82_FR_59892 82 FR 59652 - Scope of Preexisting Subscription Services

82 FR 59652 - Scope of Preexisting Subscription Services

LIBRARY OF CONGRESS
U.S. Copyright Office

Federal Register Volume 82, Issue 240 (December 15, 2017)

Page Range59652-59660
FR Document2017-27088

The Copyright Royalty Judges referred novel material questions of substantive law to the Register of Copyrights for resolution in connection with the SDARS III proceeding. The Register responded with a written opinion that is reproduced below.

Federal Register, Volume 82 Issue 240 (Friday, December 15, 2017)
[Federal Register Volume 82, Number 240 (Friday, December 15, 2017)]
[Notices]
[Pages 59652-59660]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-27088]


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LIBRARY OF CONGRESS

U.S. Copyright Office

[Docket No. 2017-20]


Scope of Preexisting Subscription Services

AGENCY: U.S. Copyright Office, Library of Congress.

ACTION: Final order.

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SUMMARY: The Copyright Royalty Judges referred novel material questions 
of

[[Page 59653]]

substantive law to the Register of Copyrights for resolution in 
connection with the SDARS III proceeding. The Register responded with a 
written opinion that is reproduced below.

DATES: Opinion dated November 20, 2017.

FOR FURTHER INFORMATION CONTACT: Sarang V. Damle, General Counsel and 
Associate Register of Copyrights, by email at sdam@loc.gov, or Jason E. 
Sloan, Attorney-Advisor, by email at jslo@loc.gov. Each can be 
contacted by telephone by calling (202) 707-8350.

SUPPLEMENTARY INFORMATION: The Copyright Royalty Judges (``CRJs'') are 
tasked with determining and adjusting rates and terms of royalty 
payments for statutory licenses under the Copyright Act. See 17 U.S.C. 
801. If, in the course of proceedings before the CRJs, novel material 
questions of substantive law concerning the interpretation of 
provisions of title 17 arise, the CRJs are required by statute to refer 
those questions to the Register of Copyrights for resolution. 17 U.S.C. 
802(f)(1)(B).
    On October 23, 2017, the CRJs, acting pursuant to 17 U.S.C. 
802(f)(1)(B), referred to the Register novel material questions of 
substantive law in connection with the SDARS III proceeding, Docket No. 
16-CRB-0001 SR/PSSR (2018-2022). The referred questions asked whether a 
preexisting subscription service's transmissions of multiple, unique 
channels of music that are accessible through that entity's website and 
through a mobile application are ``subscription transmissions by 
preexisting subscription services'' for which the CRJs are required to 
determine rates and terms of royalty payments under 17 U.S.C. 
114(f)(1)(A), and, if so, whether there are any conditions a service 
must satisfy to qualify for a license under section 114(f)(1)(A). On 
November 20, 2017, the Register resolved these questions in a 
Memorandum Opinion that she transmitted to the CRJs. To provide the 
public with notice of the decision rendered by the Register, the 
Memorandum Opinion is reproduced in its entirety below.

    Dated: December 6, 2017.
Karyn Temple Claggett,
Acting Register of Copyrights and Director of the U.S. Copyright 
Office.

Before the U.S. Copyright Office, Library of Congress, Washington, DC 
20559

    In the Matter of: DETERMINATION OF ROYALTY RATES AND TERMS FOR 
TRANSMISSION OF SOUND RECORDINGS BY SATELLITE RADIO AND 
``PREEXISTING'' SUBSCRIPTION SERVICES (SDARS III)

Docket No. 16-CRB-0001 SR/PSSR (2018-2022)

MEMORANDUM OPINION ON NOVEL MATERIAL QUESTIONS OF LAW

    The Copyright Royalty Judges (``CRJs'' or ``Judges'') concluded the 
hearing in the above-captioned proceeding with closing arguments of 
counsel on July 18, 2017. In the course of their deliberations, the 
CRJs determined that novel material questions of substantive law arose 
regarding the interpretation of provisions of the Copyright Act and, as 
required under 17 U.S.C. 802(f)(1)(B), referred them to the Register of 
Copyrights for resolution. The questions were referred to the Register 
by the CRJs on October 23, 2017. The Register's determination follows.

I. Background

A. Statutory Background

    In 1995, Congress enacted the Digital Performance Right in Sound 
Recordings Act of 1995 (``DPRSRA''),\1\ recognizing the exclusive right 
of copyright owners to perform sound recordings ``publicly by means of 
a digital audio transmission.'' \2\ The DPRSRA also established a 
statutory license to allow certain noninteractive digital audio 
services to make such performances of sound recordings, provided the 
services pay a royalty fee and comply with the terms of the license. 
Under the DPRSRA, nonexempt subscription transmissions were subject to 
statutory licensing if they satisfied certain requirements, and the 
royalty rates and terms for the statutory license were to be set in 
accordance with the objectives set forth in 17 U.S.C. 801(b)(1).\3\
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    \1\ Public Law 104-39, 109 Stat. 336 (1995).
    \2\ 17 U.S.C. 106(6).
    \3\ Section 801(b)(1) provides that the rates ``shall be 
calculated to achieve the following objectives: (A) To maximize the 
availability of creative works to the public. (B) To afford the 
copyright owner a fair return for his or her creative work and the 
copyright user a fair income under existing economic conditions. (C) 
To reflect the relative roles of the copyright owner and the 
copyright user in the product made available to the public with 
respect to relative creative contribution, technological 
contribution, capital investment, cost, risk, and contribution to 
the opening of new markets for creative expression and media for 
their communication. (D) To minimize any disruptive impact on the 
structure of the industries involved and on generally prevailing 
industry practices.'' 17 U.S.C. 801(b)(1).
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    In 1998, the statutory license was amended by the Digital 
Millennium Copyright Act (``DMCA''),\4\ a major goal of which was to 
establish a market-based standard for setting royalty rates paid to 
copyright owners for use of their works under the statutory license.\5\ 
In doing so, Congress drew a distinction between preexisting 
subscription services (``PSSs'') on the one hand and nonsubscription 
services and new subscription services on the other. A ``preexisting 
subscription service'' is defined in 17 U.S.C. 114(j)(11) as:
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    \4\ Public Law 105-304, 112 Stat. 2860 (1998).
    \5\ 71 FR 64639, 64641 (Nov. 3, 2006).

    [A] service that performs sound recordings by means of 
noninteractive audio-only subscription digital audio transmissions, 
which was in existence and was making such transmissions to the 
public for a fee on or before July 31, 1998, and may include a 
limited number of sample channels representative of the subscription 
service that are made available on a nonsubscription basis in order 
to promote the subscription service.\6\
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    \6\ 17 U.S.C. 114(j)(11).

    Section 114 contains two grandfathering provisions that apply to 
PSSs and provide benefits to those services not available to new 
subscription services or nonsubscription services. The first, section 
114(d)(2)(B), preserves the DPRSRA's limited qualifications for 
entitlement to the statutory license, but only for transmissions made 
in the same transmission medium used by the PSS on July 31, 1998. The 
second, to which the referred questions most directly pertain, is the 
grandfathered method of setting royalty rates under section 114(f)(1), 
which applies to a PSS regardless of the transmission medium.
    Under this scheme, PSS transmissions in the same transmission 
medium used on July 31, 1998, are still subject to the DPRSRA's 
requirements under section 114(d)(2)(B) and are to still have royalty 
rates and terms set in accordance with the objectives of section 
801(b)(1).\7\ Nonsubscription services and new subscription services, 
however, are subject to a more expansive set of qualifications under 
section 114(d)(2)(C), and are to have their royalty rates and terms set 
to reflect those that ``would have been negotiated in the marketplace 
between a willing buyer and a willing seller.'' \8\ PSS transmissions 
made in a new transmission medium are subject to the more expansive set 
of qualifications under section 114(d)(2)(C) imposed on nonsubscription 
and new subscription services.\9\
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    \7\ See id. at 114(d)(2)(B), (f)(1).
    \8\ See id. at 114(d)(2)(C), (f)(2).
    \9\ Id. at 114(d)(2)(C).
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    The Register has explained that ``the rationale for [section 114's] 
grandfathering provisions is to `prevent disruption of the existing 
operations by

[[Page 59654]]

[preexisting subscription] services.' '' \10\ In discussing the 
legislative history explaining the objectives of the grandfathering 
provisions, the Register elaborated:
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    \10\ 71 FR at 64641 (quoting H.R. Rep. No. 105-796, at 81 (1998) 
(Conf. Rep.)); accord SoundExchange, Inc. v. Muzak LLC, 854 F.3d 
713, 719 (D.C. Cir. 2017) (``The grandfather provisions were 
intended to protect prior investments the three [PSS] business 
entities had made during a more favorable pre-1998 rate-setting 
regulatory climate.'').

    While it would appear . . . that Congress's purpose in 
grandfathering these services was to preserve a particular program 
offering, it was not its only purpose or even necessarily its major 
goal. The Conference Report also makes clear that Congress 
distinguished between preexisting subscription services and new 
subscription services as a way to prevent disruption of the existing 
operations of the services that were in existence and operating 
before July 31, 1998. It understood that the entities so designated 
as preexisting had invested a great deal of resources into 
developing their services under the terms established in 1995 as 
part of the Digital Performance Right in Sound Recording Act of 
1995, and that those services deserved to develop their businesses 
accordingly.\11\
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    \11\ 71 FR at 64645 (internal citation omitted).

B. Procedural History

    The instant proceeding will establish royalty rates and terms for 
PSSs' (as well as preexisting satellite digital audio radio services') 
digital performance of sound recordings and the making of ephemeral 
recordings under the statutory licenses set forth in sections 112(e) 
and 114(f)(1) of the Copyright Act. Music Choice is the only PSS that 
participated in the current rate-setting proceedings. The CRJs explain 
that the referred questions arose in this proceeding because 
SoundExchange, Inc.,\12\ for the first time, is seeking two separate 
royalty payments from PSSs: (1) For all licensed transmissions and 
related ephemeral recordings through a television-based service 
qualifying as a PSS, SoundExchange requests a per-subscriber, per-month 
royalty; and (2) for all licensed transmissions and related ephemeral 
recordings through an internet streaming service qualifying as a PSS 
(or any similar service capable of tracking the individual sound 
recordings received by any particular consumer and qualifying as a 
PSS), SoundExchange seeks a per-performance royalty fee that is the 
same as commercial webcasters are currently required to pay under 37 
CFR 380.10 (or, in the alternative, a royalty based on aggregate tuning 
hours for a PSS that does not have the technological capability to 
track individual performances).\13\ The parties dispute whether it is 
necessary for the CRJs to decide whether Music Choice's internet and 
mobile transmissions qualify as part of its PSS.\14\
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    \12\ SoundExchange appears in this proceeding on behalf of the 
American Association of Independent Music; the American Federation 
of Musicians of the United States and Canada; the Recording Industry 
Association of America; the Screen Actors Guild and American 
Federation of Television and Radio Artists; Sony Music 
Entertainment; Universal Music Group; and Warner Music Group. 
Referral Order at 2 n.4.
    \13\ Id. at 2-3.
    \14\ Id. at 3.
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    In response to this dispute, the CRJs found that ``consideration of 
the appropriate royalty rates and terms for a PSS's digital audio 
transmissions through a website or mobile application in which the PSS 
streams a variable number of unique channels of music presents a novel 
material question of substantive law,'' and referred the following 
questions to the Register pursuant to 17 U.S.C. 802(f)(1)(B):

    1. Are a preexisting subscription service's transmissions of 
multiple, unique channels of music that are accessible through that 
entity's website and through a mobile application ``subscription 
transmissions by preexisting subscription services'' for which the 
Judges are required to determine rates and terms of royalty payments 
under Section 114(f)(1)(A) of the Copyright Act?
    2. If yes, what conditions, if any, must the PSS meet with 
regard to streaming channels to qualify for a license under Section 
114(f)(1)(A)? For example, must the streamed stations be identical 
to counterpart stations made available through cable television? Is 
there a limitation on the number of channels that the PSS may 
stream? Is there a limitation on the number or type of customers 
that may access the website or the mobile application? \15\
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    \15\ Id. at 3-4. Section 802(f)(1)(B) provides that ``[i]n any 
case in which a novel material question of substantive law 
concerning an interpretation of those provisions of [title 17] that 
are the subject of the proceeding is presented, the Copyright 
Royalty Judges shall request a decision of the Register of 
Copyrights, in writing, to resolve such novel question.'' 17 U.S.C. 
802(f)(1)(B).
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II. Summary of the Parties' Arguments

A. Music Choice's Position

    Music Choice argues that the statutory language, legislative 
history, and factual record all support its position that its internet 
transmissions are part of its PSS and subject to section 114(f)(1). 
Music Choice begins by disputing, as a factual matter, the claim that 
its internet transmissions are an ``expansion'' of its service into a 
new medium--which it perceives as the premise for the CRJs' referred 
questions--on the grounds that its ``internet transmissions are merely 
an ancillary part of its residential audio service,'' the value of its 
internet transmissions ``has always been included in the bundled per-
subscriber fee,'' and ``the undisputed evidence establishes that Music 
Choice has been providing its subscribers with internet-based access to 
its audio channels since 1996, long before the PSS license was created 
in the DMCA, and has always included these internet transmissions as a 
part of its PSS since that time.'' \16\ Music Choice also disputes 
SoundExchange's claim that webcasting was becoming an ``increasingly 
important part'' of its business, claiming that record evidence shows 
that ``usage of Music Choice's internet transmissions has consistently 
remained at de minimis levels, and today comprises less than one 
hundredth of one percent of Music Choice's overall audio channel 
usage.'' \17\ Music Choice contends that, in any event, because it was 
making internet transmissions prior to the codification of the PSS 
definition in section 114(j)(11), ``[u]nder any reasonable 
interpretation of [the] statutory language, Music Choice's internet 
transmissions fall squarely within the definition of a PSS.'' \18\
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    \16\ Music Choice Brief at 1-2, 4-5.
    \17\ Id. at 6.
    \18\ Id. at 18-19, 30.
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    Music Choice also argues that even if its internet transmissions 
did constitute an expansion of its services to a new medium, such 
expansion is permitted and ``would not require any new, additional 
license fee or rate.'' \19\ Music Choice contends that in 
grandfathering the existing three PSSs, Congress sought to protect 
their ``need for access to the works at a price that would not hamper 
their growth'' and did not ``intend[] to limit PSS status to the PSS 
offerings as they existed in 1998 or otherwise freeze the PSS in 
time.'' \20\ Music Choice claims that ``Congress's intent to provide 
the PSS with long-term protection is further evinced by the absence of 
any sunset provision anywhere in the statutory language or discussion 
of such a provision in the legislative history'' \21\ and argues that 
in enacting the DMCA, ``the overarching intent of Congress was 
decidedly not to move the entire market to marketplace rates,'' but 
rather ``to protect the PSS' unique business expectancies.'' \22\
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    \19\ Id. at 2, 30.
    \20\ Id. at 14, 19-23.
    \21\ Id. at 15.
    \22\ Id. at 16-17.
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    Citing to Congress's discussion in the DMCA Conference Report, 
Music Choice asserts that Congress created a ``unique feature of the 
PSS license that allows a PSS to expand into new services in new 
transmission media while retaining PSS status for those new services, 
so long as the new service is similar in character to the original PSS

[[Page 59655]]

offering, i.e., does not take advantage of unique features of the new 
medium to provide a different listening experience or interactivity 
while listening to the audio channel.'' \23\ Music Choice further 
explains that ``[a]lthough Congress did not intend to allow the PSS to 
create fundamentally different types of services, with fundamentally 
different types of content or interactive audio functionality . . . , 
it did intend to allow the PSS to continue their development, 
evolution, and growth of their non-interactive, subscription audio 
services.'' \24\ Thus, Music Choice argues that ``there is no statutory 
requirement that a PSS offer the exact same channels to all of its 
subscribers or through each of its different transmission media,'' \25\ 
and ``there is no hint in the statute or the legislative history of any 
intent to impose restrictions on the number of channels that may be 
provided . . . or the number or type of subscribers that Music Choice 
may serve.'' \26\ Music Choice specifically argues that section 114 
cannot be read to require the same exact channels in a new transmission 
medium as it offers in its original medium because the statute 
``expressly acknowledges that the programming of a PSS's transmissions 
in a new medium may be different than those in the original medium, and 
in some instances requires that they be programmed differently.'' \27\ 
More generally, Music Choice asserts that its internet transmissions 
are permissible because they ``do not take advantage of the internet's 
technological capabilities,'' providing several fact-based arguments 
for why its internet service is comparable to its television 
service.\28\
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    \23\ Id. at 15, 17, 23-25.
    \24\ Id. at 24-25, 30.
    \25\ Id. at 19, 27. Music Choice specifically notes that, ``of 
the 75 channels available through the internet, 50 of those are 
identical to the channels broadcast over the television'' and the 
``additional 25 are identical to the television channels in every 
way except the genre or sub-genre in which they are programmed.'' 
Id. at 19.
    \26\ Id. at 2.
    \27\ Id. at 27.
    \28\ Id. at 25-26.
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    Music Choice rests its argument in part on the U.S. Court of 
Appeals for the District of Columbia Circuit's recent opinion in 
SoundExchange, Inc. v. Muzak LLC, which held that a music service 
acquired by Muzak was not entitled to the grandfathered rate that 
applied to its preexisting subscription service.\29\ Music Choice 
claims that this decision ``demonstrate[s] that the PSS definition was 
not intended to freeze the PSS in time, nor limit PSS status to 
channels (or customers) that are exactly the same as the channels that 
were transmitted in 1998 (or the customers who received them at that 
time)'' and that ``any rule limiting PSS status to internet-based 
channels that are exactly the same as those transmitted through cable 
or satellite, or limiting the number of channels that may be provided 
by a PSS, would be inconsistent with [the court's] interpretation of 
the PSS definition.'' \30\ Music Choice concludes that it would be 
contrary to the court's interpretation of the PSS definition to limit 
``the expansion of a PSS's service under the same brand'' beyond the 
limitation ``that the service must remain within the general category 
of transmissions identified in the . . . definition: noninteractive 
audio-only subscription digital audio transmissions made by an entity 
that was in existence and making that category of transmissions on or 
before July 31, 1998.'' \31\
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    \29\ 854 F.3d at 719.
    \30\ Music Choice Brief at 21.
    \31\ Id. 29-30 (internal quotation marks omitted).
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B. SoundExchange's Position

    SoundExchange argues that the CRJs should set ``distinct statutory 
royalty rates for delivery of a PSS to television sets and for any 
webcasting that is provided as part of a PSS,'' with the rate for 
webcasting that is part of a PSS set ``at the same level as the 
statutory rate for other subscription webcasters, because Music 
Choice's webcasting is equivalent to that provided by other webcasting 
services, and competes with other webcasting services.'' \32\ 
SoundExchange argues that this position responds to the ``rapid growth 
in Music Choice's webcasting,'' which it asserts is demonstrated by 
record evidence it describes regarding Music Choice's mobile 
application and website and how Music Choice's internet transmissions 
differ from its television-based service.\33\
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    \32\ SoundExchange Brief at 5.
    \33\ Id. at 2-5.
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    Pointing to the same discussion in the DMCA Conference Report 
referenced by Music Choice, SoundExchange argues that ``Congressional 
intent was to limit the grandfathering of the PSS to transmissions 
similar to the cable or satellite service offerings their providers 
offered on July 31, 1998,'' meaning that PSS status ``extends to a 
qualifying entity's cable and satellite offerings as they existed at 
July 31, 1998 . . . and also may extend to a qualifying entity's 
transmissions in a new medium such as the internet, if the 
transmissions are sufficiently similar to the 1998 offerings.'' \34\ 
SoundExchange contends that assessing similarity ``is a fact-intensive 
inquiry that requires comparison of a PSS provider's new offering with 
the provider's 1998 offerings,'' and that ``[i]t is not enough to 
consider only whether a qualifying entity's new offerings makes 
noninteractive audio-only subscription digital audio transmissions,'' 
but rather, ``it is necessary to consider the medium used, and the 
functionality and content provided, in the new offerings.'' \35\ 
SoundExchange claims that ``Congress gave no indication that . . . a 
PSS provider should enjoy PSS rates if it provided an offering 
different from its 1998 offering in a new medium.'' \36\ SoundExchange 
interprets the legislative history to suggest that Congress 
``grandfathered the PSS to protect investments that qualifying entities 
had already made at the time the DMCA was under consideration in 
1998.'' \37\ SoundExchange understands the D.C. Circuit's decision in 
SoundExchange to be consistent with its interpretation of the 
legislative history.\38\
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    \34\ Id. at 9-10.
    \35\ Id. at 10.
    \36\ Id. at 11.
    \37\ Id.
    \38\ Id. 11-12.
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    SoundExchange argues that the PSS definition must be construed 
narrowly, particularly in the case of webcasting given that 
``[i]nternet-based streaming services are a rapidly-growing means of 
music consumption,'' and ``webcasting by a PSS provider competes with 
webcasting by services that are currently paying for their use of sound 
recordings at much higher royalty rates.'' \39\ Such an interpretation, 
SoundExchange claims, would ``ensure that webcasters compete on level 
terms, eliminating distortions in the market and effectuating the 
Congressional intent to shift rates towards those that reflect arms-
length market transactions.'' \40\
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    \39\ Id. at 12.
    \40\ Id. at 12-13.
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    SoundExchange further argues that, ``[a]s a matter of law,'' 
``webcast transmissions made through a mobile app, or through a version 
of a provider's website that has been optimized for display using the 
browser on a mobile device, are not transmissions by a PSS for which 
the Judges are to set rates and terms under Section 114(f)(1).'' \41\ 
SoundExchange contends that the PSSs' ``1998 offerings were residential 
offerings delivered by means of cable or satellite to fixed points in 
subscribers' homes,'' while ``[t]he Internet and the wireless networks 
that are used to deliver service to mobile devices are a different 
medium than the PSS used in

[[Page 59656]]

1998.'' \42\ Furthermore, SoundExchange contends that mobile services 
``take[ ] advantage of the capability of wireless networks to provide 
portability, allowing listeners to access music anytime and virtually 
anywhere'' as well as offering ``different opportunities for user 
interaction and navigation'' that ``provide a very different user 
experience than the stereo receivers and television sets that could 
receive the PSS' 1998 offerings.'' \43\
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    \41\ Id. at 13.
    \42\ Id.
    \43\ Id. at 13-14.
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    While SoundExchange claims that internet streaming channels could 
qualify as part of a PSS, so long as it is ``sufficiently similar to 
the provider's 1998 offerings,'' SoundExchange asserts that this 
standard requires that the ``PSS provider's webcast channels [to] be 
identical to counterpart stations made available through cable 
television'' in order to qualify for a rate set under section 
114(f)(1), as a service offering internet-only channels would lack 
sufficient similarity to the PSS' 1998 offerings which did not include 
any internet-only offerings.\44\ SoundExchange argues that a PSS's 
internet transmissions are similarly disqualified if the ``number of 
webcasting channels is [not] sufficiently similar to the provider's 
pre-1998 offerings.'' \45\ SoundExchange further contends that the 
number and type of subscribers to the transmission must also be 
substantially similar, and that a PSS cannot include video programming 
``other than video related to the service or recording being 
performed'' in order for its webcasting service to qualify as a 
PSS.\46\ SoundExchange also asserts that ``[a] trier of fact may also 
consider other factors that bear on similarity of the service 
offerings, including any differences between Internet-based platforms 
and cable- and satellite-based platforms.'' \47\
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    \44\ Id. at 15-16.
    \45\ Id. 16-17.
    \46\ Id. 17-18.
    \47\ Id. at 17.
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III. Register's Determination

    Although the parties' briefs discuss at length the factual nature 
of Music Choice's particular internet transmissions, questions of fact 
are beyond the scope of the Register's inquiry under section 
802(f)(1)(B). Thus, without judging the facts as they may pertain to 
Music Choice (or any other PSS), and having considered the relevant 
statutory language, legislative history, and the input from the 
parties, the Register determines that transmissions by a PSS entity 
that are accessible to a cable or satellite television subscriber 
through that entity's website and through a mobile application can be 
``subscription transmissions by preexisting subscription services'' for 
which the CRJs must determine rates and terms of royalty payments under 
section 114(f)(1)(A), but only if such transmissions are sufficiently 
similar to the transmissions made to those subscribers via the entity's 
preexisting residential cable or satellite music service.

A. Legal Standard

    Before addressing the appropriate legal standard for determining 
whether a particular subscription transmission by a preexisting 
subscription service is subject to the grandfathered method of setting 
royalty rates for such service offerings under section 114(f)(1), the 
Register makes a few threshold points about the statute.
    First, in analyzing the grandfathering provisions, the Register 
interprets them narrowly.\48\
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    \48\ See 71 FR at 64646; accord SoundExchange, 854 F.3d at 719.
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    Second, as the Register has previously held, the definition of 
``preexisting subscription service'' in section 114(j)(11) can pertain 
to both the business entity operating a service offering and the 
service offering itself.\49\ The D.C. Circuit recently agreed with the 
Register that ``the word `service,' as used both in the statute as well 
as the legislative history, sometimes referred to the business entity 
and sometimes the program offerings.'' \50\ For clarity's sake, the 
Register generally refers below to a ``PSS entity'' or a ``PSS 
offering'' to distinguish between a preexisting business itself and a 
specific preexisting program offering by such business.
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    \49\ 71 FR at 64646, 64647 (``In construing the statutory 
language together with the legislative history, the logical 
conclusion is that Congress did use the term `service' to mean both 
the program offerings made on a subscription basis to the public and 
the business entity that secures the license to make the 
subscription transmissions.'').
    \50\ SoundExchange, 854 F.3d at 718.
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    Third, as a corollary to the second point, the Register concurs 
with the D.C. Circuit's holding that, under the grandfathering 
provisions, ``the term `service' contemplates a double limitation; both 
the business and the program offering must qualify before the 
transmissions are eligible for the favorable rate.'' \51\ Indeed, 
Congress was clear that not every subscription transmission made by a 
PSS entity is subject to section 114(f)(1).\52\ Thus, as used in 
section 114(f)(1)(A), ``subscription transmissions by preexisting 
subscription services'' must refer only to the PSS offerings made by a 
PSS entity, rather than referring to all subscription transmissions 
made by a PSS entity.
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    \51\ See id. at 719.
    \52\ See H.R. Rep. No. 105-796, at 84-85 (explaining that 
section 114(f)(2) applies to ``subscription transmissions made by a 
preexisting subscription service other than those that qualify under 
subsection (f)(1)'' in addition to new subscription services and 
eligible nonsubscription transmissions). Similarly, previous 
statements made by the Register that preexisting subscription 
``services deserved to develop their businesses accordingly'' 
pertained to the businesses of the pre-July 31, 1998 PSS offerings--
not all businesses engaged in by the PSS entities. See 71 FR at 
64645. For example, later in the same opinion, the Register 
elaborated that while ``Muzak was the pioneer music service that 
incurred both the benefits and risks that came with its investment, 
and one such benefit was its status as a preexisting subscription 
service,'' that benefit only exists ``so long as [Muzak] provided 
its music offerings over [DiSHCD],'' as it did as of July 31, 1998. 
Id. at 64646.
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    Fourth, the Register has previously determined ``that the 
preexisting services must be limited to the three named entities in the 
[DMCA] Conference Report, i.e., DMX (operated by TCI Music), Music 
Choice (operated by Digital Cable Radio Associates), and [DiSHCD] \53\ 
(operated by Muzak).'' \54\ Thus, it is long-settled that these three 
entities are the only PSS entities. What offerings by these entities 
may constitute PSS offerings, however, has continued to be unsettled, 
but is now resolved by this memorandum opinion.\55\
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    \53\ The Register believes that the DMCA Conference Report's 
reference to ``DiSH Network'' was a typo, and that Congress intended 
to refer to Muzak's ``DiSHCD'' service, which was transmitted over 
Echostar's DiSH Network. See Report of the Copyright Arbitration 
Royalty Panel, In re: Determination of Statutory License Terms and 
Rates for Certain Digital Subscription Transmissions of Sound 
Recordings, No. 96-5 CARP DSTRA ] 27 (Nov. 28, 1997) (``CARP 
Report'') (``Muzak . . . began providing . . . digital music under 
the name DiSH CD, as part of Echostar's satellite-based DiSH 
Network.''); 63 FR 25394, 25395 (May 8, 1998) (same); see also Muzak 
Limited Partnership, Initial Notice of Digital Transmission of Sound 
Recordings under Statutory License (July 2, 1998) (listing the 
service name as ``dishCD'').
    \54\ 71 FR at 64646; see H.R. Rep. No. 105-796, at 81, 85, 89.
    \55\ The D.C. Circuit correctly recognized that the Register's 
previous ``opinion did not address whether those three business 
entities' grandfather status was further limited to the programs 
they were offering at the time the statute was passed.'' See 
SoundExchange, 854 F.3d at 718.
---------------------------------------------------------------------------

    Fifth, the Register observes that PSS offerings are not limited 
solely to the offerings made by PSS entities prior to July 31, 1998. 
Rather, the statute and legislative history both confirm that Congress 
intended for PSS entities to be able to expand their service offerings 
to some limited extent and still have those service offerings be 
considered PSS offerings. Two provisions of the statute

[[Page 59657]]

in particular reflect this congressional intent. Section 114(d)(2)(C) 
sets out more expansive qualifications for the statutory license for 
transmissions made by a PSS ``other than in the same transmission 
medium used by such service on July 31, 1998.'' In other words, 
Congress suggested that a PSS could deliver its offering in a new 
transmission medium without affecting its status as a PSS offering. 
Section 114(f)(1)(C), in turn, provides for an out-of-cycle rate 
proceeding to be held where ``a new type of subscription digital audio 
transmission service on which sound recordings are performed is or is 
about to become operational.'' The statute further makes clear that 
this rate proceeding is to be conducted with reference to the 
grandfathered rate standard. Such a provision would be unnecessary if 
PSS offerings were limited to the exact offerings made in 1998; there 
would never be a ``new type of . . . service.''
    Thus, the ultimate question is whether a particular program 
offering by a PSS entity qualifies as a PSS offering within the meaning 
of section 114(j)(11), and is therefore subject to the grandfathered 
rate standard under section 114(f)(1). The DMCA Conference Report 
provides particularly helpful guidance in answering this question 
concerning section 114(f)(1):

    In grandfathering these services, the conferee's objective was 
to limit the grandfather to their existing services in the same 
transmission medium and to any new services in a new transmission 
medium where only transmissions similar to their existing service 
are provided. Thus, if a cable subscription music service making 
transmissions on July 31, 1998, were to offer the same music service 
through the Internet, then such Internet service would be considered 
part of a preexisting subscription service. If, however, a 
subscription service making transmissions on July 31, 1998, were to 
offer a new service either in the same or new transmission medium by 
taking advantages of the capabilities of that medium, such new 
service would not qualify as a preexisting subscription service.\56\
---------------------------------------------------------------------------

    \56\ H.R. Rep. No. 105-796, at 89.

    This passage, consistent with the statutory language in sections 
114(d)(2) and 114(f), demonstrates Congress's intent to distinguish 
among three different possibilities:
    1. A service offering identified by Congress as being a PSS 
offering as of July 31, 1998, that is still offered today in the same 
transmission medium identified by Congress in 1998 (referred to here as 
an ``existing service offering'').\57\ Such a service offering would be 
entitled to both a rate established under the grandfathered rate 
standard under section 114(f)(1) and the grandfathered license 
requirements in section 114(d)(2)(B).
---------------------------------------------------------------------------

    \57\ See id. (grandfathered services can be ``existing services 
in the same transmission medium'').
---------------------------------------------------------------------------

    2. A service offering identified by Congress as being a PSS 
offering as of July 31, 1998, that is still offered today, but in a 
different transmission medium than the one identified by Congress in 
1998, where only transmissions similar to the existing service offering 
are provided (referred to here as an ``expanded service 
offering'').\58\ Such a service offering would be entitled to a rate 
established under the grandfathered rate standard under section 
114(f)(1), but would not be able to take advantage of the grandfathered 
license requirements in section 114(d)(2)(B). Instead, it would be 
required to comply with more detailed license requirements in section 
114(d)(2)(C).
---------------------------------------------------------------------------

    \58\ See id. (grandfathered services can be ``new services in a 
new transmission medium where only transmissions similar to their 
existing service are provided''). While the Conference Report refers 
to ``new services,'' in the next sentence, it provides an example of 
a ``cable . . . service'' expanding into an ``Internet service'' by 
``offer[ing] the same music service through the Internet.'' See id. 
Thus, in context, such services are what the Register has here 
called ``expanded services,'' and are not meant to encompass wholly 
new services that are unrelated to an existing service offering. By 
the same logic, other references in the statute and legislative 
history to ``new'' service offerings should be similarly interpreted 
as being what is referred to here as expanded service offerings. 
See, e.g., 17 U.S.C. 114(f)(1)(C) (permitting out-of-cycle rate-
setting proceedings for a ``new type of . . . service'').
---------------------------------------------------------------------------

    3. A service offering that is not an existing service offering or 
an expanded service offering (referred to here as a ``different service 
offering'').\59\ This would include any offering that is insufficiently 
similar to an existing service offering to be considered an expanded 
service offering. A different service offering would not be entitled to 
either a rate established under the grandfathered rate standard under 
section 114(f)(1) or the grandfathered license requirements in section 
114(d)(2)(B). Instead, the rate would be set under the willing buyer/
willing seller standard in section 114(f)(2), and would be required to 
comply with the license requirements in section 114(d)(2)(C).
---------------------------------------------------------------------------

    \59\ See H.R. Rep. No. 105-796, at 89 (grandfathering 
``limit[ed]'' to ``existing services in the same transmission medium 
and to any new services in a new transmission medium where only 
transmissions similar to their existing service are provided'') 
(emphasis added).
---------------------------------------------------------------------------

    These categorizations presume that a service is eligible for the 
section 114 license. The purpose of separating them into these groups 
is to determine whether the rate for a service is determined pursuant 
to section 114(f)(1) or section 114(f)(2). Thus, if a PSS entity began 
offering, for example, an interactive service, it would not fall into 
one of these categories, as it is ineligible for the statutory license. 
The following sections describe the types of service offerings that 
fall within these three categories.
1. Existing Service Offerings
    Implicit in the Register's previous determination that the only PSS 
entities are the three entities Congress named in the DMCA Conference 
Report,\60\ is that, as a matter of law, the service offerings that 
Congress sought to identify as PSS offerings as of July 31, 1998, were 
the ones offered by those entities prior to that date. The legislative 
history makes clear that Congress further intended to limit what it 
identified as a PSS offering at that time to the PSS entities' 
offerings in the specific transmission media affirmatively identified 
in the DMCA Conference Report: ``cable'' or ``satellite'' for DMX and 
Music Choice, and ``satellite'' for DiSHCD.\61\ Thus, to qualify as an 
``existing service offering,'' the service must not only have existed 
as of July 31, 1998, but it must have also been providing its offering 
in the specific transmission media identified by Congress.
---------------------------------------------------------------------------

    \60\ See 71 FR at 64646.
    \61\ See H.R. Rep. No. 105-796, at 89 (``As of July 31, 1998, 
DMX and Music Choice made transmissions via both cable and satellite 
media; the [DiSHCD service] was available only via satellite.'').
---------------------------------------------------------------------------

    Music Choice urges that it was already making internet 
transmissions of its subscription music service as of July 31, 
1998.\62\ In so doing, it is effectively asking for its current 
internet transmissions to be treated as an ``existing service 
offering'' under the rubric set forth above. But even assuming Music 
Choice, or another service, were making such pre-1998 internet 
transmissions,\63\ it was clearly to an inconsequential degree: Any 
such transmissions were entirely unacknowledged by the Copyright 
Arbitration Royalty Panel (``CARP''), in setting royalty rates for the 
statutory license under the DPRSRA; the Librarian of Congress and the 
Register of Copyrights, in reviewing that CARP decision; and Congress, 
in enacting the DMCA in 1998. The CARP report describes the three PSSs 
at length and, notably, makes an explicit finding of fact that the 
services are the ``only three digital audio music subscription

[[Page 59658]]

services available to residential subscribers in the United States'' 
and that they ``offer their digital music via satellite, or cable, or 
both,'' making no mention of any internet retransmissions.\64\ In 
comprehensively reviewing the CARP report and adopting rates and terms 
for PSSs, the Register of Copyrights and the Librarian of Congress made 
no mention of any internet transmissions by those PSS entities.\65\ To 
the contrary, that decision concluded that the PSSs ``face new 
competition from the internet.'' \66\ These factual findings are 
further reflected in the DMCA Conference Report, where Congress clearly 
identified the three qualifying services and only described them as 
making transmissions via cable and/or satellite media.\67\ Given this 
background, it is highly improbable that Congress would have intended, 
sub silentio, to treat internet transmissions as subject to the 
grandfathering provision under section 114(d)(2)(B).
---------------------------------------------------------------------------

    \62\ Music Choice Brief at 1-2, 4-6, 18-19, 30.
    \63\ The Register notes that the only apparent evidence offered 
by Music Choice of such pre-1998 internet transmissions is the 
testimony of Music Choice CEO David Del Beccaro. See id. at 5.
    \64\ CARP Report ] 43.
    \65\ See 63 FR 25394.
    \66\ Id. at 25407 (emphasis added).
    \67\ See H.R. Rep. No. 105-796, at 81, 89.
---------------------------------------------------------------------------

    This understanding is strongly reinforced by the new requirements 
Congress added in section 114(d)(2)(C) that webcasting services and new 
subscription services, as well as preexisting subscription services 
other than in the same transmission medium used by such service on July 
31, 1998, had to comply with to qualify for the statutory license. The 
rationale behind the DMCA's amendments to the DPRSRA, including the new 
requirements in section 114(d)(2)(C), was to ``address[] unique 
programming and other issues raised by Internet transmissions.'' \68\ 
If a PSS were permitted to make internet transmissions under the less 
stringent requirements of section 114(d)(2)(B), it would undermine the 
design of this statutory scheme and blur the distinction that Congress 
intended to draw when dividing PSS transmissions between paragraphs (B) 
and (C) based on the transmission medium used on July 31, 1998.\69\
---------------------------------------------------------------------------

    \68\ See Staff of H. Comm. on the Judiciary, 105th Cong., 
Section-By-Section Analysis of H.R. 2281 as Passed by the United 
States House of Representatives on August 4th, 1998, at 50 (Comm. 
Print 1998) (emphasis added); id. at 51 (``At the time the DPRSRA 
was crafted, Internet transmissions were not the focus of Congress' 
efforts.''); see also H.R. Rep. No. 105-796, at 83 (explaining 
explicitly that the reason for one of the new requirements was 
because of ``a disturbing trend on the Internet'' pertaining to the 
``unauthorized performance of sound recordings not yet released for 
broadcast or sale to the public'').
    \69\ See 17 U.S.C. 114(d)(2)(B)-(C); see also H.R. Rep. No. 105-
796, at 89 (indicating that a ``cable subscription music service'' 
that offers ``the same music service through the Internet'' is 
engaged in the delivery of its service ``in a new transmission 
medium'').
---------------------------------------------------------------------------

    Thus, in accordance with the principles of narrow construction 
afforded to grandfathering provisions, the Register finds that, as a 
matter of law, it is irrelevant whether or not Music Choice or another 
PSS entity, to some limited degree, was making transmissions via a 
different medium than those specified in the legislative history on 
July 31, 1998, such as the internet. If such a service was in fact 
doing so, it would not be as part of an existing service offering--any 
such transmissions today would be considered either an expanded service 
offering or a different service offering, depending on the analysis 
described below.
    At the same time, the Register emphasizes that an existing service 
offering can grow and expand significantly within the same transmission 
medium while remaining a PSS offering. The Register has found no 
indication that Congress meant to freeze existing service offerings 
exactly as they were on July 31, 1998, in order for them to continue to 
qualify for the grandfathering provisions. The user interface can be 
updated, certain functionality can be changed, the number of 
subscribers can grow, and channels can be added, subtracted, or 
otherwise changed.\70\ The only restriction is that the existing 
service offering as it is today must be fundamentally the same type of 
offering that it was on July 31, 1998--i.e., it must be a 
noninteractive, residential, cable or satellite digital audio 
transmission subscription service.\71\
---------------------------------------------------------------------------

    \70\ See, e.g., 78 FR 23054, 23085 (Apr. 17, 2013) (increasing 
the royalty rate due to Music Choice's announced intention to 
increase its number of channels from 46 to 300).
    \71\ See 17 U.S.C. 114(j)(11); H.R. Rep. No. 105-796, at 81, 89; 
63 FR at 25414; CARP Report ]] 43-44, 51-78, 109.
---------------------------------------------------------------------------

2. Expanded Service Offerings
    In addition to expanding within its congressionally-recognized 
transmission medium, an existing service offering can also expand to a 
different transmission medium, provided that the subscription 
transmissions are similar.\72\
---------------------------------------------------------------------------

    \72\ See H.R. Rep. No. 105-796, at 89 (the grandfathering covers 
``a new transmission medium [but] where only transmissions similar 
to their existing service are provided''); 71 FR at 64641 (``[A] 
preexisting service does not lose its designation as such in the 
event the service decides to utilize a new transmission medium, 
provided that the subscription transmissions are similar.'') 
(emphasis added).
---------------------------------------------------------------------------

    This expansion, however, is subject to an important threshold 
limitation. For a service offering to qualify as an expanded service 
offering, the PSS entity must continue to operate its existing service 
offering. The basis for the grandfathering provisions is to protect 
existing service offerings and limited direct outgrowths of them. If 
such a limited outgrowth--i.e., an expanded service offering--were to 
exist alone, divorced from the existing service offering, the rationale 
for including them within the existing service offering's grandfather 
protection becomes less tenable. Furthermore, the legislative history 
is explicit that a service offering that is not an existing service 
offering can only be subject to the grandfathering provision if it 
provides ``transmissions similar to their existing service.'' \73\ 
Ascertaining similarity requires comparison, and if a PSS entity 
discontinues its existing service offering, there would be nothing to 
compare against.\74\
---------------------------------------------------------------------------

    \73\ See H.R. Rep. No. 105-796, at 89.
    \74\ In the event that technology evolves such that a PSS 
decides to completely discontinue its cable or satellite service and 
limit its offerings solely to another transmission medium, such as 
the internet, this limitation would act as a type of ``sunset 
provision,'' which, contrary to Music Choice's argument with respect 
to such provisions, demonstrates that Congress did not in fact 
intend for the grandfather status to apply to a service indefinitely 
regardless of the offerings it provides and the way it is 
transmitted.
---------------------------------------------------------------------------

    As Music Choice and SoundExchange agree, in assessing whether a 
service offering is an expanded service offering, and thus qualifies as 
a PSS offering, a comparison must be made between the service offering 
in question and the existing service offering to see if it is 
sufficiently similar. Because, as discussed above, an existing service 
offering can expand over time while remaining a PSS offering, the 
comparison should be made to the existing service offering as it exists 
at the time of the comparison, not, as SoundExchange argues, as it 
existed on July 31, 1998.
    To determine whether or not such a service offering is sufficiently 
similar to the existing service offering, the fact-finder should 
compare the offerings by analyzing certain factors, including but not 
limited to:
    (1) Whether the service offering has a similar effect on displacing 
or promoting sales of phonorecords.\75\
---------------------------------------------------------------------------

    \75\ See 17 U.S.C. 114(f)(2)(B) (providing this as one of the 
examples of criteria to be used in distinguishing among different 
types of non-PSSs).
---------------------------------------------------------------------------

    (2) Whether the quantity and nature of the use of sound recordings 
by the service offering is similar.\76\
---------------------------------------------------------------------------

    \76\ See id. (providing this as one of the examples of criteria 
to be used in distinguishing among different types of non-PSSs).

---------------------------------------------------------------------------

[[Page 59659]]

    (3) Whether the service offering provides similar content to 
similar groups of users.
    (4) Whether the service offering is consumed in a similar manner, 
provides a similar user experience, and has similar form, feel, and 
functionality.
    (5) Whether and to what degree the service offering relates to the 
same pre-July 31, 1998 investments Congress sought to protect.\77\
---------------------------------------------------------------------------

    \77\ See 71 FR at 64641 (``[T]he rationale for [the] 
grandfathering provisions is to `prevent disruption of the existing 
operations by such services.''') (quoting H.R. Rep. No. 105-796, at 
81); SoundExchange, 854 F.3d at 719 (``The grandfather provisions 
were intended to protect prior investments the three [PSS] business 
entities had made during a more favorable pre-1998 rate-setting 
regulatory climate.'').
---------------------------------------------------------------------------

    (6) Whether and to what degree the service offering takes advantage 
of the capabilities of the medium through which it is transmitted 
(i.e., whether and the extent to which differences between the service 
offerings are due to limitations in the existing service offering's 
transmission medium that are not present in the other service 
offering's transmission medium).\78\
---------------------------------------------------------------------------

    \78\ See H.R. Rep. No. 105-796, at 89 (``If . . . a subscription 
service making transmissions on July 31, 1998, were to offer a new 
service either in the same or new transmission medium by taking 
advantages of the capabilities of that medium, such new service 
would not qualify as a preexisting subscription service.'').
---------------------------------------------------------------------------

    Note that even if a service offering is found to be an expanded 
service offering qualifying for the section 114(f)(1) grandfathering 
provision, it would still not be eligible for the section 114(d)(2)(B) 
grandfathering provision by virtue of its being transmitted via a 
different transmission medium. Such an offering would be subject to the 
requirements in section 114(d)(2)(C).
3. Different Service Offerings
    As a matter of law, a wholly different service offering can never 
qualify as a PSS offering because it would not be one of the 
specifically identified pre-July 31, 1998, business operations (i.e., 
the three PSS offerings) Congress sought to protect when it enacted the 
DMCA.\79\ This is true regardless of whether the service offering is 
developed internally or acquired. As the D.C. Circuit recently held, 
the DMCA's amendments to section 114 were ``designed to move the 
industry to market rates,'' and if a PSS entity ``were permitted to pay 
the grandfather rate for transmissions made to customers who subscribed 
to a `service' that was previously provided by [a different, non-PSS 
entity], what would prevent * * * the complete elimination of the 
market-rate regime by [such PSS entity's] acquisitions strategy.'' \80\ 
The Register agrees that ``when [such entity] expands its operations 
and provides additional transmissions to subscribers to a different 
`service,' * * * this is an entirely new investment'' and is not a PSS 
offering.\81\
---------------------------------------------------------------------------

    \79\ See id. at 81, 89; 71 FR at 64641, 64645-46; SoundExchange, 
854 F.3d at 719.
    \80\ SoundExchange, 854 F.3d at 719.
    \81\ See id. (emphasis added). The Register thus agrees with the 
D.C. Circuit's holding that a service offering that is acquired by a 
PSS entity does not qualify as a PSS offering.
---------------------------------------------------------------------------

B. Transmission Medium

    As noted above, the statute and legislative history focus 
extensively on whether a PSS offering is being provided through the 
same or a different ``transmission medium'' than the one identified by 
Congress in 1998, and the analysis above follows Congress's lead in 
that regard. At first blush, one might conclude that Congress intended 
to draw a distinction among the kinds of physical wires or 
radiofrequency channels used to deliver signals from a service to a 
listener--e.g., coaxial cable, optical fiber, radio spectrum. But this 
would not be a proper understanding of the statutory scheme. The 
legislative history makes repeated references to ``cable,'' 
``satellite,'' and the ``internet'' as different ``transmission[] * * * 
media.'' \82\ Congress surely understood that the internet is a layer 
of services that can be reached through a variety of delivery 
mechanisms, for example, through phone lines, satellite signals, and 
optical fiber. Similarly, a ``cable'' service can be transmitted over 
different media, such as coaxial cable, optical fiber, or microwaves--a 
fact Congress explicitly understands.\83\
---------------------------------------------------------------------------

    \82\ See H.R. Rep. No. 105-796, at 81, 89 (referring to 
``transmissions via both cable and satellite media'' and explaining 
that under appropriate circumstances, a ``cable . . . service'' may 
be transmitted ``through the Internet'').
    \83\ Cf. 17 U.S.C. 111(f)(3) (defining a ``cable system'' as, 
among other things, making transmission by ``wires, cables, 
microwave, or other communications channels'').
---------------------------------------------------------------------------

    Thus, for section 114 purposes, the better understanding is that, 
in referring to the ``transmission medium'' in the context of a PSS 
offering, Congress was referring to the basic telecommunications 
service through which that offering is being delivered to the user. For 
example, an existing service offering that on July 31, 1998, was 
delivered to residential cable television subscribers through coaxial 
cable, may today be delivered to such cable television subscribers 
through optical fiber without constituting an expansion to a new 
``transmission medium'' within the meaning of section 114. In other 
words, this service offering would still be an existing service 
offering, rather than an expanded service offering or different service 
offering, because it would still be part of what is traditionally 
considered to be a residential cable television service; this is true 
even though optical fiber may provide certain advantages over coaxial 
cable. By the same token, however, when an existing cable music service 
is made available to cable television subscribers over the internet, it 
is being transmitted through a different transmission medium regardless 
of how the internet is being reached; for section 114 purposes, 
internet service is a different telecommunications service from a 
residential cable service, even if delivered by the same operator 
through the same infrastructure.\84\
---------------------------------------------------------------------------

    \84\ To be clear, this discussion relates to the meaning of 
section 114and should not be construed as having broader application 
to other areas of copyright law, such as the section 111 cable 
retransmission license.
---------------------------------------------------------------------------

C. Application to the Referred Questions

    The CRJs' referral to the Register of Copyrights specifically asked 
how the legal analysis would apply specifically to ``transmissions of 
multiple, unique channels of music that are accessible through that 
entity's website and through a mobile application,'' and the degree to 
which differences between a PSS entity's internet service and its 
existing service in terms of the numbers or types of channels or 
subscribers would result in the exclusion of the internet service from 
a grandfathered rate.\85\ Although ultimately it is not for the 
Register to apply the above-described inquiry to Music Choice's current 
program offerings, the Register offers the following observations about 
transmissions made via the internet and made available on portable 
devices, and general guidance about application of the analysis to the 
scenarios identified in the referral order.
---------------------------------------------------------------------------

    \85\ Referral Order at 3-4.
---------------------------------------------------------------------------

    Under the standard articulated above, the mere fact that a service 
offering is transmitted to cable or satellite television subscribers 
over the internet does not automatically disqualify the service 
offering from being an expanded service offering subject to the 
grandfathered rate standard, so long as the service offering, as a 
factual matter, after considering the factors described above, is 
sufficiently similar to the PSS entity's existing cable or satellite 
service offering.
    In evaluating whether a service offering is ``sufficiently 
similar'' to the PSS entity's existing cable or satellite service 
offering so as to qualify as an

[[Page 59660]]

``expanded service offering,'' the CRJs should consider the degree to 
which making the existing service offering accessible outside the home 
of the subscriber constitutes a fundamental change to the offering. One 
notable fact about PSS offerings in 1998 is that they were all limited 
to listening to music within the subscriber's home. Indeed, in the 
first ratesetting proceeding under the DPRSRA, portable listening does 
not appear to have been considered and the final rate was based on a 
percentage of gross revenues ``resulting from residential services in 
the United States'' \86\--which is how the rate is currently 
calculated.\87\ To be sure, technological developments since that time 
have made it easier to deliver digital audio transmissions outside the 
home (including over mobile networks). But, at least in the cable 
television market, there appears to be a distinction drawn between 
accessing content within the home and accessing that same content 
outside of it.\88\ To be clear, this distinction is one based on the 
location where the PSS offering is consumed, not the type of device on 
which the service is accessed. If the service offering is available 
through an internet-connected smartphone or tablet, but is designed so 
that the service offering will only work when accessed within the 
confines of the subscriber's residence, then it would be within the 
home and more similar to the PSS entity's existing cable or satellite 
service offering.
---------------------------------------------------------------------------

    \86\ See 63 FR at 25414 (to be codified at 37 CFR 260.2(a)) 
(emphasis added); see also CARP Report ] 109 (``The Panel finds that 
the Services are primarily responsible for creating a new media and 
market for digital music subscription services for residential 
consumers.'') (emphasis added). It also bears noting that in the 
last rate proceeding, the CRJs deleted the word ``Residential'' and 
its definition from the rate provision for preexisting satellite 
digital audio radio services because it was argued that ``the 
concept is a confusing artifact of a comparable term used in the PSS 
regulations'' because ``the SDARS service is not primarily 
residential in terms of being delivered to homes and the term 
residential subscriber simply means a subscriber,'' yet the term 
remained for purposes of the PSS rate. 78 FR at 23074-75, 23096, 
23098 (internal quotation marks omitted).
    \87\ 37 CFR 382.3(a).
    \88\ See, e.g., Out of Home--XFINITY Stream App Error Message, 
XFINITY, https://www.xfinity.com/support/xfinity-apps/xfinity-tv-app-unable-to-connect/ (last visited Nov. 17, 2017) (``In order to 
watch live TV or XFINITY On Demand content using the XFINITY Stream 
app, you'll need to be connected to your in-home XFINITY WiFi 
network.'').
---------------------------------------------------------------------------

    As the second referred question specifically asks about differences 
in channel offerings and customers, the Register offers the following 
guidance. In comparing the number and type of channels offered by a 
service offering to an existing service offering, examples of factors 
to consider could include how many additional or fewer channels there 
are, how many channels offer different programming, and how different 
that programming is. One should also consider the reasons why any such 
differences exist. For example, if the service offering in question has 
more channels because of some benefit the internet affords, such as 
greater bandwidth or different contractual arrangements with cable 
operators, then it would be taking advantage of the capabilities of the 
internet as a transmission medium. Depending on the evaluation of the 
other factors discussed above and how much weight is ultimately given 
to the difference in channels in an overall comparison between the 
service offerings, it may or may not be enough to disqualify the 
offering from the grandfathered royalty calculation method. The number 
and type of customers should be similarly compared.
    At the same time, the Register agrees with Music Choice that 
differences in a service offering that directly and solely result from 
the imposition of the section 114(d)(2)(C) requirements that do not 
apply to the existing service offering (which is subject to section 
114(d)(2)(B)), should not alone disqualify it from the grandfathered 
rate. Similarly, minor differences in the user interface necessitated 
by the change in medium also should not alone disqualify the service 
offering, even if they are perceived as an advantage offered by the 
medium. For example, a service offering should not be disqualified from 
being an expanded service offering merely because instead of needing to 
press a button on a remote control, the user can click a mouse or 
navigate using a touch screen. Additionally, minor differences in 
visual presentation, such as having a different aspect ratio or 
displaying less content due to differences in screen size, would not be 
so significant as to disqualify a service offering from being an 
expanded service offering.

D. CRJs' Ability to Set Different Rates

    In closing, the Register briefly notes that, even if a service 
offering qualifies for the grandfathered method of setting rates, the 
CRJs still have the authority under section 114(f)(1)(A) to 
``distinguish among the different types of digital audio transmission 
services . . . in operation.'' Thus, if there are material differences 
between an existing service offering and an expanded service offering, 
the CRJs can set separate rates and terms based on those differences, 
albeit using the section 801(b)(1) standard, and not under the willing 
buyer/willing seller standard under section 114(f)(2).


    November 20, 2017.
Karyn Temple Claggett,
Acting Register of Copyrights and Director of the U.S. Copyright 
Office.
[FR Doc. 2017-27088 Filed 12-14-17; 8:45 am]
 BILLING CODE 1410-30-P



                                                59652                       Federal Register / Vol. 82, No. 240 / Friday, December 15, 2017 / Notices

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                                                established in accordance with                          policy; and (3) advising the Secretary on             INFORMATION CONTACT section by the
                                                provisions of the Federal Advisory                      how the workforce and labor market                    date indicated in the DATES section or
                                                Committee Act (FACA), as amended and                    information system can best support                   transmitting them as email attachments
                                                will act in accordance with the                         workforce development, planning, and                  in PDF format to the email address
                                                applicable provisions of FACA and its                   program development. Additional                       indicated in the FOR FURTHER
                                                implementing regulation. The meeting                    information is available at                           INFORMATION CONTACT section with the
                                                will be open to the public.                             www.doleta.gov/wioa/wiac/.                            subject line ‘‘January 25 2018 WIAC
                                                DATES: The meeting will take place on                      Purpose: The WIAC is currently in the              Meeting Public Statements’’ by the date
                                                Thursday, January 25, 2018, at 2:00 p.m.                process of identifying and reviewing                  indicated in the DATES section.
                                                EST and conclude no later than 5:00                     issues and aspects of the WLMI system                 Submitters may include their name and
                                                p.m. EST. Public statements and                         and statewide systems that comprise the               contact information in a cover letter for
                                                requests for special accommodations or                  nationwide system and how the                         mailed statements or in the body of the
                                                to address the Advisory Council must be                 Department and the States will                        email for statements transmitted
                                                received by January 18, 2018.                           cooperate in the management of those                  electronically. Relevant statements
                                                ADDRESSES: The meeting will be held                     systems. As part of this process, the                 received before the date indicated in the
                                                virtually at https://                                   Advisory Council meets to gather                      DATES section will be included in the
                                                meet617368056.adobeconnect.com/                         information and to engage in                          record of the meeting. No deletions,
                                                wiac25/ or call 800–201–5203 and use                    deliberative and planning activities to               modifications, or redactions will be
                                                conference code 333372. If problems                     facilitate the development and provision              made to statements received, as they are
                                                arise accessing the meeting, please                     of its recommendations to the Secretary               public records. Please do not include
                                                contact Michelle Serrano by telephone                   in a timely manner.                                   personally identifiable information (PII)
                                                                                                           Agenda: Members will achieve                       in your public statement.
                                                at 336–577–5334 or email at mserrano@
                                                                                                        concensus on and finalize subcommittee                   Requests to Address the Advisory
                                                theinsgroup.com.
                                                                                                        and full-committee recommendations                    Council: Members of the public or
                                                FOR FURTHER INFORMATION CONTACT:                        for the Secretary. The committee may
                                                Steven Rietzke, Chief, Division of                                                                            representatives of organizations wishing
                                                                                                        hear general information from subject                 to address the Advisory Council should
                                                National Programs, Tools, and                           matter experts in BLS and ETA.
                                                Technical Assistance, Employment and                                                                          forward their requests to the contact
                                                                                                           The Advisory Council will open the
                                                Training Administration, U.S.                                                                                 indicated in the FOR FURTHER
                                                                                                        floor for public comment periodically.
                                                Department of Labor, Room C–4510, 200                                                                         INFORMATION CONTACT section, or contact
                                                                                                        The first opportunity for public
                                                Constitution Ave. NW, Washington, DC                                                                          the same by phone, by the date
                                                                                                        comment is expected to be at 3:00 p.m.
                                                20210; Telephone: 202–693–3912. Mr.                                                                           indicated in the DATES section. Oral
                                                                                                        EST; however, that time may change at
                                                Rietzke is the Designated Federal Officer               the WIAC chair’s discretion. Once the                 presentations will be limited to 10
                                                for the WIAC.                                           member discussion, public comment                     minutes, time permitting, and shall
                                                SUPPLEMENTARY INFORMATION:                              period, and discussion of next steps and              proceed at the discretion of the Council
                                                   Background: The WIAC is an                           new business has concluded, the                       chair. Individuals with disabilities, or
                                                important component of the Workforce                    meeting will adjourn. The WIAC does                   others, who need special
                                                Innovation and Opportunity Act. The                     not anticipate the meeting lasting past               accommodations, should indicate their
                                                WIAC is a Federal Advisory Committee                    5:00 p.m. EST.                                        needs along with their request.
                                                of workforce and labor market                              The full agenda for the meeting, and               Rosemary Lahasky,
                                                information experts representing a                      changes or updates to the agenda, will                Deputy Assistant Secretary for Employment
                                                broad range of national, State, and local               be posted on the WIAC’s web page,                     and Training Administration.
                                                data and information users and                          www.doleta.gov/wioa/wiac/.                            [FR Doc. 2017–27107 Filed 12–14–17; 8:45 am]
                                                producers. The purpose of the WIAC is                      Attending the meeting: Members of                  BILLING CODE 4510–FN–P
                                                to provide recommendations to the                       the public who require reasonable
                                                Secretary of Labor, working jointly                     accommodations to attend the meeting
                                                through the Assistant Secretary for                     may submit requests for
                                                                                                                                                              LIBRARY OF CONGRESS
                                                Employment and Training and the                         accommodations by mailing them to the
                                                Commissioner of Labor Statistics, to                    person and address indicated in the FOR               U.S. Copyright Office
                                                address: (1) The evaluation and                         FURTHER INFORMATION CONTACT section
                                                improvement of the nationwide                           by the date indicated in the DATES                    [Docket No. 2017–20]
                                                workforce and labor market information                  section or transmitting them as email
                                                (WLMI) system and statewide systems                     attachments in PDF format to the email                Scope of Preexisting Subscription
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                                                that comprise the nationwide system;                    address indicated in the FOR FURTHER                  Services
                                                and (2) how the Department and the                      INFORMATION CONTACT section with the                  AGENCY:  U.S. Copyright Office, Library
                                                States will cooperate in the management                 subject line ‘‘January 25 2018 WIAC                   of Congress.
                                                of those systems. These systems include                 Meeting Accommodations’’ by the date                  ACTION: Final order.
                                                programs to produce employment-                         indicated in the DATES section. Please
                                                related statistics and State and local                  include a specific description of the                 SUMMARY:  The Copyright Royalty Judges
                                                workforce and labor market information.                 accommodations requested and phone                    referred novel material questions of


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                                                                            Federal Register / Vol. 82, No. 240 / Friday, December 15, 2017 / Notices                                                     59653

                                                substantive law to the Register of                      ‘‘PREEXISTING’’ SUBSCRIPTION SERVICES                    works under the statutory license.5 In
                                                Copyrights for resolution in connection                 (SDARS III)                                              doing so, Congress drew a distinction
                                                with the SDARS III proceeding. The                      Docket No. 16–CRB–0001 SR/PSSR (2018–                    between preexisting subscription
                                                Register responded with a written                       2022)                                                    services (‘‘PSSs’’) on the one hand and
                                                opinion that is reproduced below.                       MEMORANDUM OPINION ON NOVEL                              nonsubscription services and new
                                                DATES: Opinion dated November 20,                       MATERIAL QUESTIONS OF LAW                                subscription services on the other. A
                                                2017.                                                                                                            ‘‘preexisting subscription service’’ is
                                                                                                          The Copyright Royalty Judges (‘‘CRJs’’
                                                                                                                                                                 defined in 17 U.S.C. 114(j)(11) as:
                                                FOR FURTHER INFORMATION CONTACT:                        or ‘‘Judges’’) concluded the hearing in
                                                                                                        the above-captioned proceeding with                         [A] service that performs sound recordings
                                                Sarang V. Damle, General Counsel and                                                                             by means of noninteractive audio-only
                                                Associate Register of Copyrights, by                    closing arguments of counsel on July 18,
                                                                                                                                                                 subscription digital audio transmissions,
                                                email at sdam@loc.gov, or Jason E.                      2017. In the course of their
                                                                                                                                                                 which was in existence and was making such
                                                Sloan, Attorney-Advisor, by email at                    deliberations, the CRJs determined that                  transmissions to the public for a fee on or
                                                jslo@loc.gov. Each can be contacted by                  novel material questions of substantive                  before July 31, 1998, and may include a
                                                telephone by calling (202) 707–8350.                    law arose regarding the interpretation of                limited number of sample channels
                                                                                                        provisions of the Copyright Act and, as                  representative of the subscription service that
                                                SUPPLEMENTARY INFORMATION: The
                                                                                                        required under 17 U.S.C. 802(f)(1)(B),                   are made available on a nonsubscription
                                                Copyright Royalty Judges (‘‘CRJs’’) are                 referred them to the Register of                         basis in order to promote the subscription
                                                tasked with determining and adjusting                   Copyrights for resolution. The questions                 service.6
                                                rates and terms of royalty payments for                 were referred to the Register by the CRJs
                                                statutory licenses under the Copyright                                                                              Section 114 contains two
                                                                                                        on October 23, 2017. The Register’s                      grandfathering provisions that apply to
                                                Act. See 17 U.S.C. 801. If, in the course               determination follows.
                                                of proceedings before the CRJs, novel                                                                            PSSs and provide benefits to those
                                                material questions of substantive law                   I. Background                                            services not available to new
                                                concerning the interpretation of                                                                                 subscription services or nonsubscription
                                                                                                        A. Statutory Background
                                                provisions of title 17 arise, the CRJs are                                                                       services. The first, section 114(d)(2)(B),
                                                required by statute to refer those                         In 1995, Congress enacted the Digital                 preserves the DPRSRA’s limited
                                                questions to the Register of Copyrights                 Performance Right in Sound Recordings                    qualifications for entitlement to the
                                                for resolution. 17 U.S.C. 802(f)(1)(B).                 Act of 1995 (‘‘DPRSRA’’),1 recognizing                   statutory license, but only for
                                                   On October 23, 2017, the CRJs, acting                the exclusive right of copyright owners                  transmissions made in the same
                                                pursuant to 17 U.S.C. 802(f)(1)(B),                     to perform sound recordings ‘‘publicly                   transmission medium used by the PSS
                                                referred to the Register novel material                 by means of a digital audio                              on July 31, 1998. The second, to which
                                                questions of substantive law in                         transmission.’’ 2 The DPRSRA also                        the referred questions most directly
                                                connection with the SDARS III                           established a statutory license to allow                 pertain, is the grandfathered method of
                                                proceeding, Docket No. 16–CRB–0001                      certain noninteractive digital audio                     setting royalty rates under section
                                                SR/PSSR (2018–2022). The referred                       services to make such performances of                    114(f)(1), which applies to a PSS
                                                questions asked whether a preexisting                   sound recordings, provided the services                  regardless of the transmission medium.
                                                subscription service’s transmissions of                 pay a royalty fee and comply with the                       Under this scheme, PSS transmissions
                                                multiple, unique channels of music that                 terms of the license. Under the                          in the same transmission medium used
                                                are accessible through that entity’s                    DPRSRA, nonexempt subscription                           on July 31, 1998, are still subject to the
                                                website and through a mobile                            transmissions were subject to statutory                  DPRSRA’s requirements under section
                                                application are ‘‘subscription                          licensing if they satisfied certain                      114(d)(2)(B) and are to still have royalty
                                                transmissions by preexisting                            requirements, and the royalty rates and                  rates and terms set in accordance with
                                                subscription services’’ for which the                   terms for the statutory license were to be               the objectives of section 801(b)(1).7
                                                CRJs are required to determine rates and                set in accordance with the objectives set                Nonsubscription services and new
                                                terms of royalty payments under 17                      forth in 17 U.S.C. 801(b)(1).3                           subscription services, however, are
                                                U.S.C. 114(f)(1)(A), and, if so, whether                   In 1998, the statutory license was
                                                                                                                                                                 subject to a more expansive set of
                                                there are any conditions a service must                 amended by the Digital Millennium
                                                                                                                                                                 qualifications under section
                                                satisfy to qualify for a license under                  Copyright Act (‘‘DMCA’’),4 a major goal
                                                                                                                                                                 114(d)(2)(C), and are to have their
                                                section 114(f)(1)(A). On November 20,                   of which was to establish a market-
                                                                                                                                                                 royalty rates and terms set to reflect
                                                2017, the Register resolved these                       based standard for setting royalty rates
                                                                                                                                                                 those that ‘‘would have been negotiated
                                                questions in a Memorandum Opinion                       paid to copyright owners for use of their
                                                                                                                                                                 in the marketplace between a willing
                                                that she transmitted to the CRJs. To                      1 Public
                                                                                                                                                                 buyer and a willing seller.’’ 8 PSS
                                                                                                                    Law 104–39, 109 Stat. 336 (1995).
                                                provide the public with notice of the                     2 17  U.S.C. 106(6).
                                                                                                                                                                 transmissions made in a new
                                                decision rendered by the Register, the                     3 Section 801(b)(1) provides that the rates ‘‘shall   transmission medium are subject to the
                                                Memorandum Opinion is reproduced in                     be calculated to achieve the following objectives:       more expansive set of qualifications
                                                its entirety below.                                     (A) To maximize the availability of creative works       under section 114(d)(2)(C) imposed on
                                                                                                        to the public. (B) To afford the copyright owner a       nonsubscription and new subscription
                                                   Dated: December 6, 2017.                             fair return for his or her creative work and the
                                                Karyn Temple Claggett,                                  copyright user a fair income under existing              services.9
                                                                                                        economic conditions. (C) To reflect the relative            The Register has explained that ‘‘the
                                                Acting Register of Copyrights and Director              roles of the copyright owner and the copyright user
                                                of the U.S. Copyright Office.                           in the product made available to the public with
                                                                                                                                                                 rationale for [section 114’s]
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                                                                                                        respect to relative creative contribution,               grandfathering provisions is to ‘prevent
                                                Before the U.S. Copyright Office,                       technological contribution, capital investment, cost,    disruption of the existing operations by
                                                Library of Congress, Washington, DC                     risk, and contribution to the opening of new
                                                20559                                                   markets for creative expression and media for their       5 71
                                                                                                        communication. (D) To minimize any disruptive                   FR 64639, 64641 (Nov. 3, 2006).
                                                 In the Matter of: DETERMINATION OF                     impact on the structure of the industries involved
                                                                                                                                                                  6 17  U.S.C. 114(j)(11).
                                                ROYALTY RATES AND TERMS FOR                             and on generally prevailing industry practices.’’ 17      7 See id. at 114(d)(2)(B), (f)(1).

                                                TRANSMISSION OF SOUND RECORDINGS                        U.S.C. 801(b)(1).                                         8 See id. at 114(d)(2)(C), (f)(2).

                                                BY SATELLITE RADIO AND                                     4 Public Law 105–304, 112 Stat. 2860 (1998).           9 Id. at 114(d)(2)(C).




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                                                59654                       Federal Register / Vol. 82, No. 240 / Friday, December 15, 2017 / Notices

                                                [preexisting subscription] services.’ ’’ 10             required to pay under 37 CFR 380.10                      establishes that Music Choice has been
                                                In discussing the legislative history                   (or, in the alternative, a royalty based on              providing its subscribers with internet-
                                                explaining the objectives of the                        aggregate tuning hours for a PSS that                    based access to its audio channels since
                                                grandfathering provisions, the Register                 does not have the technological                          1996, long before the PSS license was
                                                elaborated:                                             capability to track individual                           created in the DMCA, and has always
                                                   While it would appear . . . that Congress’s          performances).13 The parties dispute                     included these internet transmissions as
                                                purpose in grandfathering these services was            whether it is necessary for the CRJs to                  a part of its PSS since that time.’’ 16
                                                to preserve a particular program offering, it           decide whether Music Choice’s internet                   Music Choice also disputes
                                                was not its only purpose or even necessarily            and mobile transmissions qualify as part                 SoundExchange’s claim that webcasting
                                                its major goal. The Conference Report also              of its PSS.14                                            was becoming an ‘‘increasingly
                                                makes clear that Congress distinguished                   In response to this dispute, the CRJs                  important part’’ of its business, claiming
                                                between preexisting subscription services               found that ‘‘consideration of the
                                                and new subscription services as a way to
                                                                                                                                                                 that record evidence shows that ‘‘usage
                                                                                                        appropriate royalty rates and terms for                  of Music Choice’s internet transmissions
                                                prevent disruption of the existing operations
                                                of the services that were in existence and              a PSS’s digital audio transmissions                      has consistently remained at de minimis
                                                operating before July 31, 1998. It understood           through a website or mobile application                  levels, and today comprises less than
                                                that the entities so designated as preexisting          in which the PSS streams a variable                      one hundredth of one percent of Music
                                                had invested a great deal of resources into             number of unique channels of music                       Choice’s overall audio channel
                                                developing their services under the terms               presents a novel material question of                    usage.’’ 17 Music Choice contends that,
                                                established in 1995 as part of the Digital              substantive law,’’ and referred the
                                                Performance Right in Sound Recording Act of
                                                                                                                                                                 in any event, because it was making
                                                                                                        following questions to the Register                      internet transmissions prior to the
                                                1995, and that those services deserved to
                                                                                                        pursuant to 17 U.S.C. 802(f)(1)(B):                      codification of the PSS definition in
                                                develop their businesses accordingly.11
                                                                                                           1. Are a preexisting subscription service’s           section 114(j)(11), ‘‘[u]nder any
                                                B. Procedural History                                   transmissions of multiple, unique channels               reasonable interpretation of [the]
                                                                                                        of music that are accessible through that                statutory language, Music Choice’s
                                                   The instant proceeding will establish                entity’s website and through a mobile
                                                royalty rates and terms for PSSs’ (as                                                                            internet transmissions fall squarely
                                                                                                        application ‘‘subscription transmissions by
                                                well as preexisting satellite digital audio             preexisting subscription services’’ for which
                                                                                                                                                                 within the definition of a PSS.’’ 18
                                                                                                        the Judges are required to determine rates                  Music Choice also argues that even if
                                                radio services’) digital performance of
                                                sound recordings and the making of                      and terms of royalty payments under Section              its internet transmissions did constitute
                                                ephemeral recordings under the                          114(f)(1)(A) of the Copyright Act?                       an expansion of its services to a new
                                                statutory licenses set forth in sections                   2. If yes, what conditions, if any, must the          medium, such expansion is permitted
                                                                                                        PSS meet with regard to streaming channels               and ‘‘would not require any new,
                                                112(e) and 114(f)(1) of the Copyright                   to qualify for a license under Section
                                                Act. Music Choice is the only PSS that                                                                           additional license fee or rate.’’ 19 Music
                                                                                                        114(f)(1)(A)? For example, must the streamed             Choice contends that in grandfathering
                                                participated in the current rate-setting                stations be identical to counterpart stations
                                                proceedings. The CRJs explain that the                  made available through cable television? Is
                                                                                                                                                                 the existing three PSSs, Congress sought
                                                referred questions arose in this                        there a limitation on the number of channels             to protect their ‘‘need for access to the
                                                proceeding because SoundExchange,                       that the PSS may stream? Is there a limitation           works at a price that would not hamper
                                                Inc.,12 for the first time, is seeking two              on the number or type of customers that may              their growth’’ and did not ‘‘intend[] to
                                                separate royalty payments from PSSs:                    access the website or the mobile                         limit PSS status to the PSS offerings as
                                                                                                        application? 15                                          they existed in 1998 or otherwise freeze
                                                (1) For all licensed transmissions and
                                                related ephemeral recordings through a                  II. Summary of the Parties’ Arguments                    the PSS in time.’’ 20 Music Choice
                                                television-based service qualifying as a                                                                         claims that ‘‘Congress’s intent to
                                                                                                        A. Music Choice’s Position                               provide the PSS with long-term
                                                PSS, SoundExchange requests a per-
                                                subscriber, per-month royalty; and (2)                     Music Choice argues that the statutory                protection is further evinced by the
                                                for all licensed transmissions and                      language, legislative history, and factual               absence of any sunset provision
                                                related ephemeral recordings through an                 record all support its position that its                 anywhere in the statutory language or
                                                internet streaming service qualifying as                internet transmissions are part of its PSS               discussion of such a provision in the
                                                a PSS (or any similar service capable of                and subject to section 114(f)(1). Music                  legislative history’’ 21 and argues that in
                                                tracking the individual sound                           Choice begins by disputing, as a factual                 enacting the DMCA, ‘‘the overarching
                                                recordings received by any particular                   matter, the claim that its internet                      intent of Congress was decidedly not to
                                                consumer and qualifying as a PSS),                      transmissions are an ‘‘expansion’’ of its                move the entire market to marketplace
                                                SoundExchange seeks a per-                              service into a new medium—which it                       rates,’’ but rather ‘‘to protect the PSS’
                                                performance royalty fee that is the same                perceives as the premise for the CRJs’                   unique business expectancies.’’ 22
                                                as commercial webcasters are currently                  referred questions—on the grounds that                      Citing to Congress’s discussion in the
                                                                                                        its ‘‘internet transmissions are merely an               DMCA Conference Report, Music
                                                   10 71 FR at 64641 (quoting H.R. Rep. No. 105–796,    ancillary part of its residential audio                  Choice asserts that Congress created a
                                                at 81 (1998) (Conf. Rep.)); accord SoundExchange,       service,’’ the value of its internet                     ‘‘unique feature of the PSS license that
                                                Inc. v. Muzak LLC, 854 F.3d 713, 719 (D.C. Cir.         transmissions ‘‘has always been                          allows a PSS to expand into new
                                                2017) (‘‘The grandfather provisions were intended       included in the bundled per-subscriber                   services in new transmission media
                                                to protect prior investments the three [PSS]
                                                business entities had made during a more favorable      fee,’’ and ‘‘the undisputed evidence                     while retaining PSS status for those new
                                                pre-1998 rate-setting regulatory climate.’’).                                                                    services, so long as the new service is
                                                   11 71 FR at 64645 (internal citation omitted).         13 Id.  at 2–3.                                        similar in character to the original PSS
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                                                   12 SoundExchange appears in this proceeding on         14 Id.  at 3.
                                                behalf of the American Association of Independent          15 Id. at 3–4. Section 802(f)(1)(B) provides that      16 Music   Choice Brief at 1–2, 4–5.
                                                Music; the American Federation of Musicians of the      ‘‘[i]n any case in which a novel material question        17 Id. at 6.
                                                United States and Canada; the Recording Industry        of substantive law concerning an interpretation of        18 Id. at 18–19, 30.
                                                Association of America; the Screen Actors Guild         those provisions of [title 17] that are the subject of    19 Id. at 2, 30.
                                                and American Federation of Television and Radio         the proceeding is presented, the Copyright Royalty
                                                                                                                                                                  20 Id. at 14, 19–23.
                                                Artists; Sony Music Entertainment; Universal Music      Judges shall request a decision of the Register of
                                                                                                                                                                  21 Id. at 15.
                                                Group; and Warner Music Group. Referral Order at        Copyrights, in writing, to resolve such novel
                                                2 n.4.                                                  question.’’ 17 U.S.C. 802(f)(1)(B).                       22 Id. at 16–17.




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                                                                             Federal Register / Vol. 82, No. 240 / Friday, December 15, 2017 / Notices                                          59655

                                                offering, i.e., does not take advantage of              transmitted in 1998 (or the customers                 intensive inquiry that requires
                                                unique features of the new medium to                    who received them at that time)’’ and                 comparison of a PSS provider’s new
                                                provide a different listening experience                that ‘‘any rule limiting PSS status to                offering with the provider’s 1998
                                                or interactivity while listening to the                 internet-based channels that are exactly              offerings,’’ and that ‘‘[i]t is not enough
                                                audio channel.’’ 23 Music Choice further                the same as those transmitted through                 to consider only whether a qualifying
                                                explains that ‘‘[a]lthough Congress did                 cable or satellite, or limiting the number            entity’s new offerings makes
                                                not intend to allow the PSS to create                   of channels that may be provided by a                 noninteractive audio-only subscription
                                                fundamentally different types of                        PSS, would be inconsistent with [the                  digital audio transmissions,’’ but rather,
                                                services, with fundamentally different                  court’s] interpretation of the PSS                    ‘‘it is necessary to consider the medium
                                                types of content or interactive audio                   definition.’’ 30 Music Choice concludes               used, and the functionality and content
                                                functionality . . . , it did intend to                  that it would be contrary to the court’s              provided, in the new offerings.’’ 35
                                                allow the PSS to continue their                         interpretation of the PSS definition to               SoundExchange claims that ‘‘Congress
                                                development, evolution, and growth of                   limit ‘‘the expansion of a PSS’s service              gave no indication that . . . a PSS
                                                their non-interactive, subscription audio               under the same brand’’ beyond the                     provider should enjoy PSS rates if it
                                                services.’’ 24 Thus, Music Choice argues                limitation ‘‘that the service must remain             provided an offering different from its
                                                that ‘‘there is no statutory requirement                within the general category of                        1998 offering in a new medium.’’ 36
                                                that a PSS offer the exact same channels                transmissions identified in the . . .                 SoundExchange interprets the
                                                to all of its subscribers or through each               definition: noninteractive audio-only                 legislative history to suggest that
                                                of its different transmission media,’’ 25               subscription digital audio transmissions              Congress ‘‘grandfathered the PSS to
                                                and ‘‘there is no hint in the statute or                made by an entity that was in existence               protect investments that qualifying
                                                the legislative history of any intent to                and making that category of                           entities had already made at the time
                                                impose restrictions on the number of                    transmissions on or before July 31,                   the DMCA was under consideration in
                                                channels that may be provided . . . or                  1998.’’ 31                                            1998.’’ 37 SoundExchange understands
                                                the number or type of subscribers that                                                                        the D.C. Circuit’s decision in
                                                Music Choice may serve.’’ 26 Music                      B. SoundExchange’s Position
                                                                                                                                                              SoundExchange to be consistent with its
                                                Choice specifically argues that section                    SoundExchange argues that the CRJs                 interpretation of the legislative
                                                114 cannot be read to require the same                  should set ‘‘distinct statutory royalty               history.38
                                                exact channels in a new transmission                    rates for delivery of a PSS to television                SoundExchange argues that the PSS
                                                medium as it offers in its original                     sets and for any webcasting that is                   definition must be construed narrowly,
                                                medium because the statute ‘‘expressly                  provided as part of a PSS,’’ with the rate            particularly in the case of webcasting
                                                acknowledges that the programming of                    for webcasting that is part of a PSS set              given that ‘‘[i]nternet-based streaming
                                                a PSS’s transmissions in a new medium                   ‘‘at the same level as the statutory rate             services are a rapidly-growing means of
                                                may be different than those in the                      for other subscription webcasters,                    music consumption,’’ and ‘‘webcasting
                                                original medium, and in some instances                  because Music Choice’s webcasting is                  by a PSS provider competes with
                                                requires that they be programmed                        equivalent to that provided by other                  webcasting by services that are currently
                                                differently.’’ 27 More generally, Music                 webcasting services, and competes with                paying for their use of sound recordings
                                                Choice asserts that its internet                        other webcasting services.’’ 32                       at much higher royalty rates.’’ 39 Such
                                                transmissions are permissible because                   SoundExchange argues that this                        an interpretation, SoundExchange
                                                they ‘‘do not take advantage of the                     position responds to the ‘‘rapid growth               claims, would ‘‘ensure that webcasters
                                                internet’s technological capabilities,’’                in Music Choice’s webcasting,’’ which it              compete on level terms, eliminating
                                                providing several fact-based arguments                  asserts is demonstrated by record                     distortions in the market and
                                                for why its internet service is                         evidence it describes regarding Music                 effectuating the Congressional intent to
                                                comparable to its television service.28                 Choice’s mobile application and website               shift rates towards those that reflect
                                                   Music Choice rests its argument in                   and how Music Choice’s internet                       arms-length market transactions.’’ 40
                                                part on the U.S. Court of Appeals for the               transmissions differ from its television-                SoundExchange further argues that,
                                                District of Columbia Circuit’s recent                   based service.33                                      ‘‘[a]s a matter of law,’’ ‘‘webcast
                                                opinion in SoundExchange, Inc. v.                          Pointing to the same discussion in the             transmissions made through a mobile
                                                Muzak LLC, which held that a music                      DMCA Conference Report referenced by                  app, or through a version of a provider’s
                                                service acquired by Muzak was not                       Music Choice, SoundExchange argues                    website that has been optimized for
                                                entitled to the grandfathered rate that                 that ‘‘Congressional intent was to limit              display using the browser on a mobile
                                                applied to its preexisting subscription                 the grandfathering of the PSS to                      device, are not transmissions by a PSS
                                                service.29 Music Choice claims that this                transmissions similar to the cable or                 for which the Judges are to set rates and
                                                decision ‘‘demonstrate[s] that the PSS                  satellite service offerings their providers           terms under Section 114(f)(1).’’ 41
                                                definition was not intended to freeze the               offered on July 31, 1998,’’ meaning that              SoundExchange contends that the PSSs’
                                                PSS in time, nor limit PSS status to                    PSS status ‘‘extends to a qualifying                  ‘‘1998 offerings were residential
                                                channels (or customers) that are exactly                entity’s cable and satellite offerings as             offerings delivered by means of cable or
                                                the same as the channels that were                      they existed at July 31, 1998 . . . and               satellite to fixed points in subscribers’
                                                  23 Id.
                                                                                                        also may extend to a qualifying entity’s              homes,’’ while ‘‘[t]he Internet and the
                                                         at 15, 17, 23–25.
                                                  24 Id.
                                                                                                        transmissions in a new medium such as                 wireless networks that are used to
                                                         at 24–25, 30.
                                                  25 Id. at 19, 27. Music Choice specifically notes     the internet, if the transmissions are                deliver service to mobile devices are a
                                                that, ‘‘of the 75 channels available through the        sufficiently similar to the 1998                      different medium than the PSS used in
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                                                internet, 50 of those are identical to the channels     offerings.’’ 34 SoundExchange contends
                                                broadcast over the television’’ and the ‘‘additional    that assessing similarity ‘‘is a fact-                  35 Id.
                                                25 are identical to the television channels in every                                                                     at 10.
                                                                                                                                                                36 Id.   at 11.
                                                way except the genre or sub-genre in which they
                                                                                                          30 Music   Choice Brief at 21.                        37 Id.
                                                are programmed.’’ Id. at 19.
                                                  26 Id. at 2.                                            31 Id. 29–30 (internal quotation marks omitted).      38 Id. 11–12.
                                                  27 Id. at 27.                                           32 SoundExchange Brief at 5.                          39 Id. at 12.
                                                  28 Id. at 25–26.                                        33 Id. at 2–5.                                        40 Id. at 12–13.
                                                  29 854 F.3d at 719.                                     34 Id. at 9–10.                                       41 Id. at 13.




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                                                59656                           Federal Register / Vol. 82, No. 240 / Friday, December 15, 2017 / Notices

                                                1998.’’ 42 Furthermore, SoundExchange                       accessible to a cable or satellite                     used in section 114(f)(1)(A),
                                                contends that mobile services ‘‘take[ ]                     television subscriber through that                     ‘‘subscription transmissions by
                                                advantage of the capability of wireless                     entity’s website and through a mobile                  preexisting subscription services’’ must
                                                networks to provide portability,                            application can be ‘‘subscription                      refer only to the PSS offerings made by
                                                allowing listeners to access music                          transmissions by preexisting                           a PSS entity, rather than referring to all
                                                anytime and virtually anywhere’’ as                         subscription services’’ for which the                  subscription transmissions made by a
                                                well as offering ‘‘different opportunities                  CRJs must determine rates and terms of                 PSS entity.
                                                for user interaction and navigation’’ that                  royalty payments under section                            Fourth, the Register has previously
                                                ‘‘provide a very different user                             114(f)(1)(A), but only if such                         determined ‘‘that the preexisting
                                                experience than the stereo receivers and                    transmissions are sufficiently similar to              services must be limited to the three
                                                television sets that could receive the                      the transmissions made to those                        named entities in the [DMCA]
                                                PSS’ 1998 offerings.’’ 43                                   subscribers via the entity’s preexisting               Conference Report, i.e., DMX (operated
                                                   While SoundExchange claims that                          residential cable or satellite music                   by TCI Music), Music Choice (operated
                                                internet streaming channels could                           service.                                               by Digital Cable Radio Associates), and
                                                qualify as part of a PSS, so long as it is                                                                         [DiSHCD] 53 (operated by Muzak).’’ 54
                                                                                                            A. Legal Standard                                      Thus, it is long-settled that these three
                                                ‘‘sufficiently similar to the provider’s
                                                1998 offerings,’’ SoundExchange asserts                        Before addressing the appropriate                   entities are the only PSS entities. What
                                                that this standard requires that the ‘‘PSS                  legal standard for determining whether                 offerings by these entities may
                                                provider’s webcast channels [to] be                         a particular subscription transmission                 constitute PSS offerings, however, has
                                                identical to counterpart stations made                      by a preexisting subscription service is               continued to be unsettled, but is now
                                                available through cable television’’ in                     subject to the grandfathered method of                 resolved by this memorandum
                                                order to qualify for a rate set under                       setting royalty rates for such service                 opinion.55
                                                section 114(f)(1), as a service offering                    offerings under section 114(f)(1), the                    Fifth, the Register observes that PSS
                                                internet-only channels would lack                           Register makes a few threshold points                  offerings are not limited solely to the
                                                sufficient similarity to the PSS’ 1998                      about the statute.                                     offerings made by PSS entities prior to
                                                offerings which did not include any                            First, in analyzing the grandfathering              July 31, 1998. Rather, the statute and
                                                internet-only offerings.44                                  provisions, the Register interprets them               legislative history both confirm that
                                                SoundExchange argues that a PSS’s                           narrowly.48                                            Congress intended for PSS entities to be
                                                                                                               Second, as the Register has previously              able to expand their service offerings to
                                                internet transmissions are similarly
                                                                                                            held, the definition of ‘‘preexisting                  some limited extent and still have those
                                                disqualified if the ‘‘number of
                                                                                                            subscription service’’ in section                      service offerings be considered PSS
                                                webcasting channels is [not] sufficiently
                                                                                                            114(j)(11) can pertain to both the                     offerings. Two provisions of the statute
                                                similar to the provider’s pre-1998
                                                                                                            business entity operating a service
                                                offerings.’’ 45 SoundExchange further
                                                                                                            offering and the service offering itself.49            ‘‘subscription transmissions made by a preexisting
                                                contends that the number and type of
                                                                                                            The D.C. Circuit recently agreed with                  subscription service other than those that qualify
                                                subscribers to the transmission must                                                                               under subsection (f)(1)’’ in addition to new
                                                                                                            the Register that ‘‘the word ‘service,’ as
                                                also be substantially similar, and that a                                                                          subscription services and eligible nonsubscription
                                                                                                            used both in the statute as well as the                transmissions). Similarly, previous statements made
                                                PSS cannot include video programming
                                                                                                            legislative history, sometimes referred to             by the Register that preexisting subscription
                                                ‘‘other than video related to the service
                                                                                                            the business entity and sometimes the                  ‘‘services deserved to develop their businesses
                                                or recording being performed’’ in order                                                                            accordingly’’ pertained to the businesses of the pre-
                                                                                                            program offerings.’’ 50 For clarity’s sake,
                                                for its webcasting service to qualify as                                                                           July 31, 1998 PSS offerings—not all businesses
                                                                                                            the Register generally refers below to a               engaged in by the PSS entities. See 71 FR at 64645.
                                                a PSS.46 SoundExchange also asserts
                                                                                                            ‘‘PSS entity’’ or a ‘‘PSS offering’’ to                For example, later in the same opinion, the Register
                                                that ‘‘[a] trier of fact may also consider
                                                                                                            distinguish between a preexisting                      elaborated that while ‘‘Muzak was the pioneer
                                                other factors that bear on similarity of                                                                           music service that incurred both the benefits and
                                                                                                            business itself and a specific preexisting
                                                the service offerings, including any                                                                               risks that came with its investment, and one such
                                                                                                            program offering by such business.                     benefit was its status as a preexisting subscription
                                                differences between Internet-based                             Third, as a corollary to the second                 service,’’ that benefit only exists ‘‘so long as
                                                platforms and cable- and satellite-based                    point, the Register concurs with the D.C.              [Muzak] provided its music offerings over
                                                platforms.’’ 47                                             Circuit’s holding that, under the                      [DiSHCD],’’ as it did as of July 31, 1998. Id. at
                                                                                                                                                                   64646.
                                                III. Register’s Determination                               grandfathering provisions, ‘‘the term                     53 The Register believes that the DMCA
                                                                                                            ‘service’ contemplates a double                        Conference Report’s reference to ‘‘DiSH Network’’
                                                   Although the parties’ briefs discuss at
                                                                                                            limitation; both the business and the                  was a typo, and that Congress intended to refer to
                                                length the factual nature of Music
                                                                                                            program offering must qualify before the               Muzak’s ‘‘DiSHCD’’ service, which was transmitted
                                                Choice’s particular internet                                                                                       over Echostar’s DiSH Network. See Report of the
                                                                                                            transmissions are eligible for the
                                                transmissions, questions of fact are                                                                               Copyright Arbitration Royalty Panel, In re:
                                                                                                            favorable rate.’’ 51 Indeed, Congress was              Determination of Statutory License Terms and Rates
                                                beyond the scope of the Register’s
                                                                                                            clear that not every subscription                      for Certain Digital Subscription Transmissions of
                                                inquiry under section 802(f)(1)(B). Thus,
                                                                                                            transmission made by a PSS entity is                   Sound Recordings, No. 96–5 CARP DSTRA ¶ 27
                                                without judging the facts as they may                                                                              (Nov. 28, 1997) (‘‘CARP Report’’) (‘‘Muzak . . .
                                                                                                            subject to section 114(f)(1).52 Thus, as
                                                pertain to Music Choice (or any other                                                                              began providing . . . digital music under the name
                                                PSS), and having considered the                                                                                    DiSH CD, as part of Echostar’s satellite-based DiSH
                                                                                                              48 See 71 FR at 64646; accord SoundExchange,
                                                                                                                                                                   Network.’’); 63 FR 25394, 25395 (May 8, 1998)
                                                relevant statutory language, legislative                    854 F.3d at 719.                                       (same); see also Muzak Limited Partnership, Initial
                                                history, and the input from the parties,                      49 71 FR at 64646, 64647 (‘‘In construing the
                                                                                                                                                                   Notice of Digital Transmission of Sound Recordings
                                                the Register determines that                                statutory language together with the legislative       under Statutory License (July 2, 1998) (listing the
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                                                transmissions by a PSS entity that are                      history, the logical conclusion is that Congress did   service name as ‘‘dishCD’’).
                                                                                                            use the term ‘service’ to mean both the program           54 71 FR at 64646; see H.R. Rep. No. 105–796, at
                                                                                                            offerings made on a subscription basis to the public   81, 85, 89.
                                                  42 Id.
                                                                                                            and the business entity that secures the license to       55 The D.C. Circuit correctly recognized that the
                                                  43 Id. at 13–14.                                          make the subscription transmissions.’’).               Register’s previous ‘‘opinion did not address
                                                  44 Id. at 15–16.                                            50 SoundExchange, 854 F.3d at 718.
                                                                                                                                                                   whether those three business entities’ grandfather
                                                  45 Id. 16–17.                                               51 See id. at 719.
                                                                                                                                                                   status was further limited to the programs they were
                                                  46 Id. 17–18.                                               52 See H.R. Rep. No. 105–796, at 84–85               offering at the time the statute was passed.’’ See
                                                  47 Id. at 17.                                             (explaining that section 114(f)(2) applies to          SoundExchange, 854 F.3d at 718.



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                                                                             Federal Register / Vol. 82, No. 240 / Friday, December 15, 2017 / Notices                                                         59657

                                                in particular reflect this congressional                 would be entitled to both a rate                          determined pursuant to section 114(f)(1)
                                                intent. Section 114(d)(2)(C) sets out                    established under the grandfathered rate                  or section 114(f)(2). Thus, if a PSS entity
                                                more expansive qualifications for the                    standard under section 114(f)(1) and the                  began offering, for example, an
                                                statutory license for transmissions made                 grandfathered license requirements in                     interactive service, it would not fall into
                                                by a PSS ‘‘other than in the same                        section 114(d)(2)(B).                                     one of these categories, as it is ineligible
                                                transmission medium used by such                            2. A service offering identified by                    for the statutory license. The following
                                                service on July 31, 1998.’’ In other                     Congress as being a PSS offering as of                    sections describe the types of service
                                                words, Congress suggested that a PSS                     July 31, 1998, that is still offered today,               offerings that fall within these three
                                                could deliver its offering in a new                      but in a different transmission medium                    categories.
                                                transmission medium without affecting                    than the one identified by Congress in
                                                                                                                                                                   1. Existing Service Offerings
                                                its status as a PSS offering. Section                    1998, where only transmissions similar
                                                114(f)(1)(C), in turn, provides for an out-              to the existing service offering are                         Implicit in the Register’s previous
                                                of-cycle rate proceeding to be held                      provided (referred to here as an                          determination that the only PSS entities
                                                where ‘‘a new type of subscription                       ‘‘expanded service offering’’).58 Such a                  are the three entities Congress named in
                                                digital audio transmission service on                    service offering would be entitled to a                   the DMCA Conference Report,60 is that,
                                                which sound recordings are performed                     rate established under the grandfathered                  as a matter of law, the service offerings
                                                is or is about to become operational.’’                  rate standard under section 114(f)(1),                    that Congress sought to identify as PSS
                                                The statute further makes clear that this                but would not be able to take advantage                   offerings as of July 31, 1998, were the
                                                rate proceeding is to be conducted with                  of the grandfathered license                              ones offered by those entities prior to
                                                reference to the grandfathered rate                      requirements in section 114(d)(2)(B).                     that date. The legislative history makes
                                                standard. Such a provision would be                      Instead, it would be required to comply                   clear that Congress further intended to
                                                unnecessary if PSS offerings were                        with more detailed license requirements                   limit what it identified as a PSS offering
                                                limited to the exact offerings made in                   in section 114(d)(2)(C).                                  at that time to the PSS entities’ offerings
                                                1998; there would never be a ‘‘new type                     3. A service offering that is not an                   in the specific transmission media
                                                of . . . service.’’                                      existing service offering or an expanded                  affirmatively identified in the DMCA
                                                   Thus, the ultimate question is                        service offering (referred to here as a                   Conference Report: ‘‘cable’’ or
                                                whether a particular program offering by                 ‘‘different service offering’’).59 This                   ‘‘satellite’’ for DMX and Music Choice,
                                                a PSS entity qualifies as a PSS offering                 would include any offering that is                        and ‘‘satellite’’ for DiSHCD.61 Thus, to
                                                within the meaning of section 114(j)(11),                insufficiently similar to an existing                     qualify as an ‘‘existing service offering,’’
                                                and is therefore subject to the                          service offering to be considered an                      the service must not only have existed
                                                grandfathered rate standard under                        expanded service offering. A different                    as of July 31, 1998, but it must have also
                                                section 114(f)(1). The DMCA Conference                   service offering would not be entitled to                 been providing its offering in the
                                                Report provides particularly helpful                     either a rate established under the                       specific transmission media identified
                                                guidance in answering this question                      grandfathered rate standard under                         by Congress.
                                                concerning section 114(f)(1):                            section 114(f)(1) or the grandfathered                       Music Choice urges that it was
                                                                                                         license requirements in section                           already making internet transmissions
                                                   In grandfathering these services, the
                                                conferee’s objective was to limit the                    114(d)(2)(B). Instead, the rate would be                  of its subscription music service as of
                                                grandfather to their existing services in the            set under the willing buyer/willing                       July 31, 1998.62 In so doing, it is
                                                same transmission medium and to any new                  seller standard in section 114(f)(2), and                 effectively asking for its current internet
                                                services in a new transmission medium                    would be required to comply with the                      transmissions to be treated as an
                                                where only transmissions similar to their                license requirements in section                           ‘‘existing service offering’’ under the
                                                existing service are provided. Thus, if a cable                                                                    rubric set forth above. But even
                                                subscription music service making
                                                                                                         114(d)(2)(C).
                                                                                                            These categorizations presume that a                   assuming Music Choice, or another
                                                transmissions on July 31, 1998, were to offer
                                                                                                         service is eligible for the section 114                   service, were making such pre-1998
                                                the same music service through the Internet,
                                                then such Internet service would be                      license. The purpose of separating them                   internet transmissions,63 it was clearly
                                                considered part of a preexisting subscription            into these groups is to determine                         to an inconsequential degree: Any such
                                                service. If, however, a subscription service             whether the rate for a service is                         transmissions were entirely
                                                making transmissions on July 31, 1998, were                                                                        unacknowledged by the Copyright
                                                to offer a new service either in the same or                58 See id. (grandfathered services can be ‘‘new        Arbitration Royalty Panel (‘‘CARP’’), in
                                                new transmission medium by taking                        services in a new transmission medium where only          setting royalty rates for the statutory
                                                advantages of the capabilities of that                   transmissions similar to their existing service are       license under the DPRSRA; the
                                                medium, such new service would not qualify               provided’’). While the Conference Report refers to
                                                                                                         ‘‘new services,’’ in the next sentence, it provides an    Librarian of Congress and the Register of
                                                as a preexisting subscription service.56
                                                                                                         example of a ‘‘cable . . . service’’ expanding into       Copyrights, in reviewing that CARP
                                                  This passage, consistent with the                      an ‘‘Internet service’’ by ‘‘offer[ing] the same music    decision; and Congress, in enacting the
                                                statutory language in sections 114(d)(2)                 service through the Internet.’’ See id. Thus, in          DMCA in 1998. The CARP report
                                                and 114(f), demonstrates Congress’s                      context, such services are what the Register has
                                                                                                         here called ‘‘expanded services,’’ and are not meant      describes the three PSSs at length and,
                                                intent to distinguish among three                        to encompass wholly new services that are                 notably, makes an explicit finding of
                                                different possibilities:                                 unrelated to an existing service offering. By the         fact that the services are the ‘‘only three
                                                  1. A service offering identified by                    same logic, other references in the statute and           digital audio music subscription
                                                Congress as being a PSS offering as of                   legislative history to ‘‘new’’ service offerings should
                                                                                                         be similarly interpreted as being what is referred to
                                                July 31, 1998, that is still offered today               here as expanded service offerings. See, e.g., 17
                                                                                                                                                                     60 See 71 FR at 64646.
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                                                in the same transmission medium                          U.S.C. 114(f)(1)(C) (permitting out-of-cycle rate-          61 See H.R. Rep. No. 105–796, at 89 (‘‘As of July
                                                identified by Congress in 1998 (referred                 setting proceedings for a ‘‘new type of . . .             31, 1998, DMX and Music Choice made
                                                                                                         service’’).                                               transmissions via both cable and satellite media; the
                                                to here as an ‘‘existing service                                                                                   [DiSHCD service] was available only via satellite.’’).
                                                                                                            59 See H.R. Rep. No. 105–796, at 89
                                                offering’’).57 Such a service offering                   (grandfathering ‘‘limit[ed]’’ to ‘‘existing services in      62 Music Choice Brief at 1–2, 4–6, 18–19, 30.

                                                                                                         the same transmission medium and to any new                  63 The Register notes that the only apparent
                                                  56 H.R. Rep. No. 105–796, at 89.                       services in a new transmission medium where only          evidence offered by Music Choice of such pre-1998
                                                  57 See id. (grandfathered services can be ‘‘existing   transmissions similar to their existing service are       internet transmissions is the testimony of Music
                                                services in the same transmission medium’’).             provided’’) (emphasis added).                             Choice CEO David Del Beccaro. See id. at 5.



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                                                59658                        Federal Register / Vol. 82, No. 240 / Friday, December 15, 2017 / Notices

                                                services available to residential                          Thus, in accordance with the                        expanded service offering, the PSS
                                                subscribers in the United States’’ and                  principles of narrow construction                      entity must continue to operate its
                                                that they ‘‘offer their digital music via               afforded to grandfathering provisions,                 existing service offering. The basis for
                                                satellite, or cable, or both,’’ making no               the Register finds that, as a matter of                the grandfathering provisions is to
                                                mention of any internet                                 law, it is irrelevant whether or not                   protect existing service offerings and
                                                retransmissions.64 In comprehensively                   Music Choice or another PSS entity, to                 limited direct outgrowths of them. If
                                                reviewing the CARP report and adopting                  some limited degree, was making                        such a limited outgrowth—i.e., an
                                                rates and terms for PSSs, the Register of               transmissions via a different medium                   expanded service offering—were to exist
                                                Copyrights and the Librarian of                         than those specified in the legislative                alone, divorced from the existing service
                                                Congress made no mention of any                         history on July 31, 1998, such as the                  offering, the rationale for including
                                                internet transmissions by those PSS                     internet. If such a service was in fact                them within the existing service
                                                entities.65 To the contrary, that decision              doing so, it would not be as part of an                offering’s grandfather protection
                                                concluded that the PSSs ‘‘face new                      existing service offering—any such                     becomes less tenable. Furthermore, the
                                                competition from the internet.’’ 66 These               transmissions today would be                           legislative history is explicit that a
                                                factual findings are further reflected in               considered either an expanded service                  service offering that is not an existing
                                                the DMCA Conference Report, where                       offering or a different service offering,              service offering can only be subject to
                                                Congress clearly identified the three                   depending on the analysis described                    the grandfathering provision if it
                                                qualifying services and only described                  below.                                                 provides ‘‘transmissions similar to their
                                                them as making transmissions via cable                     At the same time, the Register                      existing service.’’ 73 Ascertaining
                                                and/or satellite media.67 Given this                    emphasizes that an existing service                    similarity requires comparison, and if a
                                                background, it is highly improbable that                offering can grow and expand                           PSS entity discontinues its existing
                                                Congress would have intended, sub                       significantly within the same                          service offering, there would be nothing
                                                silentio, to treat internet transmissions               transmission medium while remaining a                  to compare against.74
                                                as subject to the grandfathering                        PSS offering. The Register has found no
                                                                                                                                                                  As Music Choice and SoundExchange
                                                provision under section 114(d)(2)(B).                   indication that Congress meant to freeze
                                                   This understanding is strongly                                                                              agree, in assessing whether a service
                                                                                                        existing service offerings exactly as they
                                                reinforced by the new requirements                                                                             offering is an expanded service offering,
                                                                                                        were on July 31, 1998, in order for them
                                                Congress added in section 114(d)(2)(C)                                                                         and thus qualifies as a PSS offering, a
                                                                                                        to continue to qualify for the
                                                that webcasting services and new                                                                               comparison must be made between the
                                                                                                        grandfathering provisions. The user
                                                subscription services, as well as                                                                              service offering in question and the
                                                                                                        interface can be updated, certain
                                                preexisting subscription services other                                                                        existing service offering to see if it is
                                                                                                        functionality can be changed, the
                                                than in the same transmission medium                                                                           sufficiently similar. Because, as
                                                                                                        number of subscribers can grow, and
                                                used by such service on July 31, 1998,                                                                         discussed above, an existing service
                                                                                                        channels can be added, subtracted, or
                                                had to comply with to qualify for the                                                                          offering can expand over time while
                                                                                                        otherwise changed.70 The only
                                                statutory license. The rationale behind                                                                        remaining a PSS offering, the
                                                                                                        restriction is that the existing service
                                                the DMCA’s amendments to the                                                                                   comparison should be made to the
                                                                                                        offering as it is today must be
                                                DPRSRA, including the new                                                                                      existing service offering as it exists at
                                                                                                        fundamentally the same type of offering
                                                requirements in section 114(d)(2)(C),                                                                          the time of the comparison, not, as
                                                                                                        that it was on July 31, 1998—i.e., it must
                                                was to ‘‘address[] unique programming                                                                          SoundExchange argues, as it existed on
                                                                                                        be a noninteractive, residential, cable or
                                                and other issues raised by Internet                                                                            July 31, 1998.
                                                                                                        satellite digital audio transmission
                                                transmissions.’’ 68 If a PSS were                       subscription service.71                                   To determine whether or not such a
                                                permitted to make internet                                                                                     service offering is sufficiently similar to
                                                transmissions under the less stringent                  2. Expanded Service Offerings                          the existing service offering, the fact-
                                                requirements of section 114(d)(2)(B), it                   In addition to expanding within its                 finder should compare the offerings by
                                                would undermine the design of this                      congressionally-recognized transmission                analyzing certain factors, including but
                                                statutory scheme and blur the                           medium, an existing service offering can               not limited to:
                                                distinction that Congress intended to                   also expand to a different transmission                   (1) Whether the service offering has a
                                                draw when dividing PSS transmissions                    medium, provided that the subscription                 similar effect on displacing or
                                                between paragraphs (B) and (C) based                    transmissions are similar.72                           promoting sales of phonorecords.75
                                                on the transmission medium used on                         This expansion, however, is subject to
                                                July 31, 1998.69                                        an important threshold limitation. For a                  (2) Whether the quantity and nature of
                                                                                                        service offering to qualify as an                      the use of sound recordings by the
                                                  64 CARP     Report ¶ 43.                                                                                     service offering is similar.76
                                                  65 See   63 FR 25394.                                 music service through the Internet’’ is engaged in
                                                   66 Id. at 25407 (emphasis added).                    the delivery of its service ‘‘in a new transmission      73 See  H.R. Rep. No. 105–796, at 89.
                                                   67 See H.R. Rep. No. 105–796, at 81, 89.             medium’’).                                               74 In the event that technology evolves such that
                                                   68 See Staff of H. Comm. on the Judiciary, 105th        70 See, e.g., 78 FR 23054, 23085 (Apr. 17, 2013)    a PSS decides to completely discontinue its cable
                                                Cong., Section-By-Section Analysis of H.R. 2281 as      (increasing the royalty rate due to Music Choice’s     or satellite service and limit its offerings solely to
                                                Passed by the United States House of                    announced intention to increase its number of          another transmission medium, such as the internet,
                                                Representatives on August 4th, 1998, at 50 (Comm.       channels from 46 to 300).                              this limitation would act as a type of ‘‘sunset
                                                Print 1998) (emphasis added); id. at 51 (‘‘At the          71 See 17 U.S.C. 114(j)(11); H.R. Rep. No. 105–     provision,’’ which, contrary to Music Choice’s
                                                time the DPRSRA was crafted, Internet                   796, at 81, 89; 63 FR at 25414; CARP Report ¶¶ 43–     argument with respect to such provisions,
                                                transmissions were not the focus of Congress’           44, 51–78, 109.                                        demonstrates that Congress did not in fact intend
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                                                efforts.’’); see also H.R. Rep. No. 105–796, at 83         72 See H.R. Rep. No. 105–796, at 89 (the            for the grandfather status to apply to a service
                                                (explaining explicitly that the reason for one of the   grandfathering covers ‘‘a new transmission medium      indefinitely regardless of the offerings it provides
                                                new requirements was because of ‘‘a disturbing          [but] where only transmissions similar to their        and the way it is transmitted.
                                                trend on the Internet’’ pertaining to the               existing service are provided’’); 71 FR at 64641         75 See 17 U.S.C. 114(f)(2)(B) (providing this as one

                                                ‘‘unauthorized performance of sound recordings not      (‘‘[A] preexisting service does not lose its           of the examples of criteria to be used in
                                                yet released for broadcast or sale to the public’’).    designation as such in the event the service decides   distinguishing among different types of non-PSSs).
                                                   69 See 17 U.S.C. 114(d)(2)(B)–(C); see also H.R.     to utilize a new transmission medium, provided           76 See id. (providing this as one of the examples

                                                Rep. No. 105–796, at 89 (indicating that a ‘‘cable      that the subscription transmissions are similar.’’)    of criteria to be used in distinguishing among
                                                subscription music service’’ that offers ‘‘the same     (emphasis added).                                      different types of non-PSSs).



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                                                                             Federal Register / Vol. 82, No. 240 / Friday, December 15, 2017 / Notices                                                  59659

                                                   (3) Whether the service offering                     [such PSS entity’s] acquisitions                        would still be an existing service
                                                provides similar content to similar                     strategy.’’ 80 The Register agrees that                 offering, rather than an expanded
                                                groups of users.                                        ‘‘when [such entity] expands its                        service offering or different service
                                                   (4) Whether the service offering is                  operations and provides additional                      offering, because it would still be part
                                                consumed in a similar manner, provides                  transmissions to subscribers to a                       of what is traditionally considered to be
                                                a similar user experience, and has                      different ‘service,’ * * * this is an                   a residential cable television service;
                                                similar form, feel, and functionality.                  entirely new investment’’ and is not a                  this is true even though optical fiber
                                                   (5) Whether and to what degree the                   PSS offering.81                                         may provide certain advantages over
                                                service offering relates to the same pre-                                                                       coaxial cable. By the same token,
                                                July 31, 1998 investments Congress                      B. Transmission Medium
                                                                                                                                                                however, when an existing cable music
                                                sought to protect.77                                       As noted above, the statute and                      service is made available to cable
                                                   (6) Whether and to what degree the                   legislative history focus extensively on                television subscribers over the internet,
                                                service offering takes advantage of the                 whether a PSS offering is being                         it is being transmitted through a
                                                capabilities of the medium through                      provided through the same or a different                different transmission medium
                                                which it is transmitted (i.e., whether                  ‘‘transmission medium’’ than the one                    regardless of how the internet is being
                                                and the extent to which differences                     identified by Congress in 1998, and the                 reached; for section 114 purposes,
                                                between the service offerings are due to                analysis above follows Congress’s lead                  internet service is a different
                                                limitations in the existing service                     in that regard. At first blush, one might               telecommunications service from a
                                                offering’s transmission medium that are                 conclude that Congress intended to                      residential cable service, even if
                                                not present in the other service                        draw a distinction among the kinds of                   delivered by the same operator through
                                                offering’s transmission medium).78                      physical wires or radiofrequency                        the same infrastructure.84
                                                   Note that even if a service offering is              channels used to deliver signals from a
                                                found to be an expanded service                         service to a listener—e.g., coaxial cable,              C. Application to the Referred Questions
                                                offering qualifying for the section                     optical fiber, radio spectrum. But this                    The CRJs’ referral to the Register of
                                                114(f)(1) grandfathering provision, it                  would not be a proper understanding of                  Copyrights specifically asked how the
                                                would still not be eligible for the section             the statutory scheme. The legislative                   legal analysis would apply specifically
                                                114(d)(2)(B) grandfathering provision by                history makes repeated references to                    to ‘‘transmissions of multiple, unique
                                                virtue of its being transmitted via a                   ‘‘cable,’’ ‘‘satellite,’’ and the ‘‘internet’’          channels of music that are accessible
                                                different transmission medium. Such an                  as different ‘‘transmission[] * * *                     through that entity’s website and
                                                offering would be subject to the                        media.’’ 82 Congress surely understood                  through a mobile application,’’ and the
                                                requirements in section 114(d)(2)(C).                   that the internet is a layer of services                degree to which differences between a
                                                                                                        that can be reached through a variety of                PSS entity’s internet service and its
                                                3. Different Service Offerings                                                                                  existing service in terms of the numbers
                                                                                                        delivery mechanisms, for example,
                                                   As a matter of law, a wholly different               through phone lines, satellite signals,                 or types of channels or subscribers
                                                service offering can never qualify as a                 and optical fiber. Similarly, a ‘‘cable’’               would result in the exclusion of the
                                                PSS offering because it would not be                    service can be transmitted over different               internet service from a grandfathered
                                                one of the specifically identified pre-                 media, such as coaxial cable, optical                   rate.85 Although ultimately it is not for
                                                July 31, 1998, business operations (i.e.,               fiber, or microwaves—a fact Congress                    the Register to apply the above-
                                                the three PSS offerings) Congress sought                explicitly understands.83                               described inquiry to Music Choice’s
                                                to protect when it enacted the DMCA.79                     Thus, for section 114 purposes, the                  current program offerings, the Register
                                                This is true regardless of whether the                  better understanding is that, in referring              offers the following observations about
                                                service offering is developed internally                to the ‘‘transmission medium’’ in the                   transmissions made via the internet and
                                                or acquired. As the D.C. Circuit recently               context of a PSS offering, Congress was                 made available on portable devices, and
                                                held, the DMCA’s amendments to                          referring to the basic                                  general guidance about application of
                                                section 114 were ‘‘designed to move the                 telecommunications service through                      the analysis to the scenarios identified
                                                industry to market rates,’’ and if a PSS                which that offering is being delivered to               in the referral order.
                                                entity ‘‘were permitted to pay the                      the user. For example, an existing                         Under the standard articulated above,
                                                grandfather rate for transmissions made                 service offering that on July 31, 1998,                 the mere fact that a service offering is
                                                to customers who subscribed to a                        was delivered to residential cable                      transmitted to cable or satellite
                                                ‘service’ that was previously provided                  television subscribers through coaxial                  television subscribers over the internet
                                                by [a different, non-PSS entity], what                  cable, may today be delivered to such                   does not automatically disqualify the
                                                would prevent * * * the complete                        cable television subscribers through                    service offering from being an expanded
                                                elimination of the market-rate regime by                optical fiber without constituting an                   service offering subject to the
                                                                                                        expansion to a new ‘‘transmission                       grandfathered rate standard, so long as
                                                  77 See 71 FR at 64641 (‘‘[T]he rationale for [the]
                                                                                                        medium’’ within the meaning of section                  the service offering, as a factual matter,
                                                grandfathering provisions is to ‘prevent disruption
                                                                                                        114. In other words, this service offering              after considering the factors described
                                                of the existing operations by such services.’’’)                                                                above, is sufficiently similar to the PSS
                                                (quoting H.R. Rep. No. 105–796, at 81);
                                                SoundExchange, 854 F.3d at 719 (‘‘The grandfather         80 SoundExchange,     854 F.3d at 719.                entity’s existing cable or satellite service
                                                provisions were intended to protect prior                 81 See   id. (emphasis added). The Register thus      offering.
                                                investments the three [PSS] business entities had       agrees with the D.C. Circuit’s holding that a service      In evaluating whether a service
                                                made during a more favorable pre-1998 rate-setting      offering that is acquired by a PSS entity does not      offering is ‘‘sufficiently similar’’ to the
                                                regulatory climate.’’).                                 qualify as a PSS offering.
                                                                                                                                                                PSS entity’s existing cable or satellite
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                                                  78 See H.R. Rep. No. 105–796, at 89 (‘‘If . . . a        82 See H.R. Rep. No. 105–796, at 81, 89 (referring

                                                subscription service making transmissions on July       to ‘‘transmissions via both cable and satellite         service offering so as to qualify as an
                                                31, 1998, were to offer a new service either in the     media’’ and explaining that under appropriate
                                                same or new transmission medium by taking               circumstances, a ‘‘cable . . . service’’ may be           84 To be clear, this discussion relates to the

                                                advantages of the capabilities of that medium, such     transmitted ‘‘through the Internet’’).                  meaning of section 114and should not be construed
                                                new service would not qualify as a preexisting             83 Cf. 17 U.S.C. 111(f)(3) (defining a ‘‘cable       as having broader application to other areas of
                                                subscription service.’’).                               system’’ as, among other things, making                 copyright law, such as the section 111 cable
                                                  79 See id. at 81, 89; 71 FR at 64641, 64645–46;       transmission by ‘‘wires, cables, microwave, or other    retransmission license.
                                                SoundExchange, 854 F.3d at 719.                         communications channels’’).                               85 Referral Order at 3–4.




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                                                59660                        Federal Register / Vol. 82, No. 240 / Friday, December 15, 2017 / Notices

                                                ‘‘expanded service offering,’’ the CRJs                 factors to consider could include how                 willing buyer/willing seller standard
                                                should consider the degree to which                     many additional or fewer channels there               under section 114(f)(2).
                                                making the existing service offering                    are, how many channels offer different
                                                accessible outside the home of the                      programming, and how different that                      November 20, 2017.
                                                subscriber constitutes a fundamental                    programming is. One should also                       Karyn Temple Claggett,
                                                change to the offering. One notable fact                consider the reasons why any such                     Acting Register of Copyrights and Director
                                                about PSS offerings in 1998 is that they                differences exist. For example, if the                of the U.S. Copyright Office.
                                                were all limited to listening to music                  service offering in question has more                 [FR Doc. 2017–27088 Filed 12–14–17; 8:45 am]
                                                within the subscriber’s home. Indeed, in                channels because of some benefit the                  BILLING CODE 1410–30–P
                                                the first ratesetting proceeding under                  internet affords, such as greater
                                                the DPRSRA, portable listening does not                 bandwidth or different contractual
                                                appear to have been considered and the                  arrangements with cable operators, then               NUCLEAR REGULATORY
                                                final rate was based on a percentage of                 it would be taking advantage of the                   COMMISSION
                                                gross revenues ‘‘resulting from                         capabilities of the internet as a
                                                residential services in the United                      transmission medium. Depending on                     [Docket No. 70–7028; NRC–2017–0233]
                                                States’’ 86—which is how the rate is                    the evaluation of the other factors
                                                                                                                                                              Johns Hopkins Applied Physics
                                                currently calculated.87 To be sure,                     discussed above and how much weight
                                                                                                                                                              Laboratory
                                                technological developments since that                   is ultimately given to the difference in
                                                time have made it easier to deliver                     channels in an overall comparison                     AGENCY:  U.S. Nuclear Regulatory
                                                digital audio transmissions outside the                 between the service offerings, it may or              Commission.
                                                home (including over mobile networks).                  may not be enough to disqualify the                   ACTION: License application;
                                                But, at least in the cable television                   offering from the grandfathered royalty               opportunity to request a hearing and to
                                                market, there appears to be a distinction               calculation method. The number and                    petition for leave to intervene; order
                                                drawn between accessing content                         type of customers should be similarly                 imposing procedures.
                                                within the home and accessing that                      compared.
                                                same content outside of it.88 To be clear,                 At the same time, the Register agrees              SUMMARY:    The U.S. Nuclear Regulatory
                                                this distinction is one based on the                    with Music Choice that differences in a               Commission (NRC) has received an
                                                location where the PSS offering is                      service offering that directly and solely             application from the Johns Hopkins
                                                consumed, not the type of device on                     result from the imposition of the section             Applied Physics Laboratory for a license
                                                which the service is accessed. If the                   114(d)(2)(C) requirements that do not                 which authorizes possession and use of
                                                service offering is available through an                apply to the existing service offering                Special Nuclear Materials (SNM) for
                                                internet-connected smartphone or                        (which is subject to section                          analytical or scientific research and
                                                tablet, but is designed so that the service             114(d)(2)(B)), should not alone                       development. The license application
                                                offering will only work when accessed                   disqualify it from the grandfathered rate.            request contains sensitive unclassified
                                                within the confines of the subscriber’s                 Similarly, minor differences in the user              non-safeguards information (SUNSI).
                                                residence, then it would be within the                  interface necessitated by the change in               DATES: A request for a hearing or
                                                home and more similar to the PSS                        medium also should not alone
                                                                                                                                                              petition for leave to intervene must be
                                                entity’s existing cable or satellite service            disqualify the service offering, even if
                                                                                                                                                              filed by February 13, 2018. Any
                                                offering.                                               they are perceived as an advantage
                                                                                                                                                              potential party, as defined in § 2.4 of
                                                   As the second referred question                      offered by the medium. For example, a
                                                                                                                                                              title 10 of the Code of Federal
                                                specifically asks about differences in                  service offering should not be
                                                                                                                                                              Regulations (10 CFR), who believes
                                                channel offerings and customers, the                    disqualified from being an expanded
                                                                                                                                                              access to SUNSI is necessary to respond
                                                Register offers the following guidance.                 service offering merely because instead
                                                                                                                                                              to this notice must request document
                                                In comparing the number and type of                     of needing to press a button on a remote
                                                                                                                                                              access by December 26, 2017.
                                                channels offered by a service offering to               control, the user can click a mouse or
                                                an existing service offering, examples of               navigate using a touch screen.                        ADDRESSES: Please refer to Docket ID
                                                                                                        Additionally, minor differences in                    NRC–2017–0233 when contacting the
                                                   86 See 63 FR at 25414 (to be codified at 37 CFR      visual presentation, such as having a                 NRC about the availability of
                                                260.2(a)) (emphasis added); see also CARP Report        different aspect ratio or displaying less             information for this action. You may
                                                ¶ 109 (‘‘The Panel finds that the Services are                                                                obtain publicly-available information
                                                primarily responsible for creating a new media and
                                                                                                        content due to differences in screen
                                                market for digital music subscription services for      size, would not be so significant as to               related to this action by any of the
                                                residential consumers.’’) (emphasis added). It also     disqualify a service offering from being              following methods:
                                                bears noting that in the last rate proceeding, the      an expanded service offering.                            • Federal Rulemaking website: Go to
                                                CRJs deleted the word ‘‘Residential’’ and its                                                                 http://www.regulations.gov and search
                                                definition from the rate provision for preexisting      D. CRJs’ Ability to Set Different Rates               for Docket ID: NRC–2017–0233. Address
                                                satellite digital audio radio services because it was
                                                argued that ‘‘the concept is a confusing artifact of       In closing, the Register briefly notes             questions about NRC dockets to Carol
                                                a comparable term used in the PSS regulations’’         that, even if a service offering qualifies            Gallagher; telephone: 301–415–3463;
                                                because ‘‘the SDARS service is not primarily            for the grandfathered method of setting               email: Carol.Gallagher@nrc.gov. For
                                                residential in terms of being delivered to homes and
                                                the term residential subscriber simply means a          rates, the CRJs still have the authority              technical questions, contact the
                                                subscriber,’’ yet the term remained for purposes of     under section 114(f)(1)(A) to                         individual listed in the FOR FURTHER
                                                the PSS rate. 78 FR at 23074–75, 23096, 23098           ‘‘distinguish among the different types               INFORMATION CONTACT section of this
                                                (internal quotation marks omitted).                     of digital audio transmission services                document.
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                                                   87 37 CFR 382.3(a).
                                                   88 See, e.g., Out of Home—XFINITY Stream App
                                                                                                        . . . in operation.’’ Thus, if there are                 • NRC’s Agencywide Documents
                                                Error Message, XFINITY, https://www.xfinity.com/        material differences between an existing              Access and Management System
                                                support/xfinity-apps/xfinity-tv-app-unable-to-          service offering and an expanded                      (ADAMS): You may obtain publicly-
                                                connect/ (last visited Nov. 17, 2017) (‘‘In order to    service offering, the CRJs can set                    available documents online in the
                                                watch live TV or XFINITY On Demand content
                                                using the XFINITY Stream app, you’ll need to be
                                                                                                        separate rates and terms based on those               ADAMS Public Documents collection at
                                                connected to your in-home XFINITY WiFi                  differences, albeit using the section                 http://www.nrc.gov/reading-rm/
                                                network.’’).                                            801(b)(1) standard, and not under the                 adams.html. To begin the search, select


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Document Created: 2017-12-15 03:37:24
Document Modified: 2017-12-15 03:37:24
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionFinal order.
DatesOpinion dated November 20, 2017.
ContactSarang V. Damle, General Counsel and Associate Register of Copyrights, by email at [email protected], or Jason E. Sloan, Attorney-Advisor, by email at [email protected] Each can be contacted by telephone by calling (202) 707-8350.
FR Citation82 FR 59652 

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