Alison Pollack, Esq.

On May 18, 2012, the Copyright Royalty Board Judges (“Royalty Judges”) published proposed regulations for comment on musical rates and terms. Under the United States Copyright Act, every five years, the 17 U.S.C. § 115 statutory license provision requires the Royalty Judges to set the rates and terms for distributing musical works in ringtones, digital downloads, interactive streaming, and other offerings.

The Royalty Judges request comment on two proposed regulations relating to statements of account requirements for the § 115 statutory license.

In the royalty rate calculation, the percentage of service revenue for licensed activity remains 10.5%, but the regulations remove the language discounting that amount by 2% for licensed activity occurring on or before December 31, 2007. The proposed regulations add confidentiality language protecting a licensee’s statement of account. For calculating minimum royalty rates and subscriber-based royalty floors for specific services, the proposed regulations delete language reducing subminimums I and II for an accounting period for licensed activity occurring on or before December 31, 2007.  The regulations also add a new paragraph covering payments to record companies by third parties for providing recording rights to service providers. These regulations explain that third party revenue should be added to the amounts expensed by the service provider for purposes of computation of royalty rates.

Comments are due by June 18, 2012.

For further information, see http://www.loc.gov/crb/fedreg/2012/77fr29259.pdf