[Federal Register: January 13, 2000 (Volume 65, Number 9)]
[Page 2194-2195]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



Copyright Office
[Docket No. 2000-3 CARP DTRA2]

Digital Performance Right in Sound Recordings and Ephemeral 

AGENCY: Copyright Office, Library of Congress.

ACTION: Initiation of voluntary negotiation period.


SUMMARY: The Copyright Office is announcing the initiation of the 
voluntary negotiation period for determining reasonable rates and terms 
for two compulsory licenses, which in one case, allows public 
performances of sound recordings by means of eligible nonsubscription 
transmissions, and in the second instance, allows the making of an 
ephemeral phonorecord of a sound recording in furtherance of making a 
permitted public performance of the sound recording.

EFFECTIVE DATE: The voluntary negotiation period begins on January 13, 

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, DC 20024. 
If hand delivered, they should be brought to: Office of the General 
Counsel, James Madison Memorial Building, Room LM-403, First and 
Independence Avenue, SE, Washington, DC 20559-6000.

FOR FURTHER INFORMATION CONTACT: David O. Carson, General Counsel, or 
Tanya M. Sandros, Attorney Advisor, Copyright Arbitration Royalty 
Panel, P.O. Box 70977, Southwest Station, Washington, DC 20024. 
Telephone: (202) 707-8380. Telefax: (202) 252-3423.

SUPPLEMENTARY INFORMATION: In 1995, Congress enacted the Digital 
Performance Right in Sound Recordings Act of 1995 (``DPRA''), Public 
Law 104-39, which created 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. 
Among the limitations on the performance was the creation of a new 
compulsory license for nonexempt, noninteractive, digital subscription 
transmissions. 17 U.S.C. 114(f).
    The scope of this license was expanded in 1998 upon passage of the 
Digital Millennium Copyright Act of 1998 (``DMCA'' or ``Act''), Public 
Law 105-304, in order to allow a nonexempt eligible nonsubscription 
transmission and a nonexempt transmission by a preexisting satellite 
digital audio radio service to perform publicly a sound recording in 
accordance with the terms and rates of the statutory license. 17 U.S.C. 
    An ``eligible nonsubscription transmission'' is a noninteractive, 
digital audio transmission which, as the name implies, does not require 
a subscription for receiving the transmission. The transmission must 
also be made as part of a service that

[[Page 2195]]

provides audio programming consisting in whole or in part of 
performances of sound recordings which purpose is to provide audio or 
entertainment programming, but not to sell, advertise, or promote 
particular goods or services. A ``preexisting satellite digital audio 
radio service'' is a subscription digital audio radio service that 
received a satellite digital audio radio service license issued by the 
Federal Communications Commission on or before July 31, 1998. See 17 
U.S.C. 114(j) (6) and (10). Only two known entities, CD Radio and 
American Mobile Radio Corporation, qualify under the statutory 
definition as preexisting satellite digital audio radio services.
    In addition to expanding the current section 114 license, the DMCA 
also created a new statutory license for the making of an ``ephemeral 
recording'' of a sound recording by certain transmitting organizations. 
17 U.S.C. 112(e). The new statutory license allows entities that 
transmit performances of sound recordings to business establishments, 
pursuant to the limitations set forth in section 114(d)(1)(C)(iv), to 
make an ephemeral recording of a sound recording for purposes of a 
later transmission. The new license also provides a means by which a 
transmitting entity with a statutory license under section 114(f) can 
make more than the one phonorecord specified in section 112(a). 17 
U.S.C. 112(e).

Determination of Reasonable Terms and Rates

    The statutory scheme for establishing reasonable terms and rates is 
the same for both licenses. The terms and rates for the two new 
statutory licenses may be determined by voluntary agreement among the 
affected parties, or if necessary, through compulsory arbitration 
conducted pursuant to Chapter 8 of the Copyright Act.
    If the affected parties are able to negotiate voluntary agreements, 
then it may not be necessary for these parties to participate in an 
arbitration proceeding. Similarly, if the parties negotiate an 
industry-wide agreement, an arbitration may not be needed. 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. If no party with a substantial interest and an 
intent to participate in an arbitration proceeding files a comment 
opposing the negotiated rates and terms, the Librarian will adopt the 
proposed terms and rates 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 users relying upon one or 
both of the statutory licenses shall be bound by the terms and rates 
established through the arbitration process.
    Arbitration proceedings cannot be initiated unless a party files a 
petition for ratemaking with the Librarian of Congress during the 60-
day period, beginning July 1, 2000. 17 U.S.C. 112(e)(7) and 
    On November 27, 1998, the Copyright Office initiated a six-month 
voluntary negotiation period in accordance with sections 112(e)(4) and 
114(f)(2)(A) for the purpose of establishing rates and terms for these 
licenses for the period beginning on the effective date of the DMCA and 
ending on December 31, 2000. 63 FR 65555 (November 27, 1998). Parties 
to these negotiations, however, have been unable to reach agreement on 
the rates and terms, so in accordance with sections 112(e)(5) and 
114(f)(1)(B) the Copyright Office has initiated arbitration proceedings 
to determine the rates and terms for use of the licenses through 
December 31, 2000. These proceedings are in progress. 64 FR 52107 
(September 27, 1999).

Initiation of the Next Round of Voluntary Negotiations

    Unless the schedule has been readjusted by the parties in a 
previous rate adjustment proceeding, sections 112(e)(7) and 
114(f)(2)(C)(i)(II) of the Copyright Act require the publication of a 
notice during the first week of January 2000, and at 2-year intervals 
thereafter, initiating the voluntary negotiation periods for 
determining reasonable rates and terms for the statutory licenses 
permitting the public performance of a sound recording by means of 
certain digital transmissions and the making of an ephemeral recording 
in accordance with section 112(e).
    This notice announces the initiation of these negotiation periods. 
They shall begin on January 13, 2000. Parties who 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.


    In the absence of a license agreement negotiated under 17 U.S.C. 
112(e)(4) or 114(f)(2)(A), those copyright owners of sound recordings 
and entities availing themselves of the statutory licenses are subject 
to arbitration upon the filing of a petition by a party with a 
significant interest in establishing reasonable terms and rates for the 
statutory licenses. Petitions must be filed in accordance with 17 
U.S.C. 112(e)(7), 114(f)(2)(C)(ii)(II), and 803(a)(1) and may be filed 
anytime during the sixty-day period beginning on July 1, 2000. See also 
37 CFR 251.61. Parties should submit petitions to the Copyright Office 
at the address listed in this notice. The petitioner must deliver an 
original and five copies to the Office.

    Dated: January 7, 2000.
David O. Carson,
General Counsel.
[FR Doc. 00-808 Filed 1-12-00; 8:45 am]