PART 385—RATES AND TERMS FOR USE OF NONDRAMATIC MUSICAL WORKS IN THE MAKING AND DISTRIBUTING OF PHYSICAL AND DIGITAL PHONORECORDS Authority: 17 U.S.C. 115, 801(b)(1), 804(b)(4). Source: 84 FR 2031, Feb. 5, 2019, unless otherwise noted. Subpart A—Regulations of General Application Source: 87 FR 80453, Dec. 30, 2022, unless otherwise noted. § 385.1 General. (a) Scope. (b) Legal compliance. (c) Interpretation. (d) Relationship to voluntary agreements. § 385.2 Definitions. Unless otherwise specified, capitalized terms in this part shall have the same meaning given to them in 17 U.S.C. 115(e). For the purposes of this part, the following definitions apply: Accounting Period Active Subscriber Affiliate Artificial Accounts Bundle e.g., Bundled Subscription Offering Copyright Owner(s) Digital Phonorecord Delivery Eligible Interactive Stream Eligible Limited Download (1) An amount of time not to exceed one month from the time of the transmission (unless the Licensee, in lieu of retransmitting the same sound recording as another Eligible Limited Download, separately, and upon specific request of the End User made through a live network connection, reauthorizes use for another time period not to exceed one month), or in the case of a subscription plan, a period of time following the end of the applicable subscription no longer than a subscription renewal period or three months, whichever is shorter; or (2) A number of times not to exceed 12 (unless the Licensee, in lieu of retransmitting the same sound recording as another Eligible Limited Download, separately, and upon specific request of the End User made through a live network connection, reauthorizes use of another series of 12 or fewer plays), or in the case of a subscription transmission, 12 times after the end of the applicable subscription. End User (1) Pays a subscription fee for an Offering during the relevant Accounting Period; or (2) Makes at least one Play during the relevant Accounting Period. Family Plan Free Trial Offering (1) Neither the Service Provider, the Sound Recording Company, the Copyright Owner, nor any person or entity acting on behalf of or in lieu of any of them receives any monetary consideration for the Offering; (2) The usage does not exceed 45 days per subscriber per one-year period, which days may be nonconsecutive; (3) In connection with the Offering, the Service Provider complies with the recordkeeping requirements in § 385.4 or superseding Copyright Office recordkeeping requirements; (4) The Free Trial Offering is made available to the End User free of any charge; and (5) The Service Provider offers the End User periodically during the trial an opportunity to subscribe to, and/or auto-renews the End User into, a non-Free Trial Offering of the Service Provider. GAAP Licensee Licensed Activity Locker Service Mixed Service Bundle (1) The Offering is made available to End Users only in combination ( i.e., (2) The Offering is made available by a Service Provider that also offers End Users a separate, standalone Subscription Offering. (3) The Offering offers End Users less functionality relative to that separate, standalone Subscription Offering. Such lesser functionality may include, but is not limited to, limitations on the ability of End Users to choose to listen to specific sound recordings on request or a limited catalog of sound recordings. (4) Where an Offering could qualify or be considered as either a Bundled Subscription Offering or a Mixed Service Bundle, such Offering shall be deemed a Mixed Service Bundle for the purpose of calculating and paying royalties under subpart C of this part. Music Bundle e.g., e.g., Offering Paid Locker Service Performance Royalty Permanent Download Play Promotional Offering (1) A Sound Recording Company is lawfully distributing the sound recording through established retail channels or, if the sound recording is not yet released, the Sound Recording Company has a good faith intention to lawfully distribute the sound recording or a different version of the sound recording embodying the same musical work; (2) The Service Provider is in compliance with the recordkeeping requirements of § 385.4 or superseding Copyright Office recordkeeping requirements; (3) For Eligible Interactive Streams of segments of sound recordings not exceeding 90 seconds, the Sound Recording Company delivers or authorizes delivery of the segments for promotional purposes and neither the Service Provider nor the Sound Recording Company creates or uses a segment of a sound recording in violation of 17 U.S.C. 106(2) or 115(a)(2); (4) The Promotional Offering is made available to an End User free of any charge; and (5) The Service Provider provides to the End User at the same time as the Promotional Offering Stream an opportunity to purchase the sound recording or the Service Provider periodically offers End Users the opportunity to subscribe to a paid Offering of the Service Provider. Purchased Content Locker Service (1) A qualifying seller for purposes of this definition is the entity operating the Service Provider, including Affiliates, predecessors, or successors in interest, or— (2) In the case of Permanent Downloads or Ringtones, a seller having a legitimate connection to the locker service provider pursuant to one or more written agreements (including that the Purchased Content Locker Service and Permanent Downloads or Ringtones are offered through the same third party); or (3) In the case of physical phonorecords: (i) The seller of the physical phonorecord has an agreement with the Purchased Content Locker Service provider establishing an integrated offer that creates a consumer experience commensurate with having the same Service Provider both sell the physical phonorecord and offer the integrated locker service; or (ii) The Service Provider has an agreement with the entity offering the Purchased Content Locker Service establishing an integrated offer that creates a consumer experience commensurate with having the same Service Provider both sell the physical phonorecord and offer the integrated locker service. Relevant Page e.g., Restricted Download Ringtone Service Provider (1) Contracts with or has a direct relationship with End Users or otherwise controls the content made available to End Users; (2) Is able to report fully on Service Provider Revenue from the provision of musical works embodied in phonorecords to the public, and to the extent applicable, verify Service Provider Revenue through an audit; and (3) Is able to report fully on its usage of musical works, or procure such reporting and, to the extent applicable, verify usage through an audit. Service Provider Revenue. (i) All revenue from End Users recognized by a Service Provider for the provision of the Offering; (ii) All revenue recognized by a Service Provider by way of sponsorship and commissions as a result of the inclusion of third-party “in-stream” or “in-download” advertising as part of the Offering, i.e., (iii) All revenue recognized by the Service Provider, including by way of sponsorship and commissions, as a result of the placement of third-party advertising on a Relevant Page of the Service Provider or on any page that directly follows a Relevant Page leading up to and including the Eligible Limited Download or Eligible Interactive Stream of a musical work; provided that, in case more than one Offering is available to End Users from a Relevant Page, any advertising revenue shall be allocated between or among the Service Providers on the basis of the relative amounts of the page they occupy. (2) Service Provider Revenue shall: (i) Include revenue recognized by the Service Provider, or by any associate, Affiliate, agent, or representative of the Service Provider in lieu of its being recognized by the Service Provider; and (ii) Include the value of any barter or other nonmonetary consideration; and (iii) Except as expressly detailed in this part, not be subject to any other deduction or set-off other than refunds to End Users for Offerings that the End Users were unable to use because of technical faults in the Offering or other bona fide refunds or credits issued to End Users in the ordinary course of business. (3) Service Provider Revenue shall exclude revenue derived by the Service Provider solely in connection with activities other than Offering(s), whereas advertising or sponsorship revenue derived in connection with any Offering(s) shall be treated as provided in paragraphs (1), (2) and (4) of this definition. (4) For purposes of paragraph (1) of this definition, advertising or sponsorship revenue shall be reduced by the actual cost of obtaining that revenue, not to exceed 15%. (5) In instances in which a Service Provider provides a Bundled Subscription Offering to End Users, the revenue from End Users deemed to be recognized by the Service Provider for the Offering for the purpose of paragraph (1) of this definition of Service Provider Revenue shall be as follows: (i) For Bundled Subscription Offerings where both (a) each component of the Bundle is a product or service of the Service Provider (including Affiliates) and (b) the Service Provider (including Affiliates) makes the Bundle available to End Users directly, then the revenue from End Users deemed to be recognized by the Service Provider for the purpose of paragraph (1) of this definition shall be the aggregate of the retail price paid for the Bundle ( i.e., e.g., i.e., 2/3 (ii) For Bundled Subscription Offerings where either one or more components of the Bundle are not products or services of the Service Provider (including Affiliates) or the Service Provider (including Affiliates) does not make the Bundle available to End Users directly, then the revenue from End Users deemed to be recognized by the Service Provider for the purpose of paragraph (1) of this definition shall be the revenue recognized by the Service Provider from the Bundle multiplied by a fraction where the numerator is the standalone retail price of the Subscription Offering component in the Bundle and the denominator is the sum of the standalone retail prices of each of the components of the Bundle. Notwithstanding the preceding sentence, where the Service Provider does not recognize revenue for one or more components of the Bundle, then the standalone price(s) of the component(s) for which revenue is not recognized shall not be included in the calculation of the denominator of the fraction described in this sub-paragraph ( e.g., i.e., 1/2 (iii) For the calculations in paragraphs (5)(i) and (ii) of this definition, in the event that there is no standalone published price for a component of the Bundle, then the Service Provider shall use the average standalone published price for End Users for the most closely comparable product or service in the U.S. or, if more than one comparable exists, the average of standalone prices for comparables. If no reasonably comparable product or service exists in the U.S., then the Service Provider may use another good faith, reasonable measure of the market value of the component. Sound Recording Company (1) Is a copyright owner of a sound recording embodying a musical work; (2) In the case of a sound recording of a musical work fixed before February 15, 1972, has rights to the sound recording, under chapter 14 of title 17, United States Code, that are equivalent to the rights of a copyright owner of a sound recording of a musical work under title 17, United States Code; (3) Is an exclusive Licensee of the rights to reproduce and distribute a sound recording of a musical work; or (4) Performs the functions of marketing and authorizing the distribution of a sound recording of a musical work under its own label, under the authority of a person identified in paragraph (1) through (3). Standalone Limited Offering (1) An End User cannot choose to listen to a particular sound recording ( i.e., (2) The particular sound recordings available to the End User over a period of time are substantially limited relative to Service Providers in the marketplace providing access to a comprehensive catalog of recordings ( e.g., Standalone Non-Portable Subscription Offering—Streaming Only Standalone Non-Portable Subscription Offering—Mixed Standalone Portable Subscription Offering Stream (1) To allow the End User to listen to the sound recording, while maintaining a live network connection to the transmitting service, substantially at the time of transmission, except to the extent that the sound recording remains accessible for future listening from a Streaming Cache Reproduction; (2) Using technology that is designed such that the sound recording does not remain accessible for future listening, except to the extent that the sound recording remains accessible for future listening from a Streaming Cache Reproduction; and (3) That is subject to licensing as a public performance of the musical work. Streaming Cache Reproduction Student Plan Subscription Offering TCC User Manipulation e.g., e.g., § 385.3 Late payments. A Licensee shall pay a late fee of 1.5% per month, or the highest lawful rate, whichever is lower, for any payment owed to a Copyright Owner and remaining unpaid after the due date established in 17 U.S.C. 115(c)(2)(I) or 17 U.S.C. 115(d)(4)(A)(i), as applicable and detailed in part 210 of this title. Late fees shall accrue from the due date until the Copyright Owner receives payment, except that where payment is due to the mechanical licensing collective under 17 U.S.C. 115(d)(4)(A)(i), late fees shall accrue from the due date until the mechanical licensing collective receives payment. [89 FR 19274, Mar. 18, 2024] § 385.4 Recordkeeping for promotional or free trial non-royalty-bearing uses. (a) Effect of Copyright Office recordkeeping regulations. (b) General. (c) Retention of records. (d) Availability of records. Subpart B—Physical Phonorecord Deliveries, Permanent Downloads, Ringtones, and Music Bundles § 385.10 Scope. This subpart establishes rates and terms of royalty payments for making and distributing physical phonorecords, Permanent Downloads, Ringtones, and Music Bundles, in accordance with the provisions of 17 U.S.C. 115. [87 FR 76942, Dec. 16, 2022] § 385.11 Royalty rates. (a) Physical phonorecords and Permanent Downloads 2026 rate. (2) Annual rate adjustment. Federal Register (b) Ringtones. (c) Music Bundles. [84 FR 2031, Feb. 5, 2019, as amended at 84 FR 32316, July 8, 2019; 87 FR 76942, Dec. 16, 2022; 88 FR 86058, Dec. 12, 2023; 88 FR 88254, Dec. 21, 2023; 89 FR 93477, Nov. 27, 2024; 90 FR 55045, Dec. 1, 2025] Subpart C—Eligible Interactive Streaming, Eligible Limited Downloads, Standalone Limited Offerings, Mixed Service Bundles, Bundled Subscription Offerings, Locker Services, and Other Delivery Configurations Source: 87 FR 80458, Dec. 30, 2022, unless otherwise noted. § 385.20 Scope. This subpart establishes rates and terms of royalty payments for Eligible Interactive Streams and Eligible Limited Downloads of musical works, and other reproductions or distributions of musical works through Standalone Limited Offerings, Mixed Service Bundles, Bundled Subscription Offerings, Paid Locker Services, and Purchased Content Locker Services provided through subscription and nonsubscription digital music Service Providers in accordance with the provisions of 17 U.S.C. 115, exclusive of Offerings subject to subpart D of this part. § 385.21 Royalty rates and calculations. (a) Applicable royalty. (b) Rate calculation. (1) Step 1: Calculate the all-in royalty for the Offering. (i) The applicable percent of Service Provider Revenue, as set forth in Table 1 to this paragraph (b)(1), and (ii) The result of the TCC Prong Calculation for the respective type of Offering as set forth in Table 2 to this paragraph (b)(1). For Mixed Service Bundles, the all-in royalty shall be the result of the TCC Prong Calculation as set forth in Table 2. Table 1 to Paragraph ( b Royalty year: 2023 2024 2025 2026 2027 Percent of Service Provider Revenue 15.1 15.2 15.25 15.3 15.35 Table 2 to Paragraph ( b Type of offering TCC prong calculation Standalone Non-Portable Subscription Offering—Streaming Only The lesser of (i) 26.2% of TCC for the Accounting Period or (ii) the aggregate amount of 60 cents per subscriber for the Accounting Period. Standalone Non-Portable Subscription Offering—Mixed The lesser of (i) 26.2% of TCC for the Accounting Period or (ii) the aggregate amount of 60 cents per subscriber for the Accounting Period. Standalone Portable Subscription Offering The lesser of (i) 26.2% of TCC for the Accounting Period or (ii) the aggregate amount of $1.10 per subscriber for the Accounting Period. Free nonsubscription/ad-supported services free of any charge to the End User 26.2% of TCC for the Accounting Period. Bundled Subscription Offering 24.5% of TCC for the Accounting Period. Mixed Service Bundle 26.2% of TCC for the Accounting Period. Purchased Content Locker Service 26.2% of TCC for the Accounting Period. Standalone Limited Offering 26.2% of TCC for the Accounting Period. Paid Locker Service 26.2% of TCC for the Accounting Period. (2) Step 2: Subtract applicable Performance Royalties. (3) Step 3: Determine the payable royalty pool. (i) The result determined in step 2 in paragraph (b)(2) of this section; and (ii) The royalty floor (if any) resulting from the calculations described in paragraph (d) of this section. (4) Step 4: Calculate the per-work royalty allocation. i.e., (c) Overtime adjustment. (1) 5:01 to 6:00 minutes—Each Play = 1.2 Plays. (2) 6:01 to 7:00 minutes—Each Play = 1.4 Plays. (3) 7:01 to 8:00 minutes—Each Play = 1.6 Plays. (4) 8:01 to 9:00 minutes—Each Play = 1.8 Plays. (5) 9:01 to 10:00 minutes—EachPlay = 2.0 Plays. (6) For playing times of greater than 10 minutes, continue to add 0.2 Plays for each additional minute or fraction thereof. (d) Royalty floors for specific types of Offerings. (1) Standalone Non-Portable Subscription Offerings—Streaming Only. (2) Standalone Non-Portable Subscription Offerings—Mixed. (3) Standalone Portable Subscription Offerings. (4) Bundled Subscription Offerings. (5) Mixed Service Bundles. (6) Other Offerings. (e) Computation of per-subscriber rates and royalty floors. [87 FR 80458, Dec. 30, 2022, as amended at 89 FR 19274, Mar. 18, 2024] Subpart D—Promotional Offerings, Free Trial Offerings and Certain Purchased Content Locker Services Source: 87 FR 80460, Dec. 30, 2022, unless otherwise noted. § 385.30 Scope. This subpart establishes rates and terms of royalty payments for Promotional Offerings, Free Trial Offerings, and certain Purchased Content Locker Services provided by subscription and nonsubscription digital music Service Providers in accordance with the provisions of 17 U.S.C. 115. § 385.31 Royalty rates. (a) Promotional Offerings. (b) Free Trial Offerings. (c) Certain Purchased Content Locker Services. Appendix A to Part 385—Part 385 Applicable to the Period January 1, 2018, through December 31, 2022, as clarified on August 10, 2023 Source: 88 FR 54481, Aug. 10, 2023, unless otherwise noted. Note: Cross-references to part 385 in this appendix are to those provisions as contained within this appendix. PART 385—RATES AND TERMS FOR USE OF MUSICAL WORKS UNDER COMPULSORY LICENSE FOR MAKING AND DISTRIBUTING PHYSICAL AND DIGITAL PHONORECORDS Subpart A—Regulations of General Application 385.1 General. 385.2 Definitions. 385.3 Late payments. 385.4 Recordkeeping for promotional or free trial non-royalty-bearing uses. Subpart B—Physical Phonorecord Deliveries, Permanent Downloads, Ringtones, and Music Bundles 385.10 Scope. 385.11 Royalty rates. Subpart C—Eligible Interactive Streaming, Eligible Limited Downloads, Limited Offerings, Mixed Service Bundles, Bundled Subscription Offerings, Locker Services, and Other Delivery Configurations 385.20 Scope. 385.21 Royalty rates and calculations. 385.22 Royalty floors for specific types of Offerings. Subpart D—Promotional Offerings, Free Trial Offerings and Certain Purchased Content Locker Services 385.30 Scope. 385.31 Royalty rates. Subpart A—Regulations of General Application § 385.1 General. (a) Scope. (b) Legal compliance. (c) Interpretation. (d) Relationship to voluntary agreements. § 385.2 Definitions. For the purposes of this part, the following definitions apply: Accounting Period Active Subscriber Affiliate Bundled Subscription Offering e.g., Copyright Owner(s) Digital Phonorecord Delivery Eligible Interactive Stream Eligible Limited Download (1) An amount of time not to exceed one month from the time of the transmission (unless the Licensee, in lieu of retransmitting the same sound recording as another Eligible Limited Download, separately, and upon specific request of the End User made through a live network connection, reauthorizes use for another time period not to exceed one month), or in the case of a subscription plan, a period of time following the end of the applicable subscription no longer than a subscription renewal period or three months, whichever is shorter; or (2) A number of times not to exceed 12 (unless the Licensee, in lieu of retransmitting the same sound recording as another Eligible Limited Download, separately, and upon specific request of the End User made through a live network connection, reauthorizes use of another series of 12 or fewer plays), or in the case of a subscription transmission, 12 times after the end of the applicable subscription. End User (1) Pays a subscription fee for an Offering during the relevant Accounting Period; or (2) Makes at least one Play during the relevant Accounting Period. Family Plan Free Trial Offering (1) Neither the Service Provider, the Sound Recording Company, the Copyright Owner, nor any person or entity acting on behalf of or in lieu of any of them receives any monetary consideration for the Offering; (2) The free usage does not exceed 30 consecutive days per subscriber per two-year period; (3) In connection with the Offering, the Service Provider is operating with appropriate musical license authority and complies with the recordkeeping requirements in § 385.4; (4) Upon receipt by the Service Provider of written notice from the Copyright Owner or its agent stating in good faith that the Service Provider is in a material manner operating without appropriate license authority from the Copyright Owner under 17 U.S.C. 115, the Service Provider shall within 5 business days cease transmission of the sound recording embodying that musical work and withdraw it from the repertoire available as part of a Free Trial Offering; (5) The Free Trial Offering is made available to the End User free of any charge; and (6) The Service Provider offers the End User periodically during the free usage an opportunity to subscribe to a non-Free Trial Offering of the Service Provider. GAAP Licensee Licensed Activity, Limited Offering (1) An End User cannot choose to listen to a particular sound recording ( i.e., (2) The particular sound recordings available to the End User over a period of time are substantially limited relative to Service Providers in the marketplace providing access to a comprehensive catalog of recordings ( e.g., Locker Service Locker Service Mixed Service Bundle e.g., e.g., Music Bundle e.g., e.g., Offering Paid Locker Service Performance Royalty Permanent Download Play Promotional Offering (1) A Sound Recording Company is lawfully distributing the sound recording through established retail channels or, if the sound recording is not yet released, the Sound Recording Company has a good faith intention to lawfully distribute the sound recording or a different version of the sound recording embodying the same musical work; (2) For Eligible Interactive Streams or Eligible Limited Downloads, the Sound Recording Company requires a writing signed by an authorized representative of the Service Provider representing that the Service Provider is operating with appropriate musical works license authority and that the Service Provider is in compliance with the recordkeeping requirements of § 385.4; (3) For Eligible Interactive Streams of segments of sound recordings not exceeding 90 seconds, the Sound Recording Company delivers or authorizes delivery of the segments for promotional purposes and neither the Service Provider nor the Sound Recording Company creates or uses a segment of a sound recording in violation of 17 U.S.C. 106(2) or 115(a)(2); (4) The Promotional Offering is made available to an End User free of any charge; and (5) The Service Provider provides to the End User at the same time as the Promotional Offering Stream an opportunity to purchase the sound recording or the Service Provider periodically offers End Users the opportunity to subscribe to a paid Offering of the Service Provider. Purchased Content Locker Service (1) A qualifying seller for purposes of this definition is the entity operating the Service Provider, including Affiliates, predecessors, or successors in interest, or— (i) In the case of Permanent Downloads or Ringtones, a seller having a legitimate connection to the locker service provider pursuant to one or more written agreements (including that the Purchased Content Locker Service and Permanent Downloads or Ringtones are offered through the same third party); or (ii) In the case of physical phonorecords: (A) The seller of the physical phonorecord has an agreement with the Purchased Content Locker Service provider establishing an integrated offer that creates a consumer experience commensurate with having the same Service Provider both sell the physical phonorecord and offer the integrated locker service; or (B) The Service Provider has an agreement with the entity offering the Purchased Content Locker Service establishing an integrated offer that creates a consumer experience commensurate with having the same Service Provider both sell the physical phonorecord and offer the integrated locker service. (2) [Reserved] Relevant Page e.g., Restricted Download Ringtone Service Provider (1) Contracts with or has a direct relationship with End Users or otherwise controls the content made available to End Users; (2) Is able to report fully on Service Provider Revenue from the provision of musical works embodied in phonorecords to the public, and to the extent applicable, verify Service Provider Revenue through an audit; and (3) Is able to report fully on its usage of musical works, or procure such reporting and, to the extent applicable, verify usage through an audit. Service Provider Revenue, (1) Subject to paragraphs (2) through (5) of this definition and subject to GAAP, Service Provider Revenue (i) All revenue from End Users recognized by a Service Provider for the provision of any Offering; (ii) All revenue recognized by a Service Provider by way of sponsorship and commissions as a result of the inclusion of third-party “in-stream” or “in-download” advertising as part of any Offering, i.e., (iii) All revenue recognized by the Service Provider, including by way of sponsorship and commissions, as a result of the placement of third-party advertising on a Relevant Page of the Service Provider or on any page that directly follows a Relevant Page leading up to and including the Eligible Limited Download or Eligible Interactive Stream of a musical work; provided that, in case more than one Offering is available to End Users from a Relevant Page, any advertising revenue shall be allocated between or among the Service Providers on the basis of the relative amounts of the page they occupy. (2) Service Provider Revenue shall: (i) Include revenue recognized by the Service Provider, or by any associate, Affiliate, agent, or representative of the Service Provider in lieu of its being recognized by the Service Provider; and (ii) Include the value of any barter or other nonmonetary consideration; and (iii) Except as expressly detailed in this part, not be subject to any other deduction or set-off other than refunds to End Users for Offerings that the End Users were unable to use because of technical faults in the Offering or other bona fide refunds or credits issued to End Users in the ordinary course of business. (3) Service Provider Revenue shall exclude revenue derived by the Service Provider solely in connection with activities other than Offering(s), whereas advertising or sponsorship revenue derived in connection with any Offering(s) shall be treated as provided in paragraphs (2) and (4) of this definition. (4) For purposes of paragraph (1) of this definition, advertising or sponsorship revenue shall be reduced by the actual cost of obtaining that revenue, not to exceed 15%. (5) In instances in which a Service Provider provides an Offering to End Users as part of the same transaction with one or more other products or services that are not Licensed Activities, then the revenue from End Users deemed to be recognized by the Service Provider for the Offering for the purpose of paragraph (1) of this definition shall be the revenue recognized from End Users for the bundle less the standalone published price for End Users for each of the other component(s) of the bundle; provided that, if there is no standalone published price for a component of the bundle, then the Service Provider shall use the average standalone published price for End Users for the most closely comparable product or service in the U.S. or, if more than one comparable exists, the average of standalone prices for comparables. (6) In the case of a Mixed Service Bundle, the revenue deemed to be recognized from End Users for the Offering for the purpose of paragraph (1) of this definition shall be the greater of— (i) The revenue deemed to be recognized pursuant to paragraph (5) of this definition; and (ii) Either— (A) In the case of a Mixed Service Bundle that either has 750,000 subscribers or other registered users, or is reasonably expected to have 750,000 subscribers or other registered users within 1 year after commencement of the Mixed Service Bundle, 40% of the standalone published price of the licensed music component of the bundle ( i.e., (B) Otherwise, 50% of the standalone published price of the licensed music component of the bundle ( i.e., Sound Recording Company (1) Is a copyright owner of a sound recording embodying a musical work; (2) In the case of a sound recording of a musical work fixed before February 15, 1972, has rights to the sound recording, under 17 U.S.C. chapter 14, that are equivalent to the rights of a copyright owner of a sound recording of a musical work under title 17, United States Code; (3) Is an exclusive Licensee of the rights to reproduce and distribute a sound recording of a musical work; or (4) Performs the functions of marketing and authorizing the distribution of a sound recording of a musical work under its own label, under the authority of the Copyright Owner of the sound recording. Standalone Non-Portable Subscription Offering—Mixed Standalone Non-Portable Subscription Offering—Streaming Only Standalone Portable Subscription Offering Stream (1) To allow the End User to listen to the sound recording, while maintaining a live network connection to the transmitting service, substantially at the time of transmission, except to the extent that the sound recording remains accessible for future listening from a Streaming Cache Reproduction; (2) Using technology that is designed such that the sound recording does not remain accessible for future listening, except to the extent that the sound recording remains accessible for future listening from a Streaming Cache Reproduction; and (3) That is subject to licensing as a public performance of the musical work. Streaming Cache Reproduction Student Plan Subscription Offering m Total Cost of Content TCC Applicable Consideration § 385.3 Late payments. A Licensee shall pay a late fee of 1.5% per month, or the highest lawful rate, whichever is lower, for any payment owed to a Copyright Owner and remaining unpaid after the due date established in 17 U.S.C. 115(c)(2)(I) or (d)(4)(A)(i), as applicable and detailed in part 210 of this title. Late fees shall accrue from the due date until the Copyright Owner receives payment, except that where payment is due to the mechanical licensing collective under 17 U.S.C. 115(d)(4)(A)(i), late fees shall accrue from the due date until the mechanical licensing collective receives payment. § 385.4 Recordkeeping for promotional or free trial non-royalty-bearing uses. (a) General. (b) Retention of records. (c) Availability of records. Subpart B—Physical Phonorecord Deliveries, Permanent Downloads, Ringtones, and Music Bundles § 385.10 Scope. This subpart establishes rates and terms of royalty payments for making and distributing phonorecords, including by means of Digital Phonorecord Deliveries, in accordance with the provisions of 17 U.S.C. 115. § 385.11 Royalty rates. (a) Physical phonorecord deliveries and Permanent Downloads. (b) Ringtones. (c) Music Bundles. Subpart C—Eligible Interactive Streaming, Eligible Limited Downloads, Limited Offerings, Mixed Service Bundles, Bundled Subscription Offerings, Locker Services, and Other Delivery Configurations § 385.20 Scope. This subpart establishes rates and terms of royalty payments for Eligible Interactive Streams and Eligible Limited Downloads of musical works, and other reproductions or distributions of musical works through Limited Offerings, Mixed Service Bundles, Bundled Subscription Offerings, Paid Locker Services, and Purchased Content Locker Services provided through subscription and nonsubscription digital music Service Providers in accordance with the provisions of 17 U.S.C. 115, exclusive of Offerings subject to subpart D of this part. § 385.21 Royalty rates and calculations. (a) Applicable royalty. (b) Rate calculation. (1) Step 1: Calculate the all-in royalty for the Offering. Table 1 to Paragraph ( b Royalty year 2018 2019 2020 2021 2022 Percent of Service Provider Revenue 11.4 12.3 13.3 14.2 15.1 Table 2 to Paragraph ( b Type of offering TCC prong calculation Standalone Non-Portable Subscription Offering—Streaming Only The lesser of 22% of TCC for the Accounting Period and 50 cents per subscriber per month. Standalone Non-Portable Subscription Offering—Mixed The lesser of 21% of TCC for the Accounting Period and 50 cents per subscriber per month. Standalone Portable Subscription Offering The lesser of 21% of TCC for the Accounting Period and 80 cents per subscriber per month. Bundled Subscription Offering 21% of TCC for the Accounting Period. Free nonsubscription/ad-supported services free of any charge to the End User 22% of TCC for the Accounting Period. Mixed Service Bundle 21% of TCC for the Accounting Period. Purchased Content Locker Service 22% of TCC for the Accounting Period. Limited Offering 21% of TCC for the Accounting Period. Paid Locker Service 20.65% of TCC for the Accounting Period. (2) Step 2: Subtract applicable Performance Royalties. (3) Step 3: Determine the payable royalty pool. (i) The result determined in step 2 in paragraph (b)(2) of this section; and (ii) The royalty floor (if any) resulting from the calculations described in § 385.22. (4) Step 4: Calculate the per-work royalty allocation. i.e., (c) Overtime adjustment. (1) 5:01 to 6:00 minutes—Each Play = 1.2 Plays. (2) 6:01 to 7:00 minutes—Each Play = 1.4 Plays. (3) 7:01 to 8:00 minutes—Each Play = 1.6 Plays. (4) 8:01 to 9:00 minutes—Each Play = 1.8 Plays. (5) 9:01 to 10:00 minutes—Each Play = 2.0 Plays. (6) For playing times of greater than 10 minutes, continue to add 0.2 Plays for each additional minute or fraction thereof. (d) Accounting. (e) Computation of subscriber months in TCC Prong Calculation. § 385.22 Royalty floors for specific types of Offerings. (a) In general. (1) Standalone Non-Portable Subscription Offering—Streaming Only. (2) Standalone Non-Portable Subscription Offering—Mixed. (3) Standalone Portable Subscription Offering. (4) Bundled Subscription Offering. (b) Computation of royalty floors. Subpart D—Promotional Offerings, Free Trial Offerings and Certain Purchased Content Locker Services § 385.30 Scope. This subpart establishes rates and terms of royalty payments for Promotional Offerings, Free Trial Offerings, and certain Purchased Content Locker Services provided by subscription and nonsubscription digital music Service Providers in accordance with the provisions of 17 U.S.C. 115. § 385.31 Royalty rates. (a) Promotional Offerings. (b) Free Trial Offerings. (c) Certain Purchased Content Locker Services. (d) Unauthorized use.