FR 2021-00182

The document is a public notice from the Copyright Royalty Judges announcing their receipt of a request from SoundExchange, Inc. to audit Music Choice. This audit will verify royalties paid by Commercial Webcasters, Preexisting Subscription Services, and Business Establishment Services over the years 2017, 2018, and 2019. Under U.S. copyright law, there are statutory licenses that set guidelines for the digital transmission of sound recordings. Licensees operating under these should comply with terms and pay the required royalties, which SoundExchange, the designated Collective, manages. This notice, filed by SoundExchange on December 18, 2020, and published in the Federal Register, is a procedural step in initiating the audit.

Significant Issues and Concerns

The document outlines the legal basis for SoundExchange's authority to conduct an audit but omits details on the audit process itself. This may raise concerns about the transparency of what these audits entail and how royalty payments will be scrutinized. Those unfamiliar with legal terms might find references like "17 U.S.C. 114(f)" and "37 CFR parts 380, 382, and 384" to be intricate and challenging to understand. Without more explicit explanations, stakeholders and the public may struggle to fully grasp the document's implications.

Another issue is the lack of detail on the selection of SoundExchange as the sole entity responsible for collecting royalties and conducting audits. If no competitive selection process was used, this setup could provoke concerns about favoritism or a lack of oversight.

Lastly, the notice does not address the precautions or methods to ensure that the audit process remains unbiased and equitable. This absence might prompt questions regarding the fairness and integrity of the audits, crucial elements that stakeholders might rightly expect to be transparent.

Public Impact

For the general public, this document underlines how the law oversees digital music services, safeguarding the interests of creators. By verifying that music services pay royalties accurately, it ensures that artists and rights holders receive fair compensation, reinforcing the value of intellectual property rights.

Impact on Specific Stakeholders

The audit may have significant ramifications for Music Choice and similar entities. Successfully passing the audit could bolster their credibility, while any discrepancies found might necessitate financial or operational adjustments. For sound recording copyright owners and performers, these audits aim to guarantee they are compensated justly, aligning with their rights under copyright law.

Conversely, there is an accountability aspect that SoundExchange must uphold. Being vested with the authority to conduct audits means they must execute these duties with transparency and fairness to maintain trust with the music services, rights owners, and the broader creative community. A perception of partiality or non-compliance with ethical audit standards could erode confidence in their role as the central body for royalty payment verification.