On Friday, the Copyright Royalty Board published in the Federal Register a proposal for changes in its recordkeeping rules – suggesting more detailed requirements for larger webcasters who are required to report the songs that they play on a “census” basis – that would be most webcasters who are required to report the songs that they play, how often they were played, and how many people listened when they were played each time.  Conversely, for the smallest of webcasters, those who pay a “proxy fee” so that they do not have to report the details of how many listeners were listening to each song that was played, the questions asked by the CRB are geared to potentially expanding the universe of those who do not need to report.  Comments are due on June 2, withreplies due on June 16.  Given the potential economic impact that these proposals could have on businesses of all sizes, anyone steaming their music on the Internet and reporting to SoundExchange should carefully consider the details of the Notice of Proposed Rulemaking and whether to submit comments in this proceeding.

The proposals to require more detailed recordkeeping originated from SoundExchange, which filed a Petition for Rulemaking asking that the CRB adopt new rules on a number of issues.  The Board last comprehensively visited this topic in 2009 (see our summary here).  The Board’s Notice of Proposed Recordkeeping poses a number of questions that were raised by SoundExchange, and asks for public comment.  What are these proposals?

The proposals include the following:

  • An obligation for the entity names on Statements of Account (which accompany payments and set out how they were computed) and Reports of Use (which report the songs played and how many people listened to each) to correspond, so that SoundExchange can relate the payment information to the information about the performances that are made by webcasters.
  • Changes in various headers and other information required to be in the reports of use.
  • A requirement that services serve SoundExchange with all Notices of Intent to Use the compulsory license – the form that is supposed to be submitted to the Copyright Office before a service relies on the statutory license (the license under which the service gets access to all of the publically released music in exchange for paying the fees to SoundExchange)
  • Allowing SoundExchange to have flexibility to work with particular services to modify reporting requirements to fit their needs
  • Proposals to require that the Reports of Use not be submitted in the ASCII format, but instead in other formats appropriately identified in the Reports of Use – preferably the UTF-8 format
  • A requirement that services use the ISRC codes for all recordings for which such codes are available – the unique code assigned to each song by various record and digital distribution companies
  • A requirement that services include in their Reports of use reports on tracks that are played, but for which no liability is asserted (e.g. pre-1972 sound recordings or those that have been directly licensed)
  • Allowing SoundExchange to adopt proxies for distributing the money collected where there were insufficient reports of use, without having to seek CRB approval for such proxies (see our article here where SoundExchange had to receive CRB permission to distribute via the use of proxy information). 
  • The imposition of late fees when Reports of Use are not timely submitted, or are submitted with incorrect or insufficient information
  • Requiring that Reports of Use be submitted 30 days after the end of the month, rather than the current 45 days
  • A requirement that each service require any vendors who provide it with streaming or reporting services to provide detailed access to their systems and practices to SoundExchange in connection with an audit of a particular service

SoundExchange proposes various other technical changes to the rules, and some minor changes that it considers “technical.”  All services should carefully review the NPRM to see how the proposed changes would affect them.  Many of these proposals are not new. For instance, in the past, services have argued that ISRC codes are difficult to find, and a rapid adoption of that obligation could require services to update all of their recordkeeping to include ISRC information for all back catalog.  The proposed penalties could also be of obvious concern to webcasters.  Many of the other proposals may also have issues that webcasters technical staffs will discover upon review.

For noncommercial webcasters, regulations that were adopted following the last recordkeeping proceeding exempted certain very small webcasters from having to file anything but information about the aggregate tuning hours of listening to their services plus general playlist information.  Census reporting of all performances – the songs played and the number of people who were listening to each song – was not required for these small nonprofit educational services.  However, the rules stated that such exceptions applied only to noncommercial broadcasters who streamed their signals, not to noncommercial webcasters who had no over-the-air signal.  Two college broadcaster groups, CBI and IBS, ask that the definition be expanded to include all noncommercial webcasters.  See our summary here of the recordkeeping requirements under deals applicable to noncommercial webcasters under two of the Webcasters Settlement Act agreement We note that certain very small broadcasters and commercial webcasters (“microcasters”) have similar exemptions, and may want to file comment on this issue.

Obviously, these proposed technical changes may have important ramifications for many webcasters, so all should review them carefully, and file comments to the extent they do not reflect the realities of the way that business is conducted by the services.