Copyright Royalty Board’s Proposed Regulations Set Rates, Terms for Licensing of Musical Works
The Copyright Royalty Board published proposed regulations in the Federal Register that set the rates and terms for Section 115 Copyright Act statutory licensing of musical works (http://xrl.us/bm8sk3). Besides physical copies, the rules cover permanent digital downloads, ringtones, interactive streaming and mixed service bundles. Comments are due June 18.
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The board started the proceeding in January 2011 and many companies and groups agreed to participate, including Microsoft, CTIA, Google, Amazon, AT&T, Apple, RIAA, Rhapsody and Pandora. In April, the three judges that compose the board got a “motion to adopt settlement,” saying all participants in the proceeding “do not object to its being the basis for settling statutory rates and terms,” a notice in the Federal Register said.
The judges are removing two provisions in the parties’ proposed rates and terms and are seeking comment on two others, it said. They removed language that states that the “act of obtaining a license under [Section] 115 ... shall not constitute evidence, as to the circumstances in which any of the exclusive rights of a copyright owner are implicated,” or a license under Section 115, including a compulsory license must be obtained.
And two virtually identical provisions relating to statements of account for Section 115 licenses propose requirements that go beyond those set forth by the register of copyrights, it said.
For calculating royalty payments the percentage of service revenue applicable is 10.5 percent, the notice said. A licensee’s statement of account, including any information provided by a licensee regarding “computation of a submission,” should be “maintained in confidence by the copyright owner,” it said. The judges proposed minimum royalty rates and subscriber-based royalty floors for specific types of services. In cases in which the licensee record company has granted the rights to make interactive streams or limited downloads through third-party services together with the rights to reproduce, 17.36 percent of the “total amount expensed by the service provider ... is properly recognized as expense under” generally accepted accounting principles (GAAP), it said. And in cases where the record company is not a licensee and has granted the rights to make interactive streams or limited downloads of a sound recording through the third-party service, 21 percent of it is “properly recognized as an expense under GAAP."
As for promotional royalty rates, the notice says a record company can get “no consideration” for making or authorizing interactive streams or limited downloads “except for in-kind promotional consideration given to a record company ... that is used to promote the sale or paid use of sound recordings or the paid use of music services through which sound recording are available."
The RIAA, National Music Publishers Association and Digital Media Association inked an agreement last month to set royalty rates for five new categories of digital music services under the Section 115 proceeding (CD April 12 p11).