[Federal Register: February 9, 1999 (Volume 64, Number 26)]
[Rules and Regulations]
[Page 6221-6223]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09fe99-9]
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LIBRARY OF CONGRESS
Copyright Office
37 CFR Part 255
[Docket No. 96-4 CARP DPRA]
Mechanical and Digital Phonorecord Delivery Rate Adjustment
Proceeding
AGENCY: Copyright Office, Library of Congress.
ACTION: Final regulations.
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SUMMARY: The Copyright Office of the Library of Congress is announcing
final regulations setting the rate for the delivery of digital
phonorecords in general and deferring until the next scheduled rate
adjustment proceeding further consideration of the royalty rate for the
delivery of a digital phonorecord where the reproduction or
distribution
[[Page 6222]]
is incidental to the transmission which constitutes a digital
phonorecord delivery.
EFFECTIVE DATE: January 1, 1998.
FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or
Tanya M. Sandros, Attorney Advisor, Copyright Arbitration Royalty Panel
(``CARP''), P.O. Box 70977, Southwest Station, Washington, DC 20024.
Telephone (202) 707-8380. Telefax: (202) 252-3423.
SUPPLEMENTARY INFORMATION: On November 1, 1995, Congress passed the
Digital Performance Right in Sound Recordings Act of 1995 (``Digital
Performance Act''). Pub. L. 104-39, 109 Stat. 336. Among other things,
the Act confirms and clarifies that the scope of the statutory license
to make and distribute phonorecords of nondramatic musical
compositions, 17 U.S.C. 115, includes the right to distribute or
authorize distribution by means of a digital transmission which
constitutes a ``digital phonorecord delivery.'' 17 U.S.C. 115(c)(3)(A).
A ``digital phonorecord delivery'' is defined as ``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 * *
*.'' 17 U.S.C. 115(d).
The Digital Performance Act established that the rate for all
digital phonorecord deliveries (``DPDs'') made or authorized under a
compulsory license on or before December 31, 1997, was the same as the
rate in effect for the making and distribution of physical phonorecords
for that period. 17 U.S.C. 115(c)(3)(A)(i). For digital phonorecord
deliveries made or authorized after December 31, 1997, the Digital
Performance Act established a two-step process for determining the
terms and rates; either the copyright owners of nondramatic musical
works and those persons entitled to obtain a license may negotiate the
rates and terms for the statutory license, or they may participate in a
Copyright Arbitration Royalty Panel (``CARP'') proceeding. 17 U.S.C.
115(c)(3)(A)-(D). In a CARP proceeding, the parties present evidence to
a panel of three arbitrators who, based upon the written record, write
a report for the Librarian of Congress in which the CARP sets out its
determination concerning the appropriate rates and terms. 17 U.S.C.
802(c) and (e).
The Librarian initiated the voluntary negotiation period for this
rate setting proceeding on July 17, 1996, and directed it to end on
December 31, 1996. 61 FR 37213 (July 17, 1996). At the same time, the
Librarian announced a schedule for a CARP proceeding in case the
interested parties were unable to reach an industry-wide agreement
through the negotiation process. The Librarian vacated this schedule
and a second schedule for a CARP proceeding at the request of the
negotiating parties, Recording Industry Association of America
(``RIAA''), the National Music Publishers' Association, Inc.
(``NMPA''), and The Harry Fox Agency, Inc. (``Harry Fox''). 61 FR 65243
(December 11, 1996); 62 FR 5057 (February 3, 1997).
Ultimately, these parties reached a voluntary agreement which they
submitted to the Librarian of Congress on November 5, 1997, pursuant to
37 CFR 251.63(b). Section 251.63(b) allows the Librarian to adopt rates
and terms embodied in a proposed settlement without convening an
arbitration panel, if after conducting a notice-and-comment proceeding,
no party with an intent to participate in a CARP proceeding files a
substantive comment opposing the proposed regulations. See e.g., 62 FR
63502 (December 1, 1997) (proposing regulations setting rates and terms
for the section 118 license). Accordingly, the Librarian published the
proposed rates and terms for digital phonorecord deliveries for public
comment. 62 FR 63506 (December 1, 1997).
Three parties filed comments in response to the proposed terms and
rates: the United States Telephone Association (``USTA''), the
Coalition of Internet Webcasters (``Webcasters''), and Broadcast Music,
Inc. (``BMI''). These comments served to identify heretofore unknown
parties who have a significant interest in the setting of the rates and
terms for the delivery of digital phonorecord deliveries. Consequently,
the parties entered a new round of negotiations in an attempt to
resolve the commenters' concerns and reach a mutually acceptable
industry-wide agreement.
During the second phase of negotiations, the NMPA, SGA, and RIAA
submitted a memorandum to the Copyright Office requesting that it adopt
the unopposed rate for the delivery of digital phonorecords in general
and the schedule for future rate adjustment proceedings set forth in
its November 5, 1997, agreement, and that it either adopt the proposed
rates and terms for incidental digital phonorecord deliveries set forth
in the proposed regulations or sever and defer further consideration of
these rates and terms until the next rate adjustment proceeding. The
Copyright Office then offered the parties who had filed a Notice of
Intent to Participate an opportunity to comment on the memorandum. See
Order, Docket No. 96-4 CARP DPRA (October 16, 1998).
USTA responded that its concerns were fully addressed by the
memorandum; and the three performing rights organizations, ASCAP, BMI,
and SESAC, filed a joint comment which generally supported the
recommendations outlined in the NMPA/SGA/RIAA memorandum, provided that
the final regulations included a provision recognizing that the section
115 license does not affect in any way the public performance rights
granted under 17 U.S.C. 106(4). Similarly, the Webcasters filed
comments which supported the adoption of the rate and terms for digital
phonorecord deliveries in general and the suggestion to sever and defer
further consideration of rates and terms for incidental DPDs until the
next rate adjustment proceeding with two modifications. First, the
Webcasters sought an amendment to the proposed rules that would allow a
party to petition the Copyright Office for a proceeding to set a rate
for the transmission of an incidental digital phonorecord delivery
prior to the next scheduled date. Second, the Webcasters requested that
no rate be set for the incidental DPDs prior to the completion of a
study required by Congress under section 104 of the Digital Millennium
Copyright Act of 1998 (``DMCA''), subject to the right to petition for
an interim rate adjustment proceeding.
In reply comments, NMPA/SGA/RIAA agreed to the ASCAP/BMI/SESAC
suggestion for a clarification and the Webcasters' suggestion for a
right to petition for a rate adjustment proceeding for incidental DPDs
during the interim period. However, they did not support the
Webcasters' request to postpone the rate adjustment proceeding for
incidental DPDs until the Office completes its study on the operation
of sections 109 and 117 of the Copyright Act, 17 U.S.C., as effected by
Title I of the DMCA.
On December 4, 1998, the NMPA/SGA/RIAA submitted a second joint
petition for adjustment of digital phonorecord delivery royalty rates,
incorporating the proposed modifications except for the suggestion to
postpone the rate adjustment proceeding until the completion of the
study. The petition was filed pursuant to 17 U.S.C. 115(c) and 803(a)
and 37 CFR 251.63(b). Section 251.63(b) allows the Librarian to adopt
the proposed rates and terms at the conclusion of an unopposed notice-
and-comment rulemaking proceeding. This being so,
[[Page 6223]]
the Copyright Office requested public comment on the proposed rates and
terms in a notice published in the Federal Register. 63 FR 71249
(December 24, 1998).
The Copyright Office received no comments opposing the rates and
terms for the delivery of digital phonorecords set forth in the
December 24, 1998, Federal Register notice. Therefore, by this notice,
the Librarian is adopting and the Copyright Office is announcing final
regulations which set the rate for the delivery of digital phonorecords
in general and defer until the next scheduled rate adjustment
proceeding further consideration of the royalty rate for the delivery
of a digital phonorecord where the reproduction or distribution is
incidental to the transmission which constitutes a digital phonorecord
delivery.
List of Subjects in 37 CFR Part 255
Copyright, Recordings.
For the reasons set forth in the preamble, the Library 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:
Authority: 17 U.S.C. 801(b)(1) and 803.
2. Revise Sec. 255.5 to read as follows:
Sec. 255.5 Royalty rate for digital phonorecord deliveries in general.
(a) 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.
(b) For every digital phonorecord delivery made on or after January
1, 1998, except for digital phonorecord deliveries where the
reproduction or distribution of a phonorecord is incidental to the
transmission which constitutes the digital phonorecord delivery, as
specified in 17 U.S.C. 115(c)(3)(C) and (D), the royalty rate payable
with respect to each work embodied in the phonorecord shall be the
royalty rate prescribed in Sec. 255.3 for the making and distribution
of a phonorecord made and distributed on the date of the digital
phonorecord delivery (the ``Physical Rate''). In any future proceeding
under 17 U.S.C. 115(c)(3)(C) or (D), the royalty rates payable for a
compulsory license for digital phonorecord deliveries in general shall
be established de novo, and no precedential effect shall be given to
the royalty rate payable under this paragraph for any period prior to
the period as to which the royalty rates are to be established in such
future proceeding.
3. Add Secs. 255.6 through 255.8 to read as follows:
Sec. 255.6 Royalty rate for incidental digital phonorecord deliveries.
The royalty rate for digital phonorecord deliveries where the
reproduction or distribution of a phonorecord is incidental to the
transmission which constitutes a digital phonorecord delivery, as
specified in 17 U.S.C. 115(c)(3)(C) and (D), is deferred for
consideration until the next digital phonorecord delivery rate
adjustment proceeding pursuant to the schedule set forth in Sec. 255.7;
provided, however, that any owner or user of a copyrighted work with a
significant interest in such royalty rate, as provided in 17 U.S.C.
803(a)(1), may petition the Librarian of Congress to establish a rate
prior to the commencement of the next digital phonorecord delivery rate
adjustment proceeding. In the event such a petition is filed, the
Librarian of Congress shall proceed in accordance with 17 U.S.C.
115(c)(3)(D), and all applicable regulations, as though the petition
had been filed in accordance with 17 U.S.C. 803(a)(1).
Sec. 255.7 Future proceedings.
The procedures specified in 17 U.S.C. 115(c)(3)(C) shall be
repeated in 1999, 2001, 2003, and 2006 so as to determine the
applicable rates and terms for the making of digital phonorecord
deliveries during the periods beginning January 1, 2001, 2003, 2005,
and 2008. The procedures specified in 17 U.S.C. 115(c)(3)(D) shall be
repeated, in the absence of license agreements negotiated under 17
U.S.C. 115(c)(3)(B) and (C), upon the filing of a petition in
accordance with 17 U.S.C. 803(a)(1), in 2000, 2002, 2004, and 2007 so
as to determine new rates and terms for the making of digital
phonorecord deliveries during the periods beginning January 1, 2001,
2003, 2005, and 2008. Thereafter, the procedures specified in 17 U.S.C.
115(c)(3)(C) and (D) shall be repeated in each fifth calendar year.
Notwithstanding the foregoing, different years for the repeating of
such proceedings may be determined in accordance with 17 U.S.C.
115(c)(3)(C) and (D).
Sec. 255.8 Public performances of sound recordings and musical works.
Nothing in this part annuls or limits the exclusive right to
publicly perform a sound recording or the musical work embodied
therein, including by means of a digital transmission, under 17 U.S.C.
106(4) and 106(6).
Dated: January 29, 1999.
Marybeth Peters,
Register of Copyrights.
James H. Billington,
The Librarian of Congress.
[FR Doc. 99-3119 Filed 2-8-99; 8:45 am]
BILLING CODE 1410-33-P