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Notice of Intent to Audit

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Copyright Office, Library of Congress.


Public notice.


The Copyright Office of the Library of Congress is announcing receipt of six notices of intent to audit various eligible nonsubscription and new subscription services that transmit sound recordings under statutory licenses. The audits intend to verify statements of account for the year 2005.

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Tanya M. Sandros, General Counsel, P.O. Box 70400, Washington, DC 20024-0977. Telephone: (202) 707-8380. Telefax: (202) 252-3423.

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Section 106(6) of the Copyright Act, title 17 of the United States Code, gives the copyright owner of a sound recording the right to perform a sound recording publicly by means of a digital audio transmission, subject to certain limitations. Among these limitations are certain exemptions and a statutory license which allows for the public performance of sound recordings as part of “eligible nonsubscription transmissions” and digital transmissions made by “new subscription services.”1 17 U.S.C. 114. Moreover, these services may make any necessary ephemeral reproductions to facilitate the digital transmission of a sound recording under a second license set forth in section 112(e) of the Copyright Act. Use of these licenses requires that services make payments of royalty fees to and file reports of sound recording performances with SoundExchange. SoundExchange is a collecting rights entity that was designated by the Librarian of Congress to collect statements of account and royalty fee payments from services and distribute the royalty fees to copyright owners and performers entitled to receive such royalties under sections 112(e) and 114(g) following a proceeding before a Copyright Arbitration Royalty Panel (“CARP”) that set rates for the year 2005. 69 FR 5693 (Feb. 6, 2004). CARP was the entity responsible for setting rates and terms for use of the section 112 and section 114 licenses prior to the passage of the Copyright Royalty and Distribution Reform Act of 2004 (“CRDRA”).

The CRDRA, which became effective on May 31, 2005, amends the Copyright Act, title 17 of the United States Code, by phasing out the CARP system and replacing it with three permanent Copyright Royalty Judges (“CRJs”). Consequently, the CRJs are now responsible for carrying out the functions heretofore performed by the CARPs, including the adjustment of rates and terms for certain statutory licenses such as the section 114 and 112 licenses. However, verification of statements of account for 2005 are still governed by § 262.6 of title 37 of the Code of Federal Regulations, which states that SoundExchange, as the Designated Agent, may conduct a single audit of a Licensee for the purpose of verifying their royalty payments. As a preliminary matter, the Designated Agent is required to submit a notice of its intent to audit a Licensee with the Copyright Office and serve this notice on the service to be audited. 37 CFR 262.6(c).

On June 27, 2008, the Copyright Office received six notices of intent to audit, which were submitted by SoundExchange. The notices announced an intent to audit the following eligible new subscription services for the year 2005: Yahoo!, Inc.; Real Networks, Inc.; and, Ltd. The notices also announced an intent to audit the following eligible nonsubscription transmission services for the year 2005: Yahoo!, Inc.; Real Networks, Inc.; AOL LLC; MTV Networks; Susquehanna Radio Corp.; and, Ltd.2

Section 262.6(c) requires the Copyright Office to publish a notice in the Federal Register within thirty days of receipt of the filing announcing the Designated Agent's intent to conduct an audit. In accordance with this regulation, the Office is publishing today's notice to fulfill this requirement with respect to the notices of intent to audit as received from SoundExchange on June 27, 2008.

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Dated: July 8, 2008

Tanya M. Sandros,

General Counsel.

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1.  An “eligible nonsubscription transmission” is a noninteractive digital audio transmission which, as the name implies, does not require a subscription for receiving the transmission. The transmission must also be made as a part of a service that provides audio programming consisting in whole or in part of performances of sound recordings the primary purpose of which is to provide audio or entertainment programming, but not to sell, advertise, or promote particular goods or services. See 17 U.S.C. 114(j)(6).

A “new subscription service” is “a service that performs sound recordings by means of noninteractive subscription digital audio transmissions and that is not a preexisting subscription or a preexisting satellite digital audio radio service.” 17 U.S.C. 114(j)(8).

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2.  A copy of the Notices of Intent to Audit is posted on the Copyright Office Web site at​carp/​AuditNotices2005.pdf SoundExchange also stated in the notice its intent to audit Ltd. for the calendar years 2006 and 2007. Verification of statements of account for 2006 and 2007 are governed by 37 CFR 380.6 of the CRJs' regulations. See 73 FR 15778 (Mar. 25, 2008).

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[FR Doc. E8-15952 Filed 7-11-08; 8:45 am]