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December 30, 2022
Judges Announce Royalty Rates and Terms for the Use of Musical Works in the Making and Distributing of Phonorecords
The Copyright Royalty Judges published final regulations that set rates and terms for the compulsory license for the use of musical works in the making and distributing of phonorecords. These rates will apply during the period from January 1, 2023, through December 31, 2027.
The rates for a physical phonorecord or permanent download have increased to 12 cents per track or 2.31 cents per minute of playing time or fraction thereof, for 2023, and include inflation-based adjustments for subsequent years of the rate period.
The headline royalty rate for most other digital phonorecords, including interactive streams, will be set at 15.1 to 15.35 percent of revenue, over the five-year term. Other significant components of the rate formulae for digital phonorecords, which serve as alternatives to the percent of revenue rates, also increased, including the per-subscriber minimums and the percentage of “Total Content Cost (TCC)” calculations referencing amounts that music service licensees pay to record labels.
The final regulations were the result of a series of negotiated settlements arrived upon amongst the vast majority of participants in the rate proceeding conducted by the Copyright Royalty Judges. The settlement proposals were submitted to the Copyright Royalty Judges for consideration under the process and legal criteria set forth in the Copyright Act, which includes a provision allowing non-settling participants in the proceeding an opportunity to comment and to object to the settlement agreements, and a provision allowing non-participants who would be bound by the terms, rates, or other determination set by the settlement agreements an opportunity to comment on the agreements. The Copyright Royalty Judges also received and considered the settling participants’ comment regarding the initial proposed settlement.
After having considered the input in support of and in opposition to the settlement agreements, the Copyright Royalty Judges refused to adopt one settlement agreement and adopted two settlement agreements, the latter of which are embodied in the final regulations.
The regulatory language codifying the applicable rates and terms are available on the Copyright Royalty Board website: https://www.crb.gov/fedreg/
Refusal to adopt initial proposed settlement: https://www.govinfo.gov/content/pkg/FR-2022-03-30/pdf/2022-06691.pdf
Final Rule on Subpart B: https://www.govinfo.gov/content/pkg/FR-2022-12-16/pdf/2022-27237.pdf
Final Rule on Subpart C & D: https://www.govinfo.gov/content/pkg/FR-2022-12-30/pdf/2022-28316.pdfMore Announcements
The Copyright Royalty and Distribution Reform Act of 2004 (CRDRA) established the Copyright Royalty Judges program in the Library of Congress. The Copyright Royalty Judges (Judges) oversee the copyright law’s statutory licenses, which permit qualified parties to use multiple copyrighted works without obtaining separate licenses from each copyright owner.
The Judges determine and adjust royalty rates and terms applicable to the statutory copyright licenses. They also oversee distribution of royalties deposited with the Copyright Office by certain statutory licensees and adjudicate controversies relating to the distributions.
The Judges are appointed by the Librarian of Congress to serve staggered six-year terms. Each may be reappointed to subsequent six-year terms.
Under the CRDRA, each judge must have a law degree and at least seven years’ legal experience. In addition, one judge must have significant knowledge of copyright law, one must have significant knowledge of economics, and one must have a minimum of five years’ judicial or quasi-judicial experience. The board of Judges consists of David P. Shaw, (chief judge), Judge David R. Strickler (economics), and Judge Steve Ruwe (copyright). Judge Shaw is serving as chief judge; Judge Strickler’s current term ends in January 2028; and Judge Ruwe’s current term ends in December 2025.
David P. ShawChief Copyright Royalty Judge
David R. StricklerCopyright Royalty Judge
Steve RuweCopyright Royalty JudgeRead more