Determination of Rates and Terms for Making and Distributing Phonorecords (Phonorecords IV)
| Published date | 25 June 2021 |
| Citation | 86 FR 33601 |
| Record Number | 2021-12950 |
| Section | Proposed rules |
| Court | Copyright Royalty Board,Library Of Congress |
Federal Register, Volume 86 Issue 120 (Friday, June 25, 2021)
[Federal Register Volume 86, Number 120 (Friday, June 25, 2021)]
[Proposed Rules]
[Pages 33601-33603]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-12950]
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LIBRARY OF CONGRESS
Copyright Royalty Board
37 CFR Part 385
[Docket No. 21-CRB-0001-PR (2023-2027)]
Determination of Rates and Terms for Making and Distributing
Phonorecords (Phonorecords IV)
AGENCY: Copyright Royalty Board, Library of Congress.
ACTION: Proposed rule.
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SUMMARY: The Copyright Royalty Judges publish for comment proposed
regulations that set rates and terms applicable during the period
beginning January 1, 2023, and ending December 31, 2027, for the
section 115 statutory license for making and distributing phonorecords
of nondramatic musical works.
DATES: Comments and objections, if any, are due no later than July 26,
2021.
ADDRESSES: You may send comments, identified by docket number 21-CRB-
0001-PR (2023-2027), online through eCRB 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. 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 to read background documents or
comments received, go to eCRB at https://app.crb.gov and perform a case
search for docket 21-CRB-0001-PR (2023-2027).
FOR FURTHER INFORMATION CONTACT: Anita Blaine, CRB Program Specialist,
at 202-707-7658 or [email protected].
SUPPLEMENTARY INFORMATION:
Background
Section 115 of the Copyright Act, title 17 of the United States
Code, requires a copyright owner of a nondramatic musical work to grant
a license (also known as the ``mechanical'' compulsory license) to any
person who wants to make and distribute phonorecords of that work,
provided that the copyright owner has allowed phonorecords of the work
to be produced and distributed, and that the licensee complies with the
statute and regulations. In addition to the production or distribution
of physical phonorecords (compact discs, vinyl, cassette tapes, and the
like), section 115 applies to digital transmissions of phonorecords,
including permanent digital downloads and ringtones.
Chapter 8 of the Copyright Act requires the Copyright Royalty
Judges (Judges) to conduct proceedings every five years to determine
the rates and terms for the section 115 license. 17 U.S.C. 801(b)(1),
804(b)(4). Accordingly, the Judges commenced the current proceeding in
January 2021, by publishing notice of the commencement and a request
that interested parties submit petitions to participate. See 86 FR 25
(Jan. 5, 2021).
The Judges received petitions to participate in the current
proceeding from Amazon.com Services LLC, Apple Inc., Copyright Owners
(joint petitioners Nashville Songwriters Association International
(NSAI) and National Music Publishers Association (NMPA)), Google LLC,
George Johnson, Joint Record Company Participants (filed by Recording
Industry Association of America, Inc. for joint petitioners Sony Music
Entertainment, UMG Recordings,
[[Page 33602]]
Inc., and Warner Music Group Corp.), Pandora Media, LLC, David Powell,
SoundCloud Operations Inc.,\1\ Spotify USA Inc., and Brian Zisk.
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\1\ SoundCloud Operations Inc. withdrew from the proceeding on
May 21, 2021.
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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 10, 2021. On
May 25, 2021, the Judges received a motion stating that several
participants \2\ had reached a partial settlement regarding the rates
and terms under Section 115 of the Copyright Act, namely, for physical
phonorecords, permanent downloads, ringtones, and music bundles for the
2023-2027 rate period and seeking approval of that partial settlement.
See Motion to Adopt Settlement of Statutory Royalty Rates and Terms for
Subpart B Configurations, Docket No. 21-CRB-0001-PR (2023-2027) at 1
(May 25, 2021) (Motion). The movants state that ``the settlement
represents the consensus of buyers and sellers representing the vast
majority of the market for `mechanical' rights for [the 37 CFR 385]
Subpart B Configurations.'' \3\ Motion at 4.
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\2\ The participants who filed the motion are the ``Publisher/
Songwriter Participants'' (NMPA and NSAI) and the ``Record Company
Participants'' (Sony Music Entertainment, UMG Recordings, Inc. and
Warner Music Group Corp.). Motion at 1.
\3\ Participants Amazon.com Services LLC, Google LLC, Pandora
Media, LLC, and Spotify USA Inc. do not object to the settlement,
Motion at 4 n.2, however, the movants state that they understand
that participant George Johnson intends to object to it. Motion at
4.
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The settlement proposes that ``Subpart B Configuration Rates and
Terms presently set forth in 37 CFR part 385 subpart B . . . continue
to be applicable to the Record Company Participants and all other
licensees of `mechanical' rights in musical works for the Subpart B
Configurations, for the rate period covered by the Proceeding, with
only a few minor editorial changes to the applicable regulations.''
Motion at 3.
The proposed editorial changes apply to Sec. Sec. 385.10 and
385.11 of Subpart B and to two definitions in Subpart A and would
clarify the regulations. For example, the definition of Licensed
Activity needs to be changed to remove the reference to Subpart B
because the term Licensed Activity does not appear in Subpart B. See 37
CFR 385.2, 385.10-11; Motion at 6-7 (redline of regulations with
rationale for changes).
Section 801(b)(7)(A) of the Copyright Act authorizes the Judges to
adopt 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. This section provides that the
Judges shall provide notice and an opportunity to comment on the
agreement to (1) those that would be bound by the terms, rates, or
other determination set by the agreement and (2) participants in the
proceeding that would be bound by the terms, rates, or other
determination set by the agreement. See section 801(b)(7)(A). The
Judges may decline to adopt the agreement as a basis for statutory
terms and rates for participants not party to the agreement if any
participant objects and the Judges conclude that the agreement does not
provide a reasonable basis for setting statutory terms or rates. Id.
If the Judges adopt rates and terms reached pursuant to a
negotiated settlement, those rates and terms are binding on all
copyright owners of musical works and those using the musical works in
the activities described in the proposed regulations.
The Judges propose an additional minor revision to change an
outdated cross reference. They propose to shorten the cross reference
17 U.S.C. 115(c)(3)(C) and (D) to 17 U.S.C. 115 because the section no
longer has a subsection (c)(3). See 17 U.S.C. 115; Orrin G. Hatch-Bob
Goodlatte Music Modernization Act, Public Law 115-264, 132 Stat. 3676,
3679-3684 (Oct. 11, 2018).
The Judges solicit comments on whether they should adopt the
proposed regulations as statutory rates and terms relating to the
making and distribution of physical or digital phonorecords of
nondramatic musical works.
Comments and objections regarding the rates and terms and the minor
revisions must be submitted no later than July 26, 2021.
List of Subjects in 37 CFR Part 385
Copyright, Phonorecords, Recordings.
Proposed Regulations
For the reasons set forth in the preamble, the Copyright Royalty
Judges propose to amend 37 CFR part 385 as follows:
PART 385--RATES AND TERMS FOR USE OF NONDRAMATIC MUSICAL WORKS IN
THE MAKING AND DISTRIBUTING OF PHYSICAL AND DIGITAL PHONORECORDS
0
1. The authority citation for part 385 continues to read as follows:
Authority: 17 U.S.C. 115, 801(b)(1), 804(b)(4).
Subpart A--Regulations of General Application
0
2. In Sec. 385.2 revise the introductory text of the definition for
``Eligible Limited Download'', the definition for ``Licensed
Activity'', and the fourth sentence for definition ``Sound Recording
Company'' to read as follows:
Sec. 385.2 Definitions.
* * * * *
Eligible Limited Download means a transmission of a sound recording
embodying a musical work to an End User of a digital phonorecord under
17 U.S.C. 115 that results in a Digital Phonorecord Delivery of that
sound recording that is only accessible for listening for-- * * *
* * * * *
Licensed Activity, as the term is used in subparts C and D of this
part, means delivery of musical works, under voluntary or statutory
license, via Digital Phonorecord Deliveries in connection with
Interactive Eligible Streams, Eligible Limited Downloads, Limited
Offerings, mixed Bundles, and Locker Services.
* * * * *
Sound Recording Company means a person or entity that:
* * * * *
(4) Performs the functions of marketing and authorizing the
distribution of a sound recording of a musical work under its own
label, under the authority of a person identified in paragraphs (1)
through (3) of this section.
* * * * *
Subpart B--Physical Phonorecord Deliveries, Permanent Downloads,
Ringtones, and Music Bundles
0
3. Revise Sec. 385.10 to read as follows:
Sec. 385.10 Scope.
This subpart establishes rates and terms of royalty payments for
making and distributing physical phonorecords, Permanent Downloads,
Ringtones, and Music Bundles, in accordance with the provisions of 17
U.S.C. 115.
0
4. Revise Sec. 385.11 paragraph (a) to read as follows:
Sec. 385.11 Royalty rates.
(a) Physical phonorecords and Permanent Downloads. For every
physical phonorecord and Permanent Download the Licensee makes and
distributes or authorizes to be made and distributed, the royalty rate
payable for each work embodied in the phonorecord
[[Page 33603]]
or Permanent Download shall be either 9.1 cents or 1.75 cents per
minute of playing time or fraction thereof, whichever amount is larger.
* * * * *
Jesse M. Feder,
Chief Copyright Royalty Judge.
[FR Doc. 2021-12950 Filed 6-24-21; 8:45 am]
BILLING CODE 1410-72-P
