SoundExchange, Inc. v. Copyright Royalty Bd.

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 8, 2018 Decided September 18, 2018

No. 16-1159

SOUNDEXCHANGE, INC.,
APPELLANT

v.

COPYRIGHT ROYALTY BOARD AND LIBRARIAN OF CONGRESS,
APPELLEES

GEORGE JOHNSON, ET AL.,
INTERVENORS

Consolidated with 16-1162

On Appeal from a Final Determination of the Copyright
Royalty Board

Benjamin J. Horwich argued the cause for appellant
SoundExchange, Inc. With him on the briefs were Glenn D.
Pomerantz, Kelly M. Klaus, and Rose Leda Ehler.

George D. Johnson, pro se, argued the cause and filed
briefs for appellant.
 2
Sonia M. Carson, Attorney, U.S. Department of Justice,
argued the cause for appellees. On the brief were Mark R.
Freeman and Jennifer L. Utrecht, Attorneys.

Scott H. Angstreich argued the cause for intervenors
National Association of Broadcasters, et al. With him on the
joint brief were Michael K. Kellogg, John Thorne, Leslie V.
Pope, R. Bruce Rich, Todd D. Larson, and Gregory S. Silbert.

Catherine R. Gellis was on the brief for intervenor College
Broadcasters, Inc. in support of appellees.

Before: ROGERS, GRIFFITH and SRINIVASAN, Circuit
Judges.

Opinion for the Court filed by Circuit Judge SRINIVASAN.

SRINIVASAN, Circuit Judge: This case concerns the rates
paid by webcasters to license copyrights in digital sound
recordings. Webcasters stream digital sound recordings to
listeners over the Internet. A so-called “noninteractive”
webcasting service chooses the recordings to play for listeners,
whereas an “interactive” service allows an individual listener
to select music on demand.

Congress established a statutory copyright license for
noninteractive webcasters in the Copyright Act. The statutory
license enables noninteractive webcasters to transmit
recordings by paying a standard royalty rate rather than
negotiating licensing agreements with copyright holders.
Every five years, the Copyright Royalty Board sets the standard
rates noninteractive webcasters must pay to play recordings
over the Internet under the statutory license.
 3
This appeal raises challenges to the Board’s most recent
rate determination on a number of grounds. We sustain the
Board’s determination in all respects.

I.

A.

Congress set out the statutory scheme for the protection
and regulation of copyrights in the Copyright Act, 17 U.S.C.
§ 101 et seq. While the owner of a copyright in a musical work
has long enjoyed an exclusive right to perform it to the public,
id. § 106(4), the owner of a copyright in a particular sound
recording of the work—e.g., a specific performance by a given
artist—traditionally lacked an exclusive performance right. In
1995, Congress amended the Act to grant owners of copyrights
in sound recordings the exclusive right “to perform the
copyrighted work publicly by means of a digital audio
transmission.” Digital Performance Right in Sound
Recordings Act of 1995, Pub. L. No. 104-39, § 2, 109 Stat. 336,
336 (codified at 17 U.S.C. § 106(6)).

Congress, though, subjected that right to a system of
statutory licenses. The statutory licenses enable digital audio
services to perform copyrighted sound recordings by paying
predetermined royalty fees, without separately securing a
copyright holder’s permission. See Intercollegiate Broad. Sys.,
Inc. v. Copyright Royalty Bd., 796 F.3d 111, 114 (D.C. Cir.
2015) (citing Digital Millennium Copyright Act, Pub. L. No.
105-304, 112 Stat. 2860 (1998)).

The authority to set rates and terms for the statutory
licenses resides with the Copyright Royalty Board, a group of
three Copyright Royalty Judges appointed by the Librarian of
Congress. 17 U.S.C. § 801. When the Board undertakes the
 4
process of setting a statutory license, it first allows interested
parties to negotiate private license rates and terms. See id.
§ 803(b)(3); 37 C.F.R. § 351.2. For parties that do not reach a
voluntary agreement, the Board holds adversarial proceedings
to determine the standard rates and terms of the statutory
license. See 37 C.F.R. § 351.3 et seq.

At the conclusion of its proceedings, the Board issues a
final determination establishing the rates and terms and
explaining its decisionmaking. Id. § 803(c)(3). The Board’s
determination is reviewed by the Register of Copyrights for
legal error, id. § 802(f)(1)(D), and published by the Librarian
of Congress in the Federal Register, id. § 803(c)(6). The
determination is subject to review in this court. Id. § 803(d)(1).

B.

The Board conducts a separate ratesetting proceeding for
each statutory license it administers, and each license pertains
to a distinct category of transmission service. See 17 U.S.C.
§ 801(b)(1). One license covers webcasters. Every five years,
the Board holds proceedings to determine the “reasonable rates
and terms of royalty payments” governing the webcaster
statutory license for the ensuing five-year period. Id.
§ 114(f)(2)(A).

The statutory license for webcasters applies solely to
noninteractive services, i.e., services that select the songs they
play for listeners. Id. One example of a noninteractive
webcaster is a Pandora music channel. By contrast, an
interactive webcaster—i.e., one that allows each listener to
pick particular songs to hear on demand—must negotiate its
copyright licenses on the open market. Id. § 114(d)(2)(A)(i).
An example of an interactive service is Spotify’s basic service.
 5
The Board must “establish rates and terms” for the
webcaster statutory license “that most clearly represent the
rates and terms that would have been negotiated in the
marketplace between a willing buyer and a willing seller.” Id.
§ 114(f)(2)(B). The Act further directs the Board to base its
“decision on economic, competitive and programming
information presented by the parties.” Id. The Board may also
consider the rates and terms negotiated for comparable services
and “comparable circumstances under voluntary license
agreements.” Id. Additionally, the rates and terms set by the
Board “shall distinguish among the different types of”
webcaster services, id. § 114(f)(2)(A), meaning that distinct
segments of webcasters—such as noncommercial services—
receive their own rates and terms.

In carrying out those statutory directives, the Board has
developed a benchmark-based process. See Determination of
Royalty Rates for Digital Performance Right in Sound
Recordings and Ephemeral Recordings (Web III Remand), 79
Fed. Reg. 23,102, 23,110 (Apr. 25, 2014). First, interested
parties submit information they think should guide the Board’s
ratesetting. That information includes “voluntary license
agreements” negotiated for comparable services, 17 U.S.C.
§ 114(f)(2)(B), which the parties believe the Board can use as
benchmark rates. The Board assesses whether the voluntary
agreements adequately reflect rates “that would have been
negotiated in the marketplace between a willing buyer and a
willing seller.” Id. If not, the Board determines whether it can
adjust the agreements to render them useful benchmarks. See
Web III Remand, 79 Fed. Reg. at 23,115.

The Board uses the accepted benchmarks to establish a
“zone of reasonableness” and fixes the statutory license rate
within that zone. See id. at 23,110. The Board then repeats
 6
that process for each segment of webcaster services for which
it sets distinct rates.

C.

The Board’s previous ratesetting determinations for the
webcaster statutory license have been reviewed (and largely
upheld) by this court. See Intercollegiate Broad. Sys., Inc., 796
F.3d 111 (D.C. Cir. 2015); Intercollegiate Broad. Sys., Inc. v.
Copyright Royalty Bd., 574 F.3d 748 (D.C. Cir. 2009);
Beethoven.com LLC v. Librarian of Cong., 394 F.3d 939 (D.C.
Cir. 2005). This case concerns the Board’s fourth ratesetting
proceeding for webcasters, which set the rates and terms of the
statutory license for 2016 to 2020.

The proceeding included a six-week hearing, in which the
Board admitted some 660 exhibits consisting of more than
12,000 pages of documents and heard the oral testimony of 47
witnesses. Determination of Royalty Rates and Terms for
Ephemeral Recording and Webcasting Digital Performance of
Sound Recordings (Web IV), 81 Fed. Reg. 26,316, 26,317 (May
2, 2016). Fifteen parties participated, id. at 26,316–17,
including the two parties who bring this appeal: (i)
SoundExchange, Inc., a collective management organization
representing holders of copyrights in sound recordings, which
receives royalty payments under the webcaster statutory
license and distributes the payments to copyright holders; and
(ii) George Johnson (dba GEO Music), an independent
singer/songwriter.

Several parties submitted voluntarily negotiated
agreements for the Board to consult as benchmarks. The Board
adopted several of those proposed benchmarks, using them to
set distinct rates for (i) ad-based commercial noninteractive
webcaster services and (ii) subscription-based commercial
 7
noninteractive webcaster services. Id. at 26,404. Ad-based
services do not charge listeners a fee and earn revenue by
broadcasting advertisements between songs. Subscription-
based services charge listeners a fee and play music streams
uninterrupted by advertisements.

1. With respect to the rates for ad-based services, two
webcaster companies that offer such services—Pandora Media
and iHeartMedia—each proposed a benchmark agreement
derived from the ad-based, noninteractive services market.
Pandora based its proposal on a royalty agreement it had
negotiated with Merlin, an agency representing thousands of
independent record companies. 81 Fed. Reg. at 26,355–56.
iHeart based its proposal on an agreement it had negotiated
with Warner, a major record label. 81 Fed. Reg. at 26,375.

Both Pandora’s and iHeart’s proposed ad-based
benchmark agreements contained a feature known as
“steering.” “Steering” involves technology enabling a
webcaster to alter the natural frequency of performances under
its algorithm. If a webcaster chooses to “steer” in favor of a
given record label, it will play songs from artists on the label
more often than its algorithm would otherwise yield. Steering
benefits a record label because broader exposure can help
attract additional listeners to the label’s artists and generate
revenue for the label from traditional sources like music sales
and merchandise.

Pandora and other webcasters began incorporating
steering capability into their services fairly recently. In the
Pandora-Merlin and iHeart-Warner agreements, the parties
agreed that if the webcaster steered in favor of the record
company—increasing the number of plays for the record
company’s artists by a certain percentage—the webcaster
 8
could reduce the per-performance license rate it paid to the
record company. See 81 Fed. Reg. at 26,356, 26,375.

SoundExchange opposed the use of the Pandora and iHeart
agreements as benchmarks. The Board rejected
SoundExchange’s concerns and accepted rates from the
Pandora and iHeart agreements as probative of the rates
noninteractive services would pay in the ad-based webcaster
market. The Board thus used those benchmarks to establish its
zone of reasonableness. The Board then set the statutory
royalty rate for ad-based commercial noninteractive
webcasters within that range at $0.0017 per song performance
for 2016, to be adjusted in later years to account for inflation.
81 Fed. Reg. at 26,405.

2. With respect to the rates for subscription-based
services, the Board again considered benchmarks that would be
probative of rates negotiated in that segment of the webcaster
market. Pandora proposed as a benchmark the steered rates
negotiated in its agreement with Merlin for its subscription-
based service (which it offers in addition to its ad-based
service). See 81 Fed. Reg. at 26,356. The Board, as noted,
rejected SoundExchange’s arguments against relying on the
Pandora-Merlin agreement and accepted the agreement’s
steered rates as a benchmark for subscription-based services.
81 Fed. Reg. at 26,374–75.

SoundExchange proposed its own benchmark agreement
for the Board to consider. SoundExchange’s proposal, though,
involved agreements negotiated between interactive webcaster
services and copyright owners. As discussed, interactive
webcasters—which allow on-demand streaming—cannot rely
on the statutory license and must negotiate their licenses on the
open market. 17 U.S.C. § 114(d)(2)(A)(i). To derive its
proposed benchmark, SoundExchange adjusted the average
 9
royalty rate negotiated by interactive webcaster services to
account for differences between the interactive and
noninteractive markets.

The Board concluded that SoundExchange’s proposed rate
would serve as a useful benchmark for subscription webcaster
services. 81 Fed. Reg. at 26,344. The Board, though,
determined that SoundExchange’s proposed rates needed to be
further adjusted because the interactive services market is not
“effectively competitive.” 81 Fed. Reg. at 26,344, 26,353. In
the Board’s view, the statute calls for setting rates based on a
“sufficiently competitive market, i.e., an ‘effectively
competitive’ market.” 81 Fed. Reg. at 26,332.

Because the Board believed that “the interactive services
market is not effectively competitive,” the Board concluded
that SoundExchange’s proposed benchmark from that market
needed to be adapted “to render it . . . usable as an ‘effectively
competitive’ rate in . . . the noninteractive subscription
market.” 81 Fed. Reg. at 26,344. The Board did so by
discounting SoundExchange’s proposed benchmark based on a
“steering adjustment” grounded in the steered rates in the
Pandora-Merlin agreement, which the Board believed was a
useful proxy for the effects of price competition. 81 Fed. Reg.
at 26,343–44, 26,404–05.

The Board used the SoundExchange benchmark (with the
steering adjustment) and the Pandora benchmark (which
already accounted for steering) to set the zone of reasonable
rates for the subscription-based webcasters. 81 Fed. Reg. at
26,405. Selecting a rate within that range, the Board set the
statutory royalty rate for subscription-based commercial
noninteractive webcasters at $0.0022 per song performance for
2016, to be adjusted in ensuing years to account for inflation.
Id.
 10
3. SoundExchange and George Johnson moved for
rehearing of the Board’s determination under 17 U.S.C.
§ 803(c)(2). In March 2016, the Board denied the motions for
rehearing, made certain clarifications, and issued its final
determination. In May 2016, the Librarian of Congress
published the final determination in the Federal Register. Web
IV, 81 Fed. Reg. 26,316. SoundExchange and George Johnson
now appeal the Board’s determination to this court.

II.

SoundExchange challenges four aspects of the Copyright
Royalty Board’s webcaster license determination: (i) the
adoption of the Pandora and iHeart benchmarks over
SoundExchange’s objections; (ii) the adjustment downward of
SoundExchange’s proposed benchmark rate for subscription-
based services in an effort to capture “effective competition”;
(iii) the decision to set separate license rates for ad-based and
subscription-based commercial webcasters; and (iv) the
revision of the requirements for auditors to qualify to perform
verification of royalty payments.

We review the Board’s rate determinations under § 706 of
the Administrative Procedure Act. 17 U.S.C. § 803(d)(3). The
APA requires us to “affirm the [Board’s] decision unless it is
‘arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law.’” Dodge v. Comptroller of Currency,
744 F.3d 148, 155 (D.C. Cir. 2014) (quoting 5 U.S.C.
§ 706(2)(A)). Our review of “administratively determined
rates is particularly deferential because of their highly technical
nature.” Intercollegiate Broad. Sys., Inc., 796 F.3d at 127.
Applying that standard, we sustain the Board’s determination
against SoundExchange’s challenges.
 11
A.

We first address SoundExchange’s arguments that the
Board’s acceptance of the Pandora and iHeart benchmark
agreements was arbitrary and capricious.

1.

SoundExchange contends that the Board arbitrarily failed
to account for the impact of the statutory license on the rates
negotiated in the Pandora and iHeart benchmark agreements.
It is undisputed that, in setting rates for the statutory license,
the Board must aim to approximate rates that would have been
negotiated “if the webcasting statutory license did not exist.”
Id. at 131. The hypothetical marketplace, that is, must be “free
of the influence of compulsory, statutory licenses.” Web IV, 81
Fed. Reg. at 26,316.

In approximating the rates that would be negotiated in the
hypothetical marketplace, though, the Board relies on actual,
real-world agreements. And parties in the actual marketplace,
SoundExchange emphasizes, generally negotiate with the
knowledge that they can simply fall back on the statutory rate
if they fail to strike a bargain. The parties refer to the effect of
the statutory license on market negotiations as the “shadow” of
the statutory license.

In the proceedings before the Board, SoundExchange
argued against the proposed Pandora and iHeart benchmarks
on the ground that they were affected by the shadow of the
statutory license. The Board disagreed, concluding that any
statutory shadow “did not meaningfully affect” the benchmark
rates on which it opted to rely. 81 Fed. Reg. at 26,329. Rather,
the Board reasoned, its accepted benchmarks were “sufficiently
representative” of the “particular segments of the statutory
 12
market” they were chosen to reflect. Id. at 26,330 (emphasis
omitted).

The Board further explained that there was no “‘shadow’
problem” for the iHeart or Pandora benchmarks because the
pertinent rates in those agreements were “below the otherwise
applicable statutory rates.” Id. at 26,331. And when licensors
“voluntarily agreed to rates below the applicable statutory
rates . . . rather than defaulting to the higher statutory rate,” the
Board reasoned, the rates could not have been affected by the
shadow of the statutory license. Id.; see id. at 26,383.

In its determination, the Board compared the per-
performance royalty rate in the Pandora and iHeart agreements
to the per-performance rate in the statutory license. See id. at
26,331. SoundExchange now contends that the Board’s focus
on per-performance rates was flawed in that the Board instead
should have compared the total compensation the record
companies expected to receive under the benchmark
agreements to the total compensation anticipated under the
statutory license.

SoundExchange faces an uphill battle in challenging the
Board’s selection of its benchmarks. We have repeatedly
recognized that it is “within the discretion of the [Board] to
assess evidence of an agreement’s comparability and to decide
whether to look to its rates and terms for guidance.”
Intercollegiate Broad. Sys., Inc., 574 F.3d at 759. The Board’s
“broad discretion” encompasses its selection or rejection of
benchmarks, as well as its adjustment of benchmarks to “render
them useful.” Music Choice v. Copyright Royalty Bd., 774
F.3d 1000, 1009 (D.C. Cir. 2014). The Board’s discretion thus
includes determining how to respond to the potential effect of
the statutory shadow on a proposed benchmark. See Scope of
 13
the Copyright Royalty Judges’ Continuing Jurisdiction, 80 Fed.
Reg. 58,300, 58,307 (Sept. 28, 2015).

Here, the Board decided to use per-performance rates as
the relevant point of comparison in determining whether a
benchmark agreement had been affected by the statutory
license. SoundExchange cites no Board precedent or other
authority supporting its contention that the Board was instead
obligated to use total compensation as the comparator. Nor did
SoundExchange propose to the Board a feasible way to
measure the “total compensation” supplied by a negotiated
bundle of rates and terms. We thus conclude that the Board
reasonably exercised its discretion to select per-performance
rates as the relevant metric of comparison.

Relatedly, SoundExchange faults the Board for failing to
assign value to nonmonetary terms in the Pandora and iHeart
agreements, which precluded the Board from adjusting the
benchmark rates accordingly. For instance, the copyright
holders negotiated promises of free advertising slots and
minimum shares of certain revenues. According to
SoundExchange, the Board would have better approximated
the benchmark rates under the agreements if it had accounted
for those sorts of terms.

The Board, though, examined those terms at length in its
determination and rejected the notion that they supported
raising the benchmark rates. See 81 Fed. Reg. at 26,359–63,
26,369–70, 26,384–88. In particular, because the parties
neglected to put evidence in the record about how to value the
other terms in the agreements, the Board had no basis on which
to account for their value in adjusting the benchmarks. See,
e.g., id. at 26,369, 26,387. The Board reasoned that it “cannot
arbitrarily adjust or ignore [an] otherwise proper and
reasonable benchmark.” Id. at 26,387. In its arguments before
 14
us, SoundExchange again fails to point to any evidence in the
record on which the Board could have relied in adjusting the
benchmark per-performance rates. In that context, we
conclude that the Board reasonably declined to substitute its
own speculation for evidence that the parties could have made
part of the “written record.” 17 U.S.C. § 803(c)(3).

More generally, the Board gave extensive attention to
arguments about the statutory shadow in its determination, and
it concluded that the Pandora and iHeart benchmarks were
unaffected. 81 Fed. Reg. at 26,329–31, 26,383. That was a
permissible and adequately explained exercise of the Board’s
discretion.

2.

SoundExchange next contends that the Board arbitrarily
ignored how the statutory license generally prevents parties
from negotiating rates above the statutory royalty. An expert
witness for SoundExchange testified that the existence of the
statutory license has the effect of crowding out agreements that
would otherwise contain higher negotiated rates. See id. at
26,330. In SoundExchange’s view, that dynamic skews the
evidence before the Board, in that the field of potential
benchmark agreements negotiated in the actual market will
necessarily contain a per-performance royalty below the
statutory rate.

Addressing the expert’s testimony, the Board concluded
that, although his observation was “rational,” it was “too
untethered from the facts to be predictive or useful in adjusting
for the supposed shadow of the existing statutory rate.” Id. at
26,330. The Board thus chose to adhere to the “sufficiently
representative benchmarks” it had identified, without
attempting to account for the hypothetical, “missing”
 15
agreements that might have rendered the expert’s theory a more
useful one in practice. Id.

As the Board noted elsewhere in its determination, the
Board “cannot arbitrarily adjust or ignore [an] otherwise proper
and reasonable benchmark.” Id. at 26,387. The Board was not
obligated to adjust its benchmarks based on what it considered
to be the expert’s “factual[ly] indetermina[te]” theory, id. at
26,330, in the absence of additional “written record” evidence
supporting the necessity for, and magnitude of, any associated
adjustments. 17 U.S.C. § 803(c)(3); see Settling Devotional
Claimants v. Copyright Royalty Bd., 797 F.3d 1106, 1121 (D.C.
Cir. 2015). The Board’s decision to rely on the concrete
evidence before it—instead of a theory the Board reasonably
thought could not be translated into practice—was permissible.

3.

SoundExchange also challenges the Board’s decision to
use steered rates as benchmarks. SoundExchange observes that
the discounted steered rates came with the promise of increased
performance of the record company’s recordings; and that
promise, SoundExchange notes, by nature could not be
extended to the entire marketplace (because it would be
impossible to increase the share of performances for all
copyright holders). As a result, SoundExchange asserts, it is
arbitrary to incorporate steered rates into the across-the-board
statutory license. See 81 Fed. Reg. at 26,363–65.

We disagree. The Board permissibly determined that,
although SoundExchange’s argument about steered rates is
“mathematically correct” in a “static sense,” it is not
“economically correct” in a “dynamic sense.” Id. at 26,366. A
webcaster of course cannot actually engage in steering for
every copyright holder. But the Board determined that the
 16
mere threat of steering would introduce price competition into
the market. For instance, a webcaster’s threat to steer in favor
of a copyright holder’s competitors can induce the copyright
holder to agree to lower per-performance rates. That
competitive effect occurs, the Board reasoned, even if the
threat of steering is never realized. Id. at 26,366–67. We see
no basis to set aside the Board’s determination in that regard as
arbitrary.

The Board further concluded that “[s]teering is
synonymous with price competition in this market” and
adopted the steered rates as benchmarks. Id. at 26,366. We
afford the Board “broad discretion” when it “mak[es]
predictive judgments” about the music marketplace. Music
Choice, 774 F.3d at 1015. The Board acted within this
discretion in concluding that the likely effect of steering in the
music industry would be to promote price competition.

B.

We now turn to the Board’s decision to adjust
SoundExchange’s proposed benchmark rates to offset a
perceived lack of effective competitiveness in the interactive-
services market. Whereas noninteractive webcasters can make
use of the statutory license, interactive services must negotiate
licensing agreements with copyright holders in the market. See
17 U.S.C. §§ 114(d)(2)(A)(i), (f)(2)(A). The benchmark rate
for subscription services proposed by SoundExchange came
from the interactive-services market, see 81 Fed. Reg. at
26,335, not the noninteractive market for which the Board
sought to set rates and terms.

As a threshold step before incorporating SoundExchange’s
proposed benchmark rates into the ratesetting for the
noninteractive services market, the Board examined the
 17
“[l]egal [i]ssue” of whether it was obligated “to set a rate that
reflects an ‘effectively competitive’ market populated by
willing buyers and willing sellers.” Id. at 26,331. The Board
concluded that the statute required setting “a rate that reflects a
market that is effectively competitive.” Id. at 26,332. But the
Board went on to explain that, even if the statute were
“ambiguous” in that regard, the Board “can and should
determine whether the proffered rates reflect a sufficiently
competitive market, i.e., an ‘effectively competitive’ market,”
and that such an approach is “certainly a permissible,
reasonable, and rational application of [17 U.S.C.] § 114 for a
number of reasons.” Id. at 26,332.

The Board then applied its “effective competition”
interpretation to SoundExchange’s proposed benchmark rates.
The Board found that the interactive services market giving rise
to SoundExchange’s benchmark was inadequately competitive
due to the possession of oligopoly power by certain copyright
holders, and that an adjustment was needed to “eliminate the
complementary oligopoly effect.” Id. at 26,353; see id. at
26,343–44. The Board concluded that the discount for steered
rates in the Pandora-Merlin agreement served as a suitable
proxy for estimating the effects of price competition, id. at
26,344; and it thus applied a corresponding discount factor to
SoundExchange’s proposed rates, id. at 26,404–05.

SoundExchange challenges the Board’s adoption of an
effective-competition standard when determining the “rates
and terms that would have been negotiated in the marketplace
between a willing buyer and a willing seller.” 17 U.S.C.
§ 114(f)(2)(B). SoundExchange’s objection is one of design,
not of application. That is, SoundExchange’s challenge is
confined to the Board’s threshold understanding that the statute
incorporates (or can incorporate) an effective-competition
requirement. SoundExchange does not go on to argue that, if
 18
the statute can accommodate the Board’s interpretation, then
the specific way in which the Board implemented that
understanding—by discerning that the interactive-services
market lacked effective competition and by applying a steered-
rate adjustment as a fix—was nonetheless flawed.

We first consider whether the Board’s interpretation of the
statute is subject to review under the familiar Chevron
framework. See Chevron U.S.A. Inc. v. Nat. Res. Def. Council,
Inc., 467 U.S. 837 (1984). Answering the question yes, we
then review—and sustain—the Board’s interpretation under
Chevron.

1.

We have previously applied the Chevron framework when
reviewing the Board’s interpretation of the same statutory
provision at issue here: the requirement to determine royalty
rates that “most clearly represent the rates . . . that would have
been negotiated in the marketplace between a willing buyer and
a willing seller.” 17 U.S.C. § 114(f)(2)(B); see Intercollegiate
Broad. Sys., Inc., 574 F.3d at 756–57. Our precedent thus
would seem to call for applying Chevron in this case as well.

The path is not so straightforward, though, because the
Board does not invoke—or even cite—Chevron in its briefing
to us. To the contrary, whereas SoundExchange treats (and
challenges) the Board’s adoption of an effective-competition
standard as a matter of statutory interpretation, the Board’s
briefing does not engage the issue on the same terms. The
Board does not defend its adjustment of SoundExchange’s
proposed benchmark rates as a reasonable understanding that
the statute calls for identifying rates that would prevail in a
hypothetical, effectively competitive market. The Board
instead treats the adjustment solely as a case-specific effort to
 19
adapt the conditions in the interactive market to the actual
conditions in the noninteractive market. That approach is
difficult to square with the Board’s treatment of the issue in its
order under review. Indeed, the Board’s determination
contains a separate section at the outset entitled: “The Legal
Issue of Whether Effective Competition is a Required Element
of the Statutory Rate.” 81 Fed. Reg. 26,331–34.

Does the Board’s failure to reference the Chevron
framework in its briefing in our court mean that we should
disregard Chevron when reviewing the Board’s challenged
interpretation? We recently held that an agency can forfeit its
ability to obtain deferential review under Chevron by failing to
invoke Chevron in its briefing. Neustar, Inc. v. FCC, 857 F.3d
886, 893–94 (D.C. Cir. 2017). Before Neustar, we had held
that a party challenging an agency’s interpretation of a statute
could forfeit an objection to Chevron deference. See Lubow v.
U.S. Dep’t of State, 783 F.3d 877, 884 (D.C. Cir. 2015). But
we had not addressed the converse question of whether an
agency defending its decision could forfeit an entitlement to
Chevron deference. In Neustar, the “FCC’s brief nominally
reference[d] Chevron’s deferential standard in its standard of
review but did not invoke this standard with respect to” the
challenged statutory interpretation at issue. 857 F.3d at 893–
94. We held that the agency had thereby “forfeited any claims
to Chevron deference.” Id. at 894.

If that were all we said in Neustar, the Board seemingly
would have forfeited its ability to benefit from Chevron
deference here as well. But in Neustar, we grounded our
finding of forfeiture on an additional observation beyond the
agency’s failure to invoke Chevron in its briefing to us:
“Similarly,” we explained, “review of the relevant agency
orders shows no invocation of Chevron deference for this
matter.” Id.
 20
By that observation, we did not indicate a “magic words”
requirement. We do not anticipate agencies would reference
the Chevron framework by name in the course of their own
decisionmaking: Chevron is a standard of judicial review, not
of agency action. See Braintree Elec. Light Dep’t v. FERC,
667 F.3d 1284, 1288 (D.C. Cir. 2012) (“[T]he Chevron two-
step is a dance for the court, not the Commission.”). We
instead indicated that, if an agency manifests its engagement in
the kind of interpretive exercise to which review under
Chevron generally applies—i.e., interpreting a statute it is
charged with administering in a manner (and through a
process) evincing an exercise of its lawmaking authority—we
can apply Chevron deference to the agency’s interpretation
even if there is no invocation of Chevron in the briefing in our
court. After all, “it is the expertise of the agency, not its
lawyers,” that ultimately matters. Peter Pan Bus Lines, Inc. v.
Fed. Motor Carrier Safety Admin., 471 F.3d 1350, 1354 n.3
(D.C. Cir. 2006).

Here, the Board’s determination amply manifests the
requisite engagement in an exercise of interpretive authority.
Indeed, the Board explicitly considered “the plain meaning of
the statute, the clear statutory purpose, applicable prior
decisions, and the relevant legislative history.” 81 Fed. Reg. at
26,332. The Board in fact essentially incanted the language of
the Chevron framework (even though, as we have said, an
agency need not parrot the language of Chevron in order to
receive deference). While the Board first read the statute to
compel it to determine rates that would prevail in a market
characterized by effective competition, the Board did not stop
there. The Board went on to explain that, even if the statute
were “ambiguous” on that score, it “can and should determine
whether the proffered rates reflect a sufficiently competitive
market, i.e., an ‘effectively competitive’ market.” Id. at
26,332. And while that alone confirms the agency’s
 21
involvement in an interpretive enterprise implicating Chevron,
the Board even echoed the language of Chevron review in
explaining that its interpretation “is certainly a permissible,
reasonable, and rational application of § 114.” Id.; see, e.g.,
Jacoby v. NLRB, 325 F.3d 301, 310 (D.C. Cir. 2003) (“We
are . . . required by Chevron to defer to [the agency’s]
reasonable and permissible interpretation of the Act.”).

In sum, consistent with our previous application of
Chevron to the Board’s interpretation of the same statute,
Intercollegiate Broad. Sys., Inc., 574 F.3d at 757, we will again
apply the Chevron framework in reviewing the Board’s
interpretation of § 114(f)(2)(B)—this time with regard to the
Board’s application of an effective-competition standard.

2.

Under Chevron review, we first assess whether the statute
directly speaks “to the precise question at issue” so as to
foreclose (or compel) the agency’s interpretation. Chevron,
467 U.S. at 842. If so, we “must give effect to the
unambiguously expressed intent of Congress.” Id. at 843. But
if not, we defer to the agency’s resolution of the statute’s
ambiguity as long as its interpretation is reasonable. See id.;
Intercollegiate Broad. Sys., Inc., 574 F.3d at 757.

a. SoundExchange contends that the Board’s application
of an effective-competition standard is foreclosed by the
statute. The Board reached the opposite conclusion in its
determination, reasoning that its effective-competition
interpretation is compelled by the statute. We disagree with
both propositions.

The notion that § 114(f)(2)(B) either forecloses or compels
the Board’s effective-competition interpretation stands in
 22
considerable tension with our decision in Intercollegiate
Broadcast System. There, we rejected an argument by
webcasters that the same statute “requires the [Board] to base
rates on a perfectly competitive market.” 574 F.3d at 757. The
statute, we concluded, “does not require that the market
assumed by the [Board] achieve metaphysical perfection in
competitiveness.” Id. We said that the “statute speaks only of
a ‘willing buyer and a willing seller.’” Id. That is the standard
the Board must “apply in evaluating whether a market
benchmark [is] an appropriate model on which to base [its] own
rate determination.” Id. Ultimately, we explained, there is an
“inherent ambiguity in the statute’s mandate.” Id.

In Intercollegiate Broadcast System, we deemed
§ 114(f)(2)(B) inherently ambiguous with regard to the degree
of “competitiveness” in the “market assumed by the” Board
when assessing “whether a market benchmark [is] an
appropriate model on which to base [its] own rate
determination.” Id. That description perfectly captures the
Board’s interpretive exercise in this case. And in
Intercollegiate Broadcast System, we held that the statute did
not require the Board to assume a “perfectly competitive
market” when assessing the suitability of a “market
benchmark.” Id. Instead, the statute left that decision to the
agency’s discretion. Here, by the same token, the statute leaves
to the agency’s discretion whether to assume an “effectively
competitive market” when assessing the suitability of
SoundExchange’s proposed benchmark rates.

The Board, in nonetheless concluding that § 114(f)(2)(B)
compels it to assume an effectively competitive market, located
that understanding primarily in the statute’s requirement that
the Board base the determination of rates “on economic,
competitive and programming information presented by the
parties.” 17 U.S.C. § 114(f)(2)(B) (emphasis added); see 81
 23
Fed. Reg. at 26,331–32. But the requirement to consider
“competitive information” does not say how to consider the
information. Just as the Board must consider “competitive
information” but retains discretion whether to assume a
perfectively competitive market, Intercollegiate Broad. Sys.,
Inc., 574 F.3d at 757, it likewise must consider “competitive
information” but retains discretion whether to assume an
effectively competitive market.

SoundExchange, for its part, contends that § 114(f)(2)(B)
compels the Board to adopt rates that would be negotiated in
the actual market, without any adjustment to account for how
the rates might vary if the market were effectively competitive.
But as we indicated in Intercollegiate Broadcast System, the
statute does not compel any particular level of competitiveness,
including the level existing in the actual market.

For instance, as the Board suggested in its determination,
§ 114(f)(2)(B)’s reference to rates negotiated “between a
willing buyer and a willing seller” could be understood to allow
adjustments to offset the existence of market power: “neither
sellers nor buyers can be said to be ‘willing’ partners to an
agreement if they are coerced to agree to a price through the
exercise of overwhelming market power.” 81 Fed Reg. 26,331
(internal quotation marks omitted). In that sense, “the ‘willing
seller/willing buyer’ standard” can be read to “call[] for rates
that would have been set in a ‘competitive marketplace.’” Id.
at 26,333.

SoundExchange also relies on a separate provision in the
Copyright Act that authorizes the Board to consider certain
policy objectives when setting rates for services other than
webcasting. See 17 U.S.C. § 801(b)(1). Congress’s express
mandate to consider policy objectives in that provision,
SoundExchange asserts, means that the absence of any such
 24
mandate in § 114(f)(2)(B) forecloses consideration of external
policy objectives vis-à-vis the license for webcasters. But the
consideration of market competitiveness under § 114(f)(2)(B)
does not involve policy objectives external to that provision’s
mandate. Rather, it is an implementation of the “willing
buyer/willing seller” standard itself.

We thus reject SoundExchange’s and the Board’s
competing efforts to see unambiguous clarity where we have
previously seen meaningful ambiguity. In light of “the inherent
ambiguity in the statute’s mandate,” we proceed to “assess the
reasonableness of the [Board’s] interpretation” under the
second step of the Chevron framework. Intercollegiate Broad.
Sys., Inc., 574 F.3d at 757.

b. As we explained in Intercollegiate Broadcasting
System, the Board, “not this court, bear[s] the initial
responsibility for interpreting the statute.” Id. We perceived
“nothing in the [Board’s] interpretation to establish
unreasonableness” in that case, id., and we reach the same
conclusion here.

The Board, as set out above, interpreted the “willing
buyer/willing seller” standard to authorize the setting of rates
at levels that would prevail in a market characterized by
effective competition. The Board’s understanding to that effect
is reasonable. The Board relied on one of its prior
determinations in reasoning that, “[b]etween the extremes of a
market with ‘metaphysically perfect competition’ and a
monopoly (or collusive oligopoly) market devoid of
competition there exists in the real world . . . a mind-boggling
array of different markets, all of which possess varying
characteristics of a ‘competitive marketplace.’” 81 Fed. Reg.
at 26,333 (internal quotation marks and citation omitted). The
“willing buyer/willing seller” standard, the Board permissibly
 25
believes, gives it discretion to identify the relevant
characteristics of competitiveness on which to base its
determination of the statutory royalty rates.

The Board also found support for its interpretation in the
statute’s integrally associated requirement to consider
“competitive information” submitted by the parties. 17 U.S.C.
§ 114(f)(2)(B). While that obligation does not compel the
Board to determine rates through the lens of an effective-
competition standard, it does support the Board’s decision to
do so in its discretion. As the Board explained in its
determination, the requirement to weigh “competitive
information” is “consistent with the idea that Congress
intended to delegate discretion to the [Board] to determine
whether the rates [it] set[s] reflect[] an appropriate level of
competitiveness.” 81 Fed. Reg. at 26,334. In other words, “the
statutory charge that the [Board] weigh ‘competitive
information’ indicates that the [Board is] empowered to make
judgments and decide whether the rates proposed adequately
provide for an effective level of competition.” Id. And here,
the Board believed it was “presented with highly specific facts
regarding how to use the impact of steering on rate setting in
order to measure and account for the ‘complementary
oligopoly’ power . . . that serves to prevent effective
competition” in the interactive-services market. Id.

The Board, on that basis, found it necessary to adjust
SoundExchange’s proposed benchmark rates from the
interactive-services market. We see no ground for rejecting the
Board’s interpretation of § 114(f)(2)(B) giving rise to its
decision to adjust SoundExchange’s proposal.
 26
C.

We now turn to the Board’s decision to set different
statutory rates for ad-based and subscription-based
noninteractive webcasters. SoundExchange claims that the
Board’s establishment of different rates for those two services
was arbitrary and capricious because the Board inadequately
examined the propriety of distinct rates under the approach
prescribed by its precedents. We reject that challenge and
uphold the Board’s decision.

The Copyright Act specifically contemplates the Board’s
ability to adopt different rates for distinct market segments in
the provision of webcasting services. The Act directs the
Board to “distinguish among the different types of eligible
nonsubscription transmission services and new subscription
services.” 17 U.S.C. § 114(f)(2)(A). Exercising that authority,
the Board has previously set different rates for commercial and
noncommercial noninteractive webcasting services. See
Digital Performance Right in Sound Recordings and
Ephemeral Recordings (Web II), 72 Fed. Reg. 24,084, 24,097
(May 1, 2007); Web III Remand, 79 Fed. Reg. at 23,122. And
the express grant of authority to draw distinctions between
“nonsubscription transmission services” and “new subscription
services,” 17 U.S.C. § 114(f)(2)(A), necessarily means the
Board can distinguish between nonsubscription services, on
one hand, and subscription services, on the other.

In the Board’s previous webcaster ratesetting proceedings,
it considered rate differentiation between two services to be
appropriate when the services occupied “distinct segment[s] of
the noninteractive webcasting market.” Web II, 72 Fed. Reg. at
24,097. The Board examined whether the services compete
with each other for listeners, id. at 24,098, or whether one
service instead “operate[d] in a submarket separate from and
 27
noncompetitive with” the other, id. at 24,095. And in
ascertaining whether market segmentation exists, the Board
looks to a number of factors, including whether comparable
agreements have been negotiated in which one service paid a
lower rate than the other. Id. at 24,097; Web IV, 81 Fed. Reg.
at 26,319–20.

In its proceedings in this case, the Board decided to
distinguish between ad-based and subscription-based services.
It recounted the existence of “overwhelming” “record
evidence” of a “sharp dichotomy between listeners” willing to
pay for subscription services and those instead willing to use
only ad-based (and cost-free) services. 81 Fed. Reg. at 26,345.
The “bimodal chasm” separating consumers based on their
willingness to pay, the Board explained, established a
“dichotomized market” as between ad-based and subscription-
based services. Id. Based on that evidence, the Board
determined that “ad-supported (free-to-the-listener) internet
webcasting appeals to a different segment of the market,
compared to subscription internet webcasting, and therefore the
two products [are] differentiated by this attribute.” Id. at
26,346. The Board then set distinct statutory rates for each
service. Id. at 26,404–05.

SoundExchange contends that the Board failed to explain
its decision to differentiate, instead skipping to the conclusion
that distinct rates were appropriate. It is true that the Board did
not include its analysis of the difference between ad-based and
subscription-based services in the section of its determination
entitled “Rate Differentiation.” Id. at 26,319–23. But the
Board’s analysis cannot be considered arbitrary based merely
on the title of the section in which it is found, and the Board
devoted ample attention to the issue elsewhere in the
determination. See id. at 26,344–46.
 28
SoundExchange argues that the Board’s decision to adopt
different rates was nonetheless arbitrary because the Board
departed from the approach established by its precedents. We
see no such inconsistency. In Web II, the Board established
that the key question in ascertaining the propriety of
differentiation is whether the services occupy “distinct
segment[s]” of the market or instead compete for listeners. 72
Fed. Reg. at 24,097–98. That question forms the core of the
Board’s analysis in this case, including its extensive discussion
of listeners’ divergent attitudes with regard to their willingness
to pay for webcasting services. 81 Fed. Reg. at 26,345–46.
And the determination concludes on that basis that ad-based
services make up “a different segment of the market” than
subscription-based services. Id. at 26,346. In addition, the
Pandora and iHeart benchmark agreements afforded the Board
concrete examples of buyers and sellers negotiating lower rates
for ad-based services than subscription services, and the Board
relied on those benchmarks to establish a lower statutory
license rate for ad-based services. See id. at 26,356, 26,404–
05.

We thus conclude that the Board adequately and
reasonably explained its decision to set different rates for ad-
based and subscription noninteractive webcasting services.

D.

SoundExchange’s final challenge concerns the Board’s
decision to amend a license term setting forth the requirements
to qualify as an auditor that can verify royalty payments.
Recall that, in addition to determining rates for the statutory
license, the Board also establishes other “terms that would have
been negotiated in the marketplace.” 17 U.S.C. § 114(f)(2)(B).
Since the first webcaster ratesetting, each statutory license has
included a term enabling copyright holders to conduct an audit
 29
to verify webcasters’ royalty payments. See, e.g.,
Determination of Reasonable Rates and Terms for the Digital
Performance of Sound Recordings and Ephemeral Recordings
(Web I), 67 Fed. Reg. 45,240, 45,276 (July 8, 2002); 37 C.F.R.
§ 380.6. And since Web II, the Board’s regulations have
provided that, to be “qualified” to conduct the verification
process, an auditor must be a certified public accountant. 72
Fed. Reg. at 24,109, 24,111; see 37 C.F.R. § 380.7.

A number of parties petitioned the Board to amend that
term in the proceedings for this ratesetting cycle.
SoundExchange proposed amending the definition of
“qualified auditor” to embrace auditors with “specialized
experience,” even if not a CPA. SX Proposed Findings of Fact
451, J.A. 1252. The National Association of Broadcasters
(NAB) and the National Religious Broadcasters
Noncommercial Music License Committee (NRBNMLC)
made a proposal in the opposite direction: they opposed
SoundExchange’s proposal to relax the requirements to qualify
as an auditor and instead proposed restricting them. Those
parties suggested requiring that an auditor not only be a CPA
but also be “licensed in the jurisdiction where it seeks to
conduct a verification.” NAB Proposed Rates and Terms 3,
J.A. 146; NRBNMLC Proposed Noncommerical Webcaster
Rates and Terms 3 (Oct. 7, 2014),
https://www.crb.gov/rate/14-CRB-0001-WR/statements/
NRBNMLC.pdf.

The Board adopted that proposal, defining “qualified
auditor” to mean “an independent Certified Public Accountant
licensed in the jurisdiction where it seeks to conduct a
verification.” 81 Fed. Reg. at 26,404, 26,409; 37 C.F.R.
§ 380.7. The Board explained that the new requirement
“provides assurance that the auditor will be accountable and
 30
amenable to local governance in the jurisdiction in which it
operates.” 81 Fed. Reg. at 26,404.

SoundExchange challenges the Board’s revised definition
of “qualified auditor” on the grounds that its adoption was
unsupported by evidence in the record. The Board’s
determination relies on the expert testimony of Professor
Roman Weil in support of the new licensure requirement. Id.
at 26,404. SoundExchange objects that Professor Weil’s
testimony did not speak to in-state licensure in particular. His
testimony, however, addressed the benefits of using CPAs due
to the application of local standards of professional conduct
and oversight. See Written Rebuttal Testimony of Roman L.
Weil 11–13, J.A. 1098–100. In particular, he noted that CPAs
are “governed by the principles, rules, and requirements
promulgated by their applicable state accountancy boards,” id.
at 11, J.A. 1098, and “face professional consequences” for
misconduct, including the ability of state accountancy boards
to “take action with respect to the CPA’s license,” id. at 13 &
n.16, J.A. 1100.

To the extent the importance of local boards in governing
the conduct of CPAs is not self-evident, Weil’s testimony
sufficiently brings the point home. And on that basis, the
Board reasonably concluded that requiring auditors to be
licensed where they practice would ensure that they are subject
“to the jurisdiction of the local CPA governing bodies and local
courts.” 81 Fed. Reg. at 26,404. The Board’s explanation, in
conjunction with Weil’s testimony, establishes that the
determination is adequately “supported by the written record.”
17 U.S.C. § 803(c)(3).

SoundExchange nonetheless argues that the revised
definition lacks support because the Board ignored the
existence of CPA “mobility laws.” Mobility laws permit CPAs
 31
certified in one state to practice in another state, so long as they
submit to the disciplinary authority of the other state.
Whatever the force of SoundExchange’s objection, however,
we cannot set aside the Board’s determination on those grounds
because SoundExchange failed to present the argument at a
time the Board could give it consideration.

As we have explained, a “reviewing court generally will
not consider an argument that was not raised before the agency
at the time appropriate under its practice.” BNSF Ry. Co. v.
Surface Transp. Bd., 453 F.3d 473, 479 (D.C. Cir. 2006)
(internal quotation marks omitted). Here, SoundExchange
made an argument against the licensure requirement in its
request for rehearing. But SoundExchange failed to give the
Board the opportunity to address the argument it now presses
before us: that an additional licensure requirement is irrational
because state CPA “mobility” laws already subject CPAs to the
disciplinary authority of the various local jurisdictions in which
they practice.

The rehearing request instead merely referenced the
existence of CPA mobility laws (in a footnote) to demonstrate
that the new requirement differed from requirements generally
imposed on CPAs. See SX Pet. for Rehearing 9 n.14, J.A.
1269. To be sure, at the time of SoundExchange’s rehearing
petition, the Board had not yet explicitly referenced Weil’s
testimony in support of the new licensure requirement. It did
so in responding to the rehearing petition. But the Board had
adopted the new licensure requirement, which gave
SoundExchange the opportunity to object to it on the ground
that state mobility laws rendered it unnecessary. Yet while
SoundExchange noted the existence of state mobility laws in a
footnote in its rehearing petition, it made no suggestion that the
laws rendered the new licensure requirement unnecessary. Cf.
BNSF Ry. Co., 453 F.3d at 478 (treating claim as forfeited in
 32
part because the claimant “first made the argument in a
footnote to its petition for reconsideration” to the agency).

Notably, it remains possible that the Board could interpret
its new definition of “qualified auditor” such that CPA mobility
laws would serve to “satisfy the local-licensing requirement.”
Board Br. 60; see also NAB Br. 41. The Board has confirmed
that SoundExchange can ask the Board to address the issue “on
a prospective basis.” Board Br. 61. If SoundExchange pursues
that course, the Board could clarify its regulation in a manner
favorable to SoundExchange in that respect, or could amend
the regulation to align with its definition of “qualified auditor”
in other ratesetting proceedings.

As a result, SoundExchange might be able to secure its
preferred understanding of the “qualified auditor” licensure
requirement through other means. Its effort to obtain relief
here, however, is unsuccessful.

III.

The final challenge before us, brought by pro se appellant
George Johnson, concerns the constitutionality of the Board’s
determination. During the Web IV proceedings, Johnson asked
the Board to refer several questions to the Register of
Copyrights for resolution, including whether the ratesetting
proceeding violated Johnson’s “exclusive rights” in his
copyrights or his due process rights in his property under the
Constitution. Mot. of George Johnson Requesting Referral of
Material Questions of Substantive Law 3, J.A. 351. The Board
denied Johnson’s motion to refer the questions. Johnson then
presented his constitutional concerns to the Board after its
initial determination, in his petition for rehearing.
 33
The Board rejected Johnson’s rehearing petition. The
Board found it “difficult to discern [his] argument,” stating
that, while the petition “seems to suggest that the [Board] gave
insufficient weight to copyright owners’ exclusive rights,” it
“does not develop that assertion into a coherent legal
argument.” Order Denying GEO Motion for Reh’g 5, J.A. 374.
The Board further explained that, insofar as Johnson sought “to
challenge the constitutionality of the [Copyright] Act,” the
Board “decline[d] to rule on that challenge.” Id. The Board
explained that the issue had been raised for the first time only
on rehearing, that the Board’s authority to rule on the Act’s
constitutionality was unclear, and that the Board would decline
to do so in any event “on the basis of such inadequate
argumentation.” Id.

On appeal, Johnson contends that the Board improperly
failed to address his constitutional arguments. As the Board
correctly argues, however, Johnson did not properly preserve
his constitutional challenge. Under the Copyright Act, the
Board has “considerable freedom to determine its own
procedures.” Settling Devotional Claimants, 797 F.3d at 1118
(internal quotation marks omitted). The Board has established
that “[a] party waives any objection to a provision in the
determination unless the provision conflicts with a proposed
finding of fact or conclusion of law filed by the party.” 37
C.F.R. § 351.14(b). As a result, an argument presented to the
Board for the first time at rehearing is considered forfeited. See
Intercollegiate Broad. Sys., Inc., 574 F.3d at 760.

Although Johnson requested referral of his constitutional
concerns to the Register and quoted general “copyright law
principles” in his proposed findings of fact, he did not direct a
constitutional argument to the Board until his petition for
rehearing. Order Denying GEO Mot. for Reh’g 5, J.A. 374.
Under the Board’s regulations and precedent, that was too late,
 34
and the Board reasonably denied Johnson’s petition for
rehearing in part on that basis. See Settling Devotional
Claimants, 797 F.3d at 1122.

Notwithstanding the Board’s denial of Johnson’s petition
in part on the ground that his arguments were untimely, the
Board also gave some consideration to Johnson’s arguments on
the merits. We thus will do the same.

Johnson contends that the Board set royalty rates so low as
to deprive copyright holders of their property rights in violation
of the Constitution’s Copyright Clause and Due Process
Clause. With regard to due process, the Board held an
extensive adversarial proceeding in determining the
webcasting rates. Johnson had the opportunity to testify,
submit exhibits, file motions and statements, and propose his
preferred royalty rate. No more process was due. Addressing
a similar procedure for setting royalties that was applied by the
Board’s predecessor, we characterized “the suggestion that the
Panel’s process fell below the minimum constitutional
requirements of the Due Process Clause” as “specious.” Nat’l
Ass’n of Broads. v. Librarian of Cong., 146 F.3d 907, 929 n.20
(D.C. Cir. 1998) (affirming the Copyright Arbitration Royalty
Panel). Johnson has given us no reason to reach a different
conclusion here.

The Copyright Clause, U.S. Const. art. I, § 8, cl. 8, is
equally unhelpful to him. The clause gives Congress the power
to grant copyrights, but the grant of that power has never been
understood to require Congress to establish absolute rights in
intellectual property. Congress established copyright
protections for sound recordings but then created a regime of
statutory licenses as a limitation on copyright holders’ public
performance rights. See Intercollegiate Broad. Sys., Inc., 796
F.3d at 114. The Copyright Clause gives Congress the
 35
responsibility to account for and balance the interests of
copyright holders and the public. And with regard to
noninteractive webcasting services, Congress made clear that
the Board was to approximate rates that would be negotiated in
the marketplace by willing buyers and sellers. The Board
carried out Congress’s design.

* * * * *

For the foregoing reasons, we affirm the determination of
the Copyright Royalty Board.

So ordered.