Determination of Rates and Terms for Digital Performance of Sound Recordings by New Subscription Services and Making of Ephemeral Copies To Facilitate Those Performances (NSS V)

LIBRARY OF CONGRESS <SUBAGY>Copyright Royalty Board</SUBAGY> <CFR>37 CFR Part 383</CFR> <DEPDOC>[Docket No. 23-CRB-0013-NSR (2026-2030)]</DEPDOC> <SUBJECT>Determination of Rates and Terms for Digital Performance of Sound Recordings by New Subscription Services and Making of Ephemeral Copies To Facilitate Those Performances (NSS V)</SUBJECT> <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Copyright Royalty Judges are publishing for comment proposed regulations governing the rates and terms for the digital performances of sound recordings by new subscription services and for the making of ephemeral recordings necessary to facilitate those transmissions for the period commencing January 1, 2026, and ending on December 31, 2030. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments and objections, if any, are due no later than January 21, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> You may submit comments using eCRB, the Copyright Royalty Board's online electronic filing application, at <E T="03">https://app.crb.gov/.</E> <E T="03">Instructions:</E> 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 (23-CRB-0013-NSR (2026-2030)). All properly filed comments will appear without change in eCRB at <E T="03">https://app.crb.gov,</E> including any personal information provided. <E T="03">Docket:</E> For access to the docket, go to eCRB, the Copyright Royalty Board's electronic filing and case management system, at <E T="03">https://app.crb.gov/,</E> and search for docket number 23-CRB-0013-NSR (2026-2030). <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Anita Brown, CRB Program Specialist, at (202) 707-7658 or <E T="03">crb@loc.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Background</HD> Section 114 of the Copyright Act, title 17 of the United States Code, provides a statutory license that allows for the public performance of sound recordings by means of a digital audio transmission by, among others, new subscription services. 17 U.S.C. 114(f). For purposes of the section 114 license, a “new subscription service” is a “service that performs sound recordings by means of noninteractive subscription digital audio transmissions and that is not a preexisting subscription or preexisting satellite digital audio radio service.” 17 U.S.C. 114(j)(8). Services using the section 114 license may need to make one or more temporary or “ephemeral” copies of a sound recording to facilitate the transmission of that recording. The section 112 statutory license allows for the making of these ephemeral reproductions. 17 U.S.C. 112(e). Chapter 8 of the Copyright Act requires the Judges to conduct proceedings every five years to determine the rates and terms for the sections 114 and 112 statutory licenses. 17 U.S.C. 801(b)(1), 804(b)(3)(A). The current proceeding commenced in January 2024 for rates and terms that will become effective on January 1, 2026, and end on December 31, 2030. Pursuant to section 804(b)(3)(A), the Judges published in the <E T="04">Federal Register</E> a notice commencing the proceeding and requesting that interested parties submit their petitions to participate. 89 FR 810 (Jan. 5, 2024). SoundExchange, Inc. (“SoundExchange”), Sirius XM Radio Inc. (“Sirius XM”), and Stingray Music USA Inc. (“Stingray”), each filed Petitions to Participate. 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 13, 2024. On September 9, 2024, the Copyright Royalty Judges (Judges) received a joint motion from SoundExchange, Sirius XM, and Stingray to adopt a settlement of their interests regarding the rates and terms for 2026-2030 for certain new subscription services (NSS). The parties request that the Judges adopt the settlement in its entirety as a settlement of rates and terms under sections 112(e) and 114 of the Copyright Act for new subscription services of the type at issue in the captioned proceeding, <E T="03">i.e.,</E> music services provided to residential subscribers as part of a cable or satellite television bundle subject to royalty rates and terms in 37 CFR part 383. Joint Motion to Adopt Partial Settlement at 1 (Joint Motion). SoundExchange represents sound recording copyright owners and performers. Sirius XM and Stingray rely on the royalty rates and terms in 37 CFR part 383. Joint Motion at 2. The Judges hereby publish the settlement and request comments. <HD SOURCE="HD1">Statutory Timing of Adoption of Rates and Terms</HD> Section 801(b)(7)(A) of the Copyright Act authorizes the Judges to adopt royalty 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. The Judges must provide “an opportunity to comment on the agreement” to participants and non-participants in the rate proceeding who “would be bound by the terms, rates, or other determination set by any agreement. . . .” 17 U.S.C. 801(b)(7)(A)(i). Participants in the proceeding may also “object to [the agreement's] adoption as a basis for statutory terms and rates.” <E T="03">Id.</E> The Judges “may decline to adopt the agreement as a basis for statutory terms and rates for participants that are not parties to the agreement,” only “if any participant [in the proceeding] objects to the agreement and the [Judges] conclude, based on the record before them if one exists, that the agreement does not provide a reasonable basis for setting statutory terms or rates,” 17 U.S.C. 801(b)(7)(A)(ii), or where the negotiated agreement includes provisions that are contrary to the provisions of the applicable license(s) or otherwise contrary to statutory law. <E T="03">See</E> Scope of the Copyright Royalty Judges Authority to Adopt Confidentiality Requirements upon Copyright Owners within a Voluntarily Negotiated License Agreement, 78 FR 47421, 47422 (Aug. 5, 2013), citing 74 FR 4537, 4540 (Jan. 26, 2009). <HD SOURCE="HD1">Proposed Adjustments to Rates and Terms</HD> According to SoundExchange, Sirius XM, and Stingray, the settlement incorporates the same royalty rate structure presently set forth in 37 CFR part 383 except that annual increases in the per-subscriber fees are to be based on changes in the Consumer Price Index for All Urban Consumers, rather than being pre-negotiated as during the current rate period. Thus, the statutory royalty rates for 2026 are to be based on an inflation adjustment to the 2025 rates currently provided in § 383.3(a), and the rates for each subsequent year of the royalty period are to be determined by a similar adjustment. The Parties have also agreed that the applicable terms used in part 383 should be those finally determined in the <E T="03">Web VI</E> proceeding (Docket No. 23-CRB-0012-WR (2026-2030)), except for (1) the provisions concerning auditing of payments and distributions, which are substantively the same as those currently in effect for new subscription services of the type at issue in the proceeding, and (2) a provision addressing distribution of royalties, which includes language based on that in 37 CFR 384.4(i)(1) and 370.4(f) permitting SoundExchange to use proxy data to distribute royalties when it is not able to obtain a usable report of use from a Licensee. In other respects, the Settlement preserves the existing provisions of part 383 with only minor updating. Joint Motion at 2-3. The fact that the Settlement incorporates terms that have not yet been established in the <E T="03">Web VI</E> proceeding may raise concern as to whether participants and non-participants in the rate proceeding who would be bound by the terms, rates, or other determination set by any agreement are properly afforded the aforementioned statutory opportunities to object or comment on the agreement. However, the Judges take notice that it is not inappropriate for agreements to incorporate and/or rely in part on events, facts or determinations that have not yet been established, <E T="03">e.g.,</E> references to adjustments based on yet to be determined consumer price index measurements. The Judges are also mindful that Congress intended to facilitate and encourage settlement agreements. <E T="03">See,</E> H.R. Rep. No. 108-408, at 24 and 30 (2002). Accordingly, objectors and commenters may knowingly and willingly choose to accept some uncertainty as to future settlement terms and a reference to an outside method for resolving the uncertain issues. The Judges do not express an opinion as to the extent to which any persons or entities who would otherwise be bound by this settlement may have a subsequent right to challenge the applicability of as yet non-existent terms. Therefore, the Judges publish the Settlement with the current understanding that doing so is in compliance with the statutory opportunities to object or comment on the agreement. Those who would be bound by the terms, rates, or other determination set by the agreement may comment and proceeding participants may object to any or all of the proposed regulations contained in this document. <SU>1</SU> <FTREF/> Such comments and objections must be submitted no later than January 21, 2025. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 28k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━