[Code of Federal Regulations]
[Title 37, Volume 1]
[Revised as of July 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 37CFR260.2]

[Page 649-650]
 
              TITLE 37--PATENTS, TRADEMARKS, AND COPYRIGHTS
 
                                CONGRESS
 
PART 260_RATES AND TERMS FOR PREEXISTING SUBSCRIPTION SERVICES' DIGITAL TRANSMISSIONS OF SOUND RECORDINGS AND MAKING OF EPHEMERAL PHONORECORDS--Table of Contents
 
Sec. 260.2  Royalty fees for the digital performance of sound recordings and the making of ephemeral phonorecords by preexisting subscription services.

    (a) Commencing January 1, 2002 and continuing through December 31, 
2003, a Licensee's monthly royalty fee for the public performance of 
sound recordings pursuant to 17 U.S.C. 114(d)(2) and the making of any 
number of ephemeral phonorecords to facilitate such performances 
pursuant to 17 U.S.C. 112(e) shall be 7.0% of such Licensee's monthly 
gross revenues resulting from residential services in the United States.
    (b) Commencing January 1, 2004 and continuing through December 31, 
2007, a Licensee's monthly royalty fee for the public performance of 
sound recordings pursuant to 17 U.S.C. 114(d)(2) and the making of any 
number of ephemeral phonorecords to facilitate such performances 
pursuant to 17 U.S.C. 112(e) shall be 7.25% of such Licensee's monthly 
gross revenues resulting from residential services in the United States.
    (c) Commencing in the year 2003 and continuing through the year 
2007, each Licensee making digital performances of sound recordings 
pursuant to 17 U.S.C. 114(d)(2) and ephemeral

[[Page 650]]

phonorecords pursuant to 17 U.S.C. 112(e) shall make an advance payment 
of $100,000 per year, payable no later than January 20th of each year; 
Provided, however, that for 2003, the annual advance payment shall be 
due on August 20, 2003. The annual advance payment shall be 
nonrefundable, but the royalties due and payable for a given year or any 
month therein under paragraphs (a) and (b) of this section shall be 
recoupable against the annual advance payment for such year; Provided, 
however, that any unused annual advance payment for a given year shall 
not carry over into a subsequent year.
    (d) A Licensee shall pay a late fee of 1.5% per month, or the 
highest lawful rate, whichever is lower, for any payment received after 
the due date. Late fees shall accrue from the due date until payment is 
received.
    (e)(1) For purposes of this section, gross revenues shall mean all 
monies derived from the operation of the programming service of the 
Licensee and shall be comprised of the following:
    (i) Monies received by Licensee from Licensee's carriers and 
directly from residential U.S. subscribers for Licensee's programming 
service;
    (ii) Licensee's advertising revenues (as billed), or other monies 
received from sponsors if any, less advertising agency commissions not 
to exceed 15% of those fees incurred to a recognized advertising agency 
not owned or controlled by Licensee;
    (iii) Monies received for the provision of time on the programming 
service to any third party;
    (iv) Monies received from the sale of time to providers of paid 
programming such as infomercials;
    (v) Where merchandise, service, or anything of value is received by 
Licensee in lieu of cash consideration for the use of Licensee's 
programming service, the fair market value thereof or Licensee's 
prevailing published rate, whichever is less;
    (vi) Monies or other consideration received by Licensee from 
Licensee's carriers, but not including monies received by Licensee's 
carriers from others and not accounted for by Licensee's carriers to 
Licensee, for the provision of hardware by anyone and used in connection 
with the programming service;
    (vii) Monies or other consideration received for any references to 
or inclusion of any product or service on the programming service; and
    (viii) Bad debts recovered regarding paragraphs (e)(1) (i) through 
(vii) of this section.
    (2) Gross revenues shall include such payments as set forth in 
paragraphs (e)(1) (i) through (viii) of this section to which Licensee 
is entitled but which are paid to a parent, subsidiary, division, or 
affiliate of Licensee, in lieu of payment to Licensee but not including 
payments to Licensee's carriers for the programming service. Licensee 
shall be allowed a deduction from ``gross revenues'' as defined in 
paragraph (e)(1) of this section for affiliate revenue returned during 
the reporting period and for bad debts actually written off during 
reporting period.
    (f) During any given payment period, the value of each performance 
of each digital sound recording shall be the same.

[63 FR 25413, May 8, 1998, as amended at 64 FR 36576, July 7, 1999; 65 
FR 39820, June 28, 2000; 68 FR 36470, June 18, 2003; 68 FR 39840, July 
3, 2003]