Before the COPYRIGHT ROYALTY BOARD LIBRARY OF CONGRESS UNITED STATES COPYIGHT OFFICE Washington, D.C. ) In the Matter of ) ) Digital Performance Right in Sound ) Docket No. 2005-1 CRB DTRA Recordings and Ephemeral Recordings ) ) ROYALTY LOGIC, INC.'S REBUTTAL STATEMENT Kenneth D. Freundlich SCHLEIMER 4 FREUNDLICH, LLP 9100 Wilshire Blvd., Suite 615 East Beverly Hills, CA 90212 (v)(310) 273-9807 (f) (310) 273-9809 Counsel for SoundExchange, Inc. REBUTTAL STATEMENT Royalty Logic, Inc. ("RLI"), hereby submits its rebuttal statement in the above- captioned matter, in accordance with 37 C.F.R. Section 351.11. As explained more fully below, the additional testimony provided herewith, along with the supporting Exhibits, rebut SoundExchange's contentions during the direct case phase of this proceeding. Supported by this additional testimony and exhibits, RLI submits the enclosed Revised Proposed Regulations, found in this volume. SUMMARY OF TESTIMONY For the convenience of the Board, RLI provides this brief overview of the main points of its rebuttal testimony, all of which supports RLI's designation here as a competing Designated Agent with Direct Accounting, Royalties, Payment and Audit Rights ("DARPA") from the statutory licensees. I. Benefits of Competition Ronald Gertz, the President and COO of RLI, will rebut statements made during the direct case and provide evidence supporting RLI's designation as a Designated Agent with DARPA and particularly of the fact that the benefits of Competition and freedom of choice for royalty recipients under the statutory license, which SoundExchange denies, are manifest. Peter Paterno, an entertainment transactional attorney in the music area whose practice encompasses the representation of best-selling recording artists which have sold more than One Hundred Million albums worldwide in all aspects of the recording, music publishing and live concert touring industries, also to rebut statements made in the direct case, testifies that choice among collectives benefits artists under the statutory system. II. There are no Acceptable Substitutes for Competition in Statutory License Administration Mr. Gertz rebuts SoundExchange's contention that their so-called "independent" Board of Directors, and the Direct Licensing alternative provided in the statute are viable substitutes for competition in statutory licensing administration. Mr. Paterno also rebuts SoundExchange's contention that their Board of Directors is "independent". III. Performine Rights Organizations ("PRO's) Are a Benchmark and Relevant Comparison For Analvzine SoundKxchanee and the Need For Competition Mr. Gertz rebuts SoundExchange's contention that competition among the PRO's is not a relevant analogy to the statutory license under consideration, presenting testimony that in fact, the PRO's are a relevant analogy as to why competition would benefit copyright owners and performers of sound recordings. Mr. Paterno also rebuts SoundExchange's this contention by presenting testimony that competition in the PRO arena is an important check on royalty accounting and is relevant to the reason why competition under this statutory license is necessary to benefit artists. IV. Agreement Between RLI and Statutorv Licensees (willing buvers) Supports Designating RLI with DARPA c Mr. Gertz provides testimony concerning an agreement between RLI and DiMA wherein the DiMA members are able to designate RLI as a collective with DARPA for these statutory Royalties. This Agreement eschews both the previous multi-tier Receiving/Designated Agent structure and SoundExchange's "sole collective" model. V. Avoidine Cost Recoupment Is A Reason Not To Affiliate With SoundKxchanee and to Affiliate With RLI Mr. Paterno presents testimony concerning the need for a competing collective so that artist may choose to avoid SoundExchange's cost recoupment scheme. VI. RLI's Revised Prouosed Regulations o Mr. Gertz draws on his experience in administering sound recording copyright royalties and music performance royalties, and the direct testimony in this case, and proposes Revised Proposed Regulations to provide copyright owners and users with a competitive alternative to SoundExchange. Respectfully Submitted, SCHLEIMER dk ICH, L Kenneth 5. Freundlich 9100 Wilshire Blvd. Suite 615 East Beverly Hills, CA 90212 (310 273-9807 Counsel For Royalty Logic, Inc. September 27, 2006 Page 1 of 1 Ronald Gertz From: Ronald Gertz Sent: Wednesday, September 27, 2006 4:40 PM To: Alixandra Steier (E-mail) Subject: delivery to the CRB Alix - here is the delivery address there is a box and an extra copy of our rebuttal case - please have them stamp the extra copy "received" and send to back to me Copyright Royalty Board Library of Congress James Madison Memorial Building Room: LM-401 101 Independence Ave SE Washington DC 20559-6000 Many big thankyous Ronald H. Gertz, Esq. President Music Reports, Inc. Royalty Logic, Inc. 21122 Erwin Street Woodland Hills, CA 91367 Tel: (818) 558-1400 Fax:(818) 558-3481 Email: ronnie musicreoorts.corn Website: www.musicreoorts.corn The information contained in this e-mail transmission, including any previous messages or attachments to it, is intended only for the personal and confidential use of the recipient(s) named above. If you have received this transmission in error, please forget that you saw it and delete the original transmission, without making copies, disclosing, distributing, saving or making use of it in any manner. 9/27/2006 Before the COPYRIGHT ROYALTY BOARD LIBRARY OF CONGRESS UNITED STATES COPYIGHT OFFICE Washington, D.C. ) In the Matter of ) ) Digital Performance Right in Sound ) Docket No. 2005-1 CRB DTRA Recordings and Ephemeral Recordings ) ) REBUTTAL CASK OF ROYALTY LOGIC, INC. Kenneth D. Freundlich SCHLEIMER 8'c FREUNDLICH, LLP 9100 Wilshire Blvd., Suite 615 East Beverly Hills, CA 90212 (v)(310) 273-9807 (f) (310) 273-9809 5KP 29 N06 Counsel for Royalty Logic, Inc. ERR'a%i'%4 g. Q QFGOPNiGNiota C~ ofay Before the COPYRIGHT ROYALTY BOARD LIBRARY OF CONGRESS UNITED STATES COPYIGHT OFFICE Washington, D.C. ) In the Matter of ) ) Digital Performance Right in Sound ) Docket No. 2005-1 CRB DTRA Recordings and Ephemeral Recordings ) ) ROYALTY LOGIC, INC.'S REBUTTAL STATEMENT Kenneth D. Freundlich SCHLEMER k FREUNDLICH, LLP 9100 Wilshire Blvd., Suite 615 East Beverly Hills, CA 90212 (v)(310) 273-9807 (fj (310) 273-9809 Counsel for SoundExchange, Inc. REBUTTAL STATEMENT Royalty Logic, Inc. ("RLI"), hereby submits its rebuttal statement in the above- captioned matter, in accordance with 37 C.F.R. Section 351.11. As explained more fully below, the additional testimony provided herewith, along with the supporting Exhibits, rebut SoundExchange's contentions during the direct case phase of this proceeding. Supported by this additional testimony and exhibits, RLI submits the enclosed Revised Proposed Regulations, found in this volume. SUMMARY OF TESTIMONY For the convenience of the Board, RLI provides this brief overview of the main points of its rebuttal testimony, all of which supports RLI's designation here as a competing Designated Agent with Direct Accounting, Royalties, Payment and Audit Rights ("DARPA") from the statutory licensees. Benefits of Com etition Ronald Gertz, the President and COO of RLI, will rebut statements made during the direct case and provide evidence supporting RLI's designation as a Designated Agent with DARPA and particularly of the fact that the benefits of Competition and freedom of choice for royalty recipients under the statutory license, which SoundExchange denies, are manifest. e Peter Paterno, an entertainment transactional attorney in the music area whose practice encompasses the representation of best-selling recording artists which have sold more than One Hundred Million albums worldwide in all aspects of the recording, music publishing and live concert touring industries, also to rebut statements made in the direct case, testifies that choice among collectives benefits artists under the statutory system. II. There are no Acceptable Substitutes for Competition in Statutorv License Administration Mr. Gertz rebuts SoundExchange's contention that their so-called "independent" Board of Directors, and the Direct Licensing alternative provided in the statute are viable substitutes for competition in statutory licensing administration. Mr. Paterno also rebuts SoundExchange's contention that their Board of Directors is "independent". III. Performine Rights Organizations ("PRO's) Are a Benchmark and Relevant Comnarison For Analvzine SoundExchanee and the Need For Comnetition o Mr. Gertz rebuts SoundExchange's contention that competition among the PRO's is not a relevant analogy to the statutory license under consideration, presenting testimony that in fact, the PRO's are a relevant analogy as to why competition would benefit copyright owners and performers of sound recordings. Mr. Paterno also rebuts SoundExchange's this contention by presenting testimony that competition in the PRO arena is an important check on royalty accounting and is relevant to the reason why competition under this statutory license is necessary to benefit artists. IV. Agreement Between RLI and Statutorv Licensees (willing buversl Sunnorts Designating RLI with DARPA o Mr. Gertz provides testimony concerning an agreement between RLI and DiMA wherein the DiMA members are able to designate RLI as a collective with DARPA for these statutory Royalties. This Agreement eschews both the previous multi-tier Receiving/Designated Agent structure and SoundExchange's