the license. Therefore,
we determine that a minimum fee of an
annual non-refundable, but recoupable $500
minimum per channel or station payable in
advance is reasonable over the term of this
license.
72 FR 24084, 24099 (May 1, 2007)
(footnotes omitted).
Ms. Kessler testified that the rough
estimate of the average administrative
cost for 2008 to SoundExchange per
station or channel for webcasters is
$803. All of the agreements filed
pursuant to the Webcaster Settlement
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Acts of 2008 and 2009 have similar
minimum fees as the proposed rate of
$500 per station or channel. One
includes the agreement for
noncommercial educational webcasters
(the CBI agreement), the same type of
services as IBS, which seeks to pay no
minimum fee. As found in the above
quote from the Final Determination, a
zero minimum fee is not supported by
the evidence. IBS also asserts that
administrative costs should be
proportionately tied to the number of
performances on a channel in a given
year, but fails to establish any credible
nexus. On the contrary, there are certain
basic processes that must be utilized in
administering the use of sound
recordings by any Commercial or
Noncommercial Webcaster of any size.
Not surprisingly, at lesser levels of
sound recording usage, the
establishment and conduct of such
administrative processes cannot simply
be dispensed with. Indeed, smaller
users may even result in larger
proportionate administrative processing
time than larger users. SoundExchange
Remand Trial Ex. 1 at 3–4 (Kessler). See
also Order, 72 FR 24084, 24096 n.37
(May 1, 2007).
The evidence presented in the remand
proceeding supports a minimum fee of
at least the same fee as adopted in the
Final Determination. SoundExchange
has now presented evidence on
administrative costs that exceed this
minimum. The agreements entered
pursuant to the Webcaster Settlement
Acts of 2008 and 2009 support that the
industry accepts this minimum fee,
which has substantially been in place
since the first webcasting proceeding.
IBS’ position seeks to pay no minimum
fee and indeed seeks to pay no or an
extremely small royalty for use of
copyrighted content. The Judges adopt
the same minimum fee for
Noncommercial Webcasters as stated in
the Final Determination of an annual
non-refundable, but recoupable $500
minimum per annum per channel or
station payable in advance. 37 CFR
380.3(b)(2).
June 30, 2010.
So ordered.
James Scott Sledge,
Chief United States Copyright Royalty
Judge.
William J. Roberts, Jr.,
United States Copyright Royalty Judge.
Stanley C. Wisniewski,
United States Copyright Royalty Judge.
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Federal Register / Vol. 75, No. 180 / Friday, September 17, 2010 / Rules and Regulations
Dated: July 21, 2010.
James Scott Sledge,
Chief, U.S. Copyright Royalty Judge.
James H. Billington,
Librarian of Congress.
[FR Doc. 2010–23264 Filed 9–16–10; 8:45 am]
BILLING CODE 1410–72–P
DEPARTMENT OF VETERANS
AFFAIRS
38 CFR part 36
RIN 2900–AM87
Loan Guaranty: Assistance to Eligible
Individuals in Acquiring Specially
Adapted Housing
Department of Veterans Affairs.
Final rule.
AGENCY:
ACTION:
This document amends the
Department of Veterans Affairs’ (VA’s)
Loan Guaranty regulations concerning
assistance to eligible individuals in
acquiring specially adapted housing.
These changes improve the readability
of the regulations; provide further detail
about longstanding program policies;
and address legislation, policy changes,
and a VA Office of the General Counsel
legal opinion.
DATES: Effective Date: October 18, 2010.
FOR FURTHER INFORMATION CONTACT:
William White, Acting Assistant
Director for Loan Policy and Valuation,
Loan Guaranty Service (262), Veterans
Benefits Administration, Department of
Veterans Affairs, 810 Vermont Avenue,
NW., Washington, DC 20420, (202) 461–
9543. (This is not a toll-free telephone
number.)
SUPPLEMENTARY INFORMATION: Veterans
and servicemembers with severe
disabilities may be eligible under 38
U.S.C. chapter 21 for specially adapted
housing (SAH) grants. In administering
the SAH program, VA helps these
eligible individuals to purchase,
construct, or adapt a home that suits the
individual’s living needs. In a document
published in the Federal Register on
October 5, 2009 (74 FR 51103), VA
proposed to amend regulations in 38
CFR part 36, subpart C, regarding
assistance to certain disabled veterans
in acquiring SAH, specifically
§§ 36.4400 through 36.4410, which
implement the SAH grant program.
As explained in the proposed rule,
VA is amending these regulations for
three reasons. First, VA believes the
regulations should be written in a
reader-focused style. Second, detailed
guidance about program policies and a
regulation written with an easy-tofollow organizational structure will help
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applicants and eligible individuals (and
those acting on their behalf) understand
program requirements. Third,
substantive changes are necessary to
implement recent legislation, policy
decisions, and a VA General Counsel
legal opinion. Pursuant to 38 U.S.C.
2101(d), the Secretary may prescribe
regulations applicable to the SAH
program. In revising these regulations,
VA intends that applicants, eligible
individuals, program participants, and
other interested parties will be better
informed about the legal requirements
and Department policies that guide the
administration of SAH grants.
The comment period for the proposed
rule ended on December 4, 2009, and
VA received two comments. The
commenters expressed concern
regarding VA’s proposed use of the
terminology ‘‘paraplegic housing grant
or PH grant’’ for the grant authorized
under 38 U.S.C. 2101(a). The
commenters pointed out that the term is
reflective of only one of the types of
disabilities that make an individual
eligible for this grant. Additionally, the
commenters suggested that the use of
the term ‘‘paraplegic’’ might result in an
improper restriction on eligibility for
SAH grants. The concern was that the
term ‘‘paraplegia’’ or ‘‘paraplegic’’ might
not be interpreted to include the
functional loss of use of the lower limbs
due to psychological disorders or other
non-organic impairments. One
commenter, citing General Counsel
Precedent Opinion 60–90, asserted that
such a restriction on eligibility for SAH
grants is improper, and both
commenters wanted to ensure that the
definition for ‘‘paraplegic grant’’ would
not exclude individuals who otherwise
would have been eligible for assistance
under 38 U.S.C. 2101(a).
The General Counsel opinion held
that the determination of ‘‘loss of use’’ is
made ‘‘irrespective of whether such loss
is functional or organic in origin.’’ VA
did not propose to diverge from this
holding. VA agrees with the
commenters’ concerns and, therefore,
has decided to use the applicable
statutory citations when referring to the
grants authorized under 38 U.S.C.
2101(a) as well as 2101(b), rather than
the terms ‘‘paraplegic housing grant’’ or
‘‘adaptive housing grant’’ as proposed.
No other substantive changes are
made to the proposed rule. However,
VA has made a few technical revisions.
First, VA has revised the heading of
subpart C to refer to ‘‘Eligible
Individuals’’ rather than ‘‘Certain
Disabled Veterans.’’ Second, VA is
amending the language in
§ 36.4404(a)(1), (2), and (3) to clarify
that assistance is based on an
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56875
individual’s rating for entitlement to
compensation under 38 U.S.C. chapter
11. These changes are intended to
clarify that assistance under 38 U.S.C.
chapter 21 is available to veterans and
active duty servicemembers. Third, on
September 24, 2009, VA published a
final rule establishing 38 CFR 36.4412,
which implemented provisions of the
Housing and Economic Recovery Act of
2008, Public Law 110–289. Those
provisions authorize VA to provide
automatic annual increases to certain
SAH grant recipients. VA sought
comments on proposed § 36.4412 in a
document published in the Federal
Register on May 12, 2009 (74 FR 22145).
VA inadvertently omitted § 36.4412 in
the proposed rule that preceded this
final rule. See 74 FR 51103. VA is reinserting this provision, without further
change, as § 36.4411. No substantive
changes were made to the regulation.
Finally, VA has revised
§§ 36.4405(a)(iii), 36.4405(b), and
36.4406(b) for grammatical reasons.
Unfunded Mandates
The Unfunded Mandates Reform Act
of 1995 requires, at 2 U.S.C. 1532, that
agencies prepare an assessment of
anticipated costs and benefits before
issuing any rule that may result in
expenditure by State, local, and tribal
governments, in the aggregate, or by the
private sector, of $100 million or more
(adjusted annually for inflation) in any
given year. This final rule will have no
such effect on State, local, and tribal
governments, or on the private sector.
Paperwork Reduction Act of 1995
Although this document contains
provisions constituting collections of
information, under the provisions of the
Paperwork Reduction Act of 1995 (44
U.S.C. 3501–3521), no new or proposed
revised collections of information are
associated with this final rule. The
information collection provisions for
subpart C of 38 CFR part 36 are
currently approved by the Office of
Management and Budget (OMB) and
have been assigned OMB control
numbers 2900–0031, 2900–0047, 2900–
0132, and 2900–0300.
Executive Order 12866
Executive Order 12866 directs
agencies to assess all costs and benefits
of available regulatory alternatives and,
when regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety, and other advantages;
distributive impacts; and equity). The
Executive Order classifies a regulatory
action as a ‘‘significant regulatory
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]]>Agencies
[Federal Register Volume 75, Number 180 (Friday, September 17, 2010)]
[Rules and Regulations]
[Pages 56873-56875]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-23264]
-----------------------------------------------------------------------
LIBRARY OF CONGRESS
Copyright Royalty Board
37 CFR Part 380
[Docket No. 2005-1 CRB DTRA]
Digital Performance Right in Sound Recordings and Ephemeral
Recordings
AGENCY: Copyright Royalty Board, Library of Congress.
ACTION: Remand order.
-----------------------------------------------------------------------
SUMMARY: The Copyright Royalty Judges are announcing their
determination regarding the minimum fee to be paid by Noncommercial
Webcasters under two statutory licenses, permitting certain digital
performances of sound recordings and the making of ephemeral
recordings, in response to an order of remand by the United States
Court of Appeals for the District of Columbia Circuit.
DATES: Effective September 17, 2010.
ADDRESSES: The remand order also is published on the Copyright Royalty
Board Web site at https://www.loc.gov/crb/orders/2010/amendment-remand-order-6-30-10.pdf.
FOR FURTHER INFORMATION CONTACT: Richard Strasser, Senior Attorney, or
Gina Giuffreda, Attorney Advisor, by telephone at (202) 707-7658 or by
e-mail at crb@loc.gov.
SUPPLEMENTARY INFORMATION: On May 1, 2007, the Copyright Royalty Judges
(``Judges'') published in the Federal Register their determination of
royalty rates and terms under the statutory licenses under Sections
112(e) and 114 of the Copyright Act, title 17 of the United States
Code, for the period 2006 through 2010 for the digital public
performance of sound recordings by means of eligible nonsubscription
transmission or a transmission by a new subscription service. 72 FR
24084. In Intercollegiate Broadcast System, Inc. v. Copyright Royalty
Board, 574 F.3d 748 (DC Cir. 2009), the United States Court of Appeals
for the District of Columbia Circuit (``DC Circuit'') affirmed the
Judges' determination in the main but remanded to the Judges the matter
of setting the minimum fee to be paid by both Commercial Webcasters and
Noncommercial Webcasters under Sections 112(e) and 114 of the Copyright
Act. Id. at 762, 767. No rules or procedures applied to a proceeding
that is remanded, and the Judges adopted an Interim Final Rule to
govern. 37 CFR 351.15. Pursuant to this Rule, Intercollegiate
Broadcasting System, Inc. (``IBS'') and SoundExchange, Inc.
(``SoundExchange'') presented proposals for the conduct and schedule of
the remand proceeding, including settlement negotiations, written
direct statements with proposed rates, discovery and an evidentiary
hearing. By order dated October 23, 2009, the Judges established a
period commencing November 2, 2009, and concluding on December 2, 2009,
for the parties to negotiate and submit a settlement of the minimum fee
issue that is the subject of the remand. Absent settlement, the parties
were directed to file written direct statements by January 11, 2010.
On December 2, 2009, SoundExchange, Inc. and the Digital Media
Association (``DiMA'') submitted a settlement regarding the statutory
minimum fee to be paid by Commercial Webcasters. Subsequently, the
Judges published for comment the proposed change in the rule necessary
to implement that settlement pursuant to the order of remand from the
DC Circuit. 74 FR 68214 (December 23, 2009). The Judges received one
comment from IBS. The Final Rule for the minimum fee to be paid by
Commercial Webcasters was published. 75 FR 6097 (February 8, 2010).
Following the filing of Written Direct Statements by IBS and
SoundExchange, on January 20, 2010, the Judges established the
discovery schedule on the remaining issue of the minimum fee for
Noncommercial Webcasters. Following discovery, the hearing was held May
18, 2010. SoundExchange presented the testimony of W. Tucker McCrady,
associate counsel, digital legal affairs, Warner Music Group (``WMG''),
and Barrie Kessler, chief operating officer, SoundExchange. It also
offered Webcaster Settlement Acts of 2008 and 2009 agreements between
SoundExchange and College Broadcasters, Inc. (``CBI'') for
noncommercial educational webcasters, National Association of
Broadcasters (``NAB'') for broadcasters, Sirius XM Radio, Inc.
(``Sirius XM'') for satellite services and DiMA for commercial
webcasters. 5/18/10 Tr. at 13 (McCrady). IBS presented the testimony of
Frederick J. Kass, Jr., John E. Murphy and Benjamin Shaiken. 5/18/10
Tr. at 62 and 67 (Kass). The testimony of Mr. Kass was that IBS
supported a different rate proposal than the one filed. When this
different rate proposal was not timely filed, the Judges ordered that
it be filed by June 1, 2010. 5/18/10 Tr. at 98 (Kass). The IBS'
Restated Rate Proposal was filed June 1, 2010.
Mr. McCrady testified that WMG enters voluntary licenses for
commercial webcasters. A negotiated license for the full catalogue must
generate at least payments of $25,000. 5/18/10 Tr. at 25 (McCrady). The
lowest commercial minimum fee is 20% of revenue. A smaller revenue
stream would not justify the time and resources WMG would need to
devote to evaluating, negotiating, implementing and monitoring an
agreement. 5/18/10 Tr. at 20 (McCrady). Noncommercial Webcasters use
the statutory license, because they do not generate enough revenue to
WMG to support negotiating a license. SX Remand Trial Ex. 1 at 6
(McCrady).
The CBI agreement has the rates and terms for noncommercial
educational webcasters, the same group that IBS represents in this
proceeding. 5/18/10 Tr. at 71 (Kass). It has a minimum fee of $500 per
year per station or channel and a usage rate of $500 per channel for
streaming a noncommercial educational service up to 159,400 aggregate
tuning hours (``ATH''). 5/18/10 Tr. at 14 (McCrady). The SoundExchange
proposed minimum fee is $500 per station or channel. 5/18/10 Tr. at 14
(McCrady). The proposed minimum fee is fully recoupable against royalty
fees owed and this feature reduces transaction costs for both parties.
5/18/10 Tr. at 21, 22 (McCrady). IBS says the average annual revenue of
its member stations is $9,000. 5/18/10 Tr. at 20 (McCrady) and 5/18/10
Tr. at 71 (Kass). So, the proposed fee is 6% of revenue, a large
discount for Noncommercial Webcasters off the negotiated license
agreements for commercial webcasters. 5/18/10 Tr. at 20 (McCrady). All
users of sound recordings should be licensed and pay something. It is
an important educational message for students to learn the value of
recorded music and to pay for it. 5/18/10 Tr. at 23 (McCrady). From the
first webcasting proceeding, the standard minimum fee
[[Page 56874]]
for statutory licenses has been $500, on the theory that the minimum
fee should be sufficient to cover at least the costs of administering
the license. SX Remand Trial Ex. 1 at 7 (McCrady).
Ms. Kessler testified about administering the royalties paid under
the statutory license. Of the approximately 730 webcasting services
paying royalties in 2009, 363 are noncommercial. The noncommercial
royalties are less than 1% of the total webcasting royalties paid for
2009. 5/18/10 Tr. at 34 (Kessler). Of the noncommercial services, 305
paid only the minimum fee of $500, and the remaining 58 paid more for
exceeding the ATH cap or streaming multiple channels or stations. These
payments are pursuant to the royalty minimum fee that is the subject of
this remand proceeding, 5/18/10 Tr. at 42 (Kessler), and they
demonstrate that noncommercial services are able and willing to pay the
minimum fee. 5/18/10 Tr. at 33 (Kessler). SoundExchange does not
regularly track the administrative costs on a licensee, station or
channel basis. Such costs vary widely based on the quality of the data
provided by the service. For this proceeding, SoundExchange estimated
its administrative costs. The average per channel or station cost for
webcasters for 2008 is $803. 5/18/10 Tr. at 36 (Kessler). The cost of
administering the statutory license is greater than the revenue from
noncommercial webcasters. 5/18/10 Tr. at 34 (Kessler). The CBI
agreement for noncommercial educational webcasters, together with the
NAB agreement, the Sirius XM agreement and the DiMA agreement all
provide a similar minimum fee of $500, as SoundExchange proposes in
this proceeding. All of these agreements were filed under the Webcaster
Settlement Acts of 2008 and 2009, which permit agreements on the
royalty rates under the statutory licenses. 5/18/10 Tr. at 13
(McCrady).
On June 1, 2010, IBS filed the restated rate proposal that Mr. Kass
had supported in his testimony. The general principle of the proposal
is that small noncommercial webcasters should pay only for the
performances of music subject to the statutory license that they
actually webcast. This principle is the same as the Judges used in the
Final Determination to support the per performance metric for royalty
rates, being more directly tied to the nature of the right being
licensed. See Intercollegiate Broadcast System, Inc. v. Copyright
Royalty Board, 574 F.3d 748, 760-61 (DC Cir. 2009). But contrary to
this principle, the proposal then provides for a flat royalty rate and
an exemption from recordkeeping and reporting requirements. Both the
flat rate and the exemptions are inconsistent with a per performance
royalty, which is based on the number of performances times the rate
for each performance. The proposal was for the royalty rates to be paid
by Noncommercial Webcasters (set by 37 CFR 380.3(a)(2)(i)) and not for
the minimum fee, which is the subject of this remand proceeding. The
proposed rate is $20 to $50 per annum, based on the number of aggregate
tuning hours. The proposal did not include a minimum fee. 5/18/10 Tr.
at 76, 83-85 (Kass). Mr. Kass said no minimum fee should be paid. He
said this discount is justified, because the small noncommercial
educational webcasters are teaching students. IBS Remand Trial Ex. 1 at
2. The CBI agreement is available for use by IBS members and some of
those members have joined the CBI agreement. 5/18/10 Tr. at 104, 105
(Kass). It proposes the $500 minimum fee per channel or station. 5/18/
10 Tr. at 14 (McCrady).
Noncommercial Minimum Fee
The Final Determination discussed in Section IV.C.2 that most
Noncommercial Webcasters qualified for a distinct segment of the
marketplace that justified royalties lower than those paid by
Commercial Webcasters. However, the Judges found that:
the bare minimum that such services should have to pay is the
administrative cost of administering the license. There is no
evidence in the record to suggest that the submarket in which a
Noncommercial Webcaster may reside would yield a different
administrative cost for SoundExchange as compared to the
administrative costs associated with Commercial Webcasters and
SoundExchange, notably, makes no distinction between webcasters with
respect to the $500 minimum fee. Webcaster I affirmed the notion
that all webcasters-all Noncommercial Webcasters as well as all
Commercial Webcasters-should pay the same minimum fee for the same
license. 67 FR 45259 (July 8, 2002). We also find no basis in the
record for distinguishing between Commercial Webcasters and
Noncommercial Webcasters with respect to the administrative cost of
administering the license. Therefore, we determine that a minimum
fee of an annual non-refundable, but recoupable $500 minimum per
channel or station payable in advance is reasonable over the term of
this license.
72 FR 24084, 24099 (May 1, 2007) (footnotes omitted).
Ms. Kessler testified that the rough estimate of the average
administrative cost for 2008 to SoundExchange per station or channel
for webcasters is $803. All of the agreements filed pursuant to the
Webcaster Settlement Acts of 2008 and 2009 have similar minimum fees as
the proposed rate of $500 per station or channel. One includes the
agreement for noncommercial educational webcasters (the CBI agreement),
the same type of services as IBS, which seeks to pay no minimum fee. As
found in the above quote from the Final Determination, a zero minimum
fee is not supported by the evidence. IBS also asserts that
administrative costs should be proportionately tied to the number of
performances on a channel in a given year, but fails to establish any
credible nexus. On the contrary, there are certain basic processes that
must be utilized in administering the use of sound recordings by any
Commercial or Noncommercial Webcaster of any size. Not surprisingly, at
lesser levels of sound recording usage, the establishment and conduct
of such administrative processes cannot simply be dispensed with.
Indeed, smaller users may even result in larger proportionate
administrative processing time than larger users. SoundExchange Remand
Trial Ex. 1 at 3-4 (Kessler). See also Order, 72 FR 24084, 24096 n.37
(May 1, 2007).
The evidence presented in the remand proceeding supports a minimum
fee of at least the same fee as adopted in the Final Determination.
SoundExchange has now presented evidence on administrative costs that
exceed this minimum. The agreements entered pursuant to the Webcaster
Settlement Acts of 2008 and 2009 support that the industry accepts this
minimum fee, which has substantially been in place since the first
webcasting proceeding. IBS' position seeks to pay no minimum fee and
indeed seeks to pay no or an extremely small royalty for use of
copyrighted content. The Judges adopt the same minimum fee for
Noncommercial Webcasters as stated in the Final Determination of an
annual non-refundable, but recoupable $500 minimum per annum per
channel or station payable in advance. 37 CFR 380.3(b)(2).
June 30, 2010.
So ordered.
James Scott Sledge,
Chief United States Copyright Royalty Judge.
William J. Roberts, Jr.,
United States Copyright Royalty Judge.
Stanley C. Wisniewski,
United States Copyright Royalty Judge.
[[Page 56875]]
Dated: July 21, 2010.
James Scott Sledge,
Chief, U.S. Copyright Royalty Judge.
James H. Billington,
Librarian of Congress.
[FR Doc. 2010-23264 Filed 9-16-10; 8:45 am]
BILLING CODE 1410-72-P
