FR 2025-02220

In a recent document published by the Copyright Royalty Board (CRB), amendments have been made to a proposed rule concerning the rates and terms for digital performances of sound recordings by new subscription services and the creation of ephemeral recordings necessary to facilitate these transmissions. The initial rule, proposed on December 19, 2024, had errors in the formula for calculating rate adjustments due to missing parentheses. These errors have now been corrected, and the document clarifies the correct formulas.

General Summary

The document is a part of a larger regulatory framework aimed at determining how new subscription services should be charged for the digital performance of sound recordings from 2026 to 2030. Ephemeral recordings, which are temporary copies made to enable streaming, are also covered. The correction specifically addresses the mathematical formulas used to determine the rates, ensuring they are logically sound and can be implemented correctly.

Significant Issues or Concerns

There are several issues worth noting in this publication:

1. Complexity in Public Engagement: The process and instructions for public comment submission are detailed and somewhat intricate. Potential commenters must navigate a multi-step sign-up and authentication process on an electronic platform, which could be daunting for those not adept with technology.

2. Lack of Contextual Information: The correction involves technical formulas, yet there is little context given for the variables used, like ‘Cy’. Furthermore, there is no explanation about how or if these rates will be regularly adjusted during the specified period, leading to possible uncertainties.

3. Limitation in Scope of Corrections: The correction only applies to two types of contracts—Stand-Alone and Bundled Contracts. If other types of contracts exist, stakeholders involved in those areas might find the document insufficient.

4. Communication with CRB: The contact information provided lists a name and phone number but does not provide additional context about the role of Anita Brown, potentially narrowing understanding and access for those seeking more information.

Impact on the Public and Stakeholders

Public

For the general public, particularly consumers of music streaming services, this document might not have a direct immediate impact, as it deals with the behind-the-scenes regulations affecting how these services pay royalties. However, changes in cost structures for service providers could eventually influence subscription fees or service offerings for consumers.

Specific Stakeholders

For the service providers, particularly new subscription offerings, the clarified formulas are crucial as they directly impact the financial calculations and economic viability of their business models. Service providers may have to adjust their pricing strategies or renegotiate contracts based on these revised regulations.

On the positive side, accurate formulas ensure fair and balanced financial obligations. However, the lack of clarity around formula variables could create challenges in planning and forecasting costs.

In conclusion, while this document attempts to rectify previous errors, its effectiveness depends on the accessibility of the comment submission process and the comprehensiveness of the corrections made. Authorities need to consider simplifying the engagement process and offering more thorough explanations to bolster understanding and compliance among stakeholders.

In reviewing the Federal Register document regarding the proposed regulations for the digital performance of sound recordings, specific attention is given to the financial adjustments outlined in the corrected formulas, as these directly impact the monetary dealings and contractual arrangements for the stakeholders involved.

Financial References and Their Implications

The document provides corrected formulas for rate adjustments concerning two types of contractual arrangements: Stand-Alone Contracts and Bundled Contracts. For Stand-Alone Contracts, the rate adjustment formula is expressed as (1 + (Cy−315.664)/315.664) × $0.0234. Similarly, for Bundled Contracts, the formula is (1 + (Cy−315.664)/315.664) × $0.0390.

These formulas are crucial as they define how rates will be calculated for new subscription services utilizing sound recordings. The document, however, does not fully elucidate the determination or definition of the variable Cy within these formulas, which leaves room for interpretation and potential confusion among stakeholders regarding how these rates will change relative to Cy's value.

Relationship to Identified Issues

One of the key issues identified in the document is the lack of specificity regarding the frequency of rate adjustments during the 2026-2030 period. This absence of detail could result in significant uncertainty for service providers who must budget and plan financially based on these rates. The stated formulas, while corrected, do not address how often or under what circumstances the rates can be modified, leaving stakeholders potentially unprepared for future changes.

Additionally, other non-financial elements such as the complexity of submitting comments and the need for multi-factor authentication could discourage stakeholders from participating in the feedback process, which might lead to less informed or balanced feedback on the financial aspects of the rule.

Conclusion

The corrected financial formulas in the document suggest precise methodologies for calculating rates for Stand-Alone and Bundled Contracts. However, the ambiguity around the variable Cy and the potential variability in the frequency of rate adjustments remain significant areas of concern. These gaps highlight the need for stakeholders to seek further clarification on these points to better understand the financial implications of these proposed rules on their operations.