Frequently Asked Questions

The Phono 3 rate period is from January 1, 2018 through December 31, 2022.

On August 10, 2023, the Copyright Royalty Board (CRB) published the final determination of the mechanical royalty rates for interactive streaming activities for the Phono 3 period. The full text of the Phono 3 rates and terms is available here. 

In 2019, the CRB published the final determination of the mechanical royalty rates for permanent digital downloads for the Phono 3 period. Those rates are not affected by the determination published on August 10, 2023. The full text of the rates and terms covering permanent digital downloads is available here. 

Blanket Licensees that engaged in interactive streaming activities during the Phono 3 period must provide adjusted reporting to The MLC no later than February 9, 2024 (six months from August 10, 2023, and adjusted for the fact that February 10, 2024 is a Saturday. The deadline cannot be extended). See 37 C.F.R. 210.10(k)(6) & 210.27(k)(6) available here.

The MLC’s website hosts detailed information pertaining to DSP usage reporting requirements, including specifications, templates, and guidelines available here.

Blanket Licensees that engaged in interactive streaming activities during the Phono 3 period should review the following information:

General (2018-2022)

• Phono 3 FAQs

Historical Period (2018-2020)

• Phono 3 Cover Sheet - Adjustment of Cumulative Statement of Account
• Phono 3 Supplemental Subscriber and End User information for Family Plans
• Phono 3 Certification of No Changes (2018-2020)

The full text of federal regulations governing Statements of Adjustment of a Cumulative Statement of Account (relevant to DSPs seeking to adjust reporting from the time period January 2018 through December 2020) can be found at 37 C.F.R. 210.10(k) available here.

Blanket License Period (2021-2022)

• Phono 3 Cover Sheet - Report of Adjustment
• Phono 3 Supplemental Subscriber and End User information for Family Plans
• Phono 3 Technical guidelines for DSPs making adjustments pursuant to 210.27(k) for Phono 3 Period
• Phono 3 Certification of No Changes (2021-2022)

The full text of federal regulations governing Reports of Adjustment Under Compulsory Blanket License for Making and Distributing Phonorecords (relevant to DSPs seeking to adjust reporting from the time period January 2021 through December 2022) can be found at 37 C.F.R. 210.27(k) available here.

The documentation required depends on the changes, if any, being made to usage and associated royalties. The MLC’s website hosts detailed information pertaining to DSP usage reporting requirements, including specifications, templates, and guidelines available here.

Adjustments to Historical Period (2018-2020)

Scenarios: Statement of Adjustment of a Cumulative Statement of Account

 

 

Scenario 1: No Changes

In this scenario, a DSP will simply re-certify information provided in the Cumulative Statement of Account and any subsequent adjustments (i.e., no further adjustments will be made). A DSP can do so by completing and delivering the PIII Certification of No Changes (2018-2020) document available here.

Scenario 2: Changes to Royalty Pool Information Only

In this scenario, a DSP intends to adjust only information related to inputs to royalty pool calculations (“Royalty Pool Information”) previously provided via the Cumulative Statement of Account (and any subsequent adjustments). In other words, a DSP will adjust revenue information, such as total cost of content (“TCC”) and performance amounts but will not adjust previously provided track/usage level information (“Usage Information”).

The DSP must submit files containing new Royalty Pool Information for all months in any fiscal year to which the adjustment pertains. A DSP can do so by completing and delivering the PIII Cover Sheet - Adjustment of Cumulative Statement of Account document available here. 

Because the DSP is not adjusting Usage Information, the DSP should contact The MLC’s DSP Relations team (DSP.Relations@themlc.com) and request a list of the names of the files that comprised the DSP’s original Cumulative Statement of Account for Making and Distributing Phonorecords relevant to the time period of January 2018 through December 2020. The MLC will provide this list, and upon the DSP’s receipt and confirmation, the DSP may include this information (i.e., The MLC file names) in the corresponding cover sheet.

Scenario 3: Changes to Royalty Pool Information and Usage Information (no changes to number of Offerings reported)

In this scenario, a DSP intends to adjust both Royalty Pool and Usage Information previously provided via the Cumulative Statement of Account.

The DSP must submit a Statement of Adjustment of a Cumulative Statement of Account containing new Royalty Pool Information and new Usage Information.

The DSP must deliver adjusted Royalty Pool Information and adjusted Usage Information in the same format as delivered in the original Cumulative Statement of Account.

Scenario 4: Changes to Royalty Pool Information and Usage Information (previously aggregated Offerings reported separately)

In this scenario, a DSP intends to adjust both Royalty Pool Information and Usage Information previously provided via the Cumulative Statement of Account and further intends to report previously aggregated Offerings as separate Offerings (for example, where a DSP previously reported a family plan and an individual plan together as a single Offering, the DSP is required to report each plan as a separate Offering).

The DSP must submit a Statement of Adjustment of a Cumulative Statement of Account containing new Royalty Pool Information and new Usage Information.

The DSP must deliver adjusted Royalty Pool Information and adjusted Usage Information in the same format as delivered in the original Cumulative Statement of Account.

Adjustments to Blanket License Period (2021-2022)

Scenarios: Reports of Adjustment Under Compulsory Blanket License for Making and Distributing Phonorecords

 

Scenario 1: No Changes

In this scenario, a DSP will simply re-certify information provided in Annual Reports of Usage delivered to The MLC in 2021 and 2022 and any subsequent adjustments (i.e., no further adjustments will be made). A DSP can do so by completing and delivering the PIII Certification of No Changes (2021-2022) available here. 

Scenario 2: Changes to Royalty Pool Information Only

In this scenario, a DSP intends to adjust only information related to inputs to royalty pool calculations (“Royalty Pool Information”) previously provided via the 2021 and 2022 Annual Reports of Usage (and any subsequent adjustments). In other words, a DSP will adjust revenue information, such as total cost of content (“TCC”) and performance amounts but will not adjust previously provided track/usage level information (“Usage Information”).

The DSP must submit files containing new Royalty Pool Information for all months in any fiscal year to which the adjustment pertains. Please note that such files are referred to in the PIII Technical guidelines for DSPs making adjustments pursuant to 210.27(k) for Phono 3 Period (“Technical Specifications document”) as “DDEX HEAD and SYxx records.” The Technical Specifications document is available here.

Because the DSP is not adjusting Usage Information, the DSP should contact The MLC’s DSP Relations team (DSP.Relations@themlc.com) and request a list of the names of the files that comprised the DSP’s 2021 and 2022 Annual Reports of Usage. The MLC will provide this list, and upon the DSP’s receipt and confirmation, the DSP may include this information (i.e., The MLC file names) in the corresponding cover sheet.

Scenario 3: Changes to Royalty Pool Information and Usage Information (no changes to number of Offerings reported)

In this scenario, a DSP intends to adjust both Royalty Pool and Usage Information previously provided via the Cumulative Statement of Account.

The DSP must submit a Report of Adjustment containing new Royalty Pool Information and new Usage Information.

The DSP must deliver adjusted Royalty Pool Information and adjusted Usage Information as described in the Technical Specifications document.

Scenario 4: Changes to Royalty Pool Information and Usage Information (previously aggregated Offerings reported separately)

In this scenario, a DSP intends to adjust both Royalty Pool Information and Usage Information previously provided via the 2021 and 2022 Annual Reports of Usage and further intends to report previously aggregated Offerings as separate Offerings (for example, where a DSP previously reported a family plan and an individual plan together as a single Offering, the DSP is required to report each plan as a separate Offering).

The DSP must submit a Report of Adjustment containing new Royalty Pool Information and new Usage Information.

The DSP must deliver adjusted Royalty Pool Information and adjusted Usage Information as described in Technical Specifications document.

DSPs must report each consumer Offering separately from any other consumer Offering. 37 C.F.R. 385.21(b) provides that:

“If a Service Provider includes different Offerings, royalties must be calculated

separately with respect to each Offering taking into consideration Service Provider

Revenue and expenses associated with each Offering.”

 

This includes Family Plan and Student Plans, each of which must each be reported as separate Offerings and separately from any other Offerings. Under 37 C.F.R. 385.2:

“Family Plan means a discounted Subscription Offering to be shared by two or more family members for a single subscription price.

…

Student Plan means a discounted Subscription Offering available on a limited basis to students.”

 

 This also includes bundled Offerings, which must each be reported separately from any other Offering (including other bundled offerings). Provisions defining different bundled Offerings can be found in 37 C.F.R. 385.2 and 37 C.F.R. 385.21.

Consumer Offerings are described in The MLC usage reporting documentation (whether for DDEX or SURF reporting) as “Service Configurations.” Reporting Offerings separately means identifying the Offerings as distinct Service Configurations in header/summary reports and then submitting separate Service Configuration detail files for each respective offering.

The full text of federal regulations cited above is available here.

Please note this hypothetical is an example for illustrative purposes and does not describe the full extent or all examples of the requirement that all Offerings be reported separately.

Hypothetical Scenario for Phono 3 Reporting

A DSP makes available the following consumer Offerings under the Blanket License with the following hypothetical subscribers for January 2022 usage:

	Offering	Subscribers
1.	Individual Standalone Portable Subscription Plan	100
2.	Family Plan	100 Family Plans (200 total End Users)
3.	Student Plan	100
4.	Bundled Subscription Offering with Product A	50
5.	Bundled Subscription Offering with Products B and C	50

 

Reporting Requirements:

The DSP must identify each of these five Offerings as a separate Service Configuration in header/summary files, and must provide five separate usage files (one for each of the five Service Configurations) that reflect the usage associated with each Offering.

DSPs are not required to subject the same portion of Service Provider Revenue, TCC, Subscribers, Plays, or Performance Royalties to the calculation of royalties for more than one of the five Offerings in an Accounting (i.e., monthly) Period.

Specific Reporting Requirements For Student and Family Plan Subscribers:

In reporting Family Plans, DSPs should continue to follow the instructions in The MLC documentation and report only the number of paying Family Plan accounts without adjustment to account for the treatment of Family Plans. Thus, in this example, the DSP would report 100 subscribers for its Family Plan Service Configuration. The DSP should also complete and deliver a “PIII Supplemental Subscriber and End User Information for Family Plans” document that discloses the 200 total associated End Users. (available here.)

In reporting Student Plans, DSPs should continue to follow the instructions in The MLC documentation and report the number of Student Plan End Users without adjustment. Thus, in this example, the DSP would report 100 subscribers for its Student Plan Service Configuration.

Improper Reporting Will Be Rejected By The MLC – An example of what NOT to do:

A DSP should not combine any of its five Offerings or their associated usage data in reporting to The MLC. As 37 C.F.R. 385.21(b) provides:

“If a Service Provider makes available different Offerings, royalties must be calculated separately with respect to each Offering …”

 

1. Do not combine all Standalone Service Offerings

A DSP should not report a single Service Configuration that combines usage from its Standalone Individual Plan, Family Plan, and/or Student Plan. This is true whether or not a DSP intended to adjust subscriber counts prior to reporting for the purposes of computing per-subscriber rates and royalty floors.

Thus, a DSP should not report a single standalone portable Service Configuration that combines usage from Standalone Individual, Family, and Student Plans with either:

• 300 combined unadjusted Subscriber counts or
• 300 adjusted Subscribers:
            100 (Individual Subscribers)
            + 150 (100 Family Subscribers * 1.5
            + 50 (100 Student Subscribers * .5)

Please see 37 C.F.R. 385.21(e) to compute applicable per-subscriber rates and royalty floors.

2. Do not combine all Bundled Service Offerings

A DSP should not report a single Service Configuration that combines usage from its Bundled Subscription Offering with Product A and its Bundled Subscription Offering with Products B & C. Thus, a DSP should not report a single Bundled Subscription Offering with 100 subscribers and other combined usage details.

Please contact The MLC’s DSP Relations team (DSP.Relations@themlc.com) if you have questions about technical requirements for usage reporting or royalty payments or other applicable interactions with The MLC.

Please consult with legal counsel if you have questions about obligations under the new rates and terms.