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account and a total royalty fee for the period covered by the
statement, based on the royalty rates specified by clause (4).
(3) In the absence of a negotiated license, failure to record the
notice, file the statement, or deposit the royalty fee prescribed
by clause (2) renders the public performance of a sound record-
ing actionable as an act of infringement under section 501 and
fully subject to the remedies provided by sections 502 through
505, but not including the criminal remedies provided by sec-
tion 506.

(4) The annual royalty fees under this subsection may, at the
user's option, be computed on either a blanket or a prorated basis.
Although a negotiated license may be substituted for the compul-
sory license prescribed by this subsection, in no case shall the
negotiated rate amount to less than the applicable rate provided
by this clause. The following rates shall be applicable:

(A) For a radio or television broadcast station licensed by
the Federal Communications Commission, the blanket rate
is 2 percent of the net receipts from advertising sponsors dur-
ing the applicable period. The alternative prorated rate is a
fraction of 2 percent of such net receipts, based on a calcu-
lation made in accordance with a standard formula that the
Register of Copyrights shall prescribe by regulation, taking
into account the amount of the station's commercial time
devoted to playing copyrighted sound recordings and whether
the station is a radio or television broadcaster.

(B) Subject to section 111, for background music services
and other transmitters of performances of sound recordings
the blanket rate is 2 percent of the gross receipts from sub-
scribers or others who pay to receive the transmission during
the applicable period. The alternative prorated rate is a frac-
tion of 2 percent of such gross receipts, based on a calculation
made in accordance with a standard formula that the Register
of Copyrights shall prescribe by regulation, taking into ac-
count the proportion of time devoted to musical performances
by the transmitter during the applicable period, and the ex-
tent to which the transmitter is also the owner of copyright
in the sound recordings performed during said period.
(C) For an operator of coin-operated phonorecord players,
as that term is defined by section 116, and for a cable system,

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as that term is defined by section 111, the compulsory licensing rates shall be governed exclusively by those respective sections, and not by this subsection.

(D) For all other users not otherwise exempted, the blanket rate is $25 per year for each location at which copyrighted sound recordings are performed. The alternative prorated rate shall be based on the number of separate performances of such works during the year and, in accordance with a standard formula that the Register of Copyrights shall prescribe by regulation, shall not exceed $5 per day of use. (d) EXEMPTIONS.—In addition to users exempted from liability by section 110 or subject to the provisions of section 111 or 116, any person who publicly performs a copyrighted sound recording and who would otherwise be subject to liability for such performance is ex15 empted from liability for infringement and from the compulsory 16 licensing requirements of this section, during the applicable annual 17 period, if

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(1) In the case of a broadcast station, its gross receipts from advertising sponsors were less than $25,000; or

(2) In the case of a background music service or other transmitter of performances of sound recordings, its gross receipts from subscribers or others who pay to receive the transmission were less than $10,000.

(e) DISTRIBUTION OF ROYALTIES.—

(1) During the month of September in each year, every person claiming to be entitled to compulsory license fees under this section for performances during the preceding twelve-month period shall file a claim with the Register of Copyrights, in accordance with requirements that the Register shall prescribe by regulation. Such claim shall include an agreement to accept as final, except as provided in section 809 of this title, the determination of the Copyright Royalty Tribunal in any controversy concerning the distribution of royalty fees deposited under subclause (B) of subsection (c) (2) of this section to which the claimant is a party. Notwithstanding any provisions of the antitrust laws (the Act of October 15, 1914, 38 Stat. 730, and any amendments of any such laws), for purposes of this subsection any claimants may agree among themselves as to the proportionate division of compulsory licensing fees among them, may lump their claims together and

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file them jointly or as a single claim, or may designate a common agent to receive payment on their behalf.

(2) After the first day of October of each year, the Register of Copyrights shall determine whether there exists a controversy concerning the distribution of royalty fees deposited under subclause (B) of subsection (c) (2). If he determines that no such controversy exists, he shall, after deducting his reasonable administrative costs under this section, distribute such fees to the copyright owners and performers entitled, or to their designated agents. If he finds that such a controversy exists he shall certify to that fact and proceed to constitute a panel of the Copyright Royalty Tribunal in accordance with section 803. In such cases the reasonable administrative costs of the Register under this section shall be deducted prior to distribution of the royalty fee by the tribunal. (3) For the purposes of this section

(A) One half of all royalties to be distributed shall be paid to the copyright owners, and the other half shall be paid to the performers, of the sound recordings for which claims have been made under clause (1); and

(B) During the pendency of any proceeding under this section, the Register of Copyrights or the Copyright Royalty Tribunal shall withhold from distribution an amount sufficient to satisfy all claims with respect to which a controversy exists, but shall have discretion to proceed to distribute any

amounts that are not in controversy.

(f) RELATION TO OTHER SECTIONS.-The public performance of sound recordings by means of secondary transmissions and coin-operated phonorecord players is governed by sections 111 and 116, respectively, and not by this section, except that there shall be an equal distribution of royalty fees for such public performances between copyright owners and performers as provided by subsection (e) (3) (A) of this section.

(g) DEFINITIONS.-As used in this section, the following terms and their variant forms mean the following:

(1) "Commercial time" is any transmission program, the time for which is paid for by a commercial sponsor, or any transmission program that is interrupted by a spot commercial announcement at intervals of less than fourteen and one-half minutes.

(2) "Performers" are musicians, singers, conductors, actors,

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narrators, and others whose performance of a literary, musical, or dramatic work is embodied in a sound recording.

§ 115. Scope of exclusive rights in nondramatic musical works: Compulsory license for making and distributing phonorecords

In the case of nondramatic musical works, the exclusive rights provided by clauses (1) and (3) of section 106, to make and to distribute phonorecords of such works, are subject to compulsory licensing under the conditions specified by this section.

(a) AVAILABILITY AND SCOPE OF COMPULSORY LICENSE.—

(1) When phonorecords of a nondramatic musical work have been distributed to the public under the authority of the copyright owner, any other person may, by complying with the provisions of this section, obtain a compulsory license to make and distribute phonorecords of the work. A person may obtain a compulsory license only if his primary purpose in making phonorecords is to distribute them to the public for private use.

(2) A compulsory license includes the privilege of making a musical arrangement of the work to the extent necessary to conform it to the style or manner of intrpretation of the performance involved, but the arrangement shall not change the basic melody or fundamental character of the work, and shall not be subject to protection as a derivative work under this title, except with the express consent of the copyright owner.

(b) NOTICE OF INTENTION TO OBTAIN COMPULSORY LICENSE; DESIGNATION OF OWNER OF PERFORMANCE RIGHT.

(1) Any person who wishes to obtain a compulsory license under this section shall, before or within thirty days after making, and before distributing any phonorecords of the work, serve notice of his intention to do so on the copyright owner. If the registration or other public records of the Copyright Office do not identify the copyright owner and include an address at which notice can be served on him, it shall be sufficient to file the notice of intention in the Copyright Office. The notice shall comply, in form, content, and manner of service, with requirements that the Register of Copyrights shall prescribe by regulation.

(2) If the copyright owner so requests in writing not later than ten days after service or filing of the notice required by clause (1), the person exercising the compulsory license shall designate, on a label or container accompanying each phonorecord of the work

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distributed by him, and in the form and manner that the Register of Copyrights shall prescribe by regulation, the name of the copyright owner or his agent to whom royalties for public performance of the work are to be paid.

(3) Failure to serve or file the notice required by clause (1), or to designate the name of the owner or agent as required by clause (2), forecloses the possibility of a compulsory license and, in the absence of a negotiated license, renders the making and distribution of phonorecords actionable as acts of infringement under section 501 and fully subject to the remedies provided by sections 502 through 506.

(c) ROYALTY PAYABLE UNDER COMPULSORY LICENSE.—

(1) To be entitled to receive royalties under a compulsory license, the copyright owner must be identified in the registration or other public records of the Copyright Office. The owner is entitled to royalties for phonorecords made and distributed after he is so identified but he is not entitled to recover for any phonorecords previously made and distributed.

(2) Except as provided by clause (1), the royalty under a compulsory license shall be payable for every phonorecord made and distributed in accordance with the license. With respect to each work embodied in the phonorecord, the royalty shall be either two and one-half cents, or one-half cent per minute of playing time or fraction thereof, whichever amount is larger.

(3) Royalty payments shall be made quarterly, in January, April, July, and October, and shall include all royalties for the

27 three months next preceding. Each quarterly payment shall be accompanied by a detailed statement of account, which shall comply in form, content, and manner of certification with requirements that the Register of Copyrights shall prescribe by regulation.

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(4) If the copyright owner does not receive the quarterly payment and statement of account when due, he may give written notice to the licensee that, unless the default is remedied within thirty days from the date of the notice, the compulsory license will be automatically terminated. Such termination renders the making and distribution of all phonorecords, for which the royalty had not been paid, actionable as acts of infringement under section 501 and fully subject to the remedies provided by sections 502 through 506.