May of 2003, the Digital Media Association, the American Federation of Television and Radio
Artists, the American Federation of Musicians of the United States and Canada, and the RIAA
agreed on a proposal for royalty rates to be paid by new subscription services for the period from
1998 through Dec. 31, 2004, and submitted the proposal to the Copyright Office for possible
adoption without a CARP. On May 20, 2003, the Copyright Office published the proposal for
comment.^3216 On Feb. 6, 2004, the Copyright Office adopted the proposal as a final rule.^3217
As noted in the previous subsection, on Nov. 30, 2004, the Copyright Royalty and
Distribution Reform Act of 2004^3218 was enacted, with an effective date of May 31, 2005. That
Act eliminated the CARP system and replaced it with three permanent Copyright Royalty
Judges. In addition, the Act terminated the voluntary negotiation proceeding initiated by the
Copyright Office in February 2004 to set rates for the 2005-2006 period for new subscription
services.^3219 On Feb. 8, 2005, as required by the Act, the Copyright Office published a notice
that the rates and terms for the statutory licenses in effect on Dec. 31, 2004, for new subscription
services, eligible nonsubscription services, and services exempt under Section 114(d)(1)(C)(iv),
as well as the rates and terms for small webcasters published in the Federal Register under the
authority of the SWSA for the years 2003-2004, would remain in effect for at least 2005.^3220 On
Feb. 16, 2005, again as required by the Act, the Copyright Office published a notice initiating a
proceeding, and requesting petitions to participate therein, to establish or adjust rates and terms
for the statutory licenses for new subscription services and eligible nonsubscription services for
the period commencing Jan. 1, 2006.^3221
After two years of testimony, on May 1, 2007, the CRB published in the Federal Register
its final rule and order setting forth its decision as to the royalties that non-interactive new
subscription services must pay to stream copyrighted music over the Internet for the period 2006
through 2010. The details of that decision are set forth in the preceding subsection.
On Oct. 31, 2005, XM Satellite Radio, Inc., filed a Petition to Initiate and Schedule
Proceeding for a “new type of subscription service [which] performs sound recordings on digital
audio channels programmed by the licensee for transmission by a satellite television distribution
service to its residential customers, where the audio channels are bundled with television
channels as part of a ‘basic’ package of service and not for a separate fee.”^3222 The CRB
published a notice in the Federal Register on Dec. 5, 2005 announcing commencement of the
proceedings to set rates and terms for the royalty payments under Sections 112 and 114 for the
activities of the new subscription service described in the XM Petition and soliciting interested
(^3216) 68 Fed. Reg. 27506 (May 20, 2003).
(^3217) 69 Fed. Reg. 5693 (Feb. 6, 2004).
(^3218) Pub. L. No. 108-419, 118 Stat. 2341 (2004).
(^3219) 69 Fed. Reg. 5196 (Feb. 3, 2004).
(^3220) 70 Fed. Reg. 6736 (Feb. 8, 2005).
(^3221) 70 Fed. Reg. 7970 (Feb. 16, 2005).
(^3222) 72 Fed. Reg. 72253 (Dec. 20, 2007).