Wednesday, November 21, 2007

The King Makes His Mark


It's official. Howard Stern is the King of All Media. He received the trademark registration Tuesday, 13 November. The news is a little dated due to very limited access in the land of pork and potatoes. It's good to be back home for the holidays, but soon I go back again.

The image to the side shows the first use of the "King of All Media".

Mark Image
Word Mark KING OF ALL MEDIA
Goods and Services IC 041. US 100 101 107. G & S: Entertainment services, namely, live performances and an on-going radio, satellite, and television broadcast program, all by a radio, satellite radio and television personality featuring humorous observations of the human condition. FIRST USE: 19940000. FIRST USE IN COMMERCE: 19940000
Standard Characters Claimed
Mark Drawing Code (4) STANDARD CHARACTER MARK
Serial Number 78970100
Filing Date September 8, 2006
Current Filing Basis 1A
Original Filing Basis 1A
Published for Opposition August 28, 2007
Registration Number 3335302
Registration Date November 13, 2007
Owner (REGISTRANT) Stern, Howard INDIVIDUAL UNITED STATES c/o One Twelve Inc. 600 Madison Avenue New York NEW YORK 10022
Attorney of Record Michael A. Cornman
Type of Mark SERVICE MARK
Register PRINCIPAL
Live/Dead Indicator LIVE


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Friday, November 09, 2007

Royalty Rates Proposed for New Subscription Service

Today, the Copyright Royal Board (CRB) published its royalty rate proposal for a new subscription service. How does this concern satellite radio, you ask? It affects it directly. These are the royalty rates for satellite radio on satellite TV. The proposed rates are given below:

§ 383.3 Royalty fees for public
performances of sound recordings and the
making of ephemeral recordings.
(a) Royalty rates. Royalty rates for the
public performance of sound recordings
by eligible digital transmissions made
over a Service pursuant to 17 U.S.C.
114, and for ephemeral recordings of
sound recordings made pursuant to 17
U.S.C. 112 to facilitate such
transmissions, are as follows. Each
Licensee will pay, with respect to
content covered by the License that is
provided via the Service of each such
Licensee:
(1) For Stand-Alone Contracts, the
greater of:
(i) 15% of Revenue, or
(ii) The following monthly minimum
payment per Subscriber to the Service of
such Licensee—
(A) From inception through 2006:
$0.0075
(B) 2007: $0.0075
(C) 2008: $0.0075
(D) 2009: $0.0125
(E) 2010: $0.0150 and
(2) For Bundled Contracts, the greater
of:
(i) 15% of Revenue allocated to reflect
the objective value of the Licensee’s
Service, or
(ii) The following monthly minimum
payment per Subscriber to the Service of
such Licensee:
(A) From inception through 2006:
$0.0220
(B) 2007: $0.0220
(C) 2008: $0.0220
(D) 2009: $0.0220
(E) 2010: $0.0250
(b) Minimum fee. Each Licensee will
pay an annual, non-refundable
minimum fee of one hundred thousand
dollars ($100,000), payable on January
31 of each calendar year in which the
Service is provided pursuant to the
section 112 and 114 statutory licenses,
but payable pursuant to the applicable
regulations for all years 2007 and
earlier. Such fee shall be recoupable and
credited against royalties due in the
calendar year in which it is paid.

§ 383.4 Terms for making payment of
royalty fees.
(a) Subject to the provisions of this
section, terms governing timing and due
dates of royalty payments, late fees,
statements of account, audit and
verification of royalty payments and
distributions, cost of audit and
verification, record retention
requirements, treatment of Licensees’
confidential information, distribution of
royalties, unclaimed funds, designation
and definition of the collection and
distribution organization, and any
definitions for applicable terms not
defined herein and not otherwise
inapplicable shall be those adopted by
the Copyright Royalty Judges for
subscription transmissions and the
reproduction of ephemeral recordings
by preexisting satellite digital audio
radio services in Docket No. 2006–1
CRB DSTRA (‘‘the SDARS Proceeding’’).
(b) Without prejudice to any
applicable notice and recordkeeping
provisions, statements of account shall
not require reports of performances.
(c) If the Copyright Royalty Judges
adopt reports of use regulations in the
SDARS Proceeding, those regulations, if
any, shall govern Licensees’ obligations
to report sound recordings used
pursuant to this part, except that
Licensees also shall report to
SoundExchange which channels are
transmitted by their respective
Providers for all past, current and future
periods. In the event that the Copyright
Royalty Judges do not adopt reports of
use regulations in the SDARS
Proceeding, then reports of use provided
by XM Satellite Radio Inc. (‘‘XM’’) and
Sirius Satellite Radio Inc. (‘‘Sirius’’) for
their use of sound recordings on their
preexisting satellite digital audio radio
services (as defined in 17 U.S.C.
114(j)(10)) shall be deemed to satisfy
XM’s and Sirius’ obligations to report
sound recordings used pursuant to this
part, and MTV Networks shall provide
census reporting, retroactive to the
inception of its Service.
Dated: November 6, 2007.
James Scott Sledge,
Chief Copyright Royalty Judge.
[FR Doc. E7–22044 Filed 11–8–07; 8:45 am]

On a separate note, those you who haven't read the Billboard interview with Chief CRB Judge James Sledge, you can read it here. It is an interesting read.



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Tuesday, November 06, 2007

Random Comments on the Recent FCC Document Request

There have been a lot of comments by analysts over the recent document request by the FCC. Some say it means that a decision by the FCC is close at hand. Others say it means that a decision won't be rendered anytime soon. In the context of recent headlines, we don't see how any analyst could conclude that a decision is close at hand. Without the recent headlines, close might mean 3 months. However, the headlines seem to indicate that a DOJ decision could be rendered this week. So, it that context, "close" means to us this week or next. That isn't going to happen. We do believe the Commission is "close" to beginning its determination but it is a long way from being finished.

The FCC already has most of this information at its disposal. However, the FCC is a ubiquitous organization. It could be that those making the decisions don't have the information ready at their disposal; i.e., they can't find it. Plus, the same information has already been provided to the DOJ, so it is probably less of a burden just to ask the satcasters for the information. We were amazed at the brevity of the merger application in light of the application of the DirecTV/EchoStar application. The XM and Sirius have been accused of trying to exempt themselves from the conventional merger analysis. Their application seems to reflect this. Most all of this information should have been included in the original application. In our opinion, the request is just the FCC attempt to acquire all the information it needs to perform a conventional merger analysis. It is a lot of information to process. First the FCC must digest the material, analyze it against the horizontal merger guidelines, generate its determination, fact check, review, spell check, and perform the final review, or something along those lines. If the FCC has already digested the filed comments and has already started forming an opinion, we don't see a determination is less than 3 months. If not, it might be more like six months. It certainly is not a matter of weeks.

For those that favor the merger, it does bode well in the sense that FCC is not summarily rejecting it; however, it means nothing in how it might ultimately rule. It gives hope; that's about it, in our humble opinion.

One question conspicuous by its absence is anything on satellite weather. This is an area of a clear monopoly should the merger be approved. The FCC obviously is not concerned about it, so this is a positive for those favoring the merger.

The detailed request for the number of FM and AM stations in each census block and in each zip code leads one to believe that the FCC is considering terrestrial radio as competition. If so, this would be a major victory for the pro merger camp.

There are lots and lots of questions on interoperable radios. Interoperable radios were a major theme throughout the comment period. The failure of XM and Sirius to comply with the interoperable mandate could be an issue with the FCC. The toughest questions are about interoperable radios. The FCC isn't leaving any wiggle room. It is about time, in our opinion, to resolve this issue.

The technical details for the repeaters is a bit puzzling. The FCC doesn't seem to be focusing on violations that many of the merger opponents have disparaged the satcasters about. That's a positive for the merger camp, but we never thought it would get any play. It's just the technical details the Commission seeks. Maybe the FCC is attempting to determine how one system might be adapted to another. The details would seem to have little bearing on the merger. The receiver details are applicable with respect to interoperability. The step to migrate all of XM's subscribers to a common platform is a very telling request. The FCC is at least entertaining the idea of whether or not a single platform is feasible. If so, then this could imply the possible lost of the XM or Sirius frequency band.

The FCC is certainly not taking the public benefit claims at face value. It is digging into the details. XM and Sirius will have to prove their claims. This is likely the meat of the request. If it is not a public benefit, the merger will not be approved. There in no focus on minority programming. It doesn't appear that this will be an issue. The recent opportunism by Georgetown Partners would likely get much play, in our opinion.

In the final analysis, we see it neither as positive nor negative. However, it seems to indication that the final determination by the FCC is months away.

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XM Document Request

Below is the text of the FCC request from XM for additional information. We thought it might be useful to have the text version available to make it easier to cut and paste. We apologize in advance for the formatting. We will work on it as we have time.

Information and Document Request for XM Satellite Radio Holdings Inc.

INFORMATION AND DOCUMENT REQUEST FOR XM SATELLITE RADIO HOLDINGS INC.

November 2, 2007

Corporate Documents and Other Agreements:

A. Provide any and all agreements and like documents relating to the Transaction, including, but not limited to, the Merger Agreement and any and all attachments, appendices, side or separate letter agreements and like documents by and between the Applicants.

B. Provide any documents relating to:

(1) agreements with major retailers, including, but not limited to, Wal-Mart, Best Buy and Circuit City, relating to the marketing and sale of XM radio receivers and related equipment (including FM wireless transmitter modulators), including commissions, advertising credits, subsidies, co-share advertising arrangements and the provision of complimentary XM service subscriptions to equipment purchasers;

(2) agreements with aftermarket equipment manufacturers or distributors, including, but not limited to, Audiovox, Delphi, Pioneer, AGT, Alpine, Sony, Polk and eton/Grundig, relating to the manufacture, distribution and/or marketing of XM radio receivers and/or related equipment (including FM wireless transmitter modulators), including commissions, advertising credits, subsidies, co-share advertising arrangements and the provision of complimentary XM service subscriptions to equipment purchasers;

(3) programming agreements relating to specialized channels, including sports and entertainment programming, including, but not limited to, Major League Baseball, MLB Home Plate, National Hockey League, the PGA Tour, Andretti Green Racing, Indy Racing League, ESPN Radio, ESPN Sports, Fox News, Fox Sports, CNN and the Food Network;

(4) agreements relating to programming with celebrity talent, including, but not limited to, Oprah Winfrey, Bob Dylan, Snoop Dog, Ludacris, Ellen DeGeneres, Tyra Banks, Bill O’ Reilly, Larry King, Opie and Anthony, and Graham Nash;

(5) agreements with car, truck, boat, recreational vehicle and motorcycle manufacturers relating to the marketing, sale and/or installation of XM equipment and service contracts, including revenue sharing, training for vehicle sales staff, service activation, subsidies, provision of complimentary XM subscriber service to vehicle purchasers and lessees, and other services;

(6) licensing agreements with, including provisions regarding subsidies to, chipset manufacturers relating to chip and other equipment component sales to consumer electronic manufacturers for use with licensed XM radio receivers; Information and Document Request for XM Satellite Radio Holdings Inc.

(7) agreements relating to joint operations with Internet Service Providers (e.g., AOL), mobile phone companies, satellite video distributors (e.g., DIRECTV), or other entities regarding the use or distribution of XM-branded programming, including music, talk or sports channels, or other non-XM branded channels (e.g., National Public Radio);

(8) agreements with car, truck, recreational vehicle and motorcycle rental companies, such as Avis, National, Alamo and Zipcar, relating to the provision of XM radios and XM service in rental vehicles, including revenue sharing, training for vehicle rental staff; commissions, advertising credits, subsidies, co-share advertising arrangements and the provision of complementary XM service to vehicle renters;

(9) agreements between XM and Sirius relating to the joint engineering operation for the research and development of interoperable radio receivers; and

(10) agreements between XM and Sirius between 1997 and the present relating to sales, programming, service or equipment.

Data, Studies and Analyses

A. Provide all company-sponsored surveys and studies cited in the Joint Opposition to Petitions to Deny and Reply Comments or otherwise submitted to the Commission by or on behalf of XM, or XM and Sirius, in this proceeding, and any underlying data and analyses.1

B. Provide the following materials, as well as any underlying data or analyses, used in the CRA Economic Analysis of the Competitive Effects of the Sirius-XM Merger:

(1) the number of FM and AM stations reaching each census block in the lower- 48 United States states (“lower-48 states”);

(2) the average number of FM and AM stations reaching each Zip Code Tabulation Area (“ZCTA”) in the lower-48 states;

(3) the number of XM subscribers in each ZCTA in the lower-48 states; and

(4) the cited demographic information for each ZCTA in the lower-48 states.

C. Provide any underlying data and analyses used in the Furchtgott-Roth Economic Enterprises’ study of the Sirius-XM Merger that are not already in the public record.

D. Provide all studies, analyses, evaluations, and strategic discussion materials prepared by or for XM, or XM and Sirius, after January 1, 2005, that are intended to offer guidance on the economic advisability of the proposed merger.

E. Provide all studies, analyses, and evaluations prepared by or for XM of subscriber churn from the automobile and retail sales sectors, respectively, for the period January 2001, to the present.

1 See XM Satellite Radio Holdings Inc., Transferor, and Sirius Satellite Radio, Inc., Transferee, Joint Opposition to Petitions to Deny and Reply Comments of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., MB Docket No. 07-57, filed July 24, 2007. Information and Document Request for XM Satellite Radio Holdings Inc.

F. Provide all surveys, analyses, and evaluations of listener behavior prepared by or on behalf of XM, including, but not limited to, audience studies (i.e., ratings data, usage, audience demographics, and geographic distribution of audience) for the period January 2001, to the present.

G. Provide all studies, analyses, and evaluations prepared by or on behalf of XM, or XM and Sirius, performed after January 1, 2005, regarding price projections for proposed new programming options and a la carte packages, including information relating to price stability, channels per programming package, and pricing comparisons between the current basic $12.95 package and new programming options on a per-channel basis.

H. Provide the following information on all promotions conducted by XM involving pricing, rebates, coupons, and all other forms of discounts offered to new or existing subscribers (including, but not limited to, discounts on equipment, service activation fees, installation charges, and service fees, such as free or discounted service trial periods), for the period January 1, 2005, to the present:

the name of the promotion;

the beginning date of the promotion;

the ending date of the promotion;

(4) the nature of the promotion (coupons, rebates, promotional pricing, etc.);

the effect of the promotion on prices (e.g., reduced monthly price by $5 per month for three months, two free months of service, $50 rebate on a radio, no activation fee, etc.);

(6) the eligibility and other requirements (e.g., new customers only, minimum subscription periods, purchases from specific retailers or original equipment manufacturers (“OEMs”), or of specific equipment, geographical limitations, etc.); and

(7) the number of subscribers that took advantage of the promotion.

I. For each such promotion described in the response to Question H above, provide copies of all documents supporting the response or otherwise relating to the promotion. Technical Information

A. Provide a list of the XM terrestrial repeaters deployed in each market since January 2001, and, for each such terrestrial repeater, provide the following information:

(1) latitude, longitude, and community;

(2) antenna type;

(3) antenna orientation;

(4) antenna downtilt;

(5) antenna height;

(6) Equivalent Isotropically Radiated Power (“EIRP”);

(7) dates that operation of the facility with those parameters commenced and ended;

(8) description of any technical modification to the facility; and

(9) dates that operation of the modified facility commenced and ended. Information and Document Request for XM Satellite Radio Holdings Inc.

B. Provide the methods or technologies of coding, compression, encryption, modulation, signal bandwidth and bit rate for both satellite and terrestrial repeater networks used since January 2001.

C. List all receiver models sold since January 2001 and include all chipsets data including the manufacturer of the chipset used in them. Provide any statistics showing whether these receivers could become interoperable with minor changes in the chipset design or in the software program of these receiver chips.

D. Provide the data sheet of technical characteristics for each chipset used in all receiver models sold since January 2001.

. Provide a description of all efforts to develop and commercialize interoperable satellite radio receivers and any difficulties in such development and commercialization. F. Describe all steps necessary to migrate all of XM’s subscribers to a common technology platform and the cost the company and its customers will incur to implement such a migration.

G. Provide maps, in .gxt format where possible, of the actual or expected geographic coverage area(s) for each of the XM satellites already in orbit or under development, including associated power flux density contours. Describe what factors went into the selection of the geographic coverage areas for the XM satellite networks, as well as any technical, economic, or other considerations that limit the ability of the XM satellite network to serve U.S. states and territories outside the contiguous United States.

IV. Claimed Public Interest Benefits

A. Provide a detailed description of each of the cost savings expected to be realized as a result of the proposed transaction. For each of these anticipated cost savings:

(1) provide a full explanation as to why those cost savings would not be achieved absent the proposed transaction;

(2) provide a quantification of the cost savings and an explanation of how the quantification was calculated, including all assumptions and their sources;

(3) state separately the one-time fixed cost savings, recurring fixed cost savings, and variable cost savings (in dollars per unit and dollars per year); and

(4) provide sufficient supporting evidence to demonstrate that these cost savings will result in cognizable public interest benefits under our merger review standard.

B. Describe any other efficiencies that are expected to occur as a result of the proposed transaction. For each of these other anticipated efficiencies:

(1) provide a full explanation as to why those efficiencies would not be achieved absent the proposed transaction; Information and Document Request for XM Satellite Radio Holdings Inc. Page 5 of 12

(2) provide a quantification of the efficiencies and an explanation of how the quantification was calculated, including all assumptions and their sources; and

(3) provide sufficient supporting evidence to demonstrate that these efficiencies will result in cognizable public interest benefits under our merger review standard.

C. With respect to the synergies Applicants expect will materialize and result in more programming choices at lower prices, including claimed benefits from a la carte programming and programming efficiencies: (see Consolidated Application at 9-11, 13, 172; Joint Opposition at 10-14, 19-21):

(1) list each audio and video channel distributed in the United States currently by XM and for each such channel state: (a) whether the content is exclusive to XM; and (b) whether the content is also available on Sirius or over other media, including but not limited to terrestrial broadcast radio, cable television, Internet stream or download/podcast, or HD radio;

(2) for each channel identified in question (1)(a), indicate whether the company has obtained the rights necessary, if any, to distribute the programming by the combined company on an a la carte basis or as part of the “best of” or other proposed programming packages.

(3) with respect to the claim that the “combined company will be able to consolidate redundant programming,” provide a list of channels which are duplicative on XM and Sirius and expected to be consolidated.

(4) explain why the proposed billing credit for subscribers who do not elect adult programming is a merger-specific benefit. In addition, address whether the Company would offer such a credit in the absence of merger approval.

(5) explain what short-term and long-term plans currently exist to “provide increased opportunities for a wider variety of content providers,” to distribute niche programming to a wider audience via the merged entity. Explain why this benefit will only be achieved through the Transaction.

(6) with respect to radio receivers and other equipment needed to access the proposed, new program packages: (a) provide all documents regarding the claim that “subscribers will be able to continue to use their existing radios.” Explain in detail what equipment, including any enhancements or additional devices, will be needed by subscribers to access these packages. Identify Applicants’ plans regarding target dates and the projected costs to subscribers for any enhancements or additional devices;

2 See XM Satellite Radio Holdings Inc., Transferor, and Sirius Satellite Radio Inc., Transferee, Consolidated Application for Authority to Transfer Control, filed Mar. 20, 2007. Information and Document Request for XM Satellite Radio Holdings Inc. Page 6 of 12 (b) if certain equipment or enhancements will be needed to access certain of these programming packages, but not others, specify the exact equipment and/or enhancements (e.g., chipsets, compression techniques) that will be required to make each of these programming packages available; and

(c) provide all documents regarding the claim that “subscribers will eventually purchase new radios capable of receiving all of the content of both services.” Explain whether all Sirius and XM subscribers – not just subscribers that select a la carte programming – will be required to purchase new radios capable of receiving all of the content of both services.

(7) provide any and all documents that discuss, identify, quantify, or otherwise relate to the anticipated synergies.

D. With respect to Applicants’ claim that the merger will “foster the commercial introduction of interoperable satellite radios” thereby providing greater customer choice and convenience (see Consolidated Application at 15-16):

(1) explain whether Applicants will make commercially available the “radio that is interoperable with each other’s networks” as developed by the jointly funded engineering team and described in the Consolidated Application. If so, explain when this interoperable radio prototype will be commercially available.

(2) if not, explain whether Applicants will make commercially available a different radio prototype capable of receiving Applicants’ combined signals, and when it will be available for commercial distribution.

(3) provide all documents that detail the intermediate steps, internally and with regard to equipment manufacturers, that will occur prior to the commercial availability of radios capable of receiving all of the content of both services.

(4) identify Applicants’ plans and target dates for the commercial distribution of interoperable radios at retail distribution centers and via automobile manufacturers. As part of this response, explain Applicants’ plans for making new receiver equipment or enhancements available to consumers who have existing automobile SDARS receivers.

(5) identify electronics manufacturers who have committed to, or have expressed an interest in, producing Applicants’ interoperable radio;

(6) identify anticipated prices for such equipment;

(7) identify and describe Applicants’ plans to subsidize interoperable radios;

(8) identify OEMs that have committed to installing interoperable radios. (9) provide any and all documents that discuss, identify, quantify, or otherwise relate to the anticipated synergies; and

(10) explain why these claimed benefits will be achieved only through the Transaction.

E. With respect to Applicants’ claim that the merger will accelerate deployment of advanced technology (see Consolidated Application at 14):

(1) identify the “wider range of low cost, easy-to-use, multi-functional devices” that will result from the merger; Information and Document Request for XM Satellite Radio Holdings Inc. Page 7 of 12

(2) identify the planned new services, such as advanced data and telematics services, including enhanced traffic, weather and infotainment offerings that will result from the merger;

(3) identify any plans to make available to XM subscribers a service similar to SIRIUS Backseat TV, and when this service will be available to XM subscribers (see Joint Opposition at 22);

(4) explain how the merger will enhance the delivery of emergency services programming and information (see Joint Opposition at 24);

(5) with regard to XM’s services to business/commercial customers: (a) identify services offered by XM and the subscription fees; and (b) identify which services will be available post-merger, their subscription fees, and any distinctions between services currently available; and 6. explain why these claimed benefits will be achieved only through the Transaction;

(7) provide any and all documents that discuss, identify, quantify, or otherwise relate to the anticipated synergies and claims.

F. With respect to Applicants’ claim that the merger will safeguard the future of satellite radio and produce a stronger, more stable competitor in the audio entertainment market (see Consolidated Application at 17-20):

(1) identify whether the merged entity will eliminate any of the satellites currently deployed by Applicants, respectively;

(2) identify whether the merged entity will eliminate any of the repeater networks currently deployed by Applicants, respectively;

(3) identify whether Applicants, absent the merger, will have access to capital markets to sustain continued research, development and technological innovation; and

(4) provide any and all documents that discuss, identify, or otherwise relate to forecasts projecting ahead for periods beyond three years regarding the financial performance of the firm, including but not limited to subscribers, revenues, costs, profits, cash flow, and overall viability of the firm.

G. Describe any other public interest benefits that are expected to occur as a result of the proposed transaction, and provide a full explanation as to why those benefits would not be achieved absent the proposed transaction. Provide documents that serve to provide sufficient support for these benefit claims so that the Commission can verify the likelihood and magnitude of each claimed benefit. Information and Document Request for XM Satellite Radio Holdings Inc.



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Monday, November 05, 2007

Georgetown Partners Latest to Lay Claim to Bandwidth

Radio Online featured an article last Friday about the opposition of the merger by Georgetown Partners (GP), unless the deal is re-structured. It is based on a filing by GP to the FCC on October 18, 2007. GP describes itself as "a minority-owned closely-held limited liability corporation that invests in and manages various properties, including those related to communications."

The group is adamantly opposed to the merger, describing it as, "Simply put, the Sirius and XM transaction as presently structured is detrimental to the public on every meaningful front."

Obviously, it is not too opposed to it. As a remedy, GP advocates the sub-leasing of part of the channel capacity to a minority-controlled entity. In an exparte filing today, GP was more specific. It wants at least 20% of the channel capacity set aside for minority programming to ensure competition and diversity in the satellite radio marketplace. Conveniently, GP would be the one to answer the call.

Unlike Primosphere, GP is not legally entitled to be a satcaster. As a consequence, there could be legal issues with this proposal.


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Saturday, November 03, 2007

Breaking News: Royalty Rates Set at 7.25% of Gross Revenues for Preexisting Subscription Services

The Copyright Royalty judges have made their proposal for the royalty rates for preexisting subscriptions services. There are two parts to the recent trial. One is for the royalty rates for pre-existing subscription services (such as Music Choice) and the other is for satellite radio. Music Choice and SoundExchange reached an agreement shortly before the trial ended. If we are interpreting this correctly, this only applies to the agreement reached between Music Choice and SoundExchange and not to satellite radio. However, one might argue that the rates will be similar for satellite radio. It is likely, at least, an upper limit or close to it.

The proposed rate is set at 7.25% of gross revenues. The proposal is now open for public comment until November 30, 2007. If you choose to comment, you must be prepared to participate in future proceedings.

Here is the summary:

37 CFR Part 382 [Docket No. 2006–1 CRB DSTRA] Adjustment of Rates and Terms for Preexisting Subscription and Satellite Digital Audio Radio Services AGENCY: Copyright Royalty Board, Library of Congress.

ACTION: Notice of proposed rulemaking. SUMMARY: The Copyright Royalty Judges are publishing for comment proposed regulations that set the rates and terms for the use of sound recordings by preexisting subscription services for the period January 1, 2008, through December 31, 2012.

DATES: Comments and objections, if any, are due no later than November 30, 2007.

Below are the relevant details:

§ 382.2 Royalty fees for the digital performance of sound recordings and the making of ephemeral phonorecords by preexisting subscription services.

(a) Commencing January 1, 2008, and continuing through December 31, 2011, a Licensee’s monthly royalty fee for the public performance of sound recordings pursuant to 17 U.S.C. 114(d)(2) and the making of any number of ephemeral phonorecords to facilitate such performances pursuant to 17 U.S.C. 112(e) shall be 7.25% of such Licensee’s monthly gross revenues resulting from residential services in the United States.

(b) Commencing January 1, 2012, and continuing through December 31, 2012, a Licensee’s monthly royalty fee for the public performance of sound recordings pursuant to 17 U.S.C. 114(d)(2) and the making of any number of ephemeral phonorecords to facilitate such performances pursuant to 17 U.S.C. 112(e) shall be 7.5% of such Licensee’s monthly gross revenues resulting from residential services in the United States.

(c) Each Licensee making digital performances of sound recordings pursuant to 17 U.S.C. 114(d)(2) and ephemeral phonorecords pursuant to 17 U.S.C. 112(e) shall make an advance payment of $100,000 per year, payable no later than January 20th of each year. The annual advance payment shall be nonrefundable, but the royalties due and payable for a given year or any month therein under paragraphs (a) and (b) of this section shall be recoupable against the annual advance payment for such year; Provided, however, that any unused annual advance payment for a given year shall not carry over into a subsequent year.

(d) A Licensee shall pay a late fee of 1.5% per month, or the highest lawful rate, whichever is lower, for any payment received after the due date. Late fees shall accrue from the due date until payment is received.

(e)(1) For purposes of this section, gross revenues shall mean all monies derived from the operation of the programming service of the Licensee and shall be comprised of the following:

(i) Monies received by Licensee from Licensee’s carriers and directly from residential U.S. subscribers for Licensee’s programming service;

(ii) Licensee’s advertising revenues (as billed), or other monies received from sponsors, if any, less advertising agency commissions not to exceed 15% of those fees incurred to a recognized advertising agency not owned or controlled by Licensee;

(iii) Monies received for the provision of time on the programming service to any third party;

(iv) Monies received from the sale of time to providers of paid programming such as infomercials;

(v) Where merchandise, service, or anything of value is received by Licensee in lieu of cash consideration for the use of Licensee’s programming service, the fair market value thereof or Licensee’s prevailing published rate, whichever is less;

(vi) Monies or other consideration received by Licensee from Licensee’s carriers, but not including monies received by Licensee’s carriers from others and not accounted for by Licensee’s carriers to Licensee, for the provision of hardware by anyone and used in connection with the programming service;

(vii) Monies or other consideration received for any references to or inclusion of any product or service on the programming service; and (viii) Bad debts recovered regarding paragraphs (e)(1)(i) through (vii) of this section.

(2) Gross revenues shall include such payments as set forth in paragraphs (e)(1)(i) through (viii) of this section to which Licensee is entitled but which are paid to a parent, subsidiary, division, or affiliate of Licensee, in lieu of payment to Licensee but not including payments to Licensee’s carriers for the programming service. Licensee shall be allowed a deduction from ‘‘gross revenues’’ as defined in paragraph (e)(1) of this section for affiliate revenue returned during the reporting period and for bad debts actually written off during reporting period.

(f) During any given payment period, the value of each performance of each digital sound recording shall be the same.

Update
It was called to my attention the the 7.25% rate set for the preexisting subscriptions services is the exact same rate as set by the library of congress in 1998. Perhaps this bodes well for the royalty rates for satellite radio remaining the same.


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