[Federal Register: February 3, 1997 (Volume 62, Number 22)]
[Page 5057-5058]


Copyright Office
[Docket No. 96-4 CARP DPRA]

Digital Phonorecord Delivery Rate Adjustment Proceeding

AGENCY: Copyright Office, Library of Congress.

ACTION: Notice vacating precontroversy discovery schedule and notice of 


SUMMARY: The Library of Congress is vacating the current precontroversy 
discovery schedule and the date for initiating the proceeding to 
determine reasonable rates and terms for digital transmissions that 
constitute a digital phonorecord delivery to allow further 
negotiations. On April 1, 1997, the parties will meet with members of 
the Copyright Office and report on the status of these negotiations.

DATES: The schedule for the digital phonorecord delivery rate 
adjustment proceeding is vacated as of February 3, 1997. On April 1, 
1997, at 10:00 a.m., the Copyright Office will conduct a status meeting 
with all interested parties.

ADDRESSES: The meeting will be held at the Library of Congress, James 
Madison Building, Room LM-414, First and Independence Avenue, SE., 
Washington, DC 20540.

FOR FURTHER INFORMATION CONTACT: William Roberts, Senior Attorney for 
Compulsory Licenses, or Tanya M.

[[Page 5058]]

Sandros, Attorney Advisor, Copyright Arbitration Royalty Panels, P.O. 
Box 70977, Southwest Station, Washington, DC 20024. Telephone: (202) 

SUPPLEMENTARY INFORMATION: The Digital Performance Right in Sound 
Recordings Act of 1995 (``Digital Performance Act''), Public Law No. 
104-39, 109 Stat. 336., confirms and clarifies that the scope of the 
compulsory license to make and distribute phonorecords of nondramatic 
musical compositions includes digital transmissions which constitute 
``digital phonorecord deliveries.'' 17 U.S.C. 115(c)(3). A ``digital 
phonorecord delivery'' is each individual delivery of a phonorecord by 
digital transmission of a sound recording which results in a 
specifically identifiable reproduction by or for any transmission 
recipient. 17 U.S.C. 115(d), 37 CFR 255.4.
    The rate for all digital phonorecord deliveries made or authorized 
under a compulsory license on or before December 31, 1997, is the same 
as the current rate for the making and distribution of physical 
phonorecords: 6.95 cents for each work embodied in a phonorecord, or 
1.3 cents per minute of playing time or fraction thereof, whichever 
amount is larger. 37 CFR 255.5.
    The current rate for digital phonorecord deliveries expires on 
December 31, 1997. Accordingly, in the Digital Performance Act, 
Congress established a two-step process for adjusting the royalty rate, 
a negotiation period wherein the owners and the users attempt to reach 
their own voluntary licenses, and then if necessary, and upon the 
filing of a petition in 1997, the convening of a copyright arbitration 
royalty panel (CARP) to establish rates and terms for those persons who 
are not covered by such voluntary licenses. 17 U.S.C. 115(c)(3) (C) and 
    On July 17, 1996, the Copyright Office published a notice 
initiating a period for the users and owners to negotiate reasonable 
rates and terms for digital transmissions that constitute a digital 
phonorecord delivery. 61 FR 37213 (July 17, 1996). In that notice, the 
Office acknowledged that the Digital Performance Act specified neither 
a date for initiating the negotiation period, nor a date for concluding 
the negotiations and instituting an arbitration proceeding. 
Nevertheless, the expiration of the current rates on December 31, 1997, 
prompted the Office to create a schedule which would have new effective 
rates in place by January 1, 1998. Id.
    The parties with an interest in negotiating the rates and terms for 
the digital phonorecord delivery license established in the Digital 
Performance Act, however, believed that the Office's proposed schedule 
did not provide sufficient time for negotiating a voluntary set of 
rates and terms. Therefore, on November 8, 1996, the Recording Industry 
Association of America, the National Music Publishers' Association, 
Inc., and the Harry Fox Agency, Inc. (collectively, ``the Parties'') 
filed a joint motion with the Library to vacate the scheduled dates 
appearing in the July 17, 1996, Federal Register notice. The Parties 
informed the Office that adherence to the proposed schedule would 
prematurely terminate their efforts to reach a voluntary license. The 
Office announced a new schedule for this proceeding, 61 FR 65243 
(December 11, 1996), which moved the date for the filing of direct 
cases from January 31, 1997, to April 1, 1997.
    In response to the new schedule, the parties requested a meeting 
with the Register of Copyrights to discuss the problems associated with 
negotiating rates and terms for the digital phonorecord delivery 
compulsory license within the proposed time frame. The Copyright Office 
met with representatives of the Recording Industry of America, the 
National Music Publishers' Association, and the Harry Fox Agency, Inc. 
on January 9, 1997. At this meeting, the Parties outlined the 
difficulties in determining rates and terms for use of a new technology 
in a marketplace with little definition or clear direction. The Parties 
indicated that they fully expected to reach a voluntary agreement 
through negotiations over the next few months; however, they believe it 
is not possible to conclude negotiations before April 1, nor to prepare 
adequate direct cases for presentation to an arbitration panel by this 
date in the event the Office chose to proceed with its schedule. At the 
conclusion of the meeting, the Parties asked the Office to reconsider 
their original motion to vacate the schedule and to refrain from 
setting a new schedule while the Parties continue their negotiations.
    Upon further consideration, the Office is granting the Parties' 
request to vacate the announced schedule for this proceeding, thereby 
removing any impediment for constructive negotiations between the users 
and the owners. The setting of the rates and terms for the delivery of 
digital phonorecords is not an open ended process; therefore, the 
Office will continue to monitor the progress of the negotiations 
through periodic status meetings, the first of which is scheduled for 
April 1, 1997.

    Dated: January 27, 1997.
Marybeth Peters,
Register of Copyrights.
[FR Doc. 97-2539 Filed 1-31-97; 8:45 am]