[Federal Register Volume 74, Number 40 (Tuesday, March 3, 2009)]
[Notices]
[Pages 9293-9307]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-4439]
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LIBRARY OF CONGRESS
Copyright Office
Notification of Agreements Under the Webcaster Settlement Act of
2008
AGENCY: Copyright Office, Library of Congress.
ACTION: Notice of agreement.
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SUMMARY: The Copyright Office is publishing three agreements which set
rates and terms for the reproduction and performance of sound
recordings made by certain specified webcasters, under two statutory
licenses. Webcasters who meet the eligibility requirements may choose
to operate under the statutory licenses in accordance with the rates
and terms set forth in the agreements published herein rather than the
rates and terms of any determination by the Copyright Royalty Judges.
FOR FURTHER INFORMATION CONTACT: Stephen Ruwe, Attorney Advisor, or
Tanya M. Sandros, Deputy General Counsel, Copyright GC/I&R, P.O. Box
70400, Washington, DC 20024. Telephone: (202) 707-8380. Telefax: (202)
707-8366. See the final paragraph of the SUPPLEMENTARY INFORMATION for
information on where to direct questions regarding the rates and terms
set forth in the agreement.
SUPPLEMENTARY INFORMATION: On October 16, 2008, President Bush signed
into law the Webcaster Settlement Act of 2008 (``WSA''), Public Law
110-435, 122 Stat. 4974, which amends Section 114 of the Copyright Act,
title 17 of the United States Code, as it relates to webcasters. The
WSA allows SoundExchange, the Receiving Agent designated by the
Librarian of Congress in his June 20, 2002, order for collecting
royalty payments made by eligible nonsubscription transmission services
under the Section 112 and Section 114 statutory licenses, see 67 FR
45239 (July 8, 2002), to enter into agreements on behalf of all
copyright owners and performers to set rates, terms and conditions for
webcasters operating under the Section 112 and Section 114 statutory
licenses for a period of not more than 11 years beginning on January 1,
2005. The authority to enter into such settlement agreements expired on
February 15, 2009.
Unless otherwise agreed to by the parties to an agreement, the
rates and terms set forth in such agreements apply only to the time
periods specified in the agreement and have no precedential value in
any proceeding concerned with the setting of rates and terms for the
public performance or reproduction in ephemeral phonorecords or copies
of sound recordings. To make this point clear, Congress included
language expressly addressing the precedential value of such
agreements. Specifically, Section 114(f)(5)(C), as added by the WSA,
states that: ``Neither subparagraph (A) nor any provisions of any
agreement entered into pursuant to subparagraph (A), including any rate
structure, fees, terms, conditions, or notice and recordkeeping
requirements set forth therein, shall be admissible as evidence or
otherwise taken into account in any administrative, judicial, or other
government proceeding involving the setting or adjustment of the
royalties payable for the public performance or reproduction in
ephemeral recordings or copies of sound recordings, the determination
of terms or conditions related thereto, or the establishment of notice
and recordkeeping requirements by the Copyright Royalty Judges under
paragraph (4) or Section 112(e)(4). It is the intent of Congress that
any royalty rates, rate structure, definitions, terms, conditions, or
notice and recordkeeping requirements, included in such agreements
shall be considered as a compromise motivated by the unique business,
economic and political circumstances of small webcasters, copyright
owners, and performers rather than as matters that would have been
negotiated in the marketplace between a willing buyer and a willing
seller, or otherwise meet the objectives set forth in Section 801(b).
This subparagraph shall not apply to the extent that the receiving
agent and a webcaster that is party to an agreement entered into
pursuant to subparagraph (A) expressly authorize the submission of the
agreement in a proceeding under this subSection.'' 17 U.S.C.
114(f)(5)(C) (2009).
On February 13, 2009, SoundExchange and the Corporation for Public
Broadcasting (``CPB'') notified the Copyright Office that they had
negotiated an agreement for the reproduction and performance of sound
[[Page 9294]]
recordings by small commercial webcasters under the Section 112 and
Section 114 statutory licenses and requested that the Copyright Office
publish the Rates and Terms in the Federal Register, as required under
Section 114(f)(5)(B) of the Copyright Act, as amended by the WSA.
On February 15, 2009, SoundExchange and the National Association of
Broadcasters (``NAB'') notified the Copyright Office that they had
negotiated an agreement for the reproduction and performance of sound
recordings by small commercial webcasters under the Section 112 and
Section 114 statutory licenses and requested that the Copyright Office
publish the Rates and Terms in the Federal Register, as required under
Section 114(f)(5)(B) of the Copyright Act, as amended by the WSA.
On February 15, 2009, SoundExchange and the Small Webcasters \1\
notified the Copyright Office that they had negotiated an agreement for
the reproduction and performance of sound recordings by small
commercial webcasters under the Section 112 and Section 114 statutory
licenses and requested that the Copyright Office publish the Rates and
Terms in the Federal Register, as required under Section 114(f)(5)(B)
of the Copyright Act, as amended by the WSA.
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\1\ The ``Small Webcasters'' that negotiated the agreement are
Attention Span Radio; Blogmusik (Deezer.com); Born Again Radio;
Christmas Music 24/7; Club 80's Internet Radio; Dark Horse
Productions; Edgewater Radio; Forever Cool (Forevercool.us);
Indiwaves (Set YourMusicFree.com); Ludlow Media (MandarinRadio.com);
Musical Justice; My Jazz Network; PartiRadio; Playa Cofi Jukebox
(Tropicalglen.com); Soulsville Online; taintradio; Voice of Country;
and Window To The World Communications (WFMT.com).
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Thus, in accordance with the requirement set forth in amended
Section 114(f)(5)(B), the Copyright Office is publishing the submitted
agreements, as Appendix A (Agreement made between SoundExchange and
CPB); Appendix B (Agreement made between SoundExchange and NAB); and
Appendix C (Agreement made between SoundExchange and Small Webcasters),
thereby making the rates and terms in the agreements available to any
webcasters meeting the respective eligibility conditions of the
agreements as an alternative to the rates and terms of any
determination by the Copyright Royalty Judges.
The Copyright Office has no responsibility for administering the
rates and terms of the agreement beyond the publication of this notice.
For this reason, questions regarding the rates and terms set forth in
the agreement should be directed to SoundExchange (for contact
information, see http://www.soundexchange.com).
Dated: February 24, 2009.
Marybeth Peters,
Register of Copyrights.
Note: The following Appendices will not be codified in the Code
of Federal Regulations.
Appendix A
Agreement Concerning Rates and Terms
This Agreement Concerning Rates and Terms (``Agreement''), dated
as of January 13, 2009 (``Execution Date''), is made by and between
SoundExchange, Inc. (``SoundExchange'') and the Corporation for
Public Broadcasting (``CPB''), on behalf of all Covered Entities
(SoundExchange, and CPB each a ``Party'' and, jointly, the
``Parties''). Capitalized terms used herein are defined in Article 1
below.
Whereas, SoundExchange is the ``receiving agent'' as defined in
17 U.S.C. 114(f)(5)(E)(ii) designated for collecting and
distributing statutory royalties received from Covered Entities for
their Web Site Performances;
Whereas, the Webcaster Settlement Act of 2008 (codified at 17
U.S.C. 114(f)(5)) authorizes SoundExchange to enter into agreements
for the reproduction and performance of Sound Recordings under
Sections 112(e) and 114 of the Copyright Act that, once published in
the Federal Register, shall be binding on all Copyright Owners and
Performers, in lieu of any determination by the Copyright Royalty
Judges;
Whereas, in view of the unique business, economic and political
circumstances of CPB, Covered Entities, SoundExchange, Copyright
Owners and Performers at the Execution Date, the Parties have agreed
to the royalty rates and other consideration set forth herein for
the period January 1, 2005 through December 31, 2010;
Now, therefore, pursuant to 17 U.S.C. 114(f)(5), and in
consideration of the mutual promises contained in this Agreement and
for other good and valuable consideration, the adequacy and
sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
Article 1
Definitions
The following terms shall have the meanings set forth below:
1.1 ``Agreement'' shall have the meaning set forth in the
preamble.
1.2 ``ATH'' or ``Aggregate Tuning Hours'' means the total hours
of programming that Covered Entities have transmitted during the
relevant period to all listeners within the United States from all
Covered Entities that provide audio programming consisting, in whole
or in part, of Web Site Performances, less the actual running time
of any sound recordings for which the Covered Entity has obtained
direct licenses apart from this Agreement. By way of example, if a
Covered Entity transmitted one hour of programming to ten (10)
simultaneous listeners, the Covered Entity's Aggregate Tuning Hours
would equal ten (10). If three (3) minutes of that hour consisted of
transmission of a directly licensed recording, the Covered Entity's
Aggregate Tuning Hours would equal nine (9) hours and thirty (30)
minutes. As an additional example, if one listener listened to a
Covered Entity for ten (10) hours (and none of the recordings
transmitted during that time was directly licensed), the Covered
Entity's Aggregate Tuning Hours would equal 10.
1.3 ``Authorized Web Site'' means any Web Site operated by or on
behalf of any Covered Entity that is accessed by Web Site Users
through a Uniform Resource Locator (``URL'') owned by such Covered
Entity and through which Web Site Performances are made by such
Covered Entity.
1.4 ``CPB'' shall have the meaning set forth in the preamble.
1.5 ``Collective'' shall have the meaning set forth in 37 CFR
380.2(c).
1.6 ``Copyright Owners'' are Sound Recording copyright owners
who are entitled to royalty payments made pursuant to the statutory
licenses under 17 U.S.C. 112(e) and 114(f).
1.7 ``Covered Entities'' means NPR, American Public Media,
Public Radio International, and Public Radio Exchange, and, in
calendar years 2005 through 2007, up to four-hundred and fifty (450)
Originating Public Radio Stations as named by CPB. CPB shall notify
SoundExchange annually of the eligible Originating Public Radio
Stations to be considered Covered Entities hereunder (subject to the
numerical limitations set forth herein). The number of Originating
Public Radio Stations considered to be Covered Entities is permitted
to grow by no more than 10 Originating Public Radio Stations per
year beginning in calendar year 2008, such that the total number of
Covered Entities at the end of the Term will be less than or equal
to 480. The Parties agree that the number of Originating Public
Radio Stations licensed hereunder as Covered Entities shall not
exceed the maximum number permitted for a given year without
SoundExchange's express written approval, except that CPB shall have
the option to increase the number of Originating Public Radio
Stations that may be considered Covered Entities as provided in
Section 4.4.
1.8 ``Ephemeral Phonorecord'' shall have the meaning set forth
in Section 3.1(b).
1.9 ``Execution Date'' shall have the meaning set forth in the
preamble.
1.10 ``License Fee'' shall have the meaning set forth in Section
4.1.
1.11 ``Music ATH'' means ATH of Web Site Performances of Sound
Recordings of musical works.
1.12 ``NPR'' shall mean National Public Radio, with offices at
635 Massachusetts Avenue, NW., Washington, DC 20001.
1.13 ``Originating Public Radio Stations'' shall mean a
noncommercial terrestrial radio broadcast station that (i) is
licensed as such by the Federal Communications Commission; (ii)
originates programming and is not solely a repeater station; (iii)
is a member or affiliate of NPR, American Public Media, Public Radio
International, or Public Radio Exchange, a member of the National
Federation of Community Broadcasters, or
[[Page 9295]]
another public radio station that is qualified to receive funding
from the Corporation for Public Broadcasting pursuant to its
criteria; (iv) qualifies as a ``noncommercial webcaster'' under 17
U.S.C. 114(f)(5)(E)(i); and (v) either (a) offers Web Site
Performances only as part of the mission that entitles it to be
exempt from taxation under Section 501 of the Internal Revenue Code
of 1986 (26 U.S.C. 501), or (b) in the case of a governmental entity
(including a Native American tribal governmental entity), is
operated exclusively for public purposes.
1.14 ``Party'' shall have the meaning set forth in the preamble.
1.15 ``Performers'' means the independent administrators
identified in 17 U.S.C. 114(g)(2)(B) and (C) and the individuals and
entities identified in 17 U.S.C. 114(g)(2)(D).
1.16 ``Person'' means a natural person, a corporation, a limited
liability company, a partnership, a trust, a joint venture, any
governmental authority or any other entity or organization.
1.17 ``Phonorecords'' shall have the meaning set forth in 17
U.S.C. 101.
1.18 ``Side Channel'' means any Internet-only program available
on an Authorized Web Site or an archived program on such Authorized
Web Site that, in either case, conforms to all applicable
requirements under 17 U.S.C. 114.
1.19 ``SoundExchange'' shall have the meaning set forth in the
preamble and shall include any successors and assigns to the extent
permitted by this Agreement.
1.20 ``Sound Recording'' shall have the meaning set forth in 17
U.S.C. 101.
1.21 ``Term'' shall have the meaning set forth in Section 7.1.
1.22 ``Territory'' means the United States, its territories,
commonwealths and possessions.
1.23 ``URL'' shall have the meaning set forth in Section 1.3.
1.24 ``Web Site'' means a site located on the World Wide Web
that can be located by a Web Site User through a principal URL.
1.25 ``Web Site Performances'' means all public performances by
means of digital audio transmissions of Sound Recordings, including
the transmission of any portion of any Sound Recording, made through
an Authorized Web Site in accordance with all requirements of 17
U.S.C. 114, from servers used by a Covered Entity (provided that the
Covered Entity controls the content of all materials transmitted by
the server), or by a sublicensee authorized pursuant to Section 3.2,
that consist of either (a) the retransmission of a Covered Entity's
over-the-air terrestrial radio programming or (b) the digital
transmission of nonsubscription Side Channels that are programmed
and controlled by the Covered Entity. This term does not include
digital audio transmissions made by any other means.
1.26 ``Web Site Users'' means all those who access or receive
Web Site Performances or who access any Authorized Web Site.
Article 2
Agreement Pursuant to Webcaster Settlement Act of 2008
2.1 General. This Agreement is entered into pursuant to the
Webcaster Settlement Act of 2008 (Pub. L. 110-435; to be codified at
17 U.S.C. 114(f)(5)).
2.2 Eligibility Conditions. The only webcasters (as defined in
17 U.S.C. 114(f)(5)(E)(iii)) eligible to avail themselves of the
terms of this Agreement as contemplated by 17 U.S.C. 114(f)(5)(B)
are the Covered Entities, as expressly set forth herein. The terms
of this Agreement shall apply to the Covered Entities in lieu of
other rates and terms applicable under 17 U.S.C. 112 and 114.
2.3 Agreement Nonprecedential. Consistent with 17 U.S.C.
114(f)(5)(C), this Agreement, including any rate structure, fees,
terms, conditions, and notice and recordkeeping requirements set
forth therein, is nonprecedential and shall not be introduced nor
used by any Person, including the Parties and any Covered Entities,
admissible as evidence or otherwise taken into account in any
administrative, judicial, or other proceeding involving the setting
or adjustment of the royalties payable for the public performance or
reproduction in ephemeral phonorecords or copies of sound
recordings, the determination of terms or conditions related
thereto, or the establishment of notice or recordkeeping
requirements by the Copyright Royalty Judges under 17 U.S.C.
114(f)(4) or 112(e)(4), or any administrative or judicial proceeding
pertaining to rates, terms or reporting obligations for any yet-to-
be-created right to collect royalties for the performance of Sound
Recordings by any technology now or hereafter known. Any royalty
rates, rate structure, definitions, terms, conditions and notice and
recordkeeping requirements included in this Agreement shall be
considered as a compromise motivated by the unique business,
economic and political circumstances of webcasters, copyright
owners, and performers, and the pending appeal of the decision of
the Copyright Royalty Judges by NPR on behalf of itself and its
member stations, rather than as matters that would have been
negotiated in the marketplace between a willing buyer and a willing
seller, or otherwise meet the objectives set forth in Section 801(b)
of the Copyright Act.
2.4 Reservation of Rights. The Parties agree that the entering
into of this Agreement shall be without prejudice to any of their
respective positions in any proceeding with respect to the rates,
terms or reporting obligations to be established for the making of
Ephemeral Phonorecords or the digital audio transmission of Sound
Recordings after the Term of this Agreement on or by Covered
Entities under 17 U.S.C. 112 and 114 and their implementing
regulations. The Parties further acknowledge and agree that the
entering of this Agreement, the performance of its terms, and the
acceptance of any payments and reporting by SoundExchange (i) do not
express or imply any acknowledgement that CPB, Covered Entities, or
any other persons are eligible for the statutory license of 17
U.S.C. 112 and 114, and (ii) shall not be used as evidence that CPB,
the Covered Entities, or any other persons are acting in compliance
with the provisions of 17 U.S.C. 114(d)(2)(A) or (C) or any other
applicable laws or regulations.
Article 3
Scope of Agreement
3. General.
(a) Public Performances. In consideration for the payment of the
License Fee by CPB, SoundExchange agrees that Covered Entities that
publicly perform under Section 114 all or any portion of any Sound
Recordings through an Authorized Web Site, within the Territory, by
means of Web Site Performances, may do so in accordance with and
subject to the limitations set forth in this Agreement; provided
that: (i) Such transmissions are made in strict conformity with the
provisions of 17 U.S.C. 114(d)(2)(A) and (C); and (ii) such Covered
Entities comply with all of the terms and conditions of this
Agreement and all applicable copyright laws. For clarity, there is
no limit to the number of Web Site Performances that a Covered
Entity may transmit during the Term under the provisions of this
Section 3.1(a), if such Web Site Performances otherwise satisfy the
requirements of this Agreement.
(b) Ephemeral Phonorecords. In consideration for the payment of
the License Fee by CPB, SoundExchange agrees that Covered Entities
that make and use solely for purposes of transmitting Web Site
Performances as described in Section 3.1(a), within the Territory,
Phonorecords of all or any portion of any Sound Recordings
(``Ephemeral Phonorecords''), may do so in accordance with and
subject to the limitations set forth in this Agreement; provided
that: (i) Such Phonorecords are limited solely to those necessary to
encode Sound Recordings in different formats and at different bit
rates as necessary to facilitate Web Site Performances licensed
hereunder; (ii) such Phonorecords are made in strict conformity with
the provisions set forth in 17 U.S.C. 112(e)(1)(A)-(D); and (iii)
the Covered Entities comply with 17 U.S.C. 112(a) and (e) and all of
the terms and conditions of this Agreement.
3.2 Limited Right to Sublicense. Rights under this Agreement are
not sublicensable, except that a Covered Entity may employ the
services of a third Person to provide the technical services and
equipment necessary to deliver Web Site Performances on behalf of
such Covered Entity pursuant to Section 3.1, but only through an
Authorized Web Site. Any agreement between a Covered Entity and any
third Person for such services shall (i) contain the substance of
all terms and conditions of this Agreement and obligate such third
Person to provide all such services in accordance with all
applicable terms and conditions of this Agreement, including,
without limitation, Articles 3, 5 and 6; (ii) specify that such
third Person shall have no right to make Web Site Performances or
any other performances or Phonorecords on its own behalf or on
behalf of any Person or entity other than a Covered Entity through
the Covered Entity's Authorized Web Site by
[[Page 9296]]
virtue of this Agreement, including in the case of Phonorecords,
pre-encoding or otherwise establishing a library of Sound Recordings
that it offers to a Covered Entity or others for purposes of making
performances, but instead must obtain all necessary licenses from
SoundExchange, the copyright owner or another duly authorized
Person, as the case may be; (iii) specify that such third Person
shall have no right to grant any further sublicenses; and (iv)
provide that SoundExchange is an intended third-party beneficiary of
all such obligations with the right to enforce a breach thereof
against such third party.
3.3 Limitations.
(a) Reproduction of Sound Recordings. Except as provided in
Section 3.2, nothing in this Agreement grants Covered Entities, or
authorizes Covered Entities to grant to any other Person (including,
without limitation, any Web Site User, any operator of another Web
Site or any authorized sublicensee), the right to reproduce by any
means, method or process whatsoever, now known or hereafter
developed, any Sound Recordings, including, but not limited to,
transferring or downloading any such Sound Recordings to a computer
hard drive, or otherwise copying the Sound Recording onto any other
storage medium.
(b) No Right of Public Performance. Except as provided in
Section 3.2, nothing in this Agreement authorizes Covered Entities
to grant to any Person the right to perform publicly, by means of
digital transmission or otherwise, any Sound Recordings.
(c) No Implied Rights. The rights granted in this Agreement
extend only to Covered Entities and grant no rights, including by
implication or estoppel, to any other Person, except as expressly
provided in Section 3.2. Without limiting the generality of the
foregoing, this Agreement does not grant to Covered Entities (i) any
copyright ownership interest in any Sound Recording; (ii) any
trademark or trade dress rights; (iii) any rights outside the
Territory; (iv) any rights of publicity or rights to any endorsement
by SoundExchange or any other Person; or (v) any rights outside the
scope of a statutory license under 17 U.S.C. 112(e) and 114.
(d) Territory. The rights granted in this Agreement shall be
limited to the Territory.
(e) No Syndication Rights. Nothing in this Agreement authorizes
any Web Site Performances to be accessed by Web Site Users through
any Web Site other than an Authorized Web Site.
3.4 Effect of Non-Performance by any Covered Entity. In the
event that any Covered Entity breaches or otherwise fails to perform
any of the material terms of this Agreement it is required to
perform (including any obligations applicable under Section 112 or
114), or otherwise materially violates the terms of this Agreement
or Section 112 or 114 or their implementing regulations, the
remedies of SoundExchange shall be specific to that Covered Entity
only, and shall include, without limitation, (i) termination of that
Covered Entity's rights hereunder upon written notice to CPB, and
(ii) the rights of SoundExchange and Copyright owners under
applicable law. SoundExchange's remedies for such a breach or
failure by an individual Covered Entity shall not include
termination of this Agreement in its entirety or termination of the
rights of other Covered Entities, except that if CPB breaches or
otherwise fails to perform any of the material terms of this
Agreement, or such a breach or failure by a Covered Entity results
from CPB's inducement, and CPB does not cure such breach or failure
within thirty (30) days after receiving notice thereof from
SoundExchange, then SoundExchange may terminate this Agreement in
its entirety, and a prorated portion of the License Fee for the
remainder Term shall, after deduction of any damages payable to
SoundExchange by virtue of the breach or failure, be credited to
statutory royalty obligations of Covered Entities to SoundExchange
for the Term as specified by CPB.
Article 4
Consideration
4.1 License Fee. The total license fee for all Web Site
Performances and Ephemeral Phonorecords made during the Term shall
be one million eight hundred and fifty thousand dollars ($1,850,000)
(the ``License Fee''), unless additional payments are required as
described in Section 4.3 or 4.4. The Parties acknowledge that CPB
has paid SoundExchange two hundred and fifty thousand dollars
($250,000) of such amount prior to the Execution Date. Within ten
(10) business days after publication of this Agreement in the
Federal Register, CPB shall pay SoundExchange the balance of one
million six hundred thousand dollars ($1,600,000).
4.2 Calculation of License Fee. The Parties acknowledge that the
License Fee includes: (i) An annual minimum fee of five hundred
dollars ($500) for each Covered Entity for each year during the
Term, except that the annual minimum fee was calculated at two
hundred and fifty dollars ($250) per year for each Covered Entity
substantially all of the programming provided by which is reasonably
classified as news, talk, sports or business programming; (ii)
additional usage fees calculated in accordance with the royalty rate
structure applicable to noncommercial webcasters under the Small
Webcaster Settlement Act of 2002 (see 68 FR 35,008 (June 11, 2003));
and (iii) a discount that reflects the administrative convenience to
SoundExchange of receiving one payment that covers a large number of
separate entities for six (6) calendar years, as well as the ``time
value'' of money and protection from bad debt that arises from being
paid in advance for calendar years 2009 and 2010.
4.3 Total Music ATH True-Up: If the total Music ATH for all
Covered Entities, in the aggregate for calendar years 2008, 2009 and
2010 combined, as estimated in accordance with the methodology
described in Attachment 1, is greater than seven hundred sixty four
million six hundred thousand (764,600,000) (approximately the amount
that would result from 10% year-over-year Music ATH growth in 2008,
2009 and 2010), CPB shall make an additional payment to
SoundExchange for all such Music ATH in excess of seven hundred
sixty four million six hundred thousand (764,600,000) for all
Covered Entities in the aggregate at the rate of $0.00251 per ATH.
Such payment shall be due no later than March 1, 2011.
4.4 Station Growth True-Up: If the total number of Originating
Public Radio Stations that wish to make Web Site Performances in any
of calendar year 2008, 2009 and 2010 exceeds the number of such
Originating Public Radio Stations considered Covered Entities in the
relevant year, and the excess Originating Public Radio Stations do
not wish to pay royalties for such Web Site Performances apart from
this Agreement, CPB may elect by written notice to SoundExchange to
increase the number of Originating Public Radio Stations considered
Covered Entities in the relevant year effective as of the date of
the notice. To the extent of any such elections for all or any part
of calendar year 2008, 2009 or 2010, CPB shall make an additional
payment to SoundExchange for each calendar year or part thereof it
elects to have an additional Originating Public Radio Station
considered a Covered Entity, in the amount of five hundred dollars
($500) per Originating Public Radio Station per year. Such payment
shall accompany the notice electing to have an additional
Originating Public Radio Station considered a Covered Entity.
4.5 Late Fee. The Parties hereby agree to the terms set forth in
37 CFR 380.4(e) as if that Section (and the applicable definitions
provided in 37 CFR 380.2) were set forth herein.
4.6. Payments to Third Persons.
(a) SoundExchange and CPB agree that, except as provided in
Section 4.6(b), all obligations of, inter alia, clearance, payment
or attribution to third Persons, including, by way of example and
not limitation, music publishers and performing rights organizations
(PROs) for use of the musical compositions embodied in Sound
Recordings, shall be solely the responsibility of CPB and the
Covered Entities.
(b) SoundExchange and CPB agree that all obligations of
distribution of the License Fee to Copyright Owners and Performers
in accordance with 37 C.F.R 380.4(g) shall be solely the
responsibility of SoundExchange. In making such distribution,
SoundExchange has discretion to allocate the License Fee between
Section 112 and 114 in the same manner as the majority of other
webcasting royalties.
Article 5
Reporting, Auditing and Confidentiality
5.1 Reporting. CPB and Covered Entities shall submit reports of
use concerning Web Site Performances as set forth in Attachments 1
and 2.
5.2 Verification of Information. The Parties hereby agree to the
terms set forth in 37 CFR 380.4(h) and 380.6 as if those Sections
(and the applicable definitions provided in 37 CFR 380.2) were set
forth herein. The exercise by SoundExchange of any right under this
Section 5.2 shall not prejudice any other rights or remedies of
SoundExchange.
5.3 Confidentiality. The Parties hereby agree to the terms set
forth in 37 CFR Sec. 380.5 as if that Section (and the applicable
definitions provided in 37 CFR Sec. 380.2) were set forth herein,
except that:
[[Page 9297]]
(a) The following shall be added to the end of the first
sentence of Sec. 380.5(b): ``or documents or information that
become publicly known through no fault of SoundExchange or are known
by SoundExchange when disclosed by CPB'';
(b) The following shall be added at the end of Sec. 380.5(c):
``and enforcement of the terms of this Agreement''; and
(c) The following shall be added at the end of Sec.
380.5(d)(4): ``subject to the provisions of Section 2.3 of this
Agreement''
Article 6
Non-Participation In Further Proceedings
CPB and any Covered Entity making Web Site Transmissions in
reliance on this Agreement shall not directly or indirectly
participate as a party, amicus curiae or otherwise, or in any manner
give evidence or otherwise support or assist, in any further
proceedings to determine royalty rates and terms for digital audio
transmission or the reproduction of Ephemeral Phonorecords under
Section 112 or 114 of the Copyright Act for all or any part of the
Term, including any appeal of the Final Determination of the
Copyright Royalty Judges, published in the Federal Register at 72 FR
24084 (May 1, 2007), any proceedings on remand from such an appeal,
or any other related proceedings, unless subpoenaed on petition of a
third party (without any action by CPB or a Covered Entity to
encourage such a petition) and ordered to testify in such
proceeding. Notwithstanding anything to the contrary herein, any
entity that is eligible to be treated as a ``Covered Entity'' but
that that does not elect to be treated as a Covered Entity may elect
to participate in such proceedings.
Article 7
Term and Termination
7.1 Term. The term of this Agreement commenced as of January 1,
2005, and ends as of December 31, 2010 (``Term''). As conditions
precedent to reliance on the terms of this Agreement by any Covered
Entity, (a) CPB must pay the License Fee as and when specified in
Section 4.1, and (b) NPR must withdraw its appeal of the Final
Determination of the Copyright Royalty Judges, published in the
Federal Register at 72 FR 24084 (May 1, 2007), which it has agreed
to do within ten (10) days after the publication of this Agreement
in the Federal Register.
7.2 Mutual Termination. This Agreement may be terminated in
writing upon mutual agreement of the Parties.
7.3 Consequences of Termination.
(a) Survival of Provisions. In the event of the expiration or
termination of this Agreement for any reason, the terms of this
Agreement shall immediately become null and void, and cannot be
relied upon for making any further Web Site Performances or
Ephemeral Phonorecords, except that (i) Articles 6 and 8 and
Sections 2.3, 5.2 and 7.3 shall remain in full force and effect; and
(ii) Article 4 and Section 5.1 shall remain in effect after the
expiration or termination of this Agreement to the extent
obligations under Article 4 or Section 5.1 accrued prior to any such
termination or expiration.
(b) Applicability of Copyright Law. Any Web Site Performances
made by a Covered Entity or other Originating Public Radio Station
in violation of the terms of this Agreement or Section 112 or 114 or
their implementing regulations (except to the extent such
implementing regulations are inconsistent with this Agreement),
outside the scope of this Agreement, or after the expiration or
termination of this Agreement for any reason shall be fully subject
to, among other things, the copyright owners' rights under 17 U.S.C.
106(6), the remedies in 17 U.S.C. 501 et seq., the provisions of 17
U.S.C. 112(e) and 114, and their implementing regulations unless the
Parties have entered into a new agreement for such Web Site
Performances.
Article 8
Miscellaneous
8.1 Applicable Law and Venue. This Agreement shall be governed
by, and construed in accordance with, the laws of the District of
Columbia (without giving effect to conflicts of law principles
thereof). All actions or proceedings arising directly or indirectly
from or in connection with this Agreement shall be litigated only in
the United States District Court for the District of Columbia
located in Washington, DC. The Parties and Covered Entities, to the
extent permitted under their state or tribal law, consent to the
jurisdiction and venue of the foregoing court and consent that any
process or notice of motion or other application to said court or a
judge thereof may be served inside or outside the District of
Columbia by registered mail, return receipt requested, directed to
the Person for which it is intended at its address set forth in this
Agreement (and service so made shall be deemed complete five (5)
days after the same has been posted as aforesaid) or by personal
service or in such other manner as may be permissible under the
rules of that court.
8.2 Rights Cumulative. The remedies provided in this Agreement
and available under applicable law shall be cumulative and shall not
preclude assertion by any Party of any other rights or the seeking
of any other remedies against the other Party hereto. This Agreement
shall not constitute a waiver of any violation of Section 112 or 114
or their implementing regulations (except to the extent such
implementing regulations are inconsistent with this Agreement). No
failure to exercise and no delay in exercising any right, power or
privilege shall operate as a waiver of such right, power or
privilege. Neither this Agreement nor any such failure or delay
shall give rise to any defense in the nature of laches or estoppel.
No single or partial exercise of any right, power or privilege
granted under this Agreement or available under applicable law shall
preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. No waiver by either Party of
full performance by the other Party in any one or more instances
shall be a waiver of the right to require full and complete
performance of this Agreement and of obligations under applicable
law thereafter or of the right to exercise the remedies of
SoundExchange under Section 3.4.
8.3 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law,
such provisions shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
8.4 Amendment. This Agreement may be modified or amended only by
a writing signed by the Parties.
8.5 Entire Agreement. This Agreement expresses the entire
understanding of the Parties and supersedes all prior and
contemporaneous agreements and undertakings of the Parties with
respect to the subject matter hereof.
8.6 Headings. The titles used in this Agreement are used for
convenience only and are not to be considered in construing or
interpreting this Agreement.
In witness whereof, the Parties hereto have executed this
Agreement as of the date first above written.
Attachment 1
Reporting
1. Definitions. The following terms shall have the meaning set
forth below for purposes of this Attachment 1. All other capitalized
terms shall have the meaning set forth in Article 1 of the
Agreement.
(a) ``Content Logs'' shall have the meaning set forth in Section
4(a)(ii) of this Attachment 1.
(b) ``Current Period'' shall mean the period commencing with the
first day after the end of the Historic Period and continuing to the
end of the Term.
(c) ``Historic Period'' shall mean the period from April 1, 2004
through the last day of the month of the Execution Date.
(d) ``Major Format Group'' shall mean each of the following
format descriptions characterizing the programming offered by
various Covered Entities: (i) Classical; (ii) jazz; (iii) music mix;
(iv) news and information; (v) news/classical; (vi) news/jazz; (vii)
news/music mix; and (viii) adult album alternative. A Covered
Entity's Major Format Group is determined based on the format
description best describing the programming of the principal
broadcast service offered by the Covered Entity and will include all
channels streamed.
(e) ``Reporting Data'' shall mean, for each Sound Recording for
which Reporting Data is to be provided, (1) the relevant Covered
Entity (including call sign and community of license of any
terrestrial broadcast station and any Side Channel(s)); (2) the
title of the song or track performed; (3) the featured recording
artist, group, or orchestra; (4) the title of the commercially
available album or other product on which the Sound Recording is
found; (5) the marketing label of the commercially available album
or other product on which the sound recording is found; and (6) play
frequency.
(f) ``Specified Reports'' are reports that provide Reporting
Data concerning over-the-air performances of Sound Recordings that
are also Web Site Performances by an
[[Page 9298]]
Originating Public Radio Station. The Parties agree that such
reports will initially be the ones provided by Mediaguide, Inc. or a
successor thereto (``Mediaguide''). In the event that Mediaguide, or
other agreed-upon source of Specified Reports, should cease to
provide Reporting Data that satisfy the function of such reports
hereunder, the Parties shall promptly identify and agree upon an
alternative vendor of reports, or an alternative approach to
providing Reporting Data to SoundExchange, provided that such
alternative reports or approaches are available on commercial terms
comparable to Mediaguide reports.
2. General.
All data required to be provided hereunder shall be provided to
SoundExchange electronically in the manner provided in 37 CFR
370.3(d), except to the extent the parties agree otherwise. CPB
shall consult with SoundExchange in advance concerning the content
and format of all data to be provided hereunder, and shall provide
data that is accurate, to the best of CPB's and the relevant Covered
Entity's knowledge, information and belief. The methods used to make
estimates, predictions and projections of data shall be subject to
SoundExchange's prior written approval, which shall not be
unreasonably withheld.
3. Data for the Historic Period.
(a) For 2004. CPB and SoundExchange shall use reasonable efforts
to obtain available Specified Reports regarding Covered Entities for
the period April 1, 2004 through December 31, 2004. NPR has
previously provided SoundExchange with all available Music ATH data
from the Music Webcasting Report dated September, 2004, in the form
of an Excel spreadsheet. CPB represents that such data includes
Music ATH data for all Major Format Groups.
(b) For 2005-2008.
(i) If Covered Entities have Reporting Data, or other
information reportable under 37 CFR Part 370, with respect to Web
Site Performances during the Historic Period, such Covered Entities
shall provide such information to CPB, which shall provide the same
to SoundExchange, as soon as practicable, and in any event by no
later than sixty (60) days after the end of the Historic Period.
Such data shall be provided in a format consistent with Attachment
2.
(ii) CPB and SoundExchange shall use reasonable efforts to
obtain available Specified Reports regarding Covered Entities for
the Historic Period. CPB and SoundExchange shall each pay one-half
of the costs for such Specified Reports.
(iii) CPB has previously provided SoundExchange with the
Streaming Census Report dated October 18, 2007 which SoundExchange
has accepted which includes estimates of total Music ATH during the
Historic Period, and of the allocation thereof to Major Format
Groups, Covered Entities and applicable period.
4. Data Collection and Reporting for the Current Period. CPB
shall provide data regarding Web Site Performances during the
Current Period to SoundExchange, and Covered Entities shall provide
such data to CPB, consistent with the following terms:
(a) ATH and Content Logs. For each calendar quarter during the
Current Period:
(i) Music ATH Reporting. CPB shall provide reports (the ``ATH
Reports'') of Music ATH by Covered Entities reasonably
representative of all Major Format Groups, having relatively high
Music ATH among the set of Covered Entities, and representing at
least 60% of the total Music ATH by the Covered Entities in 2009 and
at least 80% of the total Music ATH by the Covered Entities in 2010.
Such ATH reports shall be accompanied by the Content Logs described
in Section 4(a)(ii) for the periods described therein for all
Covered Entities for which ATH Reports are provided. All ATH Reports
and Content Logs for a quarter shall be provided by CPB together in
one single batch, but all data shall be broken out by Covered Entity
and identify each Covered Entity's Major Format Group. The ATH
Reports shall be in a form similar to the Streaming Census Report
dated October 18, 2007, which reported two hundred ten million
(210,000,000) total Music ATH for all Covered Entities for calendar
year 2007, except as otherwise provided in this Section 4(a)(i). If
the ATH Reports satisfy the requirements set forth above in this
Section 4(a)(i), all Covered Entities shall be deemed in compliance
with the terms of this Section 4(a)(i).
(ii) Reporting Period and Data. The information about Music ATH
referenced in Section 4(a)(i) shall be collected from Covered
Entities for two 7-consecutive-day reporting periods per quarter in
2009 and 2010. The first ATH Report shall be provided no later than
180 days after the Execution Date. Thereafter, the ATH Reports shall
be provided within thirty (30) days of the end of each calendar
quarter. During these reporting periods, Covered Entities described
in Section 4(a)(i) above shall prepare logs containing Reporting
Data for all their Web Site Performances (``Content Logs''). These
Content Logs shall be compared with server-based logs of Music ATH
throughout the reporting period before the ATH Report is submitted
to SoundExchange.
(iii) Additional Data Reporting. Each quarter, CPB shall, for
Covered Entities representing the highest 20% of reported Music ATH
in 2009 and the highest 30% of reported Music ATH in 2010, provide
SoundExchange Reporting Data collected continuously during each 24
hour period for the majority of their Web Site Performances, along
with the Covered Entity's Music ATH, for the relevant quarter. If
during any calendar quarter of the Current Period, additional
Covered Entities, in the ordinary course of business, collect
Reporting Data continuously during each 24 hour period for the
majority of their Web Site Performances, CPB shall provide
SoundExchange such data, along with each such Covered Entity's Music
ATH, for the relevant quarter.
(b) ATH and Format Surveys. CPB shall semiannually survey all
Covered Entities to ascertain the number, format and Music ATH of
all channels (including but not limited to Side Channels) over which
such Covered Entities make Web Site Performances. CPB shall provide
the results of such survey to SoundExchange within sixty (60) days
after the end of the semiannual period to which it pertains.
(c) Consolidated Reporting. Each quarter, CPB shall provide the
information required by this Section 4 in one delivery to
SoundExchange, with a list of all Covered Entities indicating which
are and are not reporting for such quarter.
(d) Timing. Except as otherwise provided above, all information
required to be provided to SoundExchange under this Section 4 shall
be provided as soon as practicable, and in any event by no later
than sixty (60) days after the end of the quarter to which it
pertains. Such data shall be provided in a format consistent with
Attachment 2.
5. Development of Technological Solutions. During the Term, CPB
and Covered Entities shall cooperate in good faith with efforts by
SoundExchange to develop and test a technological solution that
facilitates reporting.
Attachment 2
Reporting Format
1. Format for Reporting Data. All Reporting Data provided under
Attachment 1, Sections 3(b)(i) and 4(a)(ii) shall be delivered to
SoundExchange in accordance with the following format:
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Column 1...................................... Station or Side Channel
Column 2...................................... Sound Recording Title
Column 3...................................... Featured Artist, Group or Orchestra
Column 4...................................... Album
Column 5...................................... Marketing Label
Column 6...................................... Play Frequency
----------------------------------------------------------------------------------------------------------------
2. Format for Music ATH. All Music ATH reporting by Covered
Entities under the following provisions of Attachment 1 shall be
delivered to SoundExchange in accordance with the following format:
a. Section 3(b)(i) (the ``Historic Period'')
------------------------------------------------------------------------
------------------------------------------------------------------------
Column 1.......................... Station or Side Channel
Column 2.......................... Major Format Group
Column 3.......................... ATH
Column 4.......................... 2004 and 2007
------------------------------------------------------------------------
b. Section 4(a)(i) (the ``Current Period'')
[[Page 9299]]
------------------------------------------------------------------------
------------------------------------------------------------------------
Column 1.......................... Station or Side Channel
Column 2.......................... Major Format Group
Column 3.......................... ATH
Column 4.......................... Reporting Period
------------------------------------------------------------------------
3. Major Format Groups. All requirements to provide ``Major
Format Group'' as that term is defined in Attachment 1, Section
1(d), shall correspond with one of the following:
------------------------------------------------------------------------
Major format groups
-------------------------------------------------------------------------
Classical
Jazz
Music Mix
News and Information
News/Classical
News/Jazz
News/Music Mix
Adult Album Alternative
------------------------------------------------------------------------
Appendix B--Agreed Rates and Terms for Broadcasters
Article 1--Definitions
1.1 General. In general, words used in the rates and terms set
forth herein (the ``Rates and Terms'') and defined in 17 U.S.C.
112(e) or 114 or 37 CFR Part 380 shall have the meanings specified
in those provisions as in effect on the date hereof, with such
exceptions or clarifications set forth in Section 1.2.
1.2 Additional Definitions
(a) ``Broadcaster'' shall mean a webcaster as defined in 17
U.S.C. 114(f)(5)(E)(iii) that (i) has a substantial business owning
and operating one or more terrestrial AM or FM radio stations that
are licensed as such by the Federal Communications Commission; (ii)
has obtained a compulsory license under 17 U.S.C. 112(e) and 114 and
the implementing regulations therefor to make Eligible Transmissions
and related ephemeral recordings; (iii) complies with all applicable
provisions of Sections 112(e) and 114 and applicable regulations;
and (iv) is not a noncommercial webcaster as defined in 17 U.S.C.
114(f)(5)(E)(i).
(b) ``Broadcaster Webcasts'' shall mean eligible nonsubscription
transmissions made by a Broadcaster over the internet that are not
Broadcast Retransmissions.
(c) ``Broadcast Retransmissions'' shall mean eligible
nonsubscription transmissions made by a Broadcaster over the
internet that are retransmissions of terrestrial over-the-air
broadcast programming transmitted by the Broadcaster through its AM
or FM radio station, including ones with substitute advertisements
or other programming occasionally substituted for programming for
which requisite licenses or clearances to transmit over the internet
have not been obtained. For the avoidance of doubt, a Broadcast
Retransmission does not include programming transmitted on an
internet-only side channel.
(d) ``Eligible Transmission'' shall mean either a Broadcaster
Webcast or a Broadcast Retransmission.
(e) ``Small Broadcaster'' shall mean a Broadcaster that, for any
of its channels and stations (determined as provided in Section 4.1)
over which it transmits Broadcast Retransmissions, and for all of
its channels and stations over which it transmits Broadcaster
Webcasts in the aggregate, in any calendar year in which it is to be
considered a Small Broadcaster, meets the following additional
eligibility criteria: (i) During the prior year it made Eligible
Transmissions totaling less than 27,777 aggregate tuning hours; and
(ii) during the applicable year it reasonably expects to make
Eligible Transmissions totaling less than 27,777 aggregate tuning
hours; provided that, one time during the period 2006-2015, a
Broadcaster that qualified as a Small Broadcaster under the
foregoing definition as of January 31 of one year, elected Small
Broadcaster status for that year, and unexpectedly made Eligible
Transmissions on one or more channels or stations in excess of
27,777 aggregate tuning hours during that year, may choose to be
treated as a Small Broadcaster during the following year
notwithstanding clause (i) above if it implements measures
reasonably calculated to ensure that that it will not make Eligible
Transmissions exceeding 27,777 aggregate tuning hours during that
following year. As to channels or stations over which a Broadcaster
transmits Broadcast Retransmissions, the Broadcaster may elect Small
Broadcaster status only with respect to any of its channels or
stations that meet all of the foregoing criteria.
(f) ``SoundExchange'' shall mean SoundExchange, Inc. and shall
include its successors and assigns.
Article 2--Agreement Pursuant to
Webcaster Settlement Act of 2008
2.1 Availability of Rates and Terms. Pursuant to the Webcaster
Settlement Act of 2008, and subject to the provisions set forth
below, Broadcasters may elect to be subject to the rates and terms
set forth herein (the ``Rates and Terms'') in their entirety, with
respect to such Broadcasters' Eligible Transmissions and related
ephemeral recordings, for all of the period beginning on January 1,
2006, and ending on December 31, 2015, in lieu of other rates and
terms from time to time applicable under 17 U.S.C. 112(e) and 114,
by complying with the procedure set forth in Section 2.2 hereof. Any
person or entity that does not satisfy the eligibility criteria to
be a Broadcaster must comply with otherwise applicable rates and
terms.
2.2 Election Process in General. To elect to be subject to these
Rates and Terms, in lieu of any royalty rates and terms that
otherwise might apply under 17 U.S.C. 112(e) and 114, for all of the
period beginning on January 1, 2006, and ending on December 31,
2015, a Broadcaster shall submit to SoundExchange a completed and
signed election form (available on the SoundExchange Web site at
http://www.soundexchange.com) by the later of (i) March 31, 2009;
(ii) 30 days after publication of these Rates and Terms in the
Federal Register; or (iii) in the case of a Broadcaster that is not
making Eligible Transmissions as of the publication of these Rates
and Terms in the Federal Register but begins doing so at a later
time, 30 days after the Broadcaster begins making such Eligible
Transmissions. On any such election form, the Broadcaster must,
among other things, identify all its stations making Eligible
Transmissions. If, subsequent to making an election, there are
changes in the Broadcaster's corporate name or stations making
Eligible Transmissions, or other changes in its corporate structure
that affect the application of these Rates and Terms, the
Broadcaster shall promptly notify SoundExchange thereof.
Notwithstanding anything else in these Rates and Terms, a person or
entity otherwise qualifying as a Broadcaster that has participated
in any way in any appeal of the Final Determination of the Copyright
Royalty Judges concerning royalty rates and terms under Sections
112(e) and 114 of the Copyright Act for the period January 1, 2006,
through December 31, 2010 published in the Federal Register at 72 FR
24084 (May 1, 2007) (the ``Final Determination'') or any proceeding
before the Copyright Royalty Judges to determine royalty rates and
terms under Sections 112(e) and 114 of the Copyright Act for the
period January 1, 2011, through December 31, 2015 (including Docket
No. 2009-1 CRB Webcasting III and Docket No. 2009-2 CRB New
Subscription II, as noticed in the Federal Register at 74 FR 318-20
(Jan. 5, 2009)) shall not have the right to elect to be treated as a
Broadcaster or claim the benefit of these Rates and Terms, unless it
withdraws from such proceeding prior to submitting to SoundExchange
a completed and signed election form as contemplated by this Section
2.2.
2.3 Election of Small Broadcaster Status. A Broadcaster that
elects to be subject to these Rates and Terms and qualifies as a
Small Broadcaster may elect to be treated as a Small Broadcaster for
any one or more calendar years that it qualifies as a Small
Broadcaster. To do so, the Small Broadcaster shall submit to
SoundExchange a completed and signed election form (available on the
SoundExchange Web site at http://www.soundexchange.com) by no later
than January 31 of the applicable year, except that election forms
for 2006-2009 shall be due by no later than the date for the
election provided in Section 2.2. On any such election form, the
Broadcaster must, among other things, certify that it qualifies as a
Small Broadcaster; provide information about its prior year
aggregate tuning hours and the formats of its stations (e.g., the
genres of music they use); and provide other information requested
by SoundExchange for use in creating a royalty distribution proxy.
Even if a Broadcaster has once elected to be treated as a Small
Broadcaster, it must make a separate, timely election in each
subsequent year in which it wishes to be treated as a Small
Broadcaster.
2.4 Representation of Compliance and Non-waiver. By electing to
operate pursuant to the Rates and Terms, an entity represents and
warrants that it qualifies as a Broadcaster and/or Small
Broadcaster, as the case may be. By accepting an election by a
transmitting entity or payments or reporting made pursuant to these
Rates and Terms, SoundExchange does not acknowledge that the
transmitting entity qualifies as a Broadcaster or Small Broadcaster
or that it
[[Page 9300]]
has complied with the requirements of the statutory licenses under
Sections 112(e) and 114 of the Copyright Act (including these Rates
and Terms). It is the responsibility of each transmitting entity to
ensure that it is in full compliance with applicable requirements of
the statutory licenses under Sections 112(e) and 114 of the
Copyright Act. SoundExchange is not in a position to, and does not,
make determinations as to whether each of the many services that
rely on the statutory licenses is eligible for statutory licensing
or any particular royalty payment classification, nor does it
continuously verify that such services are in full compliance with
all applicable requirements. Accordingly, a Broadcaster agrees that
SoundExchange's acceptance of its election, payment or reporting
does not give or imply any acknowledgment that it is in compliance
with the requirements of the statutory licenses (including these
Rates and Terms) and shall not be used as evidence that it is in
compliance with the requirements of the statutory licenses
(including these Rates and Terms). SoundExchange and copyright
owners reserve all their rights to take enforcement action against a
transmitting entity that is not in compliance with all applicable
requirements that are not inconsistent with these Rates and Terms.
Article 3--Scope
3.1 In General. In consideration for the payment of royalties
pursuant to Article 4 and such other consideration specified herein,
Broadcasters that have made a timely election to be subject to these
Rates and Terms as provided in Section 2.2 are entitled to publicly
perform sound recordings within the scope of the statutory license
provided by Section 114 by means of Eligible Transmissions, and to
make related ephemeral recordings for use solely for purposes of
such Eligible Transmissions within the scope of Section 112(e), in
accordance with and subject to the limitations set forth in these
Rates and Terms and in strict conformity with the provisions of 17
U.S.C. 112(e) and 114 and their implementing regulations (except as
otherwise specifically provided herein or waived by particular
copyright owners with respect to their respective sound recordings),
in lieu of other rates and terms from time to time applicable under
17 U.S.C. 112(e) and 114, for all of the period beginning on January
1, 2006, and ending on December 31, 2015.
3.2 Applicability to All Eligible Services Operated by or for a
Broadcaster. If a Broadcaster has made a timely election to be
subject to these Rates and Terms as provided in Section 2.2, these
Rates and Terms shall apply to all Eligible Transmissions made by or
for the Broadcaster that qualify as a Performance under 37 CFR
380.2(i), and related ephemeral recordings. For the avoidance of
doubt, a Broadcaster may not rely upon these Rates and Terms for its
Eligible Transmissions of one broadcast channel or station and upon
different Section 112(e) and 114 rates and terms for its Eligible
Transmissions of other broadcast channels or stations.
3.3 No Implied Rights. These Rates and Terms extend only to
electing Broadcasters and grant no rights, including by implication
or estoppel, to any other person or except as specifically provided
herein. Without limiting the generality of the foregoing, these
Rates and Terms do not grant (i) any copyright ownership interest in
any sound recording; (ii) any trademark or trade dress rights; (iii)
any rights outside the United States (as defined in 17 U.S.C. 101);
(iv) any rights of publicity or rights to any endorsement by
SoundExchange or any other person; or (v) any rights with respect to
performances or reproductions outside the scope of these Rates and
Terms or the statutory licenses under 17 U.S.C. 112(e) and 114.
Article 4--Royalties
4.1 Minimum Fees. Each Broadcaster will pay an annual,
nonrefundable minimum fee of $500 for each of its individual
channels, including each of its individual side channels, and each
of its individual stations, through which (in each case) it makes
Eligible Transmissions, for each calendar year or part of a calendar
year during 2006-2015 during which the Broadcaster is a licensee
pursuant to licenses under 17 U.S.C. 112(e) and 114, provided that a
Broadcaster shall not be required to pay more than $50,000 in
minimum fees in the aggregate (for 100 or more channels or
stations). For purposes of these Rates and Terms, each individual
stream (e.g., HD radio side channels, different stations owned by a
single licensee) will be treated separately and be subject to a
separate minimum, except that identical streams for simulcast
stations will be treated as a single stream if the streams are
available at a single Uniform Resource Locator (URL) and
performances from all such stations are aggregated for purposes of
determining the number of payable performances hereunder. Upon
payment of the minimum fee, the Broadcaster will receive a credit in
the amount of the minimum fee against any royalties payable for the
same calendar year for the same channel or station. In addition, an
electing Small Broadcaster also shall pay a $100 annual fee (the
``Proxy Fee'') to SoundExchange for the reporting waiver discussed
in Section 5.1.
4.2 Royalty Rates. Royalties for Eligible Transmissions made
pursuant to 17 U.S.C. 114, and the making of related ephemeral
recordings pursuant to 17 U.S.C. 112(e), shall, except as provided
in Section 5.3, be payable on a per-performance basis, as follows:
------------------------------------------------------------------------
Rate per
Year performance
------------------------------------------------------------------------
2006.................................................... $0.0008
2007.................................................... 0.0011
2008.................................................... 0.0014
2009.................................................... 0.0015
2010.................................................... 0.0016
2011.................................................... 0.0017
2012.................................................... 0.0020
2013.................................................... 0.0022
2014.................................................... 0.0023
2015.................................................... 0.0025
------------------------------------------------------------------------
4.3 MFN. If at any time between publication of this Agreement in
the Federal Register and December 31, 2015, SoundExchange enters
into an agreement with a Broadcaster specifying terms and conditions
for the public performance of sound recordings within the scope of
the statutory license provided by Section 114 by means of Eligible
Transmissions, and the making of related ephemeral recordings within
the scope of Section 112(e), upon principal financial or other
material terms that are more favorable to such Broadcaster than the
principal financial or other material terms set forth in these Rates
and Terms, then SoundExchange shall afford electing Broadcasters
hereunder the opportunity, in each Broadcaster's sole discretion, to
take advantage of the terms and conditions of such agreement, in
their entirety, in lieu of these Rates and Terms, with respect to
the Broadcaster's Eligible Transmissions, from the date such more
favorable terms became effective under such other agreement and
continuing until the earlier of (i) the expiration of such other
agreement, or (ii) December 31, 2015.
4.4 Ephemeral Royalty. The royalty payable under 17 U.S.C.
112(e) for any ephemeral reproductions made by a Broadcaster and
covered hereby is deemed to be included within the royalty payments
set forth above. SoundExchange has discretion to allocate payments
hereunder between the statutory licenses under Sections 112(e) and
114 in the same manner as statutory webcasting royalties for the
period 2011-2015, provided that such allocation shall not, by virtue
of a Broadcaster's agreement to this Section 4.4, be considered
precedent in any judicial, administrative, or other proceeding.
4.5 Payment. Payments of all amounts specified in these Rates
and Terms shall be made to SoundExchange. Minimum fees and, where
applicable, the Proxy Fee shall be paid by January 31 of each year.
Once a Broadcaster's royalty obligation under Section 4.2 with
respect to a channel or station for a year exceeds the minimum fee
it has paid for that channel or station and year, thereby recouping
the credit provided by Section 4.1, the Broadcaster shall make
monthly payments at the per-performance rates provided in Section
4.2 beginning with the month in which the minimum fee first was
recouped.
4.6 Monthly Obligations. Broadcasters must make monthly payments
where required by Section 4.5, and provide statements of account and
reports of use, for each month on the 45th day following the end of
the month in which the Eligible Transmissions subject to the
payments, statements of account, and reports of use were made.
4.7 Past Periods. Notwithstanding anything else in this
Agreement, to the extent that a Broadcaster that elects to be
subject to these Rates and Terms has not paid royalties for all or
any part of the period beginning on January 1, 2006, and ending on
February 28, 2009, any amounts payable under these Rates and Terms
for Eligible Transmissions during such period for which payment has
not previously been made shall be paid by no later than April 30,
2009, including late fees as provided in Section 4.8 from the
original due date.
[[Page 9301]]
4.8 Late Fees. A Broadcaster shall pay a late fee for each
instance in which any payment, any statement of account or any
report of use is not received by SoundExchange in compliance with
these Rates and Terms and applicable regulations by the due date.
The amount of the late fee shall be 1.5% of a late payment, or 1.5%
of the payment associated with a late statement of account or report
of use, per month, compounded monthly, or the highest lawful rate,
whichever is lower. The late fee shall accrue from the due date of
the payment, statement of account or report of use until a fully-
compliant payment, statement of account or report of use is received
by SoundExchange, provided that, in the case of a timely provided
but noncompliant statement of account or report of use,
SoundExchange has notified the Broadcaster within 90 days regarding
any noncompliance that is reasonably evident to SoundExchange.
Article 5--Reporting, Auditing and Confidentiality
5.1 Small Broadcasters. While SoundExchange's ultimate goal is
for all webcasters to provide census reporting, requiring census
reporting by the smallest Broadcasters at this time may present
undue challenges for them, reduce compliance, and significantly
increase SoundExchange's distribution costs. Accordingly, on a
transitional basis for a limited time and for purposes of these
Rates and Terms only, and in light of the unique business and
operational circumstances currently existing with respect to these
entities, electing Small Broadcasters shall not be required to
provide reports of their use of sound recordings for Eligible
Transmissions and related ephemeral recordings. The immediately
preceding sentence applies even if the Small Broadcaster actually
makes Eligible Transmissions for the year exceeding 27,777 aggregate
tuning hours, so long as it qualified as a Small Broadcaster at the
time of its election for that year. Instead, SoundExchange shall
distribute the aggregate royalties paid by electing Small
Broadcasters based on proxy usage data in accordance with a
methodology adopted by SoundExchange's Board of Directors. In
addition to minimum royalties hereunder, electing Small Broadcasters
will pay to SoundExchange a $100 Proxy Fee to defray costs
associated with this reporting waiver, including development of
proxy usage data. SoundExchange hopes that offering this option to
electing Small Broadcasters will promote compliance with statutory
license obligations and thereby increase the pool of royalties
available to be distributed to copyright owners and performers.
SoundExchange further hopes that selection of a proxy believed by
SoundExchange to represent fairly the playlists of Small
Broadcasters will allow payment to more copyright owners and
performers than would be possible with any other reasonably
available option. Small Broadcasters should assume that, effective
January 1, 2016, they will be required to report their actual usage
in full compliance with then-applicable regulations. Small
Broadcasters are encouraged to begin to prepare to report their
actual usage by that date, and if it is practicable for them to do
so earlier, they may wish not to elect Small Broadcaster status.
5.2 Reporting by Other Broadcasters in General. Broadcasters
other than electing Small Broadcasters covered by Section 5.1 shall
submit reports of use on a per-performance basis in compliance with
the regulations set forth in 37 CFR Part 370, except that the
following provisions shall apply notwithstanding the provisions of
applicable regulations from time to time in effect:
(a) Broadcasters may pay for, and report usage in, a percentage
of their programming hours on an aggregate tuning hour basis as
provided in Section 5.3.
(b) Broadcasters shall submit reports of use to SoundExchange on
a monthly basis.
(c) As provided in Section 4.6, Broadcasters shall submit
reports of use by no later than the 45th day following the last day
of the month to which they pertain.
(d) Except as provided in Section 5.3, Broadcasters shall submit
reports of use to SoundExchange on a census reporting basis (i.e.,
reports of use shall include every sound recording performed in the
relevant month and the number of performances thereof).
(e) Broadcasters shall either submit a separate report of use
for each of their stations, or a collective report of use covering
all of their stations but identifying usage on a station-by-station
basis.
(f) Broadcasters shall transmit each report of use in a file the
name of which includes (i) the name of the Broadcaster, exactly as
it appears on its notice of use, and (ii) if the report covers a
single station only, the call letters of the station.
(g) Broadcasters shall submit reports of use with headers, as
presently described in 37 CFR 370.3(d)(7).
(h) Broadcasters shall submit a separate statement of account
corresponding to each of their reports of use, transmitted in a file
the name of which includes (i) the name of the Broadcaster, exactly
as it appears on its notice of use, and (ii) if the statement covers
a single station only, the call letters of the station.
5.3 Limited ATH-Based Reporting. Recognizing the operational
challenge of census reporting, Broadcasters generally reporting
pursuant to Section 5.2 may pay for, and report usage in, a
percentage of their programming hours on an aggregate tuning hours
basis, if (a) census reporting is not reasonably practical for the
programming during those hours, and (b) if the total number of hours
on a single report of use, provided pursuant to Section 5.2, for
which this type of reporting is used is below the maximum percentage
set forth below for the relevant year:
------------------------------------------------------------------------
Maximum
Year percentage
------------------------------------------------------------------------
2009....................................................... 20%
2010....................................................... 18%
2011....................................................... 16%
2012....................................................... 14%
2013....................................................... 12%
2014....................................................... 10%
2015....................................................... 8%
------------------------------------------------------------------------
To the extent that a Broadcaster chooses to report and pay for
usage on an aggregate tuning hours basis pursuant to this Section
5.3, the Broadcaster shall (i) report and pay based on the
assumption that the number of sound recordings performed during the
relevant programming hours is 12 per hour; (ii) pay royalties (or
recoup minimum fees) at the per-performance rates provided in
Section 4.2 on the basis of clause (i) above; (iii) include
aggregate tuning hours in reports of use provided pursuant to
Section 5.2; and (iv) include in reports of use provided pursuant to
Section 5.2 complete playlist information for usage reported on the
basis of aggregate tuning hours. SoundExchange may distribute
royalties paid on the basis of aggregate tuning hours hereunder in
accordance with its generally-applicable methodology for
distributing royalties paid on such basis.
5.4 Verification of Information. The provisions of applicable
regulations for the retention of records and verification of
statutory royalty payments (presently 37 CFR 380.4(h) and 380.6)
shall apply hereunder. The exercise by SoundExchange of any right
under this Section 5.4 shall not prejudice any other rights or
remedies of SoundExchange or sound recording copyright owners.
5.5 Confidentiality. The provisions of applicable regulations
concerning confidentiality (presently 37 CFR 380.5 (and the
applicable definitions provided in 37 CFR 380.2)) shall apply
hereunder.
Article 6--Additional Provisions
6.1 Applicable Regulations. To the extent not inconsistent with
the Rates and Terms herein, all applicable regulations, including 37
CFR Parts 370 and 380, shall apply to activities subject to these
Rates and Terms.
6.2 Participation in Specified Proceedings. A Broadcaster that
elects to be subject to these Rates and Terms agrees that it has
elected to do so in lieu of any different statutory rates and terms
that may otherwise apply during any part of the 2006-2015 period and
in lieu of participating at any time in a proceeding to set rates
and terms for any part of the 2006-2015 period. Thus, once a
Broadcaster has elected to be subject to these Rates and Terms, it
shall not at any time participate as a party, intervenor, amicus
curiae or otherwise, or give evidence or otherwise support or
assist, in Intercollegiate Broadcasting Sys. v. Copyright Royalty
Board (D.C. Circuit Docket Nos. 07-1123, 07-1168, 07-1172, 07-1173,
07-1174, 07-1177, 07-1178, 07-1179), Digital Performance Right in
Sound Recordings and Ephemeral Recordings (Copyright Royalty Judges'
Docket No. 2009-1 CRB Webcasting III), Digital Performance Right in
Sound Recordings and Ephemeral Recordings for a New Subscription
Service (Copyright Royalty Judges' Docket No. 2009-2 CRB New
Subscription II) or any successor proceedings to determine royalty
rates and terms for reproduction of ephemeral phonorecords or
digital audio transmission under Section
[[Page 9302]]
112(e) or 114 of the Copyright Act for all or any part of the period
2006-2015, including any appeal of the foregoing or any proceedings
on remand from such an appeal, unless subpoenaed on petition of a
third party (without any action by a Broadcaster to encourage or
suggest such a subpoena or petition) and ordered to testify or
provide documents in such proceeding.
6.3 Use of Agreement in Future Proceedings.
(a) Consistent with 17 U.S.C. 114(f)(5)(C), and except as
specifically provided in Section 6.3(b), neither the Webcaster
Settlement Act nor any provisions of these Rates and Terms shall be
admissible as evidence or otherwise taken into account in any
administrative, judicial, or other government proceeding involving
the setting or adjustment of the royalties payable for the public
performance or reproduction in ephemeral phonorecords or copies of
musical works or sound recordings, the determination of terms or
conditions related thereto, or the establishment of notice or
recordkeeping requirements by the Copyright Royalty Judges.
(b) Pursuant to 17 U.S.C. 114(f)(5)(C), submission of these
Rates and Terms in a proceeding under 17 U.S.C. 114(f) is expressly
authorized. For the avoidance of doubt, this Section 6.3(b) does not
authorize participation in a proceeding by an entity that has agreed
not to participate in the proceeding (pursuant to Section 6.2 or
otherwise).
6.4 Effect of Direct Licenses. Any copyright owner may enter
into a voluntary agreement with any Broadcaster setting alternative
Rates and Terms governing the Broadcasters' transmission of
copyrighted works owned by the copyright owner, and such voluntary
agreement may be given effect in lieu of the Rates and Terms set
forth herein.
6.5 Default. A Broadcaster shall comply with all the
requirements of these Rates and Terms. If it fails to do so,
SoundExchange may give written notice to the Broadcaster that,
unless the breach is remedied within 30 days from the date of
receipt of notice, the Broadcaster's authorization to make public
performances and ephemeral reproductions under these Rates and Terms
will be automatically terminated. No such cure period shall apply
before termination in case of material noncompliance that has been
repeated multiple times so as to constitute a pattern of
noncompliance, provided that SoundExchange has given repeated
notices of noncompliance. Any transmission made by a Broadcaster in
violation of these Rates and Terms or Section 112(e) or 114 or their
implementing regulations (except to the extent such implementing
regulations are inconsistent with these Rates and Terms), outside
the scope of these Rates and Terms, or after the expiration or
termination of these Rates and Terms shall be fully subject to,
among other things, the copyright owners' rights under 17 U.S.C. 106
and the remedies in 17 U.S.C. 501-506, and all limitations,
exceptions and defenses available with respect thereto.
Article 7--Miscellaneous
7.1 Acknowledgement.
(a) The parties acknowledge this agreement was entered into
knowingly and willingly.
(b) This agreement is limited solely to webcasting royalties,
and the parties acknowledge that it shall not be cited in connection
with any efforts to obtain, and sets no precedent related to, over-
the-air performance royalties.
(c) The parties further agree that the preceding acknowledgement
in Section 7.1(a) does not in any way imply Broadcasters' agreement
that the royalty rate standard set forth in 17 U.S.C. 114(f)(2)(B)
is an appropriate rate standard to apply to Broadcasters.
Broadcasters shall never be precluded by virtue of such
acknowledgement from arguing in the context of future legislation or
otherwise that a different royalty rate standard should apply to
them, and SoundExchange shall never rely upon by such
acknowledgement as a basis for arguing that the royalty rate
standard set forth in 17 U.S.C. 114(f)(2)(B) should apply to
Broadcasters.
7.2 Applicable Law and Venue. These Rates and Terms shall be
governed by, and construed in accordance with, the laws of the
District of Columbia (without giving effect to conflicts of law
principles thereof). All actions or proceedings arising directly or
indirectly from or in connection with these Rates and Terms shall be
litigated only in the United States District Court for the District
of Columbia located in Washington, DC. SoundExchange and
Broadcasters consent to the jurisdiction and venue of the foregoing
court and consent that any process or notice of motion or other
application to said court or a judge thereof may be served inside or
outside the District of Columbia by registered mail, return receipt
requested, directed to the person for which it is intended at its
last known address (and service so made shall be deemed complete
five (5) days after the same has been posted as aforesaid) or by
personal service or in such other manner as may be permissible under
the rules of that court.
7.3 Rights Cumulative. The rights, remedies, limitations, and
exceptions provided in these Rates and Terms and available under
applicable law shall be cumulative and shall not preclude assertion
by any party of any other rights, defenses, limitations, or
exceptions or the seeking of any other remedies against another
party hereto. These Rates and Terms shall not constitute a waiver of
any violation of Section 112 or 114 or their implementing
regulations (except to the extent such implementing regulations are
inconsistent with these Rates and Terms). No failure to exercise and
no delay in exercising any right, power or privilege shall operate
as a waiver of such right, power or privilege. No single or partial
exercise of any right, power or privilege granted under these Rates
and Terms or available under applicable law shall preclude any other
or further exercise thereof or the exercise of any other right,
power or privilege. No waiver by any party of full performance by
another party in any one or more instances shall be a waiver of the
right to require full and complete performance of these Rates and
Terms and of obligations under applicable law thereafter.
7.4 Entire Agreement. These Rates and Terms represent the entire
and complete agreement between SoundExchange and a Broadcaster with
respect to their subject matter and supersede all prior and
contemporaneous agreements and undertakings of SoundExchange and a
Broadcaster with respect to the subject matter hereof.
Appendix C
Agreed Rates and Terms
1. General
(a) Availability of Rates and Terms. Pursuant to the Webcaster
Settlement Act of 2008, and subject to the provisions of Section 2,
Eligible Small Webcasters may elect to be subject to the rates and
terms set forth herein (the ``Rates and Terms'') in their entirety,
with respect to their eligible nonsubscription transmissions and
related ephemeral recordings, in lieu of other rates and terms
applicable under 17 U.S.C. 112(e) and 114, by complying with the
procedure set forth in Section 2 hereof. Any person or entity that
does not satisfy the eligibility criteria to be an Eligible Small
Webcaster during any calendar year during the period 2006-2015 must
comply with otherwise applicable rates and terms for that year.
(b) Compliance. Any Eligible Small Webcaster relying upon the
statutory licenses set forth in 17 U.S.C. 112(e) and 114 shall
comply with the requirements of those Sections, these Rates and
Terms and other applicable regulations.
(c) Effect of Direct Licenses. These Rates and Terms are without
prejudice to, and subject to, any voluntary agreements that an
Eligible Small Webcaster may have entered into with any sound
recording copyright owner.
(d) Precedential Effect of Rates and Terms. Eligible Small
Webcasters agree that these Rates and Terms (including any royalty
rates, rate structure, fees, definitions, terms, conditions, or
notice and recordkeeping requirements set forth herein), shall not
be admissible as evidence or otherwise taken into account in any
administrative, judicial, or other government proceeding, except as
specifically provided in this Section 1(d). This prohibition applies
to, but is not limited to, those proceedings involving the setting
or adjustment of the royalties payable for the public performance or
reproduction in ephemeral phonorecords or copies of sound
recordings, the determination of terms or conditions related
thereto, or the establishment of notice or recordkeeping
requirements. These Rates and Terms shall be considered as a
compromise motivated by the unique business, economic and political
circumstances of small webcasters, copyright owners, and performers
rather than as matters that would have been negotiated in the
marketplace between a willing buyer and a willing seller. Eligible
Small Webcasters shall not, in any way, seek to use in any way these
Rates and Terms in any such proceeding and further agree to take
whatever steps are appropriate to prevent use of such rates and
terms in those proceedings. SoundExchange may disclose, describe or
explain any provision of these Rates and Terms in any proceeding
without giving it precedential effect.
[[Page 9303]]
2. Election for Treatment as an Eligible Small Webcaster
(a) Election Process in General. An Eligible Small Webcaster
that wishes to elect to be subject to these Rates and Terms with
respect to its eligible nonsubscription transmissions and related
ephemeral recordings, in lieu of any royalty rates and terms that
otherwise might apply under 17 U.S.C. 112(e) and 114, for any
calendar year that it qualifies as an Eligible Small Webcaster
during the period beginning on January 1, 2006, and ending on
December 31, 2015, shall submit to SoundExchange a completed and
signed election form (available on the SoundExchange Web site at
http://www.soundexchange.com) by no later than the first date on
which the webcaster would be obligated under these Rates and Terms
to make a royalty payment for such year. An Eligible Small Webcaster
that fails to make a timely election shall pay royalties for the
relevant year as otherwise provided under 17 U.S.C. 112 and 114.
(b) Election of Microcaster Status. An Eligible Small Webcaster
that elects to be subject to these Rates and Terms and qualifies as
a Microcaster may elect to be treated as a Microcaster for any one
or more calendar years that it qualifies as a Microcaster. To do so,
the Microcaster shall submit to SoundExchange a completed and signed
election form (available on the SoundExchange Web site at http://www.soundexchange.com) by no later than the first date on which the
Eligible Small Webcaster would be obligated under these Rates and
Terms to make a royalty payment for each year it elects to be
treated as a Microcaster. On any such election form, the Eligible
Small Webcaster must, among other things, certify that it qualifies
as a Microcaster; provide its prior year Gross Revenues, Third Party
Participation Revenues and Aggregate Tuning Hours; and provide other
information requested by SoundExchange for use in creating a royalty
distribution proxy. Even if an Eligible Small Webcaster has once
elected to be treated as a Microcaster, it must make a separate,
timely election in each subsequent year in which it wishes to be
treated as a Microcaster.
(c) Participation in Proceedings. Notwithstanding anything else
in these Rates and Terms, a person or entity otherwise qualifying as
an Eligible Small Webcaster that has participated in any way in any
appeal of the Final Determination of the Copyright Royalty Judges
concerning royalty rates and terms under Sections 112(e) and 114 of
the Copyright Act for the period January 1, 2006, through December
31, 2010 published in the Federal Register at 72 FR 24084 (May 1,
2007) (the ``Final Determination'') or any proceeding before the
Copyright Royalty Judges to determine royalty rates and terms under
Sections 112(e) and 114 of the Copyright Act for the period January
1, 2011, through December 31, 2015 (including Docket No. 2009-1 CRB
Webcasting III and Docket No. 2009-2 CRB New Subscription II, as
noticed in the Federal Register at 74 FR 318-20 (Jan. 5, 2009))
shall not have the right to elect to be treated as an Eligible Small
Webcaster or claim the benefit of these Rates and Terms, unless it
withdraws from such proceeding and submits to SoundExchange a
completed and signed election form within thirty (30) days after
publication of these Rates and Terms in the Federal Register. An
Eligible Small Webcaster that elects to be subject to these Rates
and Terms for any one or more years agrees that it has elected to do
so in lieu of any different statutory rates and terms that may
otherwise apply during that year and in lieu of participating at any
time in a proceeding to set rates and terms for any part of the
2006-2015 period. Thus, once an Eligible Small Webcaster has elected
to be subject to these Rates and Terms it shall not at any time
(even if it is no longer eligible, or has no longer elected to be
treated, as an Eligible Small Webcaster) directly or indirectly
participate as a party, amicus curiae or otherwise, or in any manner
give evidence or otherwise support or assist, in any further
proceedings to determine royalty rates and terms for reproduction of
ephemeral phonorecords or digital audio transmission under Section
112(e) or 114 of the Copyright Act for all or any part of the period
2006-2015, including any appeal of the Final Determination, any
proceedings on remand from such an appeal, any proceeding before the
Copyright Royalty Judges to determine royalty rates and terms
applicable to the statutory licenses under Sections 112(e) and 114
of the Copyright Act for the period 2011-2015, any appeal of such
proceeding, or any other related proceedings.
(d) Compliance. By electing Eligible Small Webcaster and/or
Microcaster status, a transmitting entity represents that it is
eligible therefor and in compliance with all requirements of the
statutory licenses under Sections 112(e) and 114 of the Copyright
Act. By accepting an election by a transmitting entity or payments
or reporting made pursuant to these Rates and Terms, SoundExchange
does not acknowledge that the transmitting entity qualifies as an
Eligible Small Webcaster or Microcaster or that it has complied with
the requirements of the statutory licenses under Sections 112(e) and
114 of the Copyright Act (including these Rates and Terms). It is
the responsibility of each transmitting entity to ensure that it is
in full compliance with the requirements of the statutory licenses
under Sections 112(e) and 114 of the Copyright Act. SoundExchange is
not in a position to, and does not, make determinations as to
whether each of the many services that rely on the statutory
licenses is eligible for statutory licensing or any particular
royalty payment classification, nor does it continuously verify that
such services are in full compliance with all applicable
requirements. Accordingly, an Eligible Small Webcaster agrees that
SoundExchange's acceptance of its election, payment or reporting
does not give or imply any acknowledgment that it is in compliance
with the requirements of the statutory licenses (including these
Rates and Terms) and shall not be used as evidence that it is in
compliance with the requirements of the statutory licenses
(including these Rates and Terms). SoundExchange and copyright
owners reserve all their rights to take enforcement action against a
transmitting entity that is not in compliance with those
requirements.
3. Royalty Rates for Eligible Small Webcasters
For eligible nonsubscription transmissions made by an Eligible
Small Webcaster during the period 2006-2015, except an electing
Microcaster, the royalty rate shall be--
(1) On any transmissions not exceeding 5,000,000 Aggregate
Tuning Hours per month (equivalent to approximately 6,945 average
simultaneous listeners, listening for thirty consecutive days, 24
hours a day), the greater of (i) ten percent (10%) of the Eligible
Small Webcaster's first $250,000 in Gross Revenues and twelve
percent (12%) of any Gross Revenues in excess of $250,000 during the
applicable year; or (ii) seven percent (7%) of the Eligible Small
Webcaster's Expenses during the applicable year; and
(2) On any transmissions in excess of 5,000,000 Aggregate Tuning
Hours per month, the commercial webcasting rates provided in the
Final Determination (for the period 2006-2010) or the then-
applicable commercial webcasting rates under Sections 112(e) and 114
(for the period 2011-2015).
4. Minimum Annual Fees
(a) In General. For each year from 2006-2015, an Eligible Small
Webcaster shall pay annual minimum fees as follows:
(1) $500 for electing Microcasters, which shall constitute the
only royalty payable hereunder by an electing Microcaster, except
that an electing Microcaster also shall pay a $100 annual fee (the
``Proxy Fee'') to SoundExchange for the reporting waiver discussed
in Section 6(a), and the provisions of Section 5(d) shall apply;
(2) $2,000, for Eligible Small Webcasters other than electing
Microcasters that had Gross Revenues during the prior year of not
more than $50,000 and reasonably expect Gross Revenues of not more
than $50,000 during the applicable year; or
(3) $5,000, for Eligible Small Webcasters that had Gross
Revenues during the prior year of more than $50,000 or reasonably
expect Gross Revenues to exceed $50,000 during the applicable year.
(b) The amounts specified in Section 4(a) shall be paid by
January 31 of each year.
(c) All minimum fees (but not the Proxy Fee for the reporting
waiver for Microcasters) shall be fully creditable toward royalties
due for the year for which such amounts are paid, but not any other
year.
5. Payments
(a) Qualification to Make Current Payments as Eligible Small
Webcaster. If the Gross Revenues, plus the Third Party Participation
Revenues and revenues from the operation of New Subscription
Services, of a transmitting entity and its Affiliates have not
exceeded $1,250,000 in any year, and the transmitting entity
reasonably expects to be an Eligible Small Webcaster in a given
year, the transmitting entity may make payments for that year on the
assumption that it will be an Eligible Small Webcaster for that year
for so long as that assumption is reasonable.
(b) True-Up Between Gross Revenues and Expenses. In making
monthly payments, an Eligible Small Webcaster shall, at the time a
payment is due, calculate its Gross Revenues and Expenses for the
year through the end of the applicable month and pay the applicable
[[Page 9304]]
percentage of Gross Revenues or Expenses, as the case may be, for
the year through the end of the applicable month, less any amounts
previously paid for such year. For the purposes of illustration
only, if an Eligible Small Webcaster has $100,000 in Gross Revenues
and $2,000 in Expenses in Month 1, the monthly payment shall be
$10,000 (10% of aggregate gross yearly revenue up to $250,000). In
Month 2, if the Eligible Small Webcaster has $100,000 in Gross
Revenue and $2,000 in Expenses, then the Eligible Small Webcaster
shall pay $10,000 in monthly payments (10% of aggregate gross yearly
revenue for the year up to $250,000 less the $10,000 paid in Month
1). In Month 3, if the Eligible Small Webcaster has $100,000 in
Gross Revenue and $2,000 in Expenses, then the Eligible Small
Webcaster shall pay $11,000 in monthly payments (10% of aggregate
gross yearly revenue for the year up to $250,000 plus 12% of
aggregate gross yearly revenue for the amount above $250,000, less
prior payments).
(c) Effect if Eligibility Condition is Exceeded. Except as
provided in Section 5(e), if a transmitting entity has made payments
for any year based on the assumption that it will qualify as an
Eligible Small Webcaster, but the actual Gross Revenues plus Third
Party Participation Revenues and revenues from the operation of New
Subscription Services in that year of the transmitting entity and
its Affiliates exceed the Gross Revenue threshold provided in
Section 8(e), then the transmitting entity shall receive a six (6)
month grace period measured from the first month following the month
in which such revenues exceed $1,250,000 (the ``Grace Period'').
During the Grace Period, the transmitting entity shall pay the rates
as specified in Section 3(a). From and after the date the Grace
Period has expired, the transmitting entity will pay the commercial
webcasting rates provided in the Final Determination (for 2006-2010)
or the then-applicable commercial webcasting rates under Sections
112(e) and 114 (for 2011-2015), only for periods after the
expiration of the Grace Period.
(d) Effect if Microcaster Eligibility Condition is Exceeded.
Except as provided in Section 5(e), if a transmitting entity has
made payments and not reported usage for any year based on the
assumption that it will qualify as a Microcaster, but the actual
Gross Revenues plus Third Party Participation Revenues, Expenses, or
Aggregate Tuning Hours in that year of the transmitting entity and
its Affiliates exceed a threshold provided in Section 8(h), then the
transmitting entity's payments for that entire year shall
retroactively be adjusted as provided in this Section 5(d). By no
later than January 31 of the following year, the transmitting entity
shall notify SoundExchange whether it elects to be treated for the
entire year in which such threshold was exceeded as either an
Eligible Small Webcaster but not a Microcaster, or as a transmitting
entity fully subject to the Final Determination (for 2006-2010) or
to the then-applicable commercial webcasting rates under Sections
112(e) and 114 (for 2011-2015) (whichever of the foregoing it
elects, the ``Elected Status''). At the same time, the transmitting
entity must pay all amounts that would have been due for that year
if it had originally elected the Elected Status, less any royalties
previously paid hereunder as a Microcaster for that year (but not
less the Proxy Fee). The transmitting entity need not provide
reports of use for that year, and SoundExchange may distribute the
royalties paid by the transmitting entity for that year based on the
proxy usage data applicable to Microcasters. For the year following
the year in which such threshold was exceeded, the transmitting
entity must comply with applicable requirements as either an
Eligible Small Webcaster but not a Microcaster, or as a transmitting
entity fully subject to the Final Determination (for 2006-2010) or
to the then-applicable commercial webcasting rates under Sections
112(e) and 114 (for 2011-2015).
(e) True-Up for Certain Corporate Transactions. If a
transmitting entity that has at any time elected to be treated as an
Eligible Small Webcaster under these Rates and Terms, and has not
ceased to qualify as an Eligible Small Webcaster through growth in
its business and thereafter paid full commercial webcasting rates
for a period of at least twelve (12) full months (after any Grace
Period applicable under Section 5(c)), becomes a party to or subject
of any merger, sale of stock or all or substantially all of its
assets, or other corporate restructuring, such that, upon the
consummation of such transaction, the transmitting entity or its
successor (including a purchaser of all or substantially all of its
assets) does not qualify, or reasonably expect to qualify, as an
Eligible Small Webcaster for the then-current year, then the
transmitting entity or its successor shall, within thirty (30) days
after the consummation of such transaction, pay to SoundExchange the
difference between (1) the payment the transmitting entity would
have been required to make under the commercial webcasting rates
provided in the Final Determination (for 2006-2010) or under the
then-applicable commercial webcasting rates under Sections 112(e)
and 114 (for 2011-2015) for each year in which it elected to be
treated as an Eligible Small Webcaster under these Rates and Terms,
from January 1, 2006 through the date of such transaction, and (2)
the royalty payments it made under these Rates and Terms for each
such year. The burden of proof shall be on the transmitting entity
or its successor to demonstrate its actual usage for purposes of
determining the payment it would have been required to make under
such commercial webcasting rates for each such year. If the
transmitting entity has insufficient records to determine the
payment it would have been required to make under such commercial
webcasting rates for each such year, then such calculation shall be
made on the basis of the assumption that it made transmissions of
5,000,000 Aggregate Tuning Hours per month, and 15.375 performances
per each such Aggregate Tuning Hour, during the relevant period.
(f) Remittance. Payments of all amounts specified in these Rates
and Terms shall be made to SoundExchange as provided in Section
7(a). Eligible Small Webcasters shall not be entitled to a refund of
any amounts paid to SoundExchange, but if an Eligible Small
Webcaster makes an overpayment of royalties (other than payments of
minimums) during a year, SoundExchange shall, at its discretion,
either refund the overpayment or give the Eligible Small Webcaster a
credit in the amount of its overpayment, which credit shall be
available to be applied to its payments for the immediately
following year only.
(g) Ephemeral Recordings Royalty. SoundExchange has discretion
to allocate payments hereunder between the statutory licenses under
Sections 112(e) and 114 in the same manner as the majority of other
webcasting royalties.
(h) Past Periods. Notwithstanding anything else in this
Agreement, to the extent that an Eligible Small Webcaster that
elects to be subject to these Rates and Terms has not paid royalties
for all or any part of the period beginning on January 1, 2006, and
ending on February 28, 2009, any amounts payable under these Rates
and Terms for eligible nonsubscription transmissions during such
period for which payment has not previously been made shall be paid
by no later than April 30, 2009, including late fees as provided in
Section 5(i) from the original due date.
(i) Late Fee. An Eligible Small Webcaster shall pay a late fee
for each instance in which any payment, any statement of account or
any report of use is not received by SoundExchange in full
compliance with these Rates and Terms and applicable regulations by
the due date. The amount of the late fee shall be 1.5% of a late
payment, or 1.5% of the payment associated with a late statement of
account or report of use, per month, or the highest lawful rate,
whichever is lower. The late fee shall accrue from the due date of
the payment, statement of account or report of use until a fully-
compliant payment, statement of account or report of use is received
by SoundExchange.
6. Notice and Recordkeeping
(a) Microcasters. SoundExchange believes that accurate census
reporting by services is the best way for it to obtain data for
making fair royalty distributions to copyright owners and
performers, and for that reason, Section 6(b) generally requires
census reporting by Eligible Small Webcasters. However,
SoundExchange has observed a low level of compliance by the smallest
webcasters with the payment and notice and recordkeeping
requirements imposed by applicable regulations. Moreover, where
SoundExchange has received reports of use from the smallest
webcasters, it has had to devote levels of resources to processing
those reports that are high relative to the usage and payment
involved. While SoundExchange's ultimate goal is for all webcasters
to provide census reporting, requiring census reporting by the
smallest webcasters at this time may further reduce compliance and
significantly increase distribution costs.
Accordingly, on a transitional basis for a limited time and for
purposes of these Rates and Terms only, and in light of the unique
business and operational circumstances currently existing with
respect to these services, electing Microcasters shall not be
required to provide reports of their use of
[[Page 9305]]
sound recordings for eligible nonsubscription transmissions and
related ephemeral recordings. Instead, SoundExchange shall
distribute the aggregate royalties paid by electing Microcasters
based on proxy usage data in accordance with a methodology adopted
by SoundExchange's Board of Directors. In addition to minimum
royalties hereunder, electing Microcasters will pay to SoundExchange
a $100 Proxy Fee to defray costs associated with this reporting
waiver, including development of proxy usage data. SoundExchange
hopes that offering this option to electing Microcasters will
promote compliance with statutory license obligations and thereby
increase the pool of royalties available to be distributed to
copyright owners and performers. SoundExchange further hopes that
selection of a proxy believed by SoundExchange to represent fairly
the playlists of the smallest webcasters will allow payment to more
copyright owners and performers than would be possible with any
other reasonably available option. Microcasters should assume that,
effective January 1, 2016, they will be required to report their
actual usage in full compliance with then-applicable regulations.
Microcasters are encouraged to begin to prepare to report their
actual usage by that date, and if it is practicable for them to do
so earlier, they may wish not to elect Microcaster status.
(b) Reports to Be Provided by other Eligible Small Webcasters.
As a condition of these Rates and Terms, except as provided in
Section 6(a), an Eligible Small Webcaster shall submit reports of
use of sound recordings to SoundExchange covering the following for
all of its eligible nonsubscription transmissions, on a channel by
channel basis:
(1) The featured recording artist, group or orchestra;
(2) The sound recording title;
(3) The title of the retail album or other product (or, in the
case of compilation albums created for commercial purposes, the name
of the retail album upon which the track was originally released);
(4) The marketing label of the commercially available album or
other product on which the sound recording is found;
(5) The International Standard Recording Code (``ISRC'')
embedded in the sound recording, if available;
(6) The copyright owner information provided in the copyright
notice on the retail album or other product (e.g., following the
symbol (P) (the letter P in a circle) or, in the case of compilation
albums created for commercial purposes, in the copyright notice for
the individual track);
(7) The Aggregate Tuning Hours, on a monthly basis, for each
channel provided by the Eligible Small Webcaster as computed by a
recognized industry ratings service or as computed by the Eligible
Small Webcaster from its server logs;
(8) The channel for each transmission of each sound recording;
and
(9) The start date and time of each transmission of each sound
recording.
If at any time during the period through December 31, 2015,
Eligible Small Webcasters would be required under regulations
applicable to the Section 112(e) or 114 statutory license to provide
reports of use more extensive than provided in this Section 6(b),
then any incremental information required by such regulations shall
be provided under these Rates and Terms in addition to the
information identified above.
(c) Provision of Reports. Reports of use described in Section
6(b) shall be provided at the same time royalty payments are due
under Section 7(a).
(d) Server Logs. To the extent not already required by the
current regulations set forth in 37 CFR Part 380, all Eligible Small
Webcasters shall retain for a period of at least four (4) years
server logs sufficient to substantiate all information relevant to
eligibility, rate calculation and reporting hereunder. To the extent
that a third-party web hosting or service provider maintains
equipment or software for an Eligible Small Webcaster and/or such
third party creates, maintains, or can reasonably create such server
logs, the Eligible Small Webcaster shall direct that such server
logs be created and maintained by said third party for a period of
at least four years and/or that such server logs be provided to, and
maintained by, the Eligible Small Webcaster. SoundExchange shall
have access to the same pursuant to applicable regulations for the
verification of statutory royalty payments (presently 37 CFR 380.6).
7. Additional Provisions
(a) Monthly Obligations. All Eligible Small Webcasters except
electing Microcasters must make monthly payments, provide statements
of account, and submit reports of use as described in Section 6 for
each month on the forty-fifth (45th) day following the month in
which the transmissions subject to the payments, statements of
account, and reports of use were made.
(b) Proof of Eligibility. At all times, the burden of proof
shall be on the Eligible Small Webcaster to demonstrate eligibility
for the Rates and Terms set forth herein and for Microcaster status,
and at all times the obligation shall be on the Eligible Small
Webcaster to maintain records sufficient to determine eligibility.
Failure to retain sufficient records to determine eligibility shall
constitute a violation of these Rates and Terms and shall render a
transmitting entity ineligible for the rates and terms set forth
herein. An Eligible Small Webcaster that elects to be governed by
the rates and terms set forth herein shall make available to
SoundExchange, within thirty (30) days after SoundExchange's written
request at any time during the three (3) years following a period
during which it is to be treated as an Eligible Small Webcaster for
purposes of these Rates and Terms, sufficient evidence to support
its eligibility as an Eligible Small Webcaster and/or Microcaster
during that period, including but not limited to an accounting of
all Affiliate and Third Party Participation Revenue, and Aggregate
Tuning Hours on a monthly basis. Any proof of eligibility provided
hereunder shall be provided with a certification signed by the
Eligible Small Webcaster if a natural person, or by an officer or
partner of the Eligible Small Webcaster if the Eligible Small
Webcaster is a corporation or partnership, stating, under penalty of
perjury, that the information provided is accurate and the person
signing is authorized to act on behalf of the Eligible Small
Webcaster.
(c) Default. An Eligible Small Webcaster shall comply with all
the requirements of these Rates and Terms. If it fails to do so,
SoundExchange may give written notice to the Eligible Small
Webcaster that, unless the breach is remedied within thirty days
from the date of notice and not repeated, the Eligible Small
Webcaster's authorization to make public performances and ephemeral
reproductions under these Rates and Terms will be automatically
terminated. Such termination renders any public performances and
ephemeral reproductions as to which the breach relates actionable as
acts of infringement under 17 U.S.C. 501 and fully subject to the
remedies provided by 17 U.S.C. 502-506.
(d) Applicable Regulations. To the extent not inconsistent with
the terms herein, use of sound recordings by Eligible Small
Webcasters shall be governed by, and Eligible Small Webcasters shall
comply with, applicable regulations, including 37 CFR Part 380.
Without limiting the foregoing, the provisions of applicable
regulations for the retention of records and verification of
statutory royalty payments (presently 37 CFR 380.4(h) and 380.6)
shall apply hereunder. Eligible Small Webcasters shall cooperate in
good faith with any such verification, and the exercise by
SoundExchange of any right with respect thereto shall not prejudice
any other rights or remedies of SoundExchange or sound recording
copyright owners.
(e) Applicable Law and Venue. These Rates and Terms shall be
governed by, and construed in accordance with, the laws of the
District of Columbia (without giving effect to conflicts of law
principles thereof). All actions or proceedings arising directly or
indirectly from or in connection with these Rates and Terms shall be
litigated only in the United States District Court for the District
of Columbia located in Washington, DC. SoundExchange and Eligible
Small Webcasters consent to the jurisdiction and venue of the
foregoing court and consent that any process or notice of motion or
other application to said court or a judge thereof may be served
inside or outside the District of Columbia by registered mail,
return receipt requested, directed to the person for which it is
intended at its last known address (and service so made shall be
deemed complete five (5) days after the same has been posted as
aforesaid) or by personal service or in such other manner as may be
permissible under the rules of that court.
(f) Rights Cumulative. The remedies provided in these Rates and
Terms and available under applicable law shall be cumulative and
shall not preclude assertion by any party of any other rights or the
seeking of any other remedies against another party hereto. These
Rates and Terms shall not constitute a waiver of any violation of
Section 112 or 114 or their implementing regulations (except to the
extent such implementing regulations are inconsistent
[[Page 9306]]
with these Rates and Terms). No failure to exercise and no delay in
exercising any right, power or privilege shall operate as a waiver
of such right, power or privilege. Neither these Rates and Terms nor
any such failure or delay shall give rise to any defense in the
nature of laches or estoppel. No single or partial exercise of any
right, power or privilege granted under these Rates and Terms or
available under applicable law shall preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. No waiver by any party of full performance by another
party in any one or more instances shall be a waiver of the right to
require full and complete performance of these Rates and Terms and
of obligations under applicable law thereafter.
(g) Entire Agreement. These Rates and Terms represent the entire
and complete agreement between SoundExchange and an Eligible Small
Webcaster with respect to their subject matter and supersede all
prior and contemporaneous agreements and undertakings of
SoundExchange and an Eligible Small Webcaster with respect to the
subject matter hereof.
8. Definitions
As used in these Rates and Terms, the following terms shall have
the following meanings:
(a) An ``Affiliate'' of a transmitting entity is a person or
entity that directly, or indirectly through one or more
intermediaries--
(1) Has securities or other ownership interests representing
more than 50 percent of such person's or entity's voting interests
beneficially owned by--
(A) Such transmitting entity; or
(B) A person or entity beneficially owning securities or other
ownership interests representing more than 50 percent of the voting
interests of the transmitting entity;
(2) Beneficially owns securities or other ownership interests
representing more than 50 percent of the voting interests of the
transmitting entity; or
(3) Otherwise Controls, is Controlled by, or is under common
Control with the transmitting entity.
(b) The term ``Aggregate Tuning Hours'' has the meaning given
that term in 37 CFR Sec. 380.2(a), as published in the Final
Determination.
(c) A ``Beneficial Owner'' of a security or other ownership
interest is any person or entity who, directly or indirectly,
through any contract, arrangement, understanding, relationship, or
otherwise, has or shares voting power with respect to such security
or other ownership interest.
(d) The term ``Control'' means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a person or entity, whether through the
ownership of voting securities, by contract or otherwise.
(e) An ``Eligible Small Webcaster'' is a person or entity that
(i) has obtained a compulsory license under 17 U.S.C. 112(e) and 114
and the implementing regulations therefor to make eligible
nonsubscription transmissions over the Internet and related
ephemeral recordings; (ii) complies with all provisions of Sections
112(e) and 114 and applicable regulations; (iii) is not a
noncommercial webcaster as defined in 17 U.S.C. 114(f)(5)(E)(i); and
(iv) in any calendar year in which it is to be considered an
Eligible Small Webcaster has, together with its Affiliates, annual
Gross Revenues plus Third Party Participation Revenues and revenues
from the operation of New Subscription Services of not more than
$1,250,000. In determining qualification under this Section 8(e), a
transmitting entity shall exclude--
(1) Income of an Affiliate that is a natural person, other than
income such natural person derives from another Affiliate of such
natural person that is either a media or entertainment related
business that provides audio or other entertainment programming, or
a business that primarily operates an Internet or wireless service;
and
(2) Gross Revenues of any Affiliate that is not engaged in a
media or entertainment related business that provides audio or other
entertainment programming, and is not engaged in a business that
primarily operates an Internet or wireless service, if the only
reason such Affiliate is Affiliated with the transmitting entity is
that (i) it is under common Control of the same natural person or
(ii) both are beneficially owned by the same natural person.
In the case of a person or entity that offers both eligible
nonsubscription transmissions (as defined in 17 U.S.C. 114(j)(6))
and a New Subscription Service, these Rates and Terms apply only to
the Eligible Small Webcaster's eligible nonsubscription
transmissions and not the New Subscription Service.
(f) The term ``Expenses''--
(1) Means all costs incurred (whether actually paid or not) by
an Eligible Small Webcaster, except that capital costs shall be
treated as Expenses allocable to a period only to the extent of
charges for amortization or depreciation of such costs during such
period as are properly allocated to such period in accordance with
United States generally accepted accounting principles (``GAAP'');
(2) Includes the fair market value of all goods, services, or
other non-cash consideration (including real, personal, tangible,
and intangible property) provided by an Eligible Small Webcaster to
any third party in lieu of a cash payment and the fair market value
of any goods or services purchased for or provided to an Eligible
Small Webcaster by an Affiliate of such webcaster; and
(3) Shall not include--
(A) The imputed value of personal services rendered by up to 5
natural persons who are, directly or indirectly, owners of the
Eligible Small Webcaster, and for which no compensation has been
paid;
(B) The imputed value of occupancy of residential property for
which no Federal income tax deduction is claimed as a business
expense;
(C) Costs of purchasing phonorecords of sound recordings used in
the Eligible Small Webcaster's service;
(D) Royalties paid for the public performance of sound
recordings; or
(E) The reasonable costs of collecting overdue accounts
receivable, provided that the reasonable costs of collecting any
single overdue account receivable may not exceed the actual account
receivable.
(g) The term ``Gross Revenues''--(1) Means all revenue of any
kind earned by a person or entity, less--
(A) Revenue from sales of phonorecords and digital phonorecord
deliveries of sound recordings;
(B) The person or entity's actual costs of other products and
services actually sold through a service that makes eligible
nonsubscription transmissions, and related sales and use taxes
imposed on such transactions, costs of shipping such products,
allowance for bad debts, and credit card and similar fees paid to
unrelated third parties;
(C) Revenue from the operation of a New Subscription Service for
which royalties are paid in accordance with provisions of 17 U.S.C.
112 and 114; and
(D) Revenue from the sale of assets in connection with the sale
of all or substantially all of the assets of such person's or
entity's business, or from the sale of capital assets; and
(2) Includes--
(A) All cash or cash equivalents;
(B) The fair market value of goods, services, or other non-cash
consideration (including real, personal, tangible, and intangible
property);
(C) In-kind and cash donations and other gifts (but not capital
contributions made in exchange for an equity interest in the
recipient); and
(D) Amounts earned by such person or entity but paid to an
Affiliate of such person or entity in lieu of payment to such person
or entity.
Gross revenues shall be calculated in accordance with U.S.
Generally Accepted Accounting Principles (GAAP), except that a
transmitting entity that computes Federal taxable income on the
basis of the cash receipts and disbursements method of accounting
for any taxable year may compute its gross receipts for any period
included in such taxable year on the same basis.
(h) A ``Microcaster'' is an Eligible Small Webcaster that,
together with its Affiliates, in any calendar year in which it is to
be considered a Microcaster, meets the following additional
eligibility criteria: (i) Transmits sound recordings only by means
of eligible nonsubscription transmissions (as defined in 17 U.S.C.
114(j)(6)); (ii) had annual Gross Revenues plus Third Party
Participation Revenues during the prior year of not more than $5,000
and reasonably expects Gross Revenues plus Third Party Participation
Revenues during the applicable year of not more than $5,000; (iii)
has Expenses during the prior year of not more than $10,000 and
reasonably expects Expenses during the applicable year of not more
than $10,000; and (iv) during the prior year did not make eligible
nonsubscription transmissions exceeding 18,067 Aggregate Tuning
Hours, and during the applicable year reasonably does not expect to
make eligible nonsubscription transmissions exceeding 18,067
Aggregate Tuning Hours.
(i) The term ``New Subscription Service'' has the meaning given
that term in 17 U.S.C. 114(j)(8).
[[Page 9307]]
(j) The ``Third Party Participation Revenues'' of a transmitting
entity are revenues of any kind earned by a person or entity, other
than the transmitting entity, including those:
(1) That relate to the public performance of sound recordings
and are subject to an economic arrangement in which the transmitting
entity receives anything of value; or
(2) That are earned by such person or entity from the sale of
advertising of any kind in connection with the transmitting entity's
eligible nonsubscription transmissions.
By way of example only, a transmitting entity's Third Party
Participation Revenues would include revenues earned by the
transmitting entity's proprietor, a marketing partner of the
transmitting entity, or an aggregator through which the transmitting
entity's transmissions are available, by virtue of the transmitting
entity's transmissions.
[FR Doc. E9-4439 Filed 3-2-09; 8:45 am]
BILLING CODE 1410-30-P