[Federal Register: December 1, 1995 (Volume 60, Number 231)]
[Rules and Regulations]
[Page 61655-61657]
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LIBRARY OF CONGRESS
37 CFR Part 255
[Docket No. RM 95-4 CARP]
Digital Performance Right in Sound Recordings
AGENCY: Copyright Office, Library of Congress.
ACTION: Initiation of voluntary negotiation period and final rule.
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SUMMARY: The Copyright Office is initiating the six month voluntary
negotiation period for negotiating terms and rates for a compulsory
license for digital subscription transmissions, and adopting the rate
for a compulsory license for digital phonorecord delivery as required
by the Digital Performance Right in Sound Recordings Act of 1995.
DATES: The effective date of this document is December 1, 1995. The
initiation of the six month voluntary negotiation period is December 1,
1995. The effective date of the rate for digital phonorecord deliveries
is February 1, 1996.
ADDRESSES: Copies of voluntary license agreements and petitions, if
sent by mail, should be addressed to: Copyright Arbitration Royalty
Panel (CARP), P.O. Box 70977, Southwest Station, Washington, D.C.
20024. If hand delivered, they should be brought to: Office of the
Copyright General Counsel, James Madison Memorial Building, Room LM-
407, First and Independence Avenue, S.E. Washington, D.C. 20540.
FOR FURTHER INFORMATION CONTACT: Marilyn Kretsinger, Acting General
Counsel, or William Roberts, Senior Attorney, Copyright Arbitration
Royalty Panel, P.O. Box 70977, Southwest Station, Washington, D.C.
20024, (202) 707-8380.
SUPPLEMENTARY INFORMATION: On November 1, 1995, the President signed
into law the ``Digital Performance Right in Sound Recordings Act of
1995'' (``Digital Performance Act''), Pub. L. 104-39. The Digital
Performance Act creates an exclusive right for copyright owners of
sound recordings, subject to certain limitations, to perform publicly
the sound recordings by means of certain digital audio transmissions.
See 17 U.S.C. 106(6).
Among the limitations on the performance of a sound recording
publicly by means of a digital audio transmission is the creation of a
new compulsory license for nonexempt subscription transmissions. The
Digital Performance Act defines a ``subscription transmission'' as one
that ``is a transmission that is controlled and limited to particular
recipients, and for which consideration is required to be paid or
otherwise given by or on behalf of the recipient to receive the
transmission or a package of transmissions including the
transmission.'' 17 U.S.C. 114(j)(8). All nonexempt subscription
transmissions are eligible for section 114 compulsory licensing
provided they are not made by an ``interactive service,'' which is
defined in part as ``one that enables a member of the public to
receive, on request, a transmission of a particular sound recording
chosen by or on behalf of the recipient.'' See 17 U.S.C. 114(j)(4).
[[Page 61656]]
The terms and rates of the section 114 statutory license are
determined by voluntary negotiation among the affected parties and,
where necessary, compulsory arbitration conducted under chapter 8 of
the Copyright Act. The voluntary negotiation period was triggered on
enactment of the Digital Performance Act, which directs the Librarian
of Congress, within 30 days of enactment, to publish in the Federal
Register a notice initiating ``voluntary negotiation proceedings for
the purpose of determining reasonable terms and rates of royalty
payments * * *'' 17 U.S.C. 114(f)(1). The voluntary negotiation period
is to last for six months, and any terms and rates negotiated during
the period are to be effective from February 1, 1996, the effective
date of the Digital Performance Act,<SUP>1 through December 31, 2000.
The Digital Performance Act requires that the terms and rates should be
established separately for each different type of digital audio
transmission service then in operation, but does not require or suggest
that the terms and rates established must be different. The
negotiations between copyright owners of sound recordings and the
entities performing such recordings under the Sec. 114 license are to
be governed by the provisions of section 114(e) (which grants the
negotiating parties an antitrust exemption), and each party is
responsible for bearing its own costs.
\1\ The effective date of the Digital Performance Act is
February 1, 1996, with the exception of sections 114 (e) and (f) of
the law, which became effective upon date of enactment.
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In the legislative history to the Digital Performance Act, the
Committee expressed hope that the voluntary negotiation period will
lead to an industry-wide agreement concerning royalty terms and rates.
S. Rep. No. 128, 104th Cong., 1st Sess. 29 (1995). If an agreement as
to rates and terms is reached and there is no further controversy, then
it is not necessary for the parties to submit to arbitration. In such
cases, the Librarian of Congress will follow current rate regulation
procedures and notify the public of the proposed agreement in a notice
and comment proceeding and, if no opposing comment is received from a
party with a substantial interest and intent to participate in an
arbitration proceeding, the Librarian will adopt the terms and rates
embodied in the agreement without convening a copyright arbitration
royalty panel. 37 CFR 251.63(b). If, however, no industry-wide
agreement is reached, or only certain parties negotiate license
agreements, then those copyright owners and entities performing sound
recordings not subject to a voluntary agreement shall be bound by the
terms and rates set by a CARP. Arbitration proceedings are initiated
upon the filing of a petition for ratemaking with the Librarian of
Congress during the 60 days immediately following the six month
voluntary negotiation period. Arbitration cannot take place without the
filing of a petition even if no voluntary license agreements are
negotiated.
Initiation of Voluntary Negotiations
Pursuant to 17 U.S.C. 114(f)(1), the Copyright Office of the
Library of Congress is initiating the six month voluntary negotiation
period for sound recording copyright owners and entities that perform
or authorize the performance of sound recordings by means of nonexempt
digital subscription transmissions. The negotiation period is to run
from December 1, 1995 to June 1, 1996. Parties which negotiate a
voluntary license agreement during this period are encouraged to submit
two copies of the agreement to the Copyright Office at the above listed
address within 30 days of its execution.
Petitions
Pursuant to 17 U.S.C. 114(f)(2), those sound recording copyright
owners and entities that perform or authorize the performance of sound
recordings by means of nonexempt digital transmissions and who have not
negotiated license agreements under section 114(f)(1) are subject to
arbitration upon the filing of a petition. Only those parties with a
significant interest in the establishment of terms and rates for the
section 114 license may file a petition. Petitions must be submitted in
accordance with 17 U.S.C. 803(a)(1), and may be filed at any time
during the period commencing on June 2, 1996, and ending on August 1,
1996. Petitions should be submitted to the Copyright Office at the
address listed in this notice. The petitioner must deliver an original
and five copies of the petition to the Office.
If all the affected parties negotiate a single industry-wide
agreement during the period described in section 114(f)(1), they must
petition the Librarian of Congress for acceptance of the agreement
during the same 60 day period. The Librarian will then follow the
notice and comment procedures of 37 CFR 251.63(b). If a party with a
significant interest and an intent to participate in an arbitration
proceeding files an objection to the agreement during the notice and
comment proceeding, then the Librarian shall initiate an arbitration
proceeding in accordance with chapter 8 of the Copyright Act and 37 CFR
251 part.
Digital Phonorecord Delivery
The Digital Performance Act also provides that the section 115
compulsory license to make and distribute phonorecord includes the
right of the compulsory licensee to make or authorize digital
phonorecord deliveries. The Act identifies that the rate for all
digital phonorecord deliveries made or authorized under a compulsory
license on or before December 31, 1997, shall be the same as the rate
in effect for the making and distribution of a physical phonorecord.
<SUP>2 As a result, the Office is amending part 255 of its rules to
reflect the new royalty rate for digital phonorecord deliveries, and to
adopt the same definition of digital phonorecord delivery as appears in
the Digital Performance Act. The effective date of the rule change is
February 1, 1996, the date on which the Digital Performance Act takes
effect.
\2\ After December 31, 1997, the rate for digital phonorecord
deliveries could be the same or different than the rate for making
and distributing a physical phonorecord, depending on the outcome of
negotiations or CARP proceedings scheduled to take place that year.
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Good Cause Finding
Section 553(b)(3)(B) states that notice of a proposed rulemaking is
not required ``when the agency for good cause finds * * * that notice
and public procedure thereon are impracticable, unnecessary, or
contrary to the public interest.''
Because the Digital Performance Act requires that the new rate for
digital phonorecord deliveries is to be the same as for the making and
distribution of physical phonorecords until December 31, 1997, the
Office is without any discretion in the matter. Therefore, it would be
impracticable, unnecessary, and contrary to the public interest to
solicit comments on a rule that is mandated by law.
List of Subjects in 37 CFR Part 255
Copyright, Recordings.
For the reasons set forth in the preamble, the Copyright Office
amends 37 CFR part 255 as follows:
PART 255--ADJUSTMENT OF ROYALTY PAYABLE UNDER COMPULSORY LICENSE
FOR MAKING AND DISTRIBUTING PHONORECORDS
1. The authority citation for part 255 continues to read as
follows:
[[Page 61657]]
Authority: 17 U.S.C. 801(b)(1) and 803.
2. Section 255.1 is revised to read as follows:
Sec. 255.1 General.
This part 255 adjusts the rates of royalties payable under the
compulsory license for making and distributing phonorecords, including
digital phonorecord deliveries, embodying nondramatic musical works,
under 17 U.S.C. 115.
3. A new Sec. 255.4 is added to read as follows:
Sec. 255.4 Definition of digital phonorecord delivery.
A ``digital phonorecord delivery'' is each individual delivery of a
phonorecord by digital transmission of a sound recording which results
in a specifically identifiable reproduction by or for any transmission
recipient of a phonorecord of that sound recording, regardless of
whether the digital transmission is also a public performance of the
sound recording or any nondramatic musical work embodied therein. A
digital phonorecord delivery does not result from a real-time,
noninteractive subscription transmission of a sound recording where no
reproduction of the sound recording or the musical work embodied
therein is made from the inception of the transmission through to its
receipt by the transmission recipient in order to make the sound
recording audible.
4. A new Sec. 255.5 is added to read as follows:
Sec. 255.5 Royalty rate for digital phonorecord deliveries.
For every digital phonorecord delivery made on or before December
31, 1997, the royalty rate payable with respect to each work embodied
in the phonorecord shall be either 6.95 cents, or 1.3 cents per minute
of playing time or fraction thereof, whichever amount is larger.
Dated: November 24, 1995.
Marilyn Kretsinger,
Acting General Counsel.
Approved:
James H. Billington,
The Librarian of Congress.
***12/5/95***