79–010 

Calendar No. 569 

115TH CONGRESS REPORT " ! SENATE 2d Session 115–339 

MUSIC MODERNIZATION ACT 

SEPTEMBER 17, 2018.—Ordered to be printed 

Mr. GRASSLEY, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

[To accompany S. 2823] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on the Judiciary, to which was referred the bill 

(S. 2823) a bill to modernize copyright law, and for other purposes, 

having considered the same, reports favorably thereon with an 

amendment in the nature of a substitute and recommends that the 

bill, as amended, do pass. 

CONTENTS 

Page 

I. Background and Purpose of the Music Modernization Act ........................ 1 

II. History of the Bill and Committee Consideration ....................................... 21 

III. Section-by-Section Summary of the Bill ...................................................... 22 

IV. Congressional Budget Office Cost Estimate ................................................ 29 

V. Regulatory Impact Evaluation ...................................................................... 34 

VI. Conclusion ...................................................................................................... 35 

VII. Changes to Existing Law Made by the Bill, as Reported ........................... 35 

I. BACKGROUND AND PURPOSE OF THE MUSIC MODERNIZATION ACT

A. BACKGROUND

The United States’ copyright laws have helped make this nation 

the center of the music world. Copyright laws protect creators and 

artists, allowing them to thrive by granting them exclusive rights 

and protections to their works. However, the law has not kept pace 

with the music industry to reflect changes in consumer preferences 

and technological developments. The current statutory scheme applies inconsistent rules that place certain technologies at a disadvantage and result in inequitable compensation variances for 


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music creators. These inconsistencies have drawn criticism that 

music copyright and licensing laws are too difficult to comply with 

and do not adequately reward the artists and professionals responsible for creating American music. 

To address these issues, multiple bills were introduced in the 

Senate and House of Representatives. Songwriters, artists, publishers, producers, distributors, and other stakeholders involved in 

the creation and distribution of music collaborated with legislators 

in both the Senate and the House to find a path forward on music 

reform. Legislative options were discussed with copyright experts 

and the Copyright Office. Hearings and briefings were held on 

music licensing reform and multiple bills were introduced. 

In the Senate, Mr. Hatch introduced S. 2823, the Music Modernization Act, which is identical to the text of the House-passed 

bill, H.R. 5447, introduced by Mr. Goodlatte. S. 2823 contains three 

titles consisting of updated versions of three previously introduced 

bills: • S. 2334, the Music Modernization Act, introduced by Mr. 

Hatch (Title I); • S. 2393, the Compensating Legacy Artists for their Songs, 

Service, and Important Contributions to Society Act 

(CLASSICS Act), introduced by Mr. Coons (Title II); and 

• S. 2625, the Allocation for Music Producers Act (AMP Act), 

introduced by Mr. Grassley (Title III). 

B. PURPOSE

S. 2823 updates music copyright laws by creating a new compulsory blanket licensing system for mechanical works, updating the 

rate standards applicable to music licensing, modifying the rate 

setting process in the Southern District of New York, providing 

copyright royalties to pre-1972 artists, and ensuring that producers, mixers, and sound engineers are able to receive compensation for their creativity. 

1. Title I—Music Licensing Modernization 

The first title of S. 2823 is an amended version of S. 2334, the 

‘‘Music Modernization Act.’’ 

17 U.S.C. 115(a) Availability and scope of compulsory license 

clause 

Clause (ii) in subparagraph (A) of paragraph (1) creates a new 

method by which a digital music provider may obtain a compulsory 

license for a nondramatic musical work. Under the current Section 

115, the musical work copyright owner has the right to authorize 

the first recording of her musical work, sometimes referred to as 

the ‘‘first use’’ right. Historically, the first use was cleared by the 

record label, which obtained the right to make a sound recording 

from the songwriter or her music publisher and distribute the 

phonorecords derived from that sound recording. A record label 

may continue to obtain a compulsory license under clause (i) when 

it is the first to record and distribute recordings of the musical 

work. 

Clause (ii) applies in the situation in which a digital music provider is the first person to make and distribute digital phonorecord 

deliveries (DPDs) of a sound recording embodying a musical work 


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(i.e., in cases for which clause (i) does not apply). In such instances, 

the digital music provider may obtain a compulsory license if it satisfies three criteria: (1) the first fixation of the musical work in a 

sound recording is made under the authority of the musical work 

copyright owner; (2) the sound recording copyright owner who first 

fixes such sound recording has the authority of the musical work 

copyright owner to make and distribute digital phonorecord deliveries of such musical work to the public in the United States; and 

(3) the sound recording copyright owner (or its authorized distributor) authorizes the digital music provider to make and distribute digital phonorecords of the sound recording to the public in 

the United States. 

Under the current language of section 115(a)(1), a compulsory license is available to ‘‘any other person’’ after a sound recording embodying a musical work has been distributed to the public in the 

United States under the authority of the musical work copyright 

owner. The new language is intended to eliminate any ambiguity 

under existing law as to whether a digital music provider may obtain a compulsory license when the digital music provider is the 

first person to distribute digital phonorecord deliveries of such musical work. The new language makes clear that a digital music provider may obtain a compulsory license in those instances in which 

the digital music provider is the first person to make and distribute 

digital phonorecord deliveries of a sound recording embodying a 

musical work. 

17 U.S.C. 115(b) Procedures to obtain a compulsory license 

The amended section 115 provides two separate means of obtaining a compulsory mechanical license. Subsection (b)(1) maintains 

the ability to obtain a compulsory license to reproduce and distribute phonorecords other than DPDs on a work-by-work basis. 

This is the historical method by which record labels have obtained 

compulsory licenses. 

A new subsection (b)(2) provides the blanket mechanical license 

for digital music providers to make and distribute DPDs. If the digital music provider is making and distributing the DPDs before the 

date the blanket license is available, which is defined in subsection 

(e)(15) as January 1 following the expiration of the 2 year period 

beginning on the date the legislation is enacted, then the digital 

music provider must file a notice of intent on the musical work 

copyright owner, if the identity and location of the musical work 

copyright owner is known. Unlike the current section 115, however, 

under the legislation, in the event the musical work copyright 

owner is unknown, the digital music provider does not file a notice 

of intent on the Copyright Office. Instead, the digital music provider continues to search for the musical work copyright owner 

until the license availability date and, if the musical work copyright owner has not been located by such time, the digital music 

provider is required to turn over to the mechanical licensing collective any accrued royalties and reports of usage for such unmatched 

works pursuant to subsection (d)(10). If the digital music provider 

is making and distributing DPDs after the date the blanket license 

is available, then the digital music provider may obtain the blanket 

license by submitting a notice of license to the mechanical licensing 

collective as described in subsection (d)(2). 


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Subsection (b)(3) maintains the ‘‘pass-through’’ license for record 

labels to obtain and pass through mechanical license rights for individual permanent downloads. Under the Music Modernization 

Act, a record label will no longer be eligible to obtain and pass 

through a Section 115 license to a digital music provider to engage 

in activities related to interactive streams or limited downloads. 

Subsection (b)(4)(A) maintains the current practice whereby 

record labels that fail to serve or file a notice of intent are foreclosed from the possibility of obtaining a compulsory license for 

that work. Subsection (b)(4)(B) provides penalties for a digital 

music provider for failing to file a notice of intent or notice of license. Again, this subsection distinguishes between activities that 

occur prior to the date of availability of the blanket license and activities that occur after. Before the date of availability of the blanket license, if the digital music provider fails to serve a notice of 

intent on the musical work copyright owner (as described in subsection (b)(2)), then the digital music provider is foreclosed from obtaining a compulsory license for use of that particular work under 

such subsection. After the date the blanket license is available, if 

the digital music provider fails to submit the notice of license on 

the mechanical licensing collective, then the digital music provider 

is foreclosed from obtaining a blanket license for 3 years. 

17 U.S.C. 115(c) Royalty payable under compulsory license 

The amendments to subsection (c) change the current rate-setting standard from that currently found at 801(b) to the ‘‘willing 

buyer/willing seller’’ standard now applicable to setting rates for 

the public performance of sound recordings by noninteractive 

webcasters under the section 114(d)(2) and section 112 statutory licenses. Consistent with the current 115 compulsory license, subsection (c)(2)(A) makes clear that voluntary licenses entered into 

between musical work copyright owners and digital music providers are given effect in lieu of the rates established for the blanket license. 

17 U.S.C. 115(d) Blanket license for digital uses, mechanical 

licensing collective, and digital licensee coordinator 

The majority of Title I creates a new section 115(d) that establishes a blanket compulsory licensing system for qualified digital 

music providers. The Committee has regularly heard from various 

parties in the music industry that the existing music licensing system does not functionally work to meet the needs of the digital 

music economy where commercial services strive to have available 

to their customers as much music as possible. Song-by-song licensing negotiations increase the transaction costs to the extent that 

only a limited amount of music would be worth engaging in such 

licensing discussions, depriving artists of revenue for less popular 

works and encouraging piracy of such works by customers looking 

for such music. 

The new mechanical licensing collective 

The Board of Directors of the new collective is required to be 

composed of individuals matching specific criteria. The detailed requirements concerning the overall framework of the Board of Directors of the collective and its three committees, the criteria used to 


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select individuals to serve on them, and the advance publication of 

their names and affiliations all highlight the importance of selecting the appropriate individuals. Service on the Board or its committees is not a reward for past actions, but is instead a serious responsibility that must not be underestimated. With the advance notification requirement, the Register is expected to allow the public 

to submit comments on whether the individuals and their affiliations meet the criteria specified in the legislation; make some effort of its own as it deems appropriate to verify that the individuals 

and their affiliations actually meet the criteria specified in the legislation; and allow the public to submit comments on whether they 

support such individuals being appointed for these positions. It has 

been agreed to by all parties that songwriters should be responsible 

for identifying and choosing representatives that faithfully reflect 

the entire songwriting community on the Board. 

To ensure that the collective’s officers are independent, individuals serving as officers of the collective may not, at the same time, 

also be an employee or agent of any member of the collective’s 

Board of Directors or any entity represented by a member of the 

collective’s Board of Directors. 

Given their importance, the three committees established by the 

collective must operate in a transparent manner to the greatest extent possible in order to avoid unnecessary litigation as well as to 

gain the trust of the entire music community. Although it would 

be desirable that the committees reach unanimous decisions, that 

will not always be possible in which case a majority vote will control the outcome of a decision. It is expected that the Board of Directors will establish rules on how to resolve tie vote decisions. For 

the responsibilities described in subparagraphs (J) and (K) of paragraph (3), the collective is only liable to a party for its actions if 

the collective is grossly negligent in carrying out the policies and 

procedures adopted by the Board of Directors pursuant to section 

115(d)(11)(D). Since the Register has broad regulatory authority 

under paragraph (12) of subsection (d), it is expected that such 

policies and procedures will be thoroughly reviewed by the Register 

to ensure the fair treatment of interested parties in such proceedings given the high bar in seeking redress. 

Not later than 1 year after designation by the Register, the collective must establish and make public bylaws relating to the governance of the collective. 

The Register is allowed to re-designate an entity to serve as the 

collective every 5 years after the initial designation. Although there 

is no guarantee of a continued designation by the collective, continuity in the collective would be beneficial to copyright owners so 

long as the entity previously chosen to be the collective has regularly demonstrated its efficient and fair administration of the collective in a manner that respects varying interests and concerns. 

In contrast, evidence of fraud, waste, or abuse, including the failure 

to follow the relevant regulations adopted by the Copyright Office, 

over the prior five years should raise serious concerns within the 

Copyright Office as to whether that same entity has the administrative capabilities necessary to perform the required functions of 

the collective. In such cases, where the record of fraud, waste, or 

abuse is clear, the Register should give serious consideration to the 


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selection of a new entity even if not all criteria are met pursuant 

to section 115(d)(3)(B)(iii). 

Reasonable cost shifting of the mechanical licensing collective 

Digital music services and musical works copyright owners 

reached an agreement to transfer the reasonable costs of the new 

mechanical licensing collective to the licensees. The Committee 

supports a true free market for copyrighted works and, in the limited number of situations in which a compulsory license exists, believes that the licensees benefit most from the reduction in transaction costs. The Committee rejects statements that copyright owners benefit from paying for the costs of collectives to administer 

compulsory licenses in lieu of a free market. Therefore, the legislation directs that licensees should bear the reasonable costs of establishing and operating the new mechanical licensing collective. 

This transfer of costs is not unlimited, however, since it is strongly 

cabined by the term ‘‘reasonable.’’ 

The legislation directs the Copyright Royalty Judges to undertake a proceeding to determine the amount of an administrative assessment fee to be paid by blanket and significant nonblanket licensees for the reasonable costs of starting up and continuing to 

operate the new mechanical licensing collective. There are several 

other licensing collectives, such as SoundExchange, American Society of Composers, Authors and Publishers (ASCAP), and Broadcast 

Music Inc. (BMI), that the Copyright Royalty Judges should look 

to for comparison points, although their expenditures are simply 

comparison points. The Copyright Royalty Judges shall make their 

own determination(s) based upon the evidence provided to them 

about the appropriate administrative assessment for such reasonable costs that are identified with specificity. 

It is expected that not all reasonable expenditures in the first 

years of the collective may be identifiable in advance, especially as 

they relate to startup costs, but that future reasonable costs are 

more likely to be able to be determined in advance with some certainty. When anticipated startup and operational costs are different than anticipated, the Copyright Royalty Judges are expected 

to use their best judgement as to what has or has not been a reasonable expenditure of the collective and use their authority to adjust the fee subject to prior under or over collection of fees for reasonable costs, as well as lesser or greater reasonable costs than anticipated. 

The legislation is focused on the transfer of the collective’s reasonable startup and operating costs to blanket and nonblanket licensees. It is expected that the collective will only accrue reasonable costs and not expend unreasonable costs either on a one-off or 

continuing basis. It is not the responsibility of any other party 

other than the collective to ensure that it only expends reasonable 

amounts of funds for its activities. Although other parties such as 

the digital licensee coordinator may choose to notify the collective 

of any concerns of unreasonable spending, they do not have the 

legal burden to do so and do not waive their right to object to the 

Copyright Royalty Judges or a federal court of any unreasonable 

spending by not notifying them of it when suspected or discovered. 

Although the licensees are free to voluntarily pay some or all unreasonable costs of the collective if they so choose, the legislation 


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does not require that and makes clear that all such unreasonable 

costs as determined by the Copyright Royalty Judges are not the 

responsibility of the licensees. Any such unreasonable costs, to the 

extent that they are accrued, should be borne by either the collective itself and/or the copyright owners that benefit from the collective. Nor should any unreasonable costs be offset by unmatched 

royalties or taken from artist revenue. The legislation requires that 

the collective pay out accrued royalties under a set schedule. With 

the exception of future adjustments to the administrative assessment, if so determined by the Copyright Royalty Judges, once the 

licensees meet the terms of the legislation in paying the applicable 

royalties with the administrative assessment and providing the accompanying usage data for the covered activities, their obligation 

ends for any additional payments for such usage. This includes any 

need to pay replacement royalties should the collective engage in 

waste, fraud, or abuse of such royalties. In the event that an employee of the collective engages in fraud by diverting royalty payments, it is not the responsibility of the licensee(s) to replace these 

stolen royalties. 

Because of the importance to the music community that the collective begin operating as soon as possible, even before any administrative assessment fees are collected, the legislation includes provisions to allow voluntary contributions by digital music providers 

to the collective to offset some or all of its startup and operational 

costs, as well as the adoption of voluntary agreements to determine 

the administrative assessment. Such contributions are to be voluntarily made and accounted for and, unless explicitly agreed to, shall 

not cover expenses deemed unreasonable by the Copyright Royalty 

Judges. 

Oversight and accountability 

The collective is expected to operate in a transparent and accountable manner. The legislation specifically requires that the collective shall ensure that its policies and practices are transparent 

and accountable. The collective must identify a point of contact for 

inquiries and complaints with timely redress. It must also establish 

an anti-comingling policy for funds. 

Audit 

To ensure that the collective does not engage in waste, fraud and 

abuse, the collective is required to submit to periodic audits to examine its operations and procedures. Beginning in the fourth full 

calendar year that begins after the initial designation of the collective by the Register, and in every fifth calendar year thereafter, the 

collective shall retain a qualified auditor to examine the collective’s 

books, records and operations and prepare a report for the Board 

of Directors to be delivered no later than December 31 of the year 

in which the auditor is retained. The auditor’s report shall address 

the implementation and efficacy of procedures of the collective’s (1) 

receipt, handling and distribution of royalty funds, including any 

amounts held as unclaimed royalties; (2) efforts to guard against 

fraud, abuse, waste, and unreasonable use of funds; and (3) efforts 

to protect the confidentiality of financial, proprietary, and other 

sensitive information. The collective shall submit the report to the 

Register and make it available via the internet to the public. 


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Musical works database 

The legislation mandates the creation of a new musical works 

database. For far too long, it has been difficult to identify the copyright owner of most copyrighted works, especially in the music industry where works are routinely commercialized before all of the 

rights have been cleared and documented. This has led to significant challenges in ensuring fair and timely payment to all creators 

even when the licensee can identify the proper individuals to pay. 

With millions of songs now available to subscribers worldwide, 

technology also has a role to play through digital fingerprinting of 

a sound recording. However, there is no reliable, public database 

to link sound recordings with their underlying musical works. Unmatched works routinely occur as a result of different spellings of 

artist names and song titles. Even differing punctuation in the 

name of a work has been enough to create unmatched works. There 

have been several attempts to create a unified music database, 

most notably the 2008 Global Repertoire Database project that 

brought together numerous music industry participants in an attempt to solve the music industry’s data problem. Despite hopes 

that this effort would succeed where others had failed, this project 

too ended without success due to cost and data ownership issues. 

Music metadata has more often been seen as a competitive advantage for the party that controls the database, rather than as a resource for building an industry on. In an era in which Americans 

can buy millions of products via an app on their phone based upon 

the UPC code on the product, the failure of the music industry to 

develop and maintain a master database has led to significant litigation and underpaid royalties for decades. This situation must end 

so that all artists are paid for their creations and that so-called 

‘‘black box’’ revenue is not a drain on the success of the entire industry. 

The database that is required by this legislation will contain information such as the title of a work, its copyright owner(s) and 

shares thereof, contact information for the copyright owner(s), 

International Standard Recordings Codes (ISRC) and International 

Standard Work Codes (ISWC), relevant information for the sound 

recordings a work is embodied in, and any other information that 

the Register of Copyrights may prescribe by regulation. Using 

standardized metadata such as ISRC and ISWC codes, is a major 

step forward in reducing the number of unmatched works. For example, the Register may at some point wish to consider after an 

appropriate rulemaking whether standardized identifiers for individuals would be appropriate, or even audio fingerprints. The Register shall use its judgement to determine what is an appropriate 

expansion of the required fields, but shall not adopt new fields that 

have not become reasonably accessible and used within the industry unless there is widespread support for the inclusion of such 

fields. 

Given the importance of this database, the legislation makes 

clear that it shall be made available to the Copyright Office and 

the public without charge, with the exception of recovery of the 

marginal cost of providing access in bulk to the public. Individual 

lookups of works shall be free although the collective may implement reasonable steps to block efforts to bypass the marginal cost 

recovery for bulk access if it appears that one or more entities are 


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attempting to download the database in bulk through repeated queries. However, there shall be no requirement that a database user 

must register or otherwise turn over personal information in order 

to obtain the free access required by the legislation. The collective 

is required under the legislation to routinely undertake its own efforts to identify the musical works embodied in particular sound recordings, as well as to identify and locate the copyright owners of 

such works so that they can update the database as appropriate. 

With only the exception of the efficient and accurate collection and 

distribution of royalties, such actions are the highest responsibility 

of the collective. 

Records of the collective 

Beyond the new database, the legislation requires that the collective’s material records be kept for not less than 7 years after the 

date of creation or receipt, whichever occurs later. The records applicable to a particular copyright owner are to be accessible to that 

copyright owner or their representative. Beyond the seven-year 

limit, there are no such limitations that apply to the access of any 

record by the Copyright Office. 

Annual report 

Not later than June 30 of each year after the first license availability date, the mechanical licensing collective shall publicly release an annual report that sets forth information regarding the 

collective’s operational and licensing practices; how royalties are 

collected and distributed; budgeting and expenditures; the collective’s total costs for the preceding calendar year; the projected annual collective budget; aggregated royalty receipts and payments; 

expenses that are more than 10% of the annual collective budget; 

and the efforts of the collective to locate and identify copyright 

owners of unmatched musical works and shares of works. It is expected that the collective will create reports similar to that of other 

collectives, while recognizing that certain reported activities of 

other collectives, involving lobbying and marketing that this collective is prohibited from doing, will not be applicable. 

Digital licensee coordinator 

The legislation anticipates, but does not require, the designation 

of a digital licensee coordinator to coordinate the activities of the 

licensees. Similar to the collective, the choice of the coordinator is 

subject to a review by the Register of Copyrights every five years, 

has specified duties, and is prohibited from engaging in lobbying. 

The coordinator shall make reasonable, good-faith efforts to assist 

the collective in locating and identifying copyright owners of unmatched musical works (and shares of such works) by encouraging 

digital music providers to publicize the existence of the collective 

and the ability of copyright owners to claim unclaimed accrued royalties, including by (1) posting contact information for the collective 

at reasonably prominent locations on digital music provider 

websites and applications, and (2) conducting in-person outreach 

with songwriters. Both the collective and the coordinator have the 

right to commence an action in federal court for specified damages, 

injunctive relief, attorneys’ fees, costs, and other relief deemed appropriate by a federal court against a significant nonblanket liVerDate Sep 11 2014 05:56 Sep 20, 2018 Jkt 079010 PO 00000 Frm 00009 Fmt 6659 Sfmt 6602 E:\HR\OC\SR339.XXX SR339

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censee that fails to provide monthly usage reports or pay the required administrative fee. Any financial recovery shall be used to 

offset the costs of the collective’s total costs. 

Voluntary licenses 

Although the primary focus of the legislation is the creation of 

a new compulsory blanket license, voluntary licenses remain in effect and are excluded from the blanket license and individual licenses. However, such voluntary licenses that rise to the threshold 

of a significant nonblanket license must meet the conditions imposed upon such licensees. Musical work copyright owners may 

designate the mechanical licensing collective to administer voluntary licenses so long as the rates and terms of the voluntary license were negotiated individually between a musical work copyright owner and digital music provider. Musical work copyright 

owners may not require as a condition for entering into a direct license that the mechanical licensing collective administer a voluntary license. 

Transition to a blanket license 

The legislation creates a transition period in order to move from 

the current work-by-work license to the new blanket license. After 

the date of enactment, a digital music provider will no longer be 

able to serve notices of intent on the Copyright Office for uses of 

musical works for which the musical work copyright owner cannot 

be identified or located. Notices of intent filed before the enactment 

date will no longer be effective. However, prior to the blanket license availability date a digital music provider is immune from 

copyright infringement liability for any use of any musical work for 

which the digital music provider was unable to identify or locate 

the musical work copyright owner so long as the digital music provider engages in good-faith, commercially reasonable efforts to 

identify and locate musical work copyright owners. The digital 

music provider is required to use one or more bulk electronic 

matching processes, and must continue using these processes, on a 

monthly basis for so long as the musical work copyright owner is 

unidentified. 

If the musical work copyright owner is identified or located during this search process, then the digital music provider is required 

to report and pay that copyright owner any royalties owed. If the 

musical work copyright owner remains unidentified between the 

date of enactment and the date the blanket license is available, 

then the digital music provider is required to provide a cumulative 

usage report and accrued royalties to the mechanical licensing collective. There are no late fees associated with these accrued royalties. 

When the blanket license becomes available, the blanket license 

will be substituted automatically for the compulsory licenses obtained pursuant to notices of intent, without any interruption in license authority. Because the new blanket license replaces the previous work-by-work compulsory license, the compulsory licenses obtained under notices of intent served on musical work copyright 

owners prior to the availability of the blanket license will no longer 

be valid. However, any voluntary license agreement between a digital music provider and a musical work copyright owner continues 


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to be effective and takes precedence over the blanket license until 

such license expires according to its own terms. 

Obtaining a blanket license 

After the blanket license availability date, digital music services 

interested in obtaining a blanket license shall provide advance notice to the mechanical licensing collective. The collective has 30 calendar days to reject such notice in writing, listing with specificity 

why such notice was rejected, either because it does meet the requirements of the legislation or applicable regulations established 

the Copyright Office or if the digital music service provider has had 

a blanket license terminated by the collective within the past three 

years. There is an additional 30-day cure period for a potential licensee. Should a provider believe that their notice was improperly 

rejected, they have the right to seek review in federal district court 

on a de novo basis. Once obtained, the license covers the making 

and distribution of server, intermediate, archival, and incidental 

reproductions of musical works that are reasonable and necessary. 

Default and termination of a blanket license 

Although it would be far preferable for every digital music provider that obtains a compulsory license to meet all of the terms of 

such license, there may be occasions when that will not be the case. 

The legislation anticipates the imposition of a late fee to be determined in advance by the Copyright Royalty Judges to address late 

payments. However, the legislation also recognizes that such late 

fees may not be enough to bring a provider back into compliance 

and therefore identifies the conditions upon which digital music 

providers shall be deemed in default of such compulsory licenses, 

and thus allow the collective to terminate such license automatically. 

A provider that believes their blanket license was improperly terminated has the right to seek review in federal court on a de novo 

basis. However, the court should recognize that the conditions for 

determining default and permitting termination are quite specific. 

So long as those conditions are met, a court may not impose additional termination requirements or waive clear deadlines in an attempt to continue the blanket license. If a party wants to obtain 

and then maintain a blanket license, it must meet the stated terms 

specified in the statute. Efforts by the collective to participate in 

such proceedings, including its own reasonable attorneys’ fees, are 

a reasonable expense of the collective. Since the digital music providers that benefit from the new licensing system are responsible 

for paying such reasonable costs, other digital music providers may 

wish to consider joining the case in opposition to a defaulting licensee under Rule 24 of the Federal Rules of Civil Procedure. However, a court could determine that the collective has attempted to 

impose new conditions beyond those permitted by the legislation. 

Should a court make such determination, the court has the authority to revoke such attempted termination and grant any other relief 

it determines to be appropriate. The Committee strongly encourages the court to make the Copyright Office aware of such determination since any financial cost to the collective that results from 

such relief or related litigation efforts shall not be considered a reasonable cost of the collective. 


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Performance saving clause 

Section (d)(13) contains two savings clauses intended to protect 

the licensing of the public performing right in musical works from 

interference by the mechanical compulsory license. The clauses 

clarify that subsection 115(d) applies solely to section 115 mechanical reproduction and distribution rights. Subsection (d)(13)(A) 

clarifies that the section 115 blanket license shall not extend to any 

other activity or right other than exclusive rights of reproduction 

and distribution of musical works with respect to covered activities. 

Subsection (d)(13)(B) clarifies that subsection (d) does not extend 

to, limit or affect any musical work public performance works. This 

administration function can include a voluntary mechanical license 

that bundles the public performance of musical works when such 

licenses are entered into by the copyright owner directly with a digital transmission services. However, the mechanical license collective may not itself own, control, grant or be granted the public performance right in musical works. It is further intended that a performing rights society or other entity licensing the public performing right to musical works or administering voluntary licenses 

shall not be required to use information from the mechanical licensing collective’s musical works database for the calculation or 

distribution of license fees or other payments for public performances of musical works licensed and/or administered by such performing rights society or entity. 

Audit rights 

The legislation contains two different audit rights, one for copyright owners due royalties from the collective and one for the collective due royalties from licensees. Both audit rights are subject 

to certain specified time limits and other requirements including 

the ability to choose alternative procedures if both parties agree. 

The key difference is that only the audit right for the collective contains a shifting of the cost of the audit to the digital music provider 

being audited if there was an underpayment of 10 percent or more. 

The reason for this difference is that the collective is assumed to 

be operating in its members’ best interests while digital music 

services have no such underlying responsibility. 

Significant nonblanket licensees 

The legislation creates a category of licensees, identified as significant nonblanket licensees, who operate outside the blanket licensing context, but who are required to provide notice to the collective of their existence and to help pay for the operation of the 

new collective. Such licensees are subject to a cause of action in 

federal court brought by either the mechanical licensing collective 

or the digital licensee coordinator if they fail to make monthly 

usage reports or pay the administrative assessment fee. This fee is 

made applicable to such licensees because they are presumed to 

benefit from the new database and as a way to avoid parties attempting to avoid funding of the mechanical licensing collective by 

engaging in direct deals outside the blanket license. Two specific 

exceptions to the definition of a significant nonblanket licensee are 

incorporated in the definition of such licensee, one concerning certain free-to-the-user streams of less than 90 seconds and the other 

in regards to public broadcasting entities. 


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Royalty distribution of matched works 

Usage reports from digital music services must include the number of digital phonorecord deliveries, specifying the number of limited downloads and interactive streams. Any reports should be consistent with then-current industry practices regarding how such 

limited downloads and interactive streams are tracked and reported. The digital music provider must also identify all musical 

work copyright owners with whom the digital music provider has 

an effective voluntary license and is not relying on the blanket license. Using this information, the collective is then required to collect and distribute royalties on a specific schedule set forth in the 

legislation. All copyright owners shall have their royalties distributed fairly and no copyright owner may receive special treatment 

as a result of their position on the Board, its committees, or for any 

other reason without a reasonable basis. For example, it may be required for the Board and its committees to focus on specific copyright owners for legitimate, specific reasons such as representing 

them in a bankruptcy proceeding that not all copyright owners are 

part of. Absent such legitimate reasons, any such special treatment 

should be viewed by the Register and federal courts as waste, 

fraud, and abuse. 

It is expected that over time one or more music services will file 

bankruptcy and the collective may represent its copyright owners 

in related court proceedings in order to recover as much of the royalties due as possible. The Board shall then distribute any lesser 

amounts of royalties collected through such bankruptcy proceedings 

to copyright owners using the best usage data available. Since a 

bankruptcy proceeding may conclude long after the relevant employees at the music service have long since departed, there may 

be discrepancies in the usage data that cannot be resolved. With 

a recorded vote, the Board shall determine how best to proceed 

with distribution(s) related to bankrupt music services. Although 

not required by the legislation, the collective may wish to consult 

with the Register for his or her opinion if a particular approach is 

reasonable in which case the Register shall provide a timely response. 

Royalty distribution of unmatched works 

It is expected that there will be some percentage of unmatched 

works that generate royalties that will decline over time as the collective’s database becomes more robust and the music industry continues to recognize the importance of obtaining and sharing proper 

metadata in advance of the initial distribution of a work. Since the 

legislation permits the distribution of unclaimed royalties that 

were accrued on unmatched works for which the creators will not 

be paid, a significantly higher bar to such distributions is required 

compared to the more routine royalty distributions of matched 

works. 

For unmatched works, the collective must wait for the prescribed 

holding period of three years before making such distribution. This 

is intended to give the collective time to actively search for the 

copyright owner. SoundExchange, a collective for royalties under 

Section 114 of the Copyright Act, has an admirable history of undertaking significant efforts to locate copyright owners who may 

not know they are due royalties. Despite their robust efforts, howVerDate Sep 11 2014 05:56 Sep 20, 2018 Jkt 079010 PO 00000 Frm 00013 Fmt 6659 Sfmt 6602 E:\HR\OC\SR339.XXX SR339

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ever, even SoundExchange distributes unmatched royalties after its 

detailed search efforts conclude. This legislation requires the new 

collective to undertake its own efforts to locate the copyright owner 

and update its database accordingly if so identified. If such efforts 

fail, then the unclaimed royalties oversight committee shall establish such policies identified in the legislation that the Committee 

believes are necessary to undertake a fair distribution of such unclaimed royalties. These policies include gathering of required information to make such distributions, 90 calendar days’ advance 

public notice, and a requirement that at least 50 percent of such 

unclaimed royalties be credited or paid to the songwriter(s) represented by that copyright owner. It is the intent of Congress to ensure that songwriters receive their fair share of monies distributed 

to copyright owners under subsection (d)(3)(J), while at the same 

time respecting contractual relationships. To that end, payments 

and credits to songwriters shall be allocated in proportion to the reported usage of individual musical works by digital music providers 

during the relevant reporting periods. The 50% payment or credit 

to a songwriter referenced in subsection (d)(3)(J)(iv)(II) is intended 

to be treated as a floor, not a ceiling, and is not meant to override 

any applicable contractual arrangement providing for a higher payment or credit of such monies to a songwriter. 

This process ensures that copyright owners and artists benefit. 

While there may be some copyright owners and/or artists who 

would prefer that such money be escrowed indefinitely until 

claimed, the simple way to avoid any distribution to other copyright owners and artists is to step forward and identify oneself and 

one’s works to the collective, an exceedingly low bar to claiming 

one’s royalties. 

Public notice of unclaimed accrued royalties 

The collective shall maintain a publicly accessible online facility 

with contact information for the collective that lists unmatched musical works (and shares of works), through which a copyright owner 

may assert an ownership claim with respect to such a work (and 

a share of such a work). The collective shall engage in diligent, 

good-faith efforts to publicize the collective and ability to claim unclaimed accrued royalties for unmatched musical works (and shares 

of such works), the procedures with respect to receiving accrued 

royalty payments, and information on accrued royalty transfers 

and pending distribution of unclaimed accrued royalties and accrued interest. 

Termination of prior litigation 

The legislation contains a key component that was necessary to 

bring the various parties together in an effort to reach common 

ground by limiting liability for digital music providers after January 1, 2018, so long as they undertake certain payment and matching obligations. Such agreement is welcomed since continued litigation generates unnecessary administrative costs, diverting royalties 

from artists. Congress routinely preempts such unnecessary litigation in other contexts and views the application here of such date 

as warranted. The imposition of detailed statutory requirements for 

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alties will be paid than otherwise would be the case through continual litigation. 

Copyright Office regulations 

Pursuant to paragraph (12) of subsection (d), the Register is expected to promulgate the necessary regulations required by the legislation in a manner that balances the need to protect the public’s 

interest with the need to let the new collective operate without 

over-regulation. The Copyright Office has the knowledge and expertise regarding music licensing through its past rulemakings and recent assistance to the Committee during the drafting of this legislation. Although the legislation provides specific criteria for the collective to operate, it is to be expected that situations will arise that 

were not contemplated by the legislation. The Office is expected to 

use its best judgement in determining the appropriate steps in 

those situations. The Register of Copyrights can also turn to another legislative branch agency, the Government Accountability Office, for assistance in determining if artists are being properly compensated for their works. 

Copyright Office activities 

The legislation requires the Register to engage in public outreach 

and educational activities. The legislation also requires the Register, after soliciting and reviewing comments and relevant information from music industry stakeholders, to submit a report to the 

Judiciary Committees of the Senate and House recommending best 

practices that the collective may implement in order to identify and 

locate musical work copyright owners with unclaimed accrued royalties held by the collective, to encourage musical work copyright 

owners to claim their royalties, and to reduce the incidence of unclaimed royalties. The collective shall carefully consider and give 

substantial weight to the Register’s recommendations when establishing procedures relative to these issues. 

Uniform rate standards 

Section 103(a) of the legislation creates a uniform willing buyer, 

willing seller rate standard in section 114(f). This fair standard for 

sound recordings ensures that copyright owners are appropriately 

compensated for their works using a standard that most approximates the rates that would have been negotiated in a free market. 

It has long been a goal of the Committee to move towards such a 

standard and move beyond earlier unfair standards, such as the 

now unnecessary discount for so-called ‘‘pre-existing services.’’ 

There is no current justification for such 40-year old discounts that 

harm copyright owners as well as competitors of such pre-existing 

services. It is also in the interest of facilitating greater competition 

in these areas that such discounts are eliminated. Whatever justification for the discounts has long since vanished. 

Section 103(a) of the legislation repeals section 114(i), to address 

the longstanding concern that songwriters have not been adequately compensated for their contributions and section 114(i) prevents songwriters from introducing potentially relevant evidence in 

rate court proceedings. Section 103(a) creates a specific exception 

for taking into account license fees payable for the public performance of sound recordings under section 106(6) related to certain 


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transmissions by broadcasters although these new definitions are 

not to be given effect in interpreting other provisions in Title 17. 

In addition, the repeal shall not be taken into account in proceedings to determine royalties for sound recordings and has no impact upon the past precedents of such proceedings. Furthermore, as 

used in this section of the legislation, the term ‘‘digital audio transmission’’ is intended to incorporate the definition of that term 

found in section 114(j)(5). Therefore, as used in this section, the 

term ‘‘digital audio transmission’’ does not include the transmission 

of any audiovisual work. 

Consent decree rate proceedings 

Section 104 of the legislation modifies the selection of rate court 

judges and related proceedings for performing rights societies subject to a consent decree, currently ASCAP and BMI. In lieu of the 

current system, the district court shall use a random process, commonly known as the wheel, to determine which judge shall hear 

rate setting cases involving a performing rights society’s license 

fees. However, the original judge(s) who oversee(s) the interpretation of the consent decree(s) shall not be permitted to oversee any 

rate proceedings. Under the present situation, this would mean 

that the two judges who oversee the ASCAP and the BMI consent 

decrees would not hear any rate proceedings involving either performing rights society. This change is not a reflection upon any 

past actions by the Southern District of New York—rather, it is believed that rate decisions should be assigned on a random basis to 

judges not involved in the underlying consent decree cases. 

Consent decree review 

In April 2018, the Antitrust Division of the Department of Justice announced its intention to review over 1300 ‘‘legacy’’ consent 

decrees, including those governing ASCAP and BMI. Collectively, 

ASCAP and BMI license over 90 percent of musical works to licensees that publicly perform music, including restaurants, retail 

stores, bars, radio and television broadcasters, and digital music 

services. 

Since the 1940s, ASCAP and BMI have been subject to consent 

decrees with the U.S. Department of Justice to address antitrust 

concerns arising from an entity collectively licensing works from 

competitors and offering them at a single price. As a result, the 

ASCAP and BMI consent decrees have fundamentally shaped the 

marketplace for licensing public performance rights in musical 

works for nearly 80 years and entire industries have developed 

around them. In 2016, the Department of Justice concluded a 

multi-year review of these decrees, determined that they still serve 

the public interest, and declined to modify the decrees. 

There is serious concern that terminating the ASCAP and BMI 

decrees without a clear alternative framework in place would result 

in serious disruption in the marketplace, harming creators, copyright owners, licensees, and consumers. In fact, sections of the legislation assume the continued existence of the decrees and alter the 

rate-setting system established by the decrees, including what evidence may be submitted in a rate dispute and how judges will be 

assigned to such disputes. 


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The legislation will improve how music is licensed and how songwriters, recording artists, record producers, engineers and copyright owners are paid. Enacting the legislation only to see the Department of Justice move forward with seeking termination of the 

decrees without a workable alternative framework could displace 

the legislation’s improvements to the marketplace with new questions and uncertainties for songwriters, copyright owners, licensees 

and consumers. 

Given these ongoing concerns, section 105 of the legislation creates a formal role for Congress during any review by the Department of Justice of a consent decree with a performing rights society, such as ASCAP or BMI. During any review of such a decree, 

the Department of Justice shall provide upon request timely briefings to any Member of the Senate and House Judiciary Committees 

regarding the status of such review. The Department of Justice 

shall also share with such Members detailed and timely information and pertinent documents related to the review, subject to confidentiality and rules of agency deliberative process. 

Additionally, section 105 of the legislation requires the Department of Justice to notify Members of the Senate and House Judiciary Committees before filing a motion to terminate, including a motion to terminate after a specified period of time, also referred to 

as ‘‘sunsetting’’, any consent decree with a performing rights society and provide information regarding the impact of the proposed 

termination on the market for licensing the public performance for 

musical works should the motion be granted. 

The Department of Justice is required to submit such notification 

in writing to the Chairmen and Ranking Members of the Senate 

and House Judiciary Committees not later than 90 days prior to filing such motion. This notification shall include a written report 

setting forth an explanation of the process used by the Department 

of Justice to review the decree, a summary of the public comments 

received by the Department of Justice during its review, and any 

other information requested by Congress. 

This section applies only to the Department of Justice’s review 

of and potential motion to terminate consent decrees governing performing rights societies. Nothing in this section broadly impacts 

the Department of Justice’s independent authority to seek whatever modifications to a consent decree, including termination, it determines are within the public interest. Moreover, nothing in this 

section changes the process a district court would use to review a 

motion to modify or terminate a consent decree between the United 

States and a performing rights society. 

2. Title II—Compensating Legacy Artists for Their Songs, Service, 

and Important Contributions to Society 

The second title of S. 2823 is an amended version of S. 2393, the 

‘‘Compensating Legacy Artists for their Songs, Service, and Important Contributions to Society’, or the ‘‘CLASSICS Act.’’ The legislation amends Title 17 to create royalties for so-called ‘‘pre-72 works’’ 

using the same rates and distribution system for royalties already 

applicable to post-72 works. These sound recordings that were fixed 

prior to February 15, 1972 generate no royalties for older artists 

who have highlighted the negative impact upon their ability to survive economically as they increasingly enter their retirement years, 


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including from testimony received at the Committee hearing on 

May 15, 2018, from Mr. Smokey Robinson, a pre-72 recording artist. Among the few options artists with pre-72 works have for generating income from such works are grueling touring schedules 

that older artists are increasingly less able to undertake. In contrast, artists with post-72 works face lesser burdens since they are 

able to earn royalties for such works outside of touring. 

Despite this discrepancy in royalties payable for works, music 

services have been able to successfully operate while paying royalties for post-72 works. Thus, these same services should be able to 

continue to successfully operate with a statutory requirement to 

pay royalties for pre-72 works to enable older artists and their families to benefit financially from their creativity. 

There have been several class action suits regarding pre-72 royalties in states including California, Florida, and New York with 

varying outcomes. A benefit of the CLASSICS Act is that, in addition to providing for financial income for older artists, it will end 

the need for state litigation by extending the existing federal royalty payment system for eligible, authorized digital transmissions, 

as defined in new section 1401(b), for works fixed between January 

1, 1923, and February 15, 1972, while pre-empting state laws for 

common law copyright or equivalent rights under the laws of any 

State that would conflict with these provisions. The legislation also 

leaves those existing settlements untouched. 

Section 1401(d)(1)(C)(ii)(II) provides there should be no liability 

under state laws protecting pre-1972 (and post-1922) recordings for 

voluntary agreements between rights owners and digital music 

services reached before the enactment of the CLASSICS Act if the 

voluntary agreement 1) either licenses the service to make, or releases the service from liability for, digital audio transmissions or 

reproductions that would otherwise have been eligible for statutory 

licensing, and 2) the service complies with the terms of the agreement. This would be the effect of such a license or settlement 

under state contract law, but the provison was included to remove 

any doubt about potential liability. 

Title II includes several limitations on remedies in the new section 1401(e), including fair use; certain uses by libraries, archives, 

and educational institutions; section 507; section 512; section 230 

safe harbors; and a new filing requirement for obtaining statutory 

damages and attorneys’ fees. This new filing requirement is designed to operate in place of a formal registration requirement that 

normally applies to claims involving statutory damages. 

Section 1401(e)(1)(B) clarifies the application of section 108 of the 

Copyright Act to a claim against unauthorized performances of pre1972 (and post-1922) sound recordings by a library or archive 

under new section 1401(a). Specifically, section 108(h) allows libraries and archives to make certain uses of published works during the last 20 years of the copyright term of those works, if certain 

conditions are met. The CLASSICS Act does not provide a term of 

copyright for pre-1972 recordings; rather, it provides a special federal sui generis form of protection for digital performances that 

aligns with the term of other state law pre-1972 recording rights. 

In the absence of a federal copyright term that would dictate when 

the limitation would apply, section 180(h) should apply commencing with the date of enactment of the CLASSICS Act. Section 


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108(h) does not apply to other uses of pre-1972 recordings, including public performance of a pre-1923 recording by means of a digital audio transmission by a library or archive, because such uses 

remain solely subject to state law. 

In the absence of full federalization of these pre-72 works, the 

new section 1401(e)(5) requires that the copyright owners file a 

schedule of works subject to potential claims of statutory damages 

or attorneys’ fees with the Copyright Office under regulations that 

it will promulgate not later than 180 days after the date of enactment of this section. Before this system is operating, the Copyright 

Office shall also promulgate regulations within 30 days of enactment for the filing of contact information for transmitting entities. 

This contact information database will operate up to 180 days after 

enactment after which the database of works by copyright owners 

will control whether statutory damages and attorneys’ fees are 

available. Copyright owners must provide a 90-day notice to transmitting entities about a claim for royalties up to 180 days after enactment after which time transmitting entities must search the 

new database established by the Copyright Office for such works. 

To ensure that works currently in the public domain remain in 

the public domain, works fixed prior to January 1, 1923, are specifically excluded from the payment of any royalties under this provision. 

3. Title III—Allocation for Music Producers 

The third title of S. 2823 is a modified version of S. 2625, the 

‘‘Allocation for Music Producers,’’ or the ‘‘AMP Act.’’ Currently, the 

provisions included in this title would only impact the one collective designated by the Copyright Royalty Judges to distribute royalties under section 114(f), SoundExchange. SoundExchange has 

gained widespread industry support with its efforts to efficiently 

distribute webcasting royalties to copyright owners and artists that 

proactively identify themselves as due such royalties or, in the absence of such identification, can be identified through the efforts of 

SoundExchange. It is hoped that the culture of transparency that 

SoundExchange has brought to the music industry will be duplicated elsewhere, including in the new mechanical licensing collective established by the first title of this legislation. 

In order to pay certain creators, such as producers, mixers, and 

sound engineers, who were not by statute receiving royalties under 

section 114, SoundExchange has had a policy since 2004 of honoring ‘‘letters of direction’’ to pay these creators a portion of the 

featured performer’s royalties. According to information supplied by 

SoundExchange, approximately 2,000 active letters of direction are 

on file with them generating royalties for these creators, although 

more such letters of direction that do not have any royalty payments due are on file with them. SoundExchange has received only 

a limited number of letter of direction submissions that do not 

meet its conditions for execution and has worked with the interested parties to ensure proper execution of them once corrected by 

the creators. 

It is expected that SoundExchange will continue to implement 

such policies in a transparent and efficient manner, and to the extent that any other distribution collective designated in the future 

by the Copyright Royalty Judges for the distribution of receipts 


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from the licensing of transmissions in accordance with section 

114(f), also do so. Nothing in section 114(g)(5) requires that 

SoundExchange modify any of its current policies in place for letters of direction for recordings fixed on or after November 1, 1995. 

Section 114(g)(5) simply makes the provision of the letter of direction system a statutory requirement while giving SoundExchange, 

and any future designated distribution collective, the discretion 

necessary to operate such a system. The effective date of section 

114(g)(5)(B) is set as January 1, 2020, by Section 303 of the legislation to correspond both to the need for SoundExchange to update 

its internal systems and the alignment with the beginning of a calendar tax year. 

Although Section 302(a) creates a brief statutory framework for 

a SoundExchange system already in operation, section 302(b) creates a more detailed statutory framework for a letter of direction 

system for works fixed before November 1, 1995, which was the 

date of enactment of P.L. 104–39, the Digital Performance Right in 

Sound Recordings Act of 1995. Prior to this date, producers, mixers, and sound engineers would not have contemplated or predicted 

the payment of digital royalties in their contracts with an artist. 

The legislation identifies the manner in which a letter of direction 

for two percent of total royalties can be submitted for such works; 

what additional efforts the collective and qualifying person must 

make over a four-month period to notify the featured performers in 

advance of any royalty distribution to one or more producers, mixers, or sound engineers; and the process for objecting to such letters of direction. After a valid letter of direction for a specific work 

goes into effect, the payout of total royalties through 

SoundExchange or another collective designated in the future for 

such distributions would be allocated as follows: • 50 percent of the receipts shall be paid to the copyright 

owner of the exclusive right under section 106(6) to publicly 

perform a sound recording by means of a digital audio transmission. 

• 2.5 percent of the receipts shall be deposited in an escrow 

account managed by an independent administrator jointly appointed by copyright owners of sound recordings and the American Federation of Musicians (or any successor entity) to be 

distributed to nonfeatured musicians (whether or not members 

of the American Federation of Musicians) who have performed 

on sound recordings. 

• 2.5 percent of the receipts shall be deposited in an escrow 

account managed by an independent administrator jointly appointed by copyright owners of sound recordings and the American Federation of Television and Radio Artists (or any successor entity) to be distributed to nonfeatured vocalists (whether or not members of the American Federation of Television 

and Radio Artists) who have performed on sound recordings. 

• 43 percent of the receipts shall be paid, on a per sound recording basis, to the recording artist or artists featured on such 

sound recording (or the persons conveying rights in the artists’ 

performance in the sound recordings). 

• 2 percent of the receipts shall be paid, on a per sound recording basis, to those eligible for payment(s) identified in section 114(g)(6)(B). 


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Similar to section 114(g)(5)(B), section 303 of the legislation 

delays the effective date of the new section 114(g)(6)(E) to January 

1, 2020, to accomodate the need for SoundExchange to update its 

internal systems and align with the beginning of a calendar tax 

year. 

Section 302(c) makes several technical and conforming amendments to section 114(g) that should have no operative impact upon 

any entity operating currently or in the future. 

II. HISTORY OF THE BILL AND COMMITTEE CONSIDERATION

A. INTRODUCTION OF THE BILL

On March 15, 2018, the Senate Judiciary Committee hosted a bipartisan staff briefing led by Judiciary Committee staff to discuss 

pending music legislation. Briefers included Mr. David Israelite, 

President and CEO, National Music Publishers Association; Mr. 

Bart Herbison, Executive Director, Nashville Songwriters Association International; Mr. Chris Harrison, CEO, Digital Media Association; Ms. Clara Kim, General Counsel, American Society of Composers, Authors and Publishers; Mr. Stu Rosen, General Counsel, 

Broadcast Music, Inc.; Mr. Michael Lewan, Director of Government 

Relations, Recording Academy; Mr. Mitch Glazier, President, Recording Industry Association of America; Mr. Michael Beckerman, 

CEO, Internet Association; Ms. Paula Calhoun, Executive Vice 

President and General Counsel, Music Choice; Ms. Cynthia Greer, 

Vice President and Associate General Counsel, SiriusXM; Ms. Meredith Rose, Policy Counsel, Public Knowledge; and Mr. Curtis 

LeGeyt, Executive Vice President–Government Relations, National 

Association of Broadcasters. 

On May 10, 2018, Mr. Hatch introduced S. 2823, the Music Modernization Act. Senators Grassley, Whitehouse, Alexander, Coons, 

Kennedy, Harris, Corker, Durbin, Isakson, Leahy, Crapo, Jones, 

Tillis, Perdue, Capito, Nelson and Blunt were original cosponsors. 

The bill was referred to the Committee on the Judiciary. 

On May 15, 2018, the Committee on the Judiciary held a hearing 

entitled ‘‘Protecting and Promoting Music Creation for the 21st 

Century.’’ Testimony regarding S. 2823 was received from Mr. 

Smokey Robinson, Recording Artist, Songwriter, and Producer; Mr. 

David Israelite, President and CEO, National Music Publishers Association; Ms. Meredith Rose, Policy Counsel, Public Knowledge; 

Mr. Justin Roberts, GRAMMY-Nominated Singer/Songwriter, 

Trustee, Recording Academy; Mr. Chris Harrison, CEO, Digital 

Media Association, Mr. Dave Del Beccaro, CEO, Music Choice; Mr. 

Mitch Glazier, President, Recording Industry Association of America; and, Mr. Josh Kear, Songwriter. 

B. COMMITTEE CONSIDERATION

The Committee on the Judiciary considered S. 2823 on June 28, 

2018. Mr. Grassley offered a substitute amendment which was 

adopted by unanimous consent. The Committee voted to report S. 

2823 as amended, favorably to the Senate, by a voice vote. 


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III. SECTION-BY-SECTION SUMMARY OF THE BILL

The following discussion describes the bill as reported by the 

Committee. 

TITLE I. MUSICAL LICENSING MODERNIZATION

Section 101. Short Title 

Section 101 sets forth the short title of Title I as the ‘‘Musical 

Works Modernization Act.’’ 

Sec. 102. Blanket license for digital uses and mechanical licensing 

collective. 

Section 102 comprises the vast majority of the overall legislation. 

The first part of Section 102 updates existing 17 U.S.C. § 115 (a)- 

(c), partly to accommodate the new provisions added by 115(d). 

Subsection 115(a) is amended to clarify what requirements for 

obtaining a compulsory license exist for digital music providers, 

and it specifies when a person may seek a license for the duplication of a sound recording. 

Subsection 115(b) is amended by removing the ability of persons 

seeking to make digital phonorecord deliveries to file a notice of intent with the Copyright Office and instead requiring such notice to 

be filed with the copyright owner. In the event that a party does 

not file such notice for non-digital phonorecord deliveries, that 

party is permanently ineligible for the compulsory licenses, although they may obtain voluntary licenses from the copyright 

owner(s). In the case of digital phonorecord deliveries, the failure 

to obtain a license forecloses the ability of a party to obtain such 

license for three years. 

Subsection 115(c) is amended to account for the new blanket licensing system created by the new legislation in 115(d). 

The latter part of section 102 strikes the existing subsection 

115(d) of Title 17 that currently contains only one definition and 

replaces it with a significantly expanded subsection to create a new 

compulsory blanket licensing system as follows: 

Paragraph 1 of the new subsection 115(d) defines the scope of the 

new compulsory license and how it interacts with other existing licenses, such as a voluntary license. By obtaining and complying 

with the terms of such license, a digital music provider is not subject to an infringement action under paragraphs (1) and (3) of section 106. 

Paragraph 2 sets forth the availability of the blanket license, including related Copyright Office regulations, its effective date, and 

dispute resolution in federal district court. 

Paragraph 3 creates the framework of the new mechanical licensing collective created by the legislation beginning with subparagraph A that identifies the requirement for a new ‘‘mechanical licensing collective’’ that shall meet specified minimum criteria including being: (1) a nonprofit single entity, (2) endorsed by and enjoying support from the majority of musical works copyright owners 

as measured over the preceding three years, (3) able to demonstrate that it has or will have prior to the license availability 

date the necessary capabilities to perform the required functions, 

and (4) designated by the Register of Copyrights, with the approval 

of the Librarian of Congress pursuant to section 702. 


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Subparagraph B sets forth the initial process for designation of 

the collective by the Register as well as periodic opportunities 

every five years for re-designation. The Register is authorized to 

choose a closest alternate designation in case every condition set 

forth in subparagraph (A) is not met. However, before an initial 

designation is made, all members of the Board of Directors and the 

various committees, along with contact information for the collective, are required to be identified with their affiliations so that interested parties can submit comments to the Register on whether 

the parties meet the requirements set forth in subparagraph (D) of 

the bill. This requirement is not waivable by the Register and is 

not subject to the alternate designation language. 

Subparagraph C identifies the authorities and functions of the 

collective along with three specific provisions: the ability of the collective to administer voluntary licenses, a restriction on negotiating 

or granting licenses for public performance rights, and a restriction 

on lobbying. 

Subparagraph D sets forth the governance of the collective. The 

collective’s Board of Directors will consist of 14 voting members 

and 3 nonvoting members, and will establish bylaws that will be 

available to the public. The Board of Directors will meet no less 

than twice a year. The Board of Directors will establish an operations advisory committee, an unclaimed royalties oversight committee, and a dispute resolution committee. The collective is also 

required to produce a public annual report, in addition to an independent officers requirement providing that individuals serving as 

officers of the collective may not, at the same time, also be an employee or agent of any member of the Board of Directors or any entity represented by a member of the Board of Directors. Since the 

Board of Directors and committee member requirements along with 

the annual report are statutory in nature, these requirements are 

not waivable by the Register or subject to modification by the 

Board of Directors. The subparagraph also requires the collective 

to ensure that its policies and practices are transparent and accountable, identify a point of contact for inquiries and complaints, 

and establish an anti-comingling policy. Finally the subparagraph 

requires that an audit be conducted, beginning in the fourth full 

calendar year after the initial designation of the collective by the 

Register and in every fifth year thereafter, to examine the implementation and efficacy of the collective’s procedures on royalty 

funds, how well the collective guards against fraud, abuse, waste, 

and the unreasonable use of funds, and how it protects the confidentiality of financial, proprietary and other sensitive information. The audit will be made available to the Register and the public. 

Subparagraph E explains in detail the fields in the new musical 

works database that the collective is required to create based upon 

information provided to them by digital music services and under 

what conditions the information is made available to others, including the public. The required information in the database depends 

upon whether a work is considered matched or unmatched. To the 

extent that information is missing, musical works copyright owners 

with works in the database are required to undertake commercially 

reasonable efforts to deliver the names of the sound recording in 


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which their works are embodied. The database ought also to be accessible. 

Subparagraph F requires the collective to maintain publicly accessible lists of blanket and significant nonblanket licensees. 

Subparagraph G sets forth how royalties are collected and then 

distributed along with efforts to collect royalties from bankrupt licensees. 

Subparagraph H clarifies that any unmatched royalties shall be 

held by the collective for at least three years after they were first 

accrued and must be kept in an interest bearing account. 

Subparagraph I sets forth the claiming process for works that 

are originally deemed unmatched. The collective is required to undertake a process to publicize the existence of a searchable database. Once a work is claimed, the royalties and accrued interest for 

such work shall be paid out and the musical works database shall 

be updated for future matching. 

Subparagraph J determines how unclaimed royalties are distributed on a market share basis after the holding period specified in 

subparagraph H. The unclaimed royalties oversight committee 

shall establish policies and procedures for such distributions subject to the approval of the Board of Directors of the collective. The 

collective shall maintain a publicly accessible online facility with 

contact information listing unmatched musical works (and shares 

of works), through which a copyright owner may assert an ownership claim with respect to such a work (and share of such work), 

and engage in good faith efforts to publicize the existence of the 

collective and ability to claim unclaimed royalties, the procedures 

by which copyright owners may receive royalties, and information 

on transfers of accrued royalties and pending unclaimed royalties. 

The collective shall also participate in music industry conferences 

and events to publicize these matters. Unclaimed royalties are to 

be distributed based upon market share data that is confidentially 

provided to the collective by copyright owners. Ninety calendar 

days notice is required for such distributions and songwriters must 

be credited at least 50 percent of the royalty paid to their publisher. 

Subparagraph K sets forth the functions of the dispute resolution 

committee concerning ownership disputes among musical works 

copyright owners. Pursuant to subparagraph (D) the collective is 

only liable for gross negligence in these functions. It will hold disputed funds in accordance with subparagraph (H)(ii). However, a 

copyright owner has the ultimate right to seek redress in a federal 

district court pursuant to paragraph (10)(E). 

Subparagraph L sets forth the verification and audit process for 

copyright owners to audit the collective, although parties may 

agree on alternate procedures. 

Subparagraph M concerns the ability of copyright owners and 

their agents to access the records of the collective subject to confidentiality agreements prescribed by the Register. 

Paragraph 4 specifies the terms and conditions for a blanket license. 

Subparagraph A identifies the data that must be reported to the 

collective by a digital music provider along with its royalty payments not later than 45 calendar days after the end of a monthly 

reporting period. The Register shall specify information technology 


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requirements of such reports along with the maintenance of the 

records of use. 

Subparagraph B requires digital music providers to engage in 

good-faith, commercially reasonable efforts to obtain information 

from sound recording copyright owners for use by the collective, including in its database. 

Subparagraph C requires digital music providers and significant 

nonblanket licensees to pay the administrative assessment established under paragraph (7)(D). 

Subparagraph D sets forth the verification and audit process for 

the collective to audit the digital music providers, although the parties may agree on alternate procedures. 

Subparagraph E identifies the conditions by which a digital 

music provider may be considered in default and the consequences 

of such default. A digital music provider may seek review of such 

default on a de novo basis in a federal district court of competent 

jurisdiction. 

Paragraph 5 identifies the role of the digital licensee coordinator, 

its initial designation and potential redesignation, as well as its authorities and functions. Like the collective, the coordinator is prohibited from lobbying. However, unlike as would be the case with 

the collective, it is possible for the new blanket licensing system to 

proceed in the event a digital licensee coordinator cannot be chosen. The coordinator is authorized to perform a number of functions, including assisting the mechanical licensing collective in publicizing the existence of the collective and the ability of copyright 

owners to claim royalties for unmatched musical works. 

Paragraph 6 sets forth the requirements for significant nonblanket licensees as defined in subsection (e)(31), including reporting requirements and payment of the administrative assessment. 

Should a significant nonblanket licensee fail to pay the assessment 

or submit the required reports, either is actionable in a federal district court for damages up to three times the amount of the unpaid 

assessment, injunctive relief, costs, and attorneys’ fees. 

Paragraph 7 details the funding of the new collective by the digital music providers and significant nonblanket licensees through a 

combination of voluntary contributions and an administrative assessment determined by the Copyright Royalty Judges in a separate proceeding. The fee shall be determined on either a percentage 

of royalties basis or other usage-based formula with a minimum 

amount due that covers the reasonable costs of the collective. 

Timelines for the adoption of the initial and future administrative 

assessments are established in this paragraph along with granting 

the Copyright Royalty Judges continuing authority to amend their 

decisions. 

Paragraph 8 provides guidance to the Copyright Royalty Judges 

as to how interim rates should be established as well as the new 

late fee for nonpayment of royalties to the collective under the 

blanket license. Neither the mechanical licensing collective nor the 

digital licensee coordinator may participate in such rate setting activities except to provide information to other parties in the proceeding. 

Paragraph 9 identifies the process to transfer the existing licensing system to the blanket system. Existing compulsory licenses will 

automatically become blanket licenses on the license availability 


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date and existing voluntary licenses will continue unchanged until 

they expire or parties agree to amend or discontinue them. Immediately after enactment of the legislation, the Copyright Office shall 

discontinue accepting notices of intention with regards to works 

that would be covered by the new blanket license. However, prior 

to the license availability date, liability is waived if a valid notice 

was filed prior to the enactment date. 

Paragraph 10 provides for a limitation on liability for prior unlicensed uses that have occurred after January 1, 2018, so long as 

digital music providers engage in at least monthly good-faith efforts to locate copyright owners and pay their royalties prior to the 

license availability date. Not later than 45 days after the blanket 

license is available, any non-matched royalties must be turned over 

to the collective, along with as much information about usage and 

ownership information as possible. Late fees and infringement 

causes of action are also limited subject to these conditions. Two 

savings clauses are included to clarify that nothing in this paragraph limits or alters any existing right of action and that any aggrieved party may seek an action in federal district court if there 

is an issue that is not adequately resolved by the Board. 

Paragraph 11 details the legal protections for various licensing 

activities, including antitrust exemptions and common agent exemptions. The collective is not liable for good-faith activities under 

a gross negligence standard, but none of its activities are immune 

from suit in federal district court. Due to the distribution of unclaimed royalties to other copyright owners, state laws on abandoned property are preempted. 

Paragraph 12 gives the Register authority to conduct proceedings 

and adopt any necessary regulations as necessary or appropriate 

with the exception of the administrative assessment that is to be 

determined by the Copyright Royalty Judges. Among the regulations required to be established are those necessary to govern business confidentiality. All such regulations are subject to judicial review. 

Paragraph 13 contains two savings clauses for limiting the scope 

of the blanket license and making clear that rights of public performance are not affected. 

A new subsection 115(e) is created that contains 36 new definitions. 

Section 102(b) amends the existing 801(b) standard such that the 

administrative assessment will henceforth be determined under the 

provisions created by this legislation, rather than the procedures of 

existing law. 

Section 102(c) sets the effective date of certain new provisions. 

Section 102(d) directs the Copyright Royalty Judges to update 

their regulations within nine months to be consistent with the legislation. 

Section 102(e) requires the Register to engage in public outreach 

and educational activities. 

Section 102(f) requires the Register to submit to the Senate and 

House Judiciary Committees a report recommending best practices 

for the collective to implement regarding identification and location 

of musical work copyright owners, claims of royalties, and reduction of unclaimed royalties. 


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Sec. 103. Amendments to section 114 

Section 103 creates a uniform willing buyer, willing seller rate 

standard by amending 17 U.S.C. 114(f), repealing 17 U.S.C. 114(i), 

and modifying 801(b), while ensuring that certain transmissions by 

a broadcaster shall not take into account license fees for public performances of sound recordings under 17 U.S.C. 106(6). The discounted ‘‘pre-existing services’’ rate standard established in 1976 is 

removed in order to equalize the rate setting process for all licensees. Further, it is clarified that the repeal of 114(i) shall not be 

taken into account for the setting of rates for sound recordings 

under section 112(e) or 114(f). A series of additional technical and 

conforming amendments rearranges several other provisions in response to these changes. 

Sec. 104. Random assignment of rate court proceedings 

Section 104 creates an updated system to randomly assign 

ASCAP and BMI rate court cases to judges of the Southern District 

of New York other than the two judges who oversee the consent decrees. These two judges will no longer hear rate court proceedings. 

Sec. 105. Performing rights society consent decrees 

Section 105 requires the Department of Justice to provide timely 

briefings upon request of any Member of the Senate and House Judiciary Committees regarding the status of any review of a consent 

decree with a performing rights society, such as ASCAP or BMI. 

The Department of Justice shall also share with such Members detailed and timely information and pertinent documents related to 

the review, subject to rules of confidentiality and agency deliberative process. Before filing a motion to terminate a consent decree 

between the United States and a performing rights society, the Department of Justice is required to notify such Members and provide 

them with information regarding the impact of the proposed termination on the market for licensing the public performance of musical works should the motion be granted. The notification will be 

provided in writing to the Chairmen and Ranking Members of the 

Senate and House Judiciary Committees not later than 90 days 

prior to the filing of the motion, and will include an explanation 

of the process used to review the decree, a summary of the public 

comments, and any other information requested by Congress. This 

section only applies to consent decrees between the United States 

and a performing rights society. 

Sec. 106. Effective date 

Section 106 provides that Title I and the amendments made by 

this Title shall take effect on the date of enactment of this Act. 

TITLE II. COMPENSATING LEGACY ARTISTS FOR THEIR SONGS, SERVICE, 

AND IMPORTANT CONTRIBUTIONS TO SOCIETY ACT

Section 201. Short title 

Section 201 designates the short title of this Title of the bill as 

the ‘‘Compensating Legacy Artists for Their Songs, Service, and 

Important Contributions to Society Act’’ or the ‘‘CLASSICS Act.’’ 


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Sec. 202. Unauthorized digital performance of pre-1972 sound recordings 

Section 202 amends Title 17 by adding a new Chapter 14 concerning pre-1972 works titled ‘‘Chapter 14—Unauthorized Digital 

Performance of Pre-1972 Sound Recordings’’ as follows: 

Chapter 14 creates a remedy under section 502 through 505 for 

the use of works fixed between January 1, 1923, and February 14, 

1972, when no federal right existed. However, should a transmitting entity make such transmissions as they do for those works 

fixed on or after February 15, 1972, including statutory royalties 

equivalent to those works, these transmissions are considered authorized. Direct licensing of such works from the copyright owners 

is recognized so long as the collective that receives and distributes 

such payments is paid 50% of the proceeds with 50% of the performance royalties credited as payments due under the license. 

State common law copyrights or other equivalent rights are preempted as are claims under them. Fair use and library use privileges in sections 108, 110(1), and 110(2) are available as a defense 

along with section 512. A rule of construction for section 108(h) 

provides that with respect to the application of setion 108(h) to a 

claim for unauthorized performance of a sound recording first fixed 

on or after January 1, 1923, and before February 15, 1972, under 

subsection (a) of this section, the phrase ‘‘during the last 20 years 

of any term of copyright of a published work’’ in such section 108(h) 

shall be construed to mean at any time after the effective date of 

this section. In order to obtain statutory damages, a copyright 

owner must file a schedule of pre-1972 works for which the copyright owner is seeking royalties. No suits may arise until 90 days 

have passed since the works are first indexed into the public 

records of the Copyright Office. Transmitting entities must also 

submit their contact information to the Copyright Office so that 

copyright owners can identify which services are transmitting their 

works and send them a notice to stop using such works in the 

event they choose not to receive webcasting royalties. Such notice 

will prevent an award of statutory damages or attorney’s fees from 

being imposed for activities within the first 90 days a notice is sent 

to the transmitter. In case the notice is undeliverable, the 90-day 

period begins on the date of the attempted delivery. Section 230 

safe harbors also apply in the use of such works. 

Sec. 203. Effective date 

Section 203 sets the effective date of Title II as the date of enactment of the overall bill. 

TITLE III. ALLOCATION FOR MUSIC PRODUCERS (AMP) ACT

Section 301. Short title 

Section 301 designates the short title of this section of the bill 

as the ‘‘Allocation for Music Producers Act’’ or the ‘‘AMP Act.’’ 

Sec. 302. Payment of statutory performance royalties 

Section 302(a) codifies an existing practice of SoundExchange to 

accept letters of direction in order to pay producers, sound engineers, and mixers a portion of the webcasting royalties that it collects. Section 302(b) expands this program to cover new royalties 


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for pre-1995 works that will be received by SoundExchange due to 

enactment of Title II. The new program requires, in the absence of 

a letter of direction, at least four months’ notice to a copyright 

owner with no objections from the copyright owner before a set percentage of royalties (2% of all webcasting royalties from a particular work) is then paid to producers, sound engineers, and mixers. 

Sec. 303. Effective date 

Section 303 sets the effective date of all three Titles of the bill 

as the date of enactment with the exception of certain changes to 

114(g) made in Title III. 

IV. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

The Committee sets forth, with respect to the bill, S. 2823, the 

following estimate and comparison prepared by the Director of the 

Congressional Budget Office under section 402 of the Congressional 

Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, September 17, 2018. 

Hon. CHUCK GRASSLEY, 

Chairman, Committee on the Judiciary, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed revised cost estimate for S. 2823, the Music 

Modernization Act. This cost estimate supersedes the estimate for 

S. 2823 that CBO transmitted on August 13, 2018. The earlier cost 

estimate did not have the correct short title for S. 2823. This cost 

estimate corrects that error. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Stephen Raben. 

Sincerely, 

KEITH HALL, Director. 

Enclosure. 

S. 2823—Music Modernization Act 

Summary: Under current law, a digital music provider (such as 

Spotify, Apple Music, or Pandora) must pay the copyright owner a 

royalty fee to use a protected work of music. If it does not otherwise have a voluntary license agreement with the copyright owner 

to use the work, the music provider must file a notice of intent— 

on a song-by-song or record-by-record basis—with the copyright 

owner or the U.S. Copyright Office when it seeks to use any copyrighted digital musical work. 

S. 2823 would eliminate notice-of-intent licensing for digital musical works and direct the Copyright Office to designate a nonprofit 

entity—a mechanical licensing collective, or MLC—to administer a 

new blanket-licensing system. Under such a license, a digital music 

provider could use certain copyrighted musical works without filing 

a notice of intent to do so. S. 2823 also would require the MLC to 


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collect royalties from digital music providers using the blanket license and distribute them to copyright owners. 

CBO estimates that enacting S. 2823 would increase deficits by 

$47 million over the 2021–2028 period. That amount comprises an 

increase in direct spending of $222 million and an increase in revenues of $175 million. In addition, CBO estimates that, over the 

2019–2023 period, it would cost $1 million to implement the bill, 

subject to the availability of appropriated funds. 

Because enacting S. 2823 would affect direct spending and revenues, pay-as-you-go procedures apply. 

CBO estimates that enacting S. 2823 would not increase net direct spending by more than $2.5 billion or on-budget deficits by 

more than $5 billion in any of the four consecutive 10-year periods 

beginning in 2029. 

S. 2823 would impose intergovernmental mandates, as defined in 

the Unfunded Mandates Reform Act (UMRA), in the form of preemptions of state laws, but CBO estimates that the costs of those 

mandates would fall well below the threshold established in UMRA 

for intergovernmental mandates ($80 million in 2018, adjusted annually for inflation). 

The bill would impose private-sector mandates on companies that 

provide digital music services by: 

• Requiring those companies to pay higher fees when they 

apply for licenses issued by the MLC to cover the administrative costs of the organization; 

• Requiring those companies to provide usage reports to the 

MLC each month detailing the artists and works that have 

been streamed; and 

• Changing the processes used to resolve disputes over 

claims of copyright infringement in certain cases. 

Because of the uncertainty in determining the effect on settlements due to copyright holders under the new dispute resolution 

process, CBO cannot determine whether the aggregate cost of the 

mandates on private entities would exceed the annual threshold established in UMRA for private-sector mandates ($160 million in 

2018, adjusted annually for inflation). 

Estimated cost to the Federal Government: The estimated budgetary effect of S. 2823 is shown in the following table. The costs 

of the legislation fall within budget function 370 (commerce and 

housing credit). 

By fiscal year, in millions of dollars— 

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2019– 

2023 

2019– 

2028 

INCREASES IN DIRECT SPENDING 

Estimated Budget Authority ............ 0 0 0 20 28 28 29 29 30 31 31 76 227 

Estimated Outlays ........................... 0 0 0 17 27 28 29 29 30 31 31 72 222 

INCREASES IN REVENUES 

Estimated Revenues ....................... 0 0 0 16 22 22 22 23 23 23 24 59 175 

NET INCREASE IN THE DEFICIT FROM INCREASES IN DIRECT SPENDING AND REVENUES 

Impact on Deficit ............................ 0 0 0 1 5 6 6 7 7 7 8 13 47 

Components may not sum to totals because of rounding. 

CBO estimates that discretionary spending to implement S. 2823 would total $1 million over the 2019–2023 period, subject to the availability of appropriated funds. 


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1For more information, see Congressional Budget Office, How CBO Determines Whether to 

Classify an Activity as Governmental When Estimating Its Budgetary Effects (June 2017), 

www.cbo.gov/publication/52803. 

Basis of estimate: For this estimate, CBO assumes that S. 2823 

will be enacted near the end of fiscal year 2018 and that the necessary amounts will be available each year. Estimated outlays are 

based on historical patterns for similar activities. 

Under S. 2823, the Copyright Office would designate an entity to 

act as the MLC and the judges of the Copyright Royalty Board 

would establish an administrative assessment to be paid by users 

of the blanket license and by certain other large users of copyrighted digital musical works. That assessment would be designed 

to cover the costs of establishing, maintaining, and operating the 

MLC. Payment of the assessment would be compulsory and could 

be enforced through a court order. In CBO’s view, in keeping with 

guidance in the 1967 Report of the President’s Commission on 

Budget Concepts, the cash flows from the assessment and subsequent spending should be recorded in the federal budget.1 Under 

the bill, the initial administrative assessment would be effective on 

January 1 two years after the date of enactment of the legislation 

and CBO expects that collections would begin in fiscal year 2021. 

S. 2823 would make several changes to royalty rates and to protections for certain copyright holders of sound recordings and musical works. Because royalty amounts collected by the U.S. Copyright 

Office or its designated agents and later distributed to copyright 

owners are not recorded in the federal budget, CBO estimates that 

implementing those provisions would have no budgetary effect. 

Direct Spending 

S. 2823 would authorize the MLC to spend amounts collected 

under the administrative assessment levied by the Copyright Royalty Judges, without further appropriation, to cover the MLC’s 

costs. Such expenditures would be considered direct spending. For 

this estimate, CBO expects that the Copyright Royalty Judges 

would estimate the operating costs of the MLC accurately and set 

an assessment rate to equal those costs each year. Using information from industry experts and the administrative costs to operate 

entities that engage in similar activities, CBO estimates that expenditures by the MLC would average $30 million annually and 

would total $227 million over the 2021–2028 period. 

Revenues 

S. 2823 would authorize the Copyright Royalty Judges to levy an 

assessment on digital music providers with blanket licenses and on 

certain other digital music providers that instead obtain voluntary 

licenses to use specific copyrighted musical works. The assessment 

would be based on the entities’ use of musical works and set at a 

rate intended to fund the operations of the MLC. For this estimate, 

CBO expects that the assessment would be set to recover all of the 

allowable costs of the MLC and would be collected in full in each 

year; therefore, CBO estimates that collections would average 

about $30 million annually. Those amounts would be recorded in 

the budget as revenues. CBO estimates that enacting S. 2823 

would increase gross revenues by $227 million over the 2021–2028 

period. 


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2See Congressional Budget Office, The Role of the 25 Percent Revenue Offset in Estimating 

the Budgetary Effects of Legislation (January 2009), www.cbo.gov/publication/20110. 

Because excise taxes and other indirect business taxes (like the 

bill’s proposed assessment) reduce the base of income and payroll 

taxes, the amounts collected would lead to reductions in revenues 

from income and payroll taxes.2 As a result, the gross assessments 

under the bill would be partially offset by a loss of receipts of 22 

percent to 24 percent of that gross amount each year. Thus, CBO 

estimates that enacting S. 2823 would increase net revenues by 

$175 million over the 2021–2028 period. 

Spending Subject to Appropriation 

S. 2823 would require the Copyright Office and Copyright Royalty Judges to make rules that create the MLC, establish a digital 

licensee coordinator, establish a blanket-licensing system, and set 

new rates for royalty payments. Under the bill, the Copyright Office also would be required to engage in outreach efforts regarding 

changes to the copyright royalty system and to complete a report 

with recommendations to the MLC to identify copyright owners 

with unclaimed royalties and to reduce the incidence of unclaimed 

royalties. Using information from the Copyright Office, CBO estimates that those activities would cost the agency $1 million over 

the 2019–2023 period. 

S. 2823 also would require the Department of Justice (DOJ) to 

provide briefings upon request to members of the House and Senate Committees on the Judiciary regarding the status of its review 

of consent decrees between the U.S. government and a performingrights society. DOJ also would be required to notify and provide 

certain information to members of Congress before filing a motion 

to terminate such a consent decree. CBO estimates that any administrative costs associated with such briefings and notifications 

would be insignificant and would be subject to the availability of 

appropriated funds. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays and revenues that are subject to those pay-asyou-go procedures are shown in the following table. 

CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR S. 2823, THE MUSIC MODERNIZATION ACT, AS 

ORDERED REPORTED BY THE SENATE COMMITTEE ON THE JUDICIARY ON JUNE 28, 2018 

By fiscal year, in millions of dollars— 

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2018– 

2023 

2018– 

2028 

NET INCREASE IN THE DEFICIT 

Statutory Pay-As-You-Go Effect ...... 0 0 0 1 5 6 6 6 7 7 8 13 47 

Memorandum: 

Changes in Outlays ............... 0 0 0 17 27 28 29 29 30 31 31 72 222 

Changes in Revenues ............ 0 0 0 16 22 22 22 23 23 23 24 59 175 

Increase in long-term direct spending and deficits: CBO estimates that enacting S. 2823 would not increase net direct spending 

by more than $2.5 billion or on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 

2029. 


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Mandates: S. 2823 would impose intergovernmental and privatesector mandates as defined in UMRA. CBO estimates that, in the 

aggregate, the cost of mandates imposed on public entities would 

not exceed the annual threshold established in that act ($80 million 

in 2018, adjusted annually for inflation). CBO cannot determine 

whether the aggregate cost of mandates on private entities would 

exceed the annual threshold established in UMRA for private-sector mandates ($160 million in 2018, adjusted annually for inflation). 

Mandates That Apply to State Governments Only 

S. 2823 would impose intergovernmental mandates as defined in 

UMRA by preempting state laws. In establishing a new system for 

collecting and distributing royalties through the MLC, S. 2823 

would preempt state laws that allow states to collect royalties that 

remain unclaimed for a certain period. Using information from 

music industry sources about current unclaimed royalties and the 

efforts states make to claim them, CBO estimates that the amount 

of revenue that states might forgo as a result of the preemption 

would be small. 

S. 2823 also would establish federal copyright protections for musical works recorded before 1972 and would preempt state property 

laws that govern infringement claims regarding those works. Although the preemption would limit the application of state laws, it 

would impose no duty on states that would result in additional 

spending or a loss of revenues. 

In addition, S. 2823 would give producers, mixers, and sound engineers a statutory right to seek payment of their royalties through 

a nonprofit collective designated by the Copyright Royalty Judges. 

The nonprofit collective would adopt and implement a policy to provide for royalty distributions that would supersede and preempt 

any state law, including common law, concerning abandoned property. CBO estimates that the preemption would not affect the 

budgets or revenues of state governments. 

Mandates That Apply to Private Entities 

S. 2823 would impose private-sector mandates on companies that 

provide digital music services. Under current law, digital music 

providers negotiate directly with copyright owners for the right to 

use musical works or, when the copyright owner cannot be identified, pay fees to the Copyright Office for the right to use the music. 

S. 2823 would direct those companies to pay fees instead to the 

MLC to administer a new blanket-licensing system. Using information from the Copyright Office and music industry sources, CBO estimates that the fees companies would pay to the MLC would 

range from $22 million to $28 million annually, beginning in 2021. 

(Those amounts include a small savings that would result from 

companies’ no longer paying fees to the Copyright Office for the 

covered services.) 

As a condition of receiving a blanket license, companies that provide digital music services would be required to submit reports to 

the MLC detailing the artists and works streamed each month. Because such companies already maintain and provide similar information under current law, CBO estimates that the costs of compliance would not be significant. 


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Finally, the bill would establish new processes for settling legal 

disputes over the infringement of copyrights for musical works by 

ending outstanding—or prohibiting future—lawsuits by copyright 

owners in certain cases. In the case of lawsuits alleging copyright 

infringement filed after January 1, 2018, the bill would terminate 

those lawsuits. In lieu of settlement under the terminated lawsuits, 

copyright owners would be entitled to royalties under the rates set 

by the MLC for music streamed during the three years preceding 

the suit (the period of the federal statute of limitations on claims 

of copyright infringement); in exchange, digital music companies 

would receive liability protection as long as they made good-faith 

efforts to aid the MLC in matching works with their copyright owners and to make timely payments of royalties. 

Similarly, in the case of lawsuits involving musical works recorded before 1972 and brought under state law, the bill would nullify those claims and substitute a federal process under which copyright holders would be entitled to three years’ worth of back royalties; in exchange, music companies would receive protection from 

further claims. 

In substituting those new processes for rights of legal action 

under current federal or state law, S. 2823 would impose mandates 

on copyright holders by terminating their existing rights to make 

infringement claims. The costs of the mandates would be the forgone value of awards and settlements for those claims to the extent 

that the legislation resulted in lower compensation than under current law. CBO is uncertain how the value of royalties claimed by 

copyright owners in lawsuits would be affected under the bill or 

how much those amounts might differ relative to current law. 

Previous CBO estimate: On April 25, 2018, CBO transmitted a 

cost estimate for H.R. 5447, the Music Modernization Act, as ordered reported by the House Committee on the Judiciary on April 

11, 2018. The estimated increases in direct spending and revenues 

are the same for both pieces of legislation. S. 2823 includes provisions that would direct the Copyright Office to engage in additional 

outreach efforts and to complete a report. S. 2823 also includes provisions requiring DOJ to provide briefings and additional information to members of Congress. CBO’s cost estimates for the two 

pieces of legislation reflect those differences. 

This estimate supersedes the cost estimate for S. 2823 that CBO 

transmitted on August 13, 2018. The earlier cost estimate did not 

have the correct short title for S. 2823. This cost estimate corrects 

that error. 

Estimate prepared by: Federal costs: Stephen Rabent and Jacob 

Fabian; Mandates: Rachel Austin. 

Estimate reviewed by: Kim P. Cawley, Chief, Natural and Physical Resources Cost Estimates Unit; Susan Willie, Chief, Mandates 

Unit; H. Samuel Papenfuss, Deputy Assistant Director for Budget 

Analysis. 

V. REGULATORY IMPACT EVALUATION

In compliance with rule XXVI of the Standing Rules of the Senate, the Committee finds that no significant regulatory impact will 

result from the enactment of S. 2823. 


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VI. CONCLUSION

The Music Modernization Act, S. 2823, will update music copyright laws and improve the ability of artists and professionals to 

receive compensation for their music creativity. 

VII. CHANGES TO EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by S. 2823, as 

reported, are shown as follows (existing law proposed to be omitted 

is enclosed in black brackets, new matter is printed in italic, and 

existing law in which no change is proposed is shown in roman): 

UNITED STATES CODE 

TITLE 17—COPYRIGHTS 

Chap. Sec. 

1. Subject Matter and Scope of Copyright ........................................................... 101 

* * * * * * * 

14. Unauthorized digital performance of pre-1972 sound recordings ................ 1401 

CHAPTER 1—SUBJECT MATTER AND SCOPE OF 

COPYRIGHT 

* * * * * * * 

§ 114. Scope of exclusive rights in sound recordings 

(a) The exclusive rights of the owner of copyright in a sound recording are limited to the rights specified by clauses (1), (2), (3) and 

(6) of section 106, and do not include any right of performance 

under section 106(4). 

(b) The exclusive right of the owner of copyright in a sound recording under clause (1) of section 106 is limited to the right to duplicate the sound recording in the form of phonorecords or copies 

that directly or indirectly recapture the actual sounds fixed in the 

recording. The exclusive right of the owner of copyright in a sound 

recording under clause (2) of section 106 is limited to the right to 

prepare a derivative work in which the actual sounds fixed in the 

sound recording are rearranged, remixed, or otherwise altered in 

sequence or quality. The exclusive rights of the owner of copyright 

in a sound recording under clauses (1) and (2) of section 106 do not 

extend to the making or duplication of another sound recording 

that consists entirely of an independent fixation of other sounds, 

even though such sounds imitate or simulate those in the copyrighted sound recording. The exclusive rights of the owner of copyright in a sound recording under clauses (1), (2), and (3) of section 

106 do not apply to sound recordings included in educational television and radio programs (as defined in section 397 of title 47) distributed or transmitted by or through public broadcasting entities 

(as defined by section 118(f)): Provided, That copies or 

phonorecords of said programs are not commercially distributed by 

or through public broadcasting entities to the general public. 


SSpencer on DSKBBXCHB2PROD with REPORTS
36 

(c) This section does not limit or impair the exclusive right to 

perform publicly, by means of a phonorecord, any of the works 

specified by section 106(4). 

(d) LIMITATIONS ON EXCLUSIVE RIGHT.—Notwithstanding the provisions of section 106(6)— 

(1) EXEMPT TRANSMISSIONS AND RETRANSMISSIONS.—The performance of a sound recording publicly by means of a digital 

audio transmission, other than as a part of an interactive service, is not an infringement of section 106(6) if the performance 

is part of— 

(A) a nonsubscription broadcast transmission; 

(B) a retransmission of a nonsubscription broadcast 

transmission: Provided, That, in the case of a retransmission of a radio station’s broadcast transmission— 

(i) the radio station’s broadcast transmission is not 

willfully or repeatedly retransmitted more than a radius of 150 miles from the site of the radio broadcast 

transmitter, however— 

(I) the 150 mile limitation under this clause 

shall not apply when a nonsubscription broadcast 

transmission by a radio station licensed by the 

Federal Communications Commission is retransmitted on a nonsubscription basis by a terrestrial 

broadcast station, terrestrial translator, or terrestrial repeater licensed by the Federal Communications Commission; and 

(II) in the case of a subscription retransmission 

of a nonsubscription broadcast retransmission covered by subclause (I), the 150 mile radius shall be 

measured from the transmitter site of such broadcast retransmitter; 

(ii) the retransmission is of radio station broadcast 

transmissions that are— 

(I) obtained by the retransmitter over the air; 

(II) not electronically processed by the retransmitter to deliver separate and discrete signals; 

and 

(III) retransmitted only within the local communities served by the retransmitter; 

(iii) the radio station’s broadcast transmission was 

being retransmitted to cable systems (as defined in 

section 111(f)) by a satellite carrier on January 1, 

1995, and that retransmission was being retransmitted by cable systems as a separate and discrete signal, and the satellite carrier obtains the radio station’s 

broadcast transmission in an analog format: Provided, 

That the broadcast transmission being retransmitted 

may embody the programming of no more than one 

radio station; or 

(iv) the radio station’s broadcast transmission is 

made by a noncommercial educational broadcast station funded on or after January 1, 1995, under section 

396(k) of the Communications Act of 1934 (47 U.S.C. 

396(k)), consists solely of noncommercial educational 

and cultural radio programs, and the retransmission, 


SSpencer on DSKBBXCHB2PROD with REPORTS
37 

whether or not simultaneous, is a nonsubscription terrestrial broadcast retransmission; or 

(C) a transmission that comes within any of the following categories— 

(i) a prior or simultaneous transmission incidental 

to an exempt transmission, such as a feed received by 

and then retransmitted by an exempt transmitter: 

Provided, That such incidental transmissions do not 

include any subscription transmission directly for reception by members of the public; 

(ii) a transmission within a business establishment, 

confined to its premises or the immediately surrounding vicinity; 

(iii) a retransmission by any retransmitter, including a multichannel video programming distributor as 

defined in section 602(12) of the Communications Act 

of 1934 (47 U.S.C. 522(12)), of a transmission by a 

transmitter licensed to publicly perform the sound recording as a part of that transmission, if the retransmission is simultaneous with the licensed transmission and authorized by the transmitter; or 

(iv) a transmission to a business establishment for 

use in the ordinary course of its business: Provided, 

That the business recipient does not retransmit the 

transmission outside of its premises or the immediately surrounding vicinity, and that the transmission does not exceed the sound recording performance complement. Nothing in this clause shall limit 

the scope of the exemption in clause (ii). 

(2) STATUTORY LICENSING OF CERTAIN TRANSMISSIONS.—The 

performance of a sound recording publicly by means of a subscription digital audio transmission not exempt under paragraph (1), an eligible nonsubscription transmission, or a transmission not exempt under paragraph (1) that is made by a preexisting satellite digital audio radio service shall be subject to 

statutory licensing, in accordance with subsection (f) if— 

(A)(i) the transmission is not part of an interactive service; 

(ii) except in the case of a transmission to a business establishment, the transmitting entity does not automatically and intentionally cause any device receiving the 

transmission to switch from one program channel to another; and 

(iii) except as provided in section 1002(e), the transmission of the sound recording is accompanied, if technically feasible, by the information encoded in that sound 

recording, if any, by or under the authority of the copyright owner of that sound recording, that identifies the 

title of the sound recording, the featured recording artist 

who performs on the sound recording, and related information, including information concerning the underlying musical work and its writer; 

(B) in the case of a subscription transmission not exempt 

under paragraph (1) that is made by a preexisting subscription service in the same transmission medium used by 


SSpencer on DSKBBXCHB2PROD with REPORTS
38 

such service on July 31, 1998, or in the case of a transmission not exempt under paragraph (1) that is made by 

a preexisting satellite digital audio radio service— 

(i) the transmission does not exceed the sound recording performance complement; and 

(ii) the transmitting entity does not cause to be published by means of an advance program schedule or 

prior announcement the titles of the specific sound recordings or phonorecords embodying such sound recordings to be transmitted; and 

(C) in the case of an eligible nonsubscription transmission or a subscription transmission not exempt under 

paragraph (1) that is made by a new subscription service 

or by a preexisting subscription service other than in the 

same transmission medium used by such service on July 

31, 1998— 

(i) the transmission does not exceed the sound recording performance complement, except that this requirement shall not apply in the case of a retransmission of a broadcast transmission if the retransmission is made by a transmitting entity that does not 

have the right or ability to control the programming of 

the broadcast station making the broadcast transmission, unless— 

(I) the broadcast station makes broadcast transmissions— 

(aa) in digital format that regularly exceed 

the sound recording performance complement; 

or 

(bb) in analog format, a substantial portion 

of which, on a weekly basis, exceed the sound 

recording performance complement; and 

(II) the sound recording copyright owner or its 

representative has notified the transmitting entity 

in writing that broadcast transmissions of the 

copyright owner’s sound recordings exceed the 

sound recording performance complement as provided in this clause; 

(ii) the transmitting entity does not cause to be published, or induce or facilitate the publication, by 

means of an advance program schedule or prior announcement, the titles of the specific sound recordings 

to be transmitted, the phonorecords embodying such 

sound recordings, or, other than for illustrative purposes, the names of the featured recording artists, except that this clause does not disqualify a transmitting 

entity that makes a prior announcement that a particular artist will be featured within an unspecified future time period, and in the case of a retransmission 

of a broadcast transmission by a transmitting entity 

that does not have the right or ability to control the 

programming of the broadcast transmission, the requirement of this clause shall not apply to a prior oral 

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tated by the broadcast station, if the transmitting entity does not have actual knowledge and has not received written notice from the copyright owner or its 

representative that the broadcast station publishes or 

induces or facilitates the publication of such advance 

program schedule, or if such advance program schedule is a schedule of classical music programming published by the broadcast station in the same manner as 

published by that broadcast station on or before September 30, 1998; 

(iii) the transmission— 

(I) is not part of an archived program of less 

than 5 hours duration; 

(II) is not part of an archived program of 5 

hours or greater in duration that is made available for a period exceeding 2 weeks; 

(III) is not part of a continuous program which 

is of less than 3 hours duration; or 

(IV) is not part of an identifiable program in 

which performances of sound recordings are rendered in a predetermined order, other than an 

archived or continuous program, that is transmitted at— 

(aa) more than 3 times in any 2-week period that have been publicly announced in advance, in the case of a program of less than 

1 hour in duration, or 

(bb) more than 4 times in any 2-week period that have been publicly announced in advance, in the case of a program of 1 hour or 

more in duration, 

except that the requirement of this subclause 

shall not apply in the case of a retransmission of 

a broadcast transmission by a transmitting entity 

that does not have the right or ability to control 

the programming of the broadcast transmission, 

unless the transmitting entity is given notice in 

writing by the copyright owner of the sound recording that the broadcast station makes broadcast transmissions that regularly violate such requirement; 

(iv) the transmitting entity does not knowingly perform the sound recording, as part of a service that offers transmissions of visual images contemporaneously 

with transmissions of sound recordings, in a manner 

that is likely to cause confusion, to cause mistake, or 

to deceive, as to the affiliation, connection, or association of the copyright owner or featured recording artist 

with the transmitting entity or a particular product or 

service advertised by the transmitting entity, or as to 

the origin, sponsorship, or approval by the copyright 

owner or featured recording artist of the activities of 

the transmitting entity other than the performance of 

the sound recording itself; 


SSpencer on DSKBBXCHB2PROD with REPORTS
40 

(v) the transmitting entity cooperates to prevent, to 

the extent feasible without imposing substantial costs 

or burdens, a transmission recipient or any other person or entity from automatically scanning the transmitting entity’s transmissions alone or together with 

transmissions by other transmitting entities in order 

to select a particular sound recording to be transmitted to the transmission recipient, except that the 

requirement of this clause shall not apply to a satellite 

digital audio service that is in operation, or that is licensed by the Federal Communications Commission, 

on or before July 31, 1998; 

(vi) the transmitting entity takes no affirmative 

steps to cause or induce the making of a phonorecord 

by the transmission recipient, and if the technology 

used by the transmitting entity enables the transmitting entity to limit the making by the transmission recipient of phonorecords of the transmission directly in 

a digital format, the transmitting entity sets such 

technology to limit such making of phonorecords to the 

extent permitted by such technology; 

(vii) phonorecords of the sound recording have been 

distributed to the public under the authority of the 

copyright owner or the copyright owner authorizes the 

transmitting entity to transmit the sound recording, 

and the transmitting entity makes the transmission 

from a phonorecord lawfully made under the authority 

of the copyright owner, except that the requirement of 

this clause shall not apply to a retransmission of a 

broadcast transmission by a transmitting entity that 

does not have the right or ability to control the programming of the broadcast transmission, unless the 

transmitting entity is given notice in writing by the 

copyright owner of the sound recording that the broadcast station makes broadcast transmissions that regularly violate such requirement; 

(viii) the transmitting entity accommodates and does 

not interfere with the transmission of technical measures that are widely used by sound recording copyright owners to identify or protect copyrighted works, 

and that are technically feasible of being transmitted 

by the transmitting entity without imposing substantial costs on the transmitting entity or resulting in 

perceptible aural or visual degradation of the digital 

signal, except that the requirement of this clause shall 

not apply to a satellite digital audio service that is in 

operation, or that is licensed under the authority of 

the Federal Communications Commission, on or before 

July 31, 1998, to the extent that such service has designed, developed, or made commitments to procure 

equipment or technology that is not compatible with 

such technical measures before such technical measures are widely adopted by sound recording copyright 

owners; and 


SSpencer on DSKBBXCHB2PROD with REPORTS
41 

(ix) the transmitting entity identifies in textual data 

the sound recording during, but not before, the time it 

is performed, including the title of the sound recording, the title of the phonorecord embodying such sound 

recording, if any, and the featured recording artist, in 

a manner to permit it to be displayed to the transmission recipient by the device or technology intended 

for receiving the service provided by the transmitting 

entity, except that the obligation in this clause shall 

not take effect until 1 year after the date of the enactment of the Digital Millennium Copyright Act and 

shall not apply in the case of a retransmission of a 

broadcast transmission by a transmitting entity that 

does not have the right or ability to control the programming of the broadcast transmission, or in the 

case in which devices or technology intended for receiving the service provided by the transmitting entity 

that have the capability to display such textual data 

are not common in the marketplace. 

(3) LICENSES FOR TRANSMISSIONS BY INTERACTIVE SERV- ICES.— (A) No interactive service shall be granted an exclusive 

license under section 106(6) for the performance of a sound 

recording publicly by means of digital audio transmission 

for a period in excess of 12 months, except that with respect to an exclusive license granted to an interactive service by a licensor that holds the copyright to 1,000 or fewer 

sound recordings, the period of such license shall not exceed 24 months: Provided, however, That the grantee of 

such exclusive license shall be ineligible to receive another 

exclusive license for the performance of that sound recording for a period of 13 months from the expiration of the 

prior exclusive license. 

(B) The limitation set forth in subparagraph (A) of this 

paragraph shall not apply if— 

(i) the licensor has granted and there remain in effect licenses under section 106(6) for the public performance of sound recordings by means of digital 

audio transmission by at least 5 different interactive 

services: Provided, however, That each such license 

must be for a minimum of 10 percent of the copyrighted sound recordings owned by the licensor that 

have been licensed to interactive services, but in no 

event less than 50 sound recordings; or 

(ii) the exclusive license is granted to perform publicly up to 45 seconds of a sound recording and the 

sole purpose of the performance is to promote the distribution or performance of that sound recording. 

(C) Notwithstanding the grant of an exclusive or nonexclusive license of the right of public performance under 

section 106(6), an interactive service may not publicly perform a sound recording unless a license has been granted 

for the public performance of any copyrighted musical 

work contained in the sound recording: Provided, That 

such license to publicly perform the copyrighted musical 


SSpencer on DSKBBXCHB2PROD with REPORTS
42 

work may be granted either by a performing rights society 

representing the copyright owner or by the copyright 

owner. 

(D) The performance of a sound recording by means of 

a retransmission of a digital audio transmission is not an 

infringement of section 106(6) if— 

(i) the retransmission is of a transmission by an 

interactive service licensed to publicly perform the 

sound recording to a particular member of the public 

as part of that transmission; and 

(ii) the retransmission is simultaneous with the licensed transmission, authorized by the transmitter, 

and limited to that particular member of the public intended by the interactive service to be the recipient of 

the transmission. 

(E) For the purposes of this paragraph— 

(i) a ‘‘licensor’’ shall include the licensing entity and 

any other entity under any material degree of common 

ownership, management, or control that owns copyrights in sound recordings; and 

(ii) a ‘‘performing rights society’’ is an association or 

corporation that licenses the public performance of 

nondramatic musical works on behalf of the copyright 

owner, such as the American Society of Composers, 

Authors and Publishers, Broadcast Music, Inc., and 

SESAC, Inc. 

(4) RIGHTS NOT OTHERWISE LIMITED.— (A) Except as expressly provided in this section, this section does not limit or impair the exclusive right to perform 

a sound recording publicly by means of a digital audio 

transmission under section 106(6). 

(B) Nothing in this section annuls or limits in any way— 

(i) the exclusive right to publicly perform a musical 

work, including by means of a digital audio transmission, under section 106(4); 

(ii) the exclusive rights in a sound recording or the 

musical work embodied therein under sections 106(1), 

106(2) and 106(3); or 

(iii) any other rights under any other clause of section 106, or remedies available under this title, as 

such rights or remedies exist either before or after the 

date of enactment of the Digital Performance Right in 

Sound Recordings Act of 1995. 

(C) Any limitations in this section on the exclusive right 

under section 106(6) apply only to the exclusive right 

under section 106(6) and not to any other exclusive rights 

under section 106. Nothing in this section shall be construed to annul, limit, impair or otherwise affect in any 

way the ability of the owner of a copyright in a sound recording to exercise the rights under sections 106(1), 106(2) 

and 106(3), or to obtain the remedies available under this 

title pursuant to such rights, as such rights and remedies 

exist either before or after the date of enactment of the 

Digital Performance Right in Sound Recordings Act of 

1995. 


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43 

(e) AUTHORITY FOR NEGOTIATIONS.— (1) Notwithstanding any provision of the antitrust laws, in 

negotiating statutory licenses in accordance with subsection (f), 

any copyright owners of sound recordings and any entities performing sound recordings affected by this section may negotiate and agree upon the royalty rates and license terms and 

conditions for the performance of such sound recordings and 

the proportionate division of fees paid among copyright owners, 

and may designate common agents on a nonexclusive basis to 

negotiate, agree to, pay, or receive payments. 

(2) For licenses granted under section 106(6), other than 

statutory licenses, such as for performances by interactive 

services or performances that exceed the sound recording performance complement— 

(A) copyright owners of sound recordings affected by this 

section may designate common agents to act on their behalf to grant licenses and receive and remit royalty payments: Provided, That each copyright owner shall establish 

the royalty rates and material license terms and conditions 

unilaterally, that is, not in agreement, combination, or 

concert with other copyright owners of sound recordings; 

and 

(B) entities performing sound recordings affected by this 

section may designate common agents to act on their behalf to obtain licenses and collect and pay royalty fees: 

Provided, That each entity performing sound recordings 

shall determine the royalty rates and material license 

terms and conditions unilaterally, that is, not in agreement, combination, or concert with other entities performing sound recordings. 

(f) LICENSES FOR CERTAIN NONEXEMPT TRANSMISSIONS.— ø(1)(A) Proceedings under chapter 8 shall determine reasonable rates and terms of royalty payments for subscription 

transmissions by preexisting subscription services and transmissions by preexisting satellite digital audio radio services 

specified by subsection (d)(2) during the 5-year period beginning on January 1 of the second year following the year in 

which the proceedings are to be commenced, except in the case 

of a different transitional period provided under section 6(b)(3) 

of the Copyright Royalty and Distribution Reform Act of 2004, 

or such other period as the parties may agree. Such terms and 

rates shall distinguish among the different types of digital 

audio transmission services then in operation. Any copyright 

owners of sound recordings, preexisting subscription services, 

or preexisting satellite digital audio radio services may submit 

to the Copyright Royalty Judges licenses covering such subscription transmissions with respect to such sound recordings. 

The parties to each proceeding shall bear their own costs. 

ø(B) The schedule of reasonable rates and terms determined 

by the Copyright Royalty Judges shall, subject to paragraph 

(3), be binding on all copyright owners of sound recordings and 

entities performing sound recordings affected by this paragraph during the 5-year period specified in subparagraph (A), 

a transitional period provided under section 6(b)(3) of the 

Copyright Royalty and Distribution Reform Act of 2004, or 


SSpencer on DSKBBXCHB2PROD with REPORTS
44 

such other period as the parties may agree. In establishing 

rates and terms for preexisting subscription services and preexisting satellite digital audio radio services, in addition to the 

objectives set forth in section 801(b)(1), the Copyright Royalty 

Judges may consider the rates and terms for comparable types 

of subscription digital audio transmission services and comparable circumstances under voluntary license agreements described in subparagraph (A). 

ø(C) The procedures under subparagraphs (A) and (B) also 

shall be initiated pursuant to a petition filed by any copyright 

owners of sound recordings, any preexisting subscription services, or any preexisting satellite digital audio radio services indicating that a new type of subscription digital audio transmission service on which sound recordings are performed is or 

is about to become operational, for the purpose of determining 

reasonable terms and rates of royalty payments with respect to 

such new type of transmission service for the period beginning 

with the inception of such new type of service and ending on 

the date on which the royalty rates and terms for subscription 

digital audio transmission services most recently determined 

under subparagraph (A) or (B) and chapter 8 expire, or such 

other period as the parties may agree. 

ø(2)(A) Proceedings under chapter 8 shall determine reasonable rates and terms of royalty payments for public performances of sound recordings by means of eligible nonsubscription 

transmission services and new subscription services specified 

by subsection (d)(2) during the 5-year period beginning on January 1 of the second year following the year in which the proceedings are to be commenced, except in the case of a different 

transitional period provided under section 6(b)(3) of the Copyright Royalty and Distribution Reform Act of 2004, or such 

other period as the parties may agree. Such rates and terms 

shall distinguish among the different types of eligible nonsubscription transmission services and new subscription services then in operation and shall include a minimum fee for 

each such type of service. Any copyright owners of sound recordings or any entities performing sound recordings affected 

by this paragraph may submit to the Copyright Royalty Judges 

licenses covering such eligible nonsubscription transmissions 

and new subscription services with respect to such sound recordings. The parties to each proceeding shall bear their own 

costs. 

ø(B) The schedule of reasonable rates and terms determined 

by the Copyright Royalty Judges shall, subject to paragraph 

(3), be binding on all copyright owners of sound recordings and 

entities performing sound recordings affected by this paragraph during the 5-year period specified in subparagraph (A), 

a transitional period provided under section 6(b)(3) of the 

Copyright Royalty and Distribution Act of 2004, or such other 

period as the parties may agree. Such rates and terms shall 

distinguish among the different types of eligible nonsubscription transmission services then in operation and shall include 

a minimum fee for each such type of service, such differences 

to be based on criteria including, but not limited to, the quantity and nature of the use of sound recordings and the degree 


SSpencer on DSKBBXCHB2PROD with REPORTS
45 

to which use of the service may substitute for or may promote 

the purchase of phonorecords by consumers. In establishing 

rates and terms for transmissions by eligible nonsubscription 

services and new subscription services, the Copyright Royalty 

Judges shall establish rates and terms that most clearly represent the rates and terms that would have been negotiated in 

the marketplace between a willing buyer and a willing seller. 

In determining such rates and terms, the Copyright Royalty 

Judges shall base their decision on economic, competitive and 

programming information presented by the parties, including— 

ø(i) whether use of the service may substitute for or may 

promote the sales of phonorecords or otherwise may interfere with or may enhance the sound recording copyright 

owner’s other streams of revenue from its sound recordings; and 

ø(ii) the relative roles of the copyright owner and the 

transmitting entity in the copyrighted work and the service made available to the public with respect to relative 

creative contribution, technological contribution, capital investment, cost, and risk. 

In establishing such rates and terms, the Copyright Royalty 

Judges may consider the rates and terms for comparable types 

of digital audio transmission services and comparable circumstances under voluntary license agreements described in 

subparagraph (A). 

ø(C) The procedures under subparagraphs (A) and (B) shall 

also be initiated pursuant to a petition filed by any copyright 

owners of sound recordings or any eligible nonsubscription 

service or new subscription service indicating that a new type 

of eligible nonsubscription service or new subscription service 

on which sound recordings are performed is or is about to become operational, for the purpose of determining reasonable 

terms and rates of royalty payments with respect to such new 

type of service for the period beginning with the inception of 

such new type of service and ending on the date on which the 

royalty rates and terms for eligible nonsubscription services 

and new subscription services, as the case may be, most recently determined under subparagraph (A) or (B) and chapter 

8 expire, or such other period as the parties may agree.¿ 

(1)(A) Proceedings under chapter 8 shall determine reasonable rates and terms of royalty payments for transmissions subject to statutory licensing under subsection (d)(2) during the 5- 

year period beginning on January 1 of the second year following the year in which the proceedings are to be commenced 

pursuant to subparagraph (A) or (B) of section 804(b)(3), as the 

case may be, or such other period as the parties may agree. The 

parties to each proceeding shall bear their own costs. 

(B) The schedule of reasonable rates and terms determined by 

the Copyright Royalty Judges shall, subject to paragraph (2), be 

binding on all copyright owners of sound recordings and entities performing sound recordings affected by this paragraph 

during the 5-year period specified in subparagraph (A), or such 

other period as the parties may agree. Such rates and terms 

shall distinguish among the different types of services then in 

operation and shall include a minimum fee for each such type 


SSpencer on DSKBBXCHB2PROD with REPORTS
46 

of service, such differences to be based on criteria including the 

quantity and nature of the use of sound recordings and the degree to which use of the service may substitute for or may promote the purchase of phonorecords by consumers. The Copyright Royalty Judges shall establish rates and terms that most 

clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller. In determining such rates and terms, the Copyright 

Royalty Judges— 

(i) shall base their decision on economic, competitive, and 

programming information presented by the parties, including— 

(I) whether use of the service may substitute for or 

may promote the sales of phonorecords or otherwise 

may interfere with or may enhance the sound recording 

copyright owner’s other streams of revenue from the 

copyright owner’s sound recordings; and 

(II) the relative roles of the copyright owner and the 

transmitting entity in the copyrighted work and the 

service made available to the public with respect to relative creative contribution, technological contribution, 

capital investment, cost, and risk; and 

(ii) may consider the rates and terms for comparable 

types of audio transmission services and comparable circumstances under voluntary license agreements. 

(C) The procedures under subparagraphs (A) and (B) shall 

also be initiated pursuant to a petition filed by any sound recording copyright owner or any transmitting entity indicating 

that a new type of service on which sound recordings are performed is or is about to become operational, for the purpose of 

determining reasonable terms and rates of royalty payments 

with respect to such new type of service for the period beginning 

with the inception of such new type of service and ending on the 

date on which the royalty rates and terms for eligible nonsubscription services and new subscription services, or preexisting subscription services and preexisting satellite digital 

audio radio services, as the case may be, most recently determined under subparagraph (A) or (B) and chapter 8 expire, or 

such other period as the parties may agree. 

ø(3)¿ (2) License agreements voluntarily negotiated at any 

time between 1 or more copyright owners of sound recordings 

and 1 or more entities performing sound recordings shall be 

given effect in lieu of any decision by the Librarian of Congress 

or determination by the Copyright Royalty Judges. 

ø(4)¿ (3)(A) The Copyright Royalty Judges shall also establish requirements by which copyright owners may receive reasonable notice of the use of their sound recordings under this 

section, and under which records of such use shall be kept and 

made available by entities performing sound recordings. The 

notice and recordkeeping rules in effect on the day before the 

effective date of the Copyright Royalty and Distribution Reform Act of 2004 shall remain in effect unless and until new 

regulations are promulgated by the Copyright Royalty Judges. 

If new regulations are promulgated under this subparagraph, 

the Copyright Royalty Judges shall take into account the subVerDate Sep 11 2014 05:56 Sep 20, 2018 Jkt 079010 PO 00000 Frm 00046 Fmt 6659 Sfmt 6602 E:\HR\OC\SR339.XXX SR339

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stance and effect of the rules in effect on the day before the 

effective date of the Copyright Royalty and Distribution Reform Act of 2004 and shall, to the extent practicable, avoid significant disruption of the functions of any designated agent authorized to collect and distribute royalty fees. 

(B) Any person who wishes to perform a sound recording 

publicly by means of a transmission eligible for statutory licensing under this subsection may do so without infringing the 

exclusive right of the copyright owner of the sound recording— 

(i) by complying with such notice requirements as the 

Copyright Royalty Judges shall prescribe by regulation 

and by paying royalty fees in accordance with this subsection; or 

(ii) if such royalty fees have not been set, by agreeing to 

pay such royalty fees as shall be determined in accordance 

with this subsection. 

(C) Any royalty payments in arrears shall be made on or before the twentieth day of the month next succeeding the month 

in which the royalty fees are set. 

ø(5)¿ (4)(A) Notwithstanding section 112(e) and the other 

provisions of this subsection, the receiving agent may enter 

into agreements for the reproduction and performance of sound 

recordings under section 112(e) and this section by any 1 or 

more commercial webcasters or noncommercial webcasters for 

a period of not more than 11 years beginning on January 1, 

2005, that, once published in the Federal Register pursuant to 

subparagraph (B), shall be binding on all copyright owners of 

sound recordings and other persons entitled to payment under 

this section, in lieu of any determination by the Copyright Royalty Judges. Any such agreement for commercial webcasters 

may include provisions for payment of royalties on the basis of 

a percentage of revenue or expenses, or both, and include a 

minimum fee. Any such agreement may include other terms 

and conditions, including requirements by which copyright 

owners may receive notice of the use of their sound recordings 

and under which records of such use shall be kept and made 

available by commercial webcasters or noncommercial 

webcasters. The receiving agent shall be under no obligation to 

negotiate any such agreement. The receiving agent shall have 

no obligation to any copyright owner of sound recordings or 

any other person entitled to payment under this section in negotiating any such agreement, and no liability to any copyright 

owner of sound recordings or any other person entitled to payment under this section for having entered into such agreement. 

(B) The Copyright Office shall cause to be published in the 

Federal Register any agreement entered into pursuant to subparagraph (A). Such publication shall include a statement containing the substance of subparagraph (C). Such agreements 

shall not be included in the Code of Federal Regulations. 

Thereafter, the terms of such agreement shall be available, as 

an option, to any commercial webcaster or noncommercial 

webcaster meeting the eligibility conditions of such agreement. 

(C) Neither subparagraph (A) nor any provisions of any 

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ing any rate structure, fees, terms, conditions, or notice and 

recordkeeping requirements set forth therein, shall be admissible as evidence or otherwise taken into account in any administrative, judicial, or other government proceeding involving the setting or adjustment of the royalties payable for the 

public performance or reproduction in ephemeral phonorecords 

or copies of sound recordings, the determination of terms or 

conditions related thereto, or the establishment of notice or 

recordkeeping requirements by the Copyright Royalty Judges 

øunder paragraph (4)¿ under paragraph (3) or section 

112(e)(4). It is the intent of Congress that any royalty rates, 

rate structure, definitions, terms, conditions, or notice and recordkeeping requirements, included in such agreements shall be 

considered as a compromise motivated by the unique business, 

economic and political circumstances of webcasters, copyright 

owners, and performers rather than as matters that would 

have been negotiated in the marketplace between a willing 

buyer and a willing seller, or otherwise meet the objectives set 

forth in section 801(b). This subparagraph shall not apply to 

the extent that the receiving agent and a webcaster that is 

party to an agreement entered into pursuant to subparagraph 

(A) expressly authorize the submission of the agreement in a 

proceeding under this subsection. 

(D) Nothing in the Webcaster Settlement Act of 2008, the 

Webcaster Settlement Act of 2009, or any agreement entered 

into pursuant to subparagraph (A) shall be taken into account 

by the United States Court of Appeals for the District of Columbia Circuit in its review of the determination by the Copyright Royalty Judges of May 1, 2007, of rates and terms for the 

digital performance of sound recordings and ephemeral recordings, pursuant to sections 112 and 114. 

(E) As used in this paragraph— 

(i) the term ‘‘noncommercial webcaster’’ means a 

webcaster that— 

(I) is exempt from taxation under section 501 of the 

Internal Revenue Code of 1986 (26 U.S.C. 501); 

(II) has applied in good faith to the Internal Revenue Service for exemption from taxation under section 501 of the Internal Revenue Code and has a commercially reasonable expectation that such exemption 

shall be granted; or 

(III) is operated by a State or possession or any governmental entity or subordinate thereof, or by the 

United States or District of Columbia, for exclusively 

public purposes; 

(ii) the term ‘‘receiving agent’’ shall have the meaning 

given that term in section 261.2 of title 37, Code of Federal 

Regulations, as published in the Federal Register on July 

8, 2002; and 

(iii) the term ‘‘webcaster’’ means a person or entity that 

has obtained a compulsory license under section 112 or 

114 and the implementing regulations therefor. 

(F) The authority to make settlements pursuant to subparagraph (A) shall expire at 11:59 p.m. Eastern time on the 30th 


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49 

day after the date of the enactment of the Webcaster Settlement Act of 2009. 

(g) PROCEEDS FROM LICENSING OF TRANSMISSIONS.— 

(1) Except in the case of a transmission licensed under a 

statutory license in accordance with subsection (f) of this section— 

(A) a featured recording artist who performs on a sound 

recording that has been licensed for a transmission shall 

be entitled to receive payments from the copyright owner 

of the sound recording in accordance with the terms of the 

artist’s contract; and 

(B) a nonfeatured recording artist who performs on a 

sound recording that has been licensed for a transmission 

shall be entitled to receive payments from the copyright 

owner of the sound recording in accordance with the terms 

of the nonfeatured recording artist’s applicable contract or 

other applicable agreement. 

(2) øAn agent designated¿ Except as provided for in paragraph (6), a nonprofit collective designated by the Copyright 

Royalty Judges to distribute receipts from the licensing of 

transmissions in accordance with subsection (f) shall distribute 

such receipts as follows: 

(A) 50 percent of the receipts shall be paid to the copyright owner of the exclusive right under section 106(6) of 

this title to publicly perform a sound recording by means 

of a digital audio transmission. 

(B) 21⁄2 percent of the receipts shall be deposited in an 

escrow account managed by an independent administrator 

jointly appointed by copyright owners of sound recordings 

and the American Federation of Musicians (or any successor entity) to be distributed to nonfeatured musicians 

(whether or not members of the American Federation of 

Musicians) who have performed on sound recordings. 

(C) 21⁄2 percent of the receipts shall be deposited in an 

escrow account managed by an independent administrator 

jointly appointed by copyright owners of sound recordings 

and the American Federation of Television and Radio Artists (or any successor entity) to be distributed to nonfeatured vocalists (whether or not members of the American 

Federation of Television and Radio Artists) who have performed on sound recordings. 

(D) 45 percent of the receipts shall be paid, on a per 

sound recording basis, to the recording artist or artists featured on such sound recording (or the persons conveying 

rights in the artists’ performance in the sound recordings). 

(3) A ønonprofit agent designated¿ nonprofit collective designated by the Copyright Royalty Judges to distribute receipts 

from the licensing of transmissions in accordance with subsection (f) may deduct from any of its receipts, prior to the distribution of such receipts to any person or entity entitled thereto other than copyright owners and performers who have elected to receive royalties from øanother designated agent¿ another designated nonprofit collective and have notified such 

nonprofit øagent¿ collective in writing of such election, the reaVerDate Sep 11 2014 05:56 Sep 20, 2018 Jkt 079010 PO 00000 Frm 00049 Fmt 6659 Sfmt 6602 E:\HR\OC\SR339.XXX SR339

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sonable costs of such øagent¿ collective incurred after November 1, 1995, in— 

(A) the administration of the collection, distribution, and 

calculation of the royalties; 

(B) the settlement of disputes relating to the collection 

and calculation of the royalties; and 

(C) the licensing and enforcement of rights with respect 

to the making of ephemeral recordings and performances 

subject to licensing under section 112 and this section, including those incurred in participating in negotiations or 

arbitration proceedings under section 112 and this section, 

except that all costs incurred relating to the section 112 

ephemeral recordings right may only be deducted from the 

royalties received pursuant to section 112. 

(4) Notwithstanding paragraph (3), any ødesignated agent¿ 

nonprofit collective designated to distribute receipts from the licensing of transmissions in accordance with subsection (f) may 

deduct from any of its receipts, prior to the distribution of such 

receipts, the reasonable costs identified in paragraph (3) of 

such øagent¿ collective incurred after November 1, 1995, with 

respect to such copyright owners and performers who have entered with such øagent¿ collective a contractual relationship 

that specifies that such costs may be deducted from such royalty receipts. 

(5) LETTER OF DIRECTION.— 

(A) IN GENERAL.—A nonprofit collective designated by the 

Copyright Royalty Judges to distribute receipts from the licensing of transmissions in accordance with subsection (f) 

shall adopt and reasonably implement a policy that provides, in circumstances determined by the collective to be 

appropriate, for acceptance of instructions from an artist 

payee identified under subparagraph (A) or (D) of paragraph (2) to distribute, to a producer, mixer, or sound engineer who was part of the creative process that created a 

sound recording, a portion of the payments to which the 

artist payee would otherwise be entitled from the licensing 

of transmissions of the sound recording. In this section, 

such instructions shall be referred to as a ‘‘letter of direction’’. 

(B) ACCEPTANCE OF LETTER.—To the extent that a collective described in subparagraph (A) accepts a letter of direction under that subparagraph, the person entitled to payment pursuant to the letter of direction shall, during the 

period in which the letter of direction is in effect and carried out by the collective, be treated for all purposes as the 

owner of the right to receive such payment, and the artist 

payee providing the letter of direction to the collective shall 

be treated as having no interest in such payment. 

(C) AUTHORITY OF COLLECTIVE.—This paragraph shall 

not be construed in such a manner so that the collective is 

not authorized to accept or act upon payment instructions 

in circumstances other than those to which this paragraph 

applies. 

(6) SOUND RECORDINGS FIXED BEFORE NOVEMBER 1, 1995.— 


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51 

(A) PAYMENT ABSENT LETTER OF DIRECTION.—A nonprofit 

collective designated by the Copyright Royalty Judges to 

distribute receipts from the licensing of transmissions in 

accordance with subsection (f) (in this paragraph referred 

to as the ‘‘collective’’) shall adopt and reasonably implement 

a policy that provides, in circumstances determined by the 

collective to be appropriate, for the deduction of 2 percent 

of all the receipts that are collected from the licensing of 

transmissions of a sound recording fixed before November 

1, 1995, but which is withdrawn from the amount otherwise payable under paragraph (2)(D) to the recording artist 

or artists featured on the sound recording (or the persons 

conveying rights in the artists’ performance in the sound recording), and the distribution of such amount to one or 

more persons described in subparagraph (B) of this paragraph, after deduction of costs described in paragraph (3) 

or (4), as applicable, if each of the following requirements 

is met: 

(i) CERTIFICATION OF ATTEMPT TO OBTAIN A LETTER OF

DIRECTION.—The person described in subparagraph (B) 

who is to receive the distribution has certified to the collective, under penalty of perjury, that— 

(I) for a period not less than 120 days, that person made reasonable efforts to contact the artist 

payee for such sound recording to request and obtain a letter of direction instructing the collective 

to pay to that person a portion of the royalties payable to the featured recording artist or artists; and 

(II) during the period beginning on the date that 

person began the reasonable efforts described in 

subclause (I) and ending on the date of that person’s certification to the collective, the artist payee 

did not affirm or deny in writing the request for a 

letter of direction. 

(ii) COLLECTIVE ATTEMPT TO CONTACT ARTIST.—After 

receipt of the certification described in clause (i) and 

for a period not less than 120 days before the first distribution by the collective to the person described in 

subparagraph (B), the collective attempts, in a reasonable manner as determined by the collective, to notify 

the artist payee of the certification made by the person 

described in subparagraph (B). 

(iii) NO OBJECTION RECEIVED.—The artist payee does 

not, as of the date that was 10 business days before the 

date on which the first distribution is made, submit to 

the collective in writing an objection to the distribution. 

(B) ELIGIBILITY FOR PAYMENT.—A person shall be eligible 

for payment under subparagraph (A) if the person— 

(i) is a producer, mixer, or sound engineer of the 

sound recording; 

(ii) has entered into a written contract with a record 

company involved in the creation or lawful exploitation 

of the sound recording, or with the recording artist or 

artists featured on the sound recording (or the persons 

conveying rights in the artists’ performance in the 


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52 

sound recording), under which the person seeking payment is entitled to participate in royalty payments that 

are based on the exploitation of the sound recording 

and are payable from royalties otherwise payable to the 

recording artist or artists featured on the sound recording (or the persons conveying rights in the artists’ performance in the sound recording); 

(iii) made a creative contribution to the creation of 

the sound recording; and (iv) submits to the collective— 

(I) a written certification stating, under penalty 

of perjury, that the person meets the requirements 

in clauses (i) through (iii); and 

(II) a true copy of the contract described in 

clause (ii). 

(C) MULTIPLE CERTIFICATIONS.—Subject to subparagraph 

(D), in a case in which more than one person described in 

subparagraph (B) has met the requirements for a distribution under subparagraph (A) with respect to a sound recording as of the date that is 10 business days before the 

date on which the distribution is made, the collective shall 

divide the 2 percent distribution equally among all such 

persons. 

(D) OBJECTION TO PAYMENT.—Not later than 10 business 

days after the date on which the collective receives from the 

artist payee a written objection to a distribution made pursuant to subparagraph (A), the collective shall cease making any further payment relating to such distribution. In 

any case in which the collective has made one or more distributions pursuant to subparagraph (A) to a person described in subparagraph (B) before the date that is 10 business days after the date on which the collective receives 

from the artist payee an objection to such distribution, the 

objection shall not affect that person’s entitlement to any 

distribution made before the collective ceases such distribution under this subparagraph. 

(E) OWNERSHIP OF THE RIGHT TO RECEIVE PAYMENTS.— 

To the extent that the collective determines that a distribution will be made under subparagraph (A) to a person described in subparagraph (B), such person shall, during the 

period covered by such distribution, be treated for all purposes as the owner of the right to receive such payments, 

and the artist payee to whom such payments would otherwise be payable shall be treated as having no interest in 

such payments. 

(F) ARTIST PAYEE DEFINED.—In this paragraph, the term 

‘‘artist payee’’ means a person, other than a person described in subparagraph (B), who owns the right to receive 

all or part of the receipts payable under paragraph (2)(D) 

with respect to a sound recording. In a case in which there 

are multiple artist payees with respect to a sound recording, an objection by one such payee shall apply only to that 

payee’s share of the receipts payable under paragraph 

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graph (A) from the share of an artist payee that does not 

so object. 

(7) PREEMPTION OF STATE PROPERTY LAWS.—The holding and 

distribution of receipts under section 112 and this section by a 

nonprofit collective designated by the Copyright Royalty Judges 

in accordance with this subsection and regulations adopted by 

the Copyright Royalty Judges shall supersede and preempt any 

State law (including common law) concerning escheatment or 

abandoned property, or any analogous provision, that might 

otherwise apply. 

(h) LICENSING TO AFFILIATES.— (1) If the copyright owner of a sound recording licenses an 

affiliated entity the right to publicly perform a sound recording 

by means of a digital audio transmission under section 106(6), 

the copyright owner shall make the licensed sound recording 

available under section 106(6) on no less favorable terms and 

conditions to all bona fide entities that offer similar services, 

except that, if there are material differences in the scope of the 

requested license with respect to the type of service, the particular sound recordings licensed, the frequency of use, the 

number of subscribers served, or the duration, then the copyright owner may establish different terms and conditions for 

such other services. 

(2) The limitation set forth in paragraph (1) of this subsection shall not apply in the case where the copyright owner 

of a sound recording licenses— 

(A) an interactive service; or 

(B) an entity to perform publicly up to 45 seconds of the 

sound recording and the sole purpose of the performance 

is to promote the distribution or performance of that sound 

recording. 

ø(i) NO EFFECT ON ROYALTIES FOR UNDERLYING WORKS.—License 

fees payable for the public performance of sound recordings under 

section 106(6) shall not be taken into account in any administrative, judicial, or other governmental proceeding to set or adjust the 

royalties payable to copyright owners of musical works for the public performance of their works. It is the intent of Congress that royalties payable to copyright owners of musical works for the public 

performance of their works shall not be diminished in any respect 

as a result of the rights granted by section 106(6).¿ 

(j) DEFINITIONS.—As used in this section, the following terms 

have the following meanings: 

(1) An ‘‘affiliated entity’’ is an entity engaging in digital 

audio transmissions covered by section 106(6), other than an 

interactive service, in which the licensor has any direct or indirect partnership or any ownership interest amounting to 5 percent or more of the outstanding voting or non-voting stock. 

(2) An ‘‘archived program’’ is a predetermined program that 

is available repeatedly on the demand of the transmission recipient and that is performed in the same order from the beginning, except that an archived program shall not include a 

recorded event or broadcast transmission that makes no more 

than an incidental use of sound recordings, as long as such recorded event or broadcast transmission does not contain an entire sound recording or feature a particular sound recording. 


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54 

(3) A ‘‘broadcast’’ transmission is a transmission made by a 

terrestrial broadcast station licensed as such by the Federal 

Communications Commission. 

(4) A ‘‘continuous program’’ is a predetermined program that 

is continuously performed in the same order and that is 

accessed at a point in the program that is beyond the control 

of the transmission recipient. 

(5) A ‘‘digital audio transmission’’ is a digital transmission as 

defined in section 101, that embodies the transmission of a 

sound recording. This term does not include the transmission 

of any audiovisual work. 

(6) An ‘‘eligible nonsubscription transmission’’ is a noninteractive nonsubscription digital audio transmission not exempt 

under subsection (d)(1) that is made as part of a service that 

provides audio programming consisting, in whole or in part, of 

performances of sound recordings, including retransmissions of 

broadcast transmissions, if the primary purpose of the service 

is to provide to the public such audio or other entertainment 

programming, and the primary purpose of the service is not to 

sell, advertise, or promote particular products or services other 

than sound recordings, live concerts, or other music-related 

events. 

(7) An ‘‘interactive service’’ is one that enables a member of 

the public to receive a transmission of a program specially created for the recipient, or on request, a transmission of a particular sound recording, whether or not as part of a program, 

which is selected by or on behalf of the recipient. The ability 

of individuals to request that particular sound recordings be 

performed for reception by the public at large, or in the case 

of a subscription service, by all subscribers of the service, does 

not make a service interactive, if the programming on each 

channel of the service does not substantially consist of sound 

recordings that are performed within 1 hour of the request or 

at a time designated by either the transmitting entity or the 

individual making such request. If an entity offers both interactive and noninteractive services (either concurrently or at 

different times), the noninteractive component shall not be 

treated as part of an interactive service. 

(8) A ‘‘new subscription service’’ is a service that performs 

sound recordings by means of noninteractive subscription digital audio transmissions and that is not a preexisting subscription service or a preexisting satellite digital audio radio service. 

(9) A ‘‘nonsubscription’’ transmission is any transmission 

that is not a subscription transmission. 

(10) A ‘‘preexisting satellite digital audio radio service’’ is a 

subscription satellite digital audio radio service provided pursuant to a satellite digital audio radio service license issued by 

the Federal Communications Commission on or before July 31, 

1998, and any renewal of such license to the extent of the 

scope of the original license, and may include a limited number 

of sample channels representative of the subscription service 

that are made available on a nonsubscription basis in order to 

promote the subscription service. 


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55 

(11) A ‘‘preexisting subscription service’’ is a service that performs sound recordings by means of noninteractive audio-only 

subscription digital audio transmissions, which was in existence and was making such transmissions to the public for a fee 

on or before July 31, 1998, and may include a limited number 

of sample channels representative of the subscription service 

that are made available on a nonsubscription basis in order to 

promote the subscription service. 

(12) A ‘‘retransmission’’ is a further transmission of an initial 

transmission, and includes any further retransmission of the 

same transmission. Except as provided in this section, a transmission qualifies as a ‘‘retransmission’’ only if it is simultaneous with the initial transmission. Nothing in this definition 

shall be construed to exempt a transmission that fails to satisfy a separate element required to qualify for an exemption 

under section 114(d)(1). 

(13) The ‘‘sound recording performance complement’’ is the 

transmission during any 3-hour period, on a particular channel 

used by a transmitting entity, of no more than— 

(A) 3 different selections of sound recordings from any 

one phonorecord lawfully distributed for public performance or sale in the United States, if no more than 2 such 

selections are transmitted consecutively; or 

(B) 4 different selections of sound recordings— 

(i) by the same featured recording artist; or 

(ii) from any set or compilation of phonorecords lawfully distributed together as a unit for public performance or sale in the United States, 

if no more than three such selections are transmitted consecutively: 

Provided, That the transmission of selections in excess of the 

numerical limits provided for in clauses (A) and (B) from multiple phonorecords shall nonetheless qualify as a sound recording performance complement if the programming of the multiple phonorecords was not willfully intended to avoid the numerical limitations prescribed in such clauses. 

(14) A ‘‘subscription’’ transmission is a transmission that is 

controlled and limited to particular recipients, and for which 

consideration is required to be paid or otherwise given by or 

on behalf of the recipient to receive the transmission or a package of transmissions including the transmission. 

(15) A ‘‘transmission’’ is either an initial transmission or a 

retransmission. 

§ 115. Scope of exclusive rights in nondramatic musical 

works: Compulsory license for making and distributing phonorecords 

In the case of nondramatic musical works, the exclusive rights 

provided by clauses (1) and (3) of section 106, to make and to distribute phonorecords of such works, are subject to compulsory licensing under the conditions specified by this section. 

(A) AVAILABILITY AND SCOPE OF COMPULSORY LICENSE IN GEN- ERAL.— 

ø(1) When phonorecords of a nondramatic musical work have 

been distributed to the public in the United States under the 


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56 

authority of the copyright owner, any other person, including 

those who make phonorecords or digital phonorecord deliveries, 

may, by complying with the provisions of this section, obtain 

a compulsory license to make and distribute phonorecords of 

the work. A person may obtain a compulsory license only if his 

or her primary purpose in making phonorecords is to distribute 

them to the public for private use, including by means of a digital phonorecord delivery. A person may not obtain a compulsory license for use of the work in the making of phonorecords 

duplicating a sound recording fixed by another, unless: (i) such 

sound recording was fixed lawfully; and (ii) the making of the 

phonorecords was authorized by the owner of copyright in the 

sound recording or, if the sound recording was fixed before 

February 15, 1972, by any person who fixed the sound recording pursuant to an express license from the owner of the copyright in the musical work or pursuant to a valid compulsory license for use of such work in a sound recording.¿ 

(1) ELIGIBILITY FOR COMPULSORY LICENSE.— (A) CONDITIONS FOR COMPULSORY LICENSE.—A person 

may by complying with the provisions of this section obtain 

a compulsory license to make and distribute phonorecords 

of a nondramatic musical work, including by means of digital phonorecord delivery. A person may obtain a compulsory license only if the primary purpose in making 

phonorecords of the musical work is to distribute them to 

the public for private use, including by means of digital 

phonorecord delivery, and— 

(i) phonorecords of such musical work have previously been distributed to the public in the United 

States under the authority of the copyright owner of the 

work, including by means of digital phonorecord delivery; or 

(ii) in the case of a digital music provider seeking to 

make and distribute digital phonorecord deliveries of a 

sound recording embodying a musical work under a 

compulsory license for which clause (i) does not 

apply— 

(I) the first fixation of such sound recording was 

made under the authority of the musical work 

copyright owner, and the sound recording copyright owner has the authority of the musical work 

copyright owner to make and distribute digital 

phonorecord deliveries embodying such work to the 

public in the United States; and 

(II) the sound recording copyright owner, or the 

authorized distributor of the sound recording copyright owner, has authorized the digital music provider to make and distribute digital phonorecord 

deliveries of the sound recording to the public in 

the United States. 

(B) DUPLICATION OF SOUND RECORDING.—A person may 

not obtain a compulsory license for the use of the work in 

the making of phonorecords duplicating a sound recording 

fixed by another, including by means of digital phonorecord 

delivery, unless— 


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57 

(i) such sound recording was fixed lawfully; and 

(ii) the making of the phonorecords was authorized 

by the owner of the copyright in the sound recording or, 

if the sound recording was fixed before February 15, 

1972, by any person who fixed the sound recording 

pursuant to an express license from the owner of the 

copyright in the musical work or pursuant to a valid 

compulsory license for use of such work in a sound recording. 

(2) øA compulsory license¿ MUSICAL ARRANGEMENT.—A compulsory license includes the privilege of making a musical arrangement of the work to the extent necessary to conform it to 

the style or manner of interpretation of the performance involved, but the arrangement shall not change the basic melody 

or fundamental character of the work, and shall not be subject 

to protection as a derivative work under this title, except with 

the express consent of the copyright owner. 

ø(b) NOTICE OF INTENTION TO OBTAIN COMPULSORY LICENSE.— ø(1) Any person who wishes to obtain a compulsory license 

under this section shall, before or within thirty days after making, and before distributing any phonorecords of the work, 

serve notice of intention to do so on the copyright owner. If the 

registration or other public records of the Copyright Office do 

not identify the copyright owner and include an address at 

which notice can be served, it shall be sufficient to file the notice of intention in the Copyright Office. The notice shall comply, in form, content, and manner of service, with requirements 

that the Register of Copyrights shall prescribe by regulation. 

ø(2) Failure to serve or file the notice required by clause (1) 

forecloses the possibility of a compulsory license and, in the absence of a negotiated license, renders the making and distribution of phonorecords actionable as acts of infringement under 

section 501 and fully subject to the remedies provided by sections 502 through 506 and 509. 

ø(c) ROYALTY PAYABLE UNDER COMPULSORY LICENSE.— ø(1) To be entitled to receive royalties under a compulsory license, the copyright owner must be identified in the registration or other public records of the Copyright Office. The owner 

is entitled to royalties for phonorecords made and distributed 

after being so identified, but is not entitled to recover for any 

phonorecords previously made and distributed. 

ø(2) Except as provided by clause (1), the royalty under a 

compulsory license shall be payable for every phonorecord 

made and distributed in accordance with the license. For this 

purpose, and other than as provided in paragraph (3), a phonorecord is considered ‘‘distributed’’ if the person exercising the 

compulsory license has voluntarily and permanently parted 

with its possession. With respect to each work embodied in the 

phonorecord, the royalty shall be either two and three-fourths 

cents, or one-half of one cent per minute of playing time or 

fraction thereof, whichever amount is larger. 

ø(3)(A) A compulsory license under this section includes the 

right of the compulsory licensee to distribute or authorize the 

distribution of a phonorecord of a nondramatic musical work 

by means of a digital transmission which constitutes a digital 


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58 

phonorecord delivery, regardless of whether the digital transmission is also a public performance of the sound recording 

under section 106(6) of this title or of any nondramatic musical 

work embodied therein under section 106(4) of this title. For 

every digital phonorecord delivery by or under the authority of 

the compulsory licensee— 

ø(i) on or before December 31, 1997, the royalty payable 

by the compulsory licensee shall be the royalty prescribed 

under paragraph (2) and chapter 8 of this title; and 

ø(ii) on or after January 1, 1998, the royalty payable by 

the compulsory licensee shall be the royalty prescribed 

under subparagraphs (B) through (E) and chapter 8 of this 

title. 

ø(B) Notwithstanding any provision of the antitrust laws, 

any copyright owners of nondramatic musical works and any 

persons entitled to obtain a compulsory license under subsection (a)(1) may negotiate and agree upon the terms and 

rates of royalty payments under this section and the proportionate division of fees paid among copyright owners, and may 

designate common agents on a nonexclusive basis to negotiate, 

agree to, pay or receive such royalty payments. Such authority 

to negotiate the terms and rates of royalty payments includes, 

but is not limited to, the authority to negotiate the year during 

which the royalty rates prescribed under this subparagraph 

and subparagraphs (C) through (E) and chapter 8 of this title 

shall next be determined. 

ø(C) Proceedings under chapter 8 shall determine reasonable 

rates and terms of royalty payments for the activities specified 

by this section during the period beginning with the effective 

date of such rates and terms, but not earlier than January 1 

of the second year following the year in which the petition requesting the proceeding is filed, and ending on the effective 

date of successor rates and terms, or such other period as the 

parties may agree. Such terms and rates shall distinguish between (i) digital phonorecord deliveries where the reproduction 

or distribution of a phonorecord is incidental to the transmission which constitutes the digital phonorecord delivery, and 

(ii) digital phonorecord deliveries in general. Any copyright 

owners of nondramatic musical works and any persons entitled 

to obtain a compulsory license under subsection (a)(1) may submit to the Copyright Royalty Judges licenses covering such activities. The parties to each proceeding shall bear their own 

costs. 

ø(D) The schedule of reasonable rates and terms determined 

by the Copyright Royalty Judges shall, subject to subparagraph (E), be binding on all copyright owners of nondramatic 

musical works and persons entitled to obtain a compulsory license under subsection (a)(1) during the period specified in 

subparagraph (C), such other period as may be determined 

pursuant to subparagraphs (B) and (C), or such other period as 

the parties may agree. Such terms and rates shall distinguish 

between (i) digital phonorecord deliveries where the reproduction or distribution of a phonorecord is incidental to the transmission which constitutes the digital phonorecord delivery, and 

(ii) digital phonorecord deliveries in general. In addition to the 


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59 

objectives set forth in section 801(b)(1), in establishing such 

rates and terms, the Copyright Royalty Judges may consider 

rates and terms under voluntary license agreements described 

in subparagraphs (B) and (C). The royalty rates payable for a 

compulsory license for a digital phonorecord delivery under 

this section shall be established de novo and no precedential 

effect shall be given to the amount of the royalty payable by 

a compulsory licensee for digital phonorecord deliveries on or 

before December 31, 1997. The Copyright Royalty Judges shall 

also establish requirements by which copyright owners may receive reasonable notice of the use of their works under this section, and under which records of such use shall be kept and 

made available by persons making digital phonorecord deliveries. 

ø(E)(i) License agreements voluntarily negotiated at any 

time between one or more copyright owners of nondramatic 

musical works and one or more persons entitled to obtain a 

compulsory license under subsection (a)(1) shall be given effect 

in lieu of any determination by the Librarian of Congress and 

Copyright Royalty Judges. Subject to clause (ii), the royalty 

rates determined pursuant to subparagraph (C) and (D) shall 

be given effect as to digital phonorecord deliveries in lieu of 

any contrary royalty rates specified in a contract pursuant to 

which a recording artist who is the author of a nondramatic 

musical work grants a license under that person’s exclusive 

rights in the musical work under paragraphs (1) and (3) of section 106 or commits another person to grant a license in that 

musical work under paragraphs (1) and (3) of section 106, to 

a person desiring to fix in a tangible medium of expression a 

sound recording embodying the musical work. 

ø(ii) The second sentence of clause (i) shall not apply to— 

ø(I) a contract entered into on or before June 22, 1995, 

and not modified thereafter for the purpose of reducing the 

royalty rates determined pursuant to subparagraph (C) 

and (D) or of increasing the number of musical works within the scope of the contract covered by the reduced rates, 

except if a contract entered into on or before June 22, 

1995, is modified thereafter for the purpose of increasing 

the number of musical works within the scope of the contract, any contrary royalty rates specified in the contract 

shall be given effect in lieu of royalty rates determined 

pursuant to subparagraph (C) and (D) for the number of 

musical works within the scope of the contract as of June 

22, 1995; and 

ø(II) a contract entered into after the date that the 

sound recording is fixed in a tangible medium of expression substantially in a form intended for commercial release, if at the time the contract is entered into, the recording artist retains the right to grant licenses as to the 

musical work under paragraphs (1) and (3) of section 106. 

ø(F) Except as provided in section 1002(e) of this title, a digital phonorecord delivery licensed under this paragraph shall 

be accompanied by the information encoded in the sound recording, if any, by or under the authority of the copyright 

owner of that sound recording, that identifies the title of the 


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sound recording, the featured recording artist who performs on 

the sound recording, and related information, including information concerning the underlying musical work and its writer. 

ø(G)(i) A digital phonorecord delivery of a sound recording is 

actionable as an act of infringement under section 501, and is 

fully subject to the remedies provided by sections 502 through 

506, unless— 

ø(I) the digital phonorecord delivery has been authorized 

by the copyright owner of the sound recording; and 

ø(II) the owner of the copyright in the sound recording 

or the entity making the digital phonorecord delivery has 

obtained a compulsory license under this section or has 

otherwise been authorized by the copyright owner of the 

musical work to distribute or authorize the distribution, by 

means of a digital phonorecord delivery, of each musical 

work embodied in the sound recording. 

ø(ii) Any cause of action under this subparagraph shall be in 

addition to those available to the owner of the copyright in the 

nondramatic musical work under subsection (c)(6) and section 

106(4) and the owner of the copyright in the sound recording 

under section 106(6). 

ø(H) The liability of the copyright owner of a sound recording 

for infringement of the copyright in a nondramatic musical 

work embodied in the sound recording shall be determined in 

accordance with applicable law, except that the owner of a 

copyright in a sound recording shall not be liable for a digital 

phonorecord delivery by a third party if the owner of the copyright in the sound recording does not license the distribution 

of a phonorecord of the nondramatic musical work. 

ø(I) Nothing in section 1008 shall be construed to prevent 

the exercise of the rights and remedies allowed by this paragraph, paragraph (6), and chapter 5 in the event of a digital 

phonorecord delivery, except that no action alleging infringement of copyright may be brought under this title against a 

manufacturer, importer or distributor of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or against a consumer, based on the actions described in such section. 

ø(J) Nothing in this section annuls or limits (i) the exclusive 

right to publicly perform a sound recording or the musical 

work embodied therein, including by means of a digital transmission, under sections 106(4) and 106(6), (ii) except for compulsory licensing under the conditions specified by this section, 

the exclusive rights to reproduce and distribute the sound recording and the musical work embodied therein under sections 

106(1) and 106(3), including by means of a digital phonorecord 

delivery, or (iii) any other rights under any other provision of 

section 106, or remedies available under this title, as such 

rights or remedies exist either before or after the date of enactment of the Digital Performance Right in Sound Recordings 

Act of 1995. 

ø(K) The provisions of this section concerning digital phonorecord deliveries shall not apply to any exempt transmissions 

or retransmissions under section 114(d)(1). The exemptions 

created in section 114(d)(1) do not expand or reduce the rights 


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61 

of copyright owners under section 106(1) through (5) with respect to such transmissions and retransmissions. 

ø(4) A compulsory license under this section includes the 

right of the maker of a phonorecord of a nondramatic musical 

work under subsection (a)(1) to distribute or authorize distribution of such phonorecord by rental, lease, or lending (or by acts 

or practices in the nature of rental, lease, or lending). In addition to any royalty payable under clause (2) and chapter 8 of 

this title, a royalty shall be payable by the compulsory licensee 

for every act of distribution of a phonorecord by or in the nature of rental, lease, or lending, by or under the authority of 

the compulsory licensee. With respect to each nondramatic musical work embodied in the phonorecord, the royalty shall be a 

proportion of the revenue received by the compulsory licensee 

from every such act of distribution of the phonorecord under 

this clause equal to the proportion of the revenue received by 

the compulsory licensee from distribution of the phonorecord 

under clause (2) that is payable by a compulsory licensee under 

that clause and under chapter 8. The Register of Copyrights 

shall issue regulations to carry out the purpose of this clause. 

ø(5) Royalty payments shall be made on or before the twentieth day of each month and shall include all royalties for the 

month next preceding. Each monthly payment shall be made 

under oath and shall comply with requirements that the Register of Copyrights shall prescribe by regulation. The Register 

shall also prescribe regulations under which detailed cumulative annual statements of account, certified by a certified 

public accountant, shall be filed for every compulsory license 

under this section. The regulations covering both the monthly 

and the annual statements of account shall prescribe the form, 

content, and manner of certification with respect to the number of records made and the number of records distributed. 

ø(6) If the copyright owner does not receive the monthly payment and the monthly and annual statements of account when 

due, the owner may give written notice to the licensee that, unless the default is remedied within thirty days from the date 

of the notice, the compulsory license will be automatically terminated. Such termination renders either the making or the 

distribution, or both, of all phonorecords for which the royalty 

has not been paid, actionable as acts of infringement under 

section 501 and fully subject to the remedies provided by sections 502 through 506. 

ø(d) DEFINITION.—As used in this section, the following term has 

the following meaning: A ‘‘digital phonorecord delivery’’ is each individual delivery of a phonorecord by digital transmission of a 

sound recording which results in a specifically identifiable reproduction by or for any transmission recipient of a phonorecord of 

that sound recording, regardless of whether the digital transmission is also a public performance of the sound recording or any 

nondramatic musical work embodied therein. A digital phonorecord 

delivery does not result from a real-time, non-interactive subscription transmission of a sound recording where no reproduction of 

the sound recording or the musical work embodied therein is made 

from the inception of the transmission through to its receipt by the 


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transmission recipient in order to make the sound recording audible.¿ 

(b) PROCEDURES TO OBTAIN A COMPULSORY LICENSE.— 

(1) PHONORECORDS OTHER THAN DIGITAL PHONORECORD DELIVERIES.—A person who seeks to obtain a compulsory license 

under subsection (a) to make and distribute phonorecords of a 

musical work other than by means of digital phonorecord delivery shall, before or not later than 30 calendar days after making, and before distributing, any phonorecord of the work, serve 

notice of intention to do so on the copyright owner. If the registration or other public records of the Copyright Office do not 

identify the copyright owner and include an address at which 

notice can be served, it shall be sufficient to file the notice of 

intention with the Copyright Office. The notice shall comply, in 

form, content, and manner of service, with requirements that 

the Register of Copyrights shall prescribe by regulation. 

(2) DIGITAL PHONORECORD DELIVERIES.—A person who seeks 

to obtain a compulsory license under subsection (a) to make and 

distribute phonorecords of a musical work by means of digital 

phonorecord delivery— 

(A) prior to the license availability date, shall, before or 

not later than 30 calendar days after first making any such 

digital phonorecord delivery, serve a notice of intention to 

do so on the copyright owner (but may not file the notice 

with the Copyright Office, even if the public records of the 

Office do not identify the owner or the owner’s address), 

and such notice shall comply, in form, content, and manner 

of service, with requirements that the Register of Copyrights 

shall prescribe by regulation; or 

(B) on or after the license availability date, shall, before 

making any such digital phonorecord delivery, follow the 

procedure described in subsection (d)(2), except as provided 

in paragraph (3). 

(3) RECORD COMPANY INDIVIDUAL DOWNLOAD LICENSES.—Notwithstanding paragraph (2)(B), a record company may, on or 

after the license availability date, obtain an individual 

download license in accordance with the notice requirements 

described in paragraph (2)(A) (except for the requirement that 

notice occur prior to the license availability date). A record company that obtains an individual download license as permitted 

under this paragraph shall provide statements of account and 

pay royalties as provided in subsection (c)(2)(I). 

(4) FAILURE TO OBTAIN LICENSE.— 

(A) PHONORECORDS OTHER THAN DIGITAL PHONORECORD

DELIVERIES.—In the case of phonorecords made and distributed other than by means of digital phonorecord delivery, the failure to serve or file the notice of intention required by paragraph (1) forecloses the possibility of a compulsory license under paragraph (1). In the absence of a 

voluntary license, the failure to obtain a compulsory license 

renders the making and distribution of phonorecords actionable as acts of infringement under section 501 and subject to the remedies provided by sections 502 through 506. 

(B) DIGITAL PHONORECORD DELIVERIES.— 


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(i) IN GENERAL.—In the case of phonorecords made 

and distributed by means of digital phonorecord delivery: 

(I) The failure to serve the notice of intention required by paragraph (2)(A) or paragraph (3), as 

applicable, forecloses the possibility of a compulsory license under such paragraph. 

(II) The failure to comply with paragraph (2)(B) 

forecloses the possibility of a blanket license for a 

period of 3 years after the last calendar day on 

which the notice of license was required to be submitted to the mechanical licensing collective under 

such paragraph. 

(ii) EFFECT OF FAILURE.—In either case described in 

subclause (I) or (II) of clause (i), in the absence of a 

voluntary license, the failure to obtain a compulsory license renders the making and distribution of 

phonorecords by means of digital phonorecord delivery 

actionable as acts of infringement under section 501 

and subject to the remedies provided by sections 502 

through 506. 

(c) GENERAL CONDITIONS APPLICABLE TO COMPULSORY LI- CENSE.— 

(1) ROYALTY PAYABLE UNDER COMPULSORY LICENSE.— (A) IDENTIFICATION REQUIREMENT.—To be entitled to receive royalties under a compulsory license obtained under 

subsection (b)(1) the copyright owner must be identified in 

the registration or other public records of the Copyright Office. The owner is entitled to royalties for phonorecords 

made and distributed after being so identified, but is not 

entitled to recover for any phonorecords previously made 

and distributed. 

(B) ROYALTY FOR PHONORECORDS OTHER THAN DIGITAL

PHONORECORD DELIVERIES.—Except as provided by subparagraph (A), for every phonorecord made and distributed 

under a compulsory license under subsection (a) other than 

by means of digital phonorecord delivery, with respect to 

each work embodied in the phonorecord, the royalty shall 

be the royalty prescribed under subparagraphs (D) through 

(F) and paragraph (2)(A) and chapter 8. For purposes of 

this subparagraph, a phonorecord is considered ‘‘distributed’’ if the person exercising the compulsory license has 

voluntarily and permanently parted with its possession. 

(C) ROYALTY FOR DIGITAL PHONORECORD DELIVERIES.— 

For every digital phonorecord delivery of a musical work 

made under a compulsory license under this section, the 

royalty payable shall be the royalty prescribed under subparagraphs (D) through (F) paragraph (2)(A) and chapter 

8. 

(D) AUTHORITY TO NEGOTIATE.—Notwithstanding any 

provision of the antitrust laws, any copyright owners of 

nondramatic musical works and any persons entitled to obtain a compulsory license under subsection (a) may negotiate and agree upon the terms and rates of royalty payments under this section and the proportionate division of 


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fees paid among copyright owners, and may designate common agents on a nonexclusive basis to negotiate, agree to, 

pay or receive such royalty payments. Such authority to negotiate the terms and rates of royalty payments includes, 

but is not limited to, the authority to negotiate the year 

during which the royalty rates prescribed under this subparagraph, subparagraphs (E) and (F), paragraph (2)(A) 

and chapter 8 shall next be determined. 

(E) DETERMINATION OF REASONABLE RATES AND TERMS.— Proceedings under chapter 8 shall determine reasonable 

rates and terms of royalty payments for the activities specified by this section during the period beginning with the effective date of such rates and terms, but not earlier than 

January 1 of the second year following the year in which 

the petition requesting the proceeding is filed, and ending 

on the effective date of successor rates and terms, or such 

other period as the parties may agree. Any copyright owners of nondramatic musical works and any persons entitled 

to obtain a compulsory license under subsection (a) may 

submit to the Copyright Royalty Judges licenses covering 

such activities. The parties to each proceeding shall bear 

their own costs. 

(F) SCHEDULE OF REASONABLE RATES.—The schedule of 

reasonable rates and terms determined by the Copyright 

Royalty Judges shall, subject to paragraph (2)(A), be binding on all copyright owners of nondramatic musical works 

and persons entitled to obtain a compulsory license under 

subsection (a) during the period specified in subparagraph 

(E), such other period as may be determined pursuant to 

subparagraphs (D) and (E), or such other period as the 

parties may agree. The Copyright Royalty Judges shall establish rates and terms that most clearly represent the 

rates and terms that would have been negotiated in the 

marketplace between a willing buyer and a willing seller. 

In determining such rates and terms for digital phonorecord deliveries, the Copyright Royalty Judges shall base 

their decision on economic, competitive, and programming 

information presented by the parties, including— 

(i) whether use of the compulsory licensee’s service 

may substitute for or may promote the sales of 

phonorecords or otherwise may interfere with or may 

enhance the musical work copyright owner’s other 

streams of revenue from its musical works; and 

(ii) the relative roles of the copyright owner and the 

compulsory licensee in the copyrighted work and the 

service made available to the public with respect to the 

relative creative contribution, technological contribution, capital investment, cost, and risk. 

(2) ADDITIONAL TERMS AND CONDITIONS.— (A) VOLUNTARY LICENSES AND CONTRACTUAL ROYALTY

RATES.— 

(i) IN GENERAL.—License agreements voluntarily negotiated at any time between one or more copyright 

owners of nondramatic musical works and one or more 

persons entitled to obtain a compulsory license under 


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subsection (a) shall be given effect in lieu of any determination by the Copyright Royalty Judges. Subject to 

clause (ii), the royalty rates determined pursuant to 

subparagraphs (E) and (F) of paragraph (1) shall be 

given effect as to digital phonorecord deliveries in lieu 

of any contrary royalty rates specified in a contract 

pursuant to which a recording artist who is the author 

of a nondramatic musical work grants a license under 

that person’s exclusive rights in the musical work 

under paragraphs (1) and (3) of section 106 or commits 

another person to grant a license in that musical work 

under paragraphs (1) and (3) of section 106, to a person desiring to fix in a tangible medium of expression 

a sound recording embodying the musical work. 

(ii) APPLICABILITY.—The second sentence of clause (i) 

shall not apply to— 

(I) a contract entered into on or before June 22, 

1995, and not modified thereafter for the purpose 

of reducing the royalty rates determined pursuant 

to subparagraphs (E) and (F) of paragraph (1) or 

of increasing the number of musical works within 

the scope of the contract covered by the reduced 

rates, except if a contract entered into on or before 

June 22, 1995, is modified thereafter for the purpose of increasing the number of musical works 

within the scope of the contract, any contrary royalty rates specified in the contract shall be given 

effect in lieu of royalty rates determined pursuant 

to subparagraphs (E) and (F) of paragraph (1) for 

the number of musical works within the scope of 

the contract as of June 22, 1995; and 

(II) a contract entered into after the date that the 

sound recording is fixed in a tangible medium of 

expression substantially in a form intended for 

commercial release, if at the time the contract is 

entered into, the recording artist retains the right 

to grant licenses as to the musical work under 

paragraphs (1) and (3) of section 106. 

(B) SOUND RECORDING INFORMATION.—Except as provided in section 1002(e), a digital phonorecord delivery licensed under this paragraph shall be accompanied by the 

information encoded in the sound recording, if any, by or 

under the authority of the copyright owner of that sound recording, that identifies the title of the sound recording, the 

featured recording artist who performs on the sound recording, and related information, including information concerning the underlying musical work and its writer. 

(C) INFRINGEMENT REMEDIES.— 

(i) IN GENERAL.—A digital phonorecord delivery of a 

sound recording is actionable as an act of infringement 

under section 501, and is fully subject to the remedies 

provided by sections 502 through 506, unless— 

(I) the digital phonorecord delivery has been authorized by the sound recording copyright owner; 

and 


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(II) the entity making the digital phonorecord 

delivery has obtained a compulsory license under 

subsection (a) or has otherwise been authorized by 

the musical work copyright owner, or by a record 

company pursuant to an individual download license, to make and distribute phonorecords of each 

musical work embodied in the sound recording by 

means of digital phonorecord delivery. 

(ii) OTHER REMEDIES.—Any cause of action under 

this subparagraph shall be in addition to those available to the owner of the copyright in the nondramatic 

musical work under subparagraph (J) and section 

106(4) and the owner of the copyright in the sound recording under section 106(6). 

(D) LIABILITY OF SOUND RECORDING OWNERS.—The liability of the copyright owner of a sound recording for infringement of the copyright in a nondramatic musical work embodied in the sound recording shall be determined in accordance with applicable law, except that the owner of a 

copyright in a sound recording shall not be liable for a digital phonorecord delivery by a third party if the owner of 

the copyright in the sound recording does not license the 

distribution of a phonorecord of the nondramatic musical 

work. 

(E) RECORDING DEVICES AND MEDIA.—Nothing in section 

1008 shall be construed to prevent the exercise of the rights 

and remedies allowed by this paragraph, subparagraph (J), 

and chapter 5 in the event of a digital phonorecord delivery, except that no action alleging infringement of copyright 

may be brought under this title against a manufacturer, 

importer or distributor of a digital audio recording device, 

a digital audio recording medium, an analog recording device, or an analog recording medium, or against a consumer, based on the actions described in such section. 

(F) PRESERVATION OF RIGHTS.—Nothing in this section 

annuls or limits— 

(i) the exclusive right to publicly perform a sound recording or the musical work embodied therein, including by means of a digital transmission, under sections 

paragraphs (4) and (6) of section 106; 

(ii) except for compulsory licensing under the conditions specified by this section, the exclusive rights to reproduce and distribute the sound recording and the 

musical work embodied therein under paragraphs (1) 

and (3) of section 106, including by means of a digital 

phonorecord delivery; or 

(iii) any other rights under any other provision of 

section 106, or remedies available under this title, as 

such rights or remedies exist before, on, or after the 

date of enactment of the Digital Performance Right in 

Sound Recordings Act of 1995. 

(G) EXEMPT TRANSMISSIONS AND RETRANSMISSIONS.— The provisions of this section concerning digital phonorecord deliveries shall not apply to any exempt transmissions or retransmissions under section 114(d)(1). The 


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exemptions created in section 114(d)(1) do not expand or reduce the rights of copyright owners under paragraphs (1) 

through (5) of section 106 with respect to such transmissions and retransmissions. 

(H) DISTRIBUTION BY RENTAL, LEASE, OR LENDING.—A 

compulsory license obtained under subsection (b)(1) to make 

and distribute phonorecords includes the right of the maker 

of such a phonorecord to distribute or authorize distribution of such phonorecord, other than by means of a digital 

phonorecord delivery, by rental, lease, or lending (or by acts 

or practices in the nature of rental, lease, or lending). With 

respect to each nondramatic musical work embodied in the 

phonorecord, the royalty shall be a proportion of the revenue received by the compulsory licensee from every such 

act of distribution of the phonorecord under this clause 

equal to the proportion of the revenue received by the compulsory licensee from distribution of the phonorecord under 

subsection (a)(1)(A)(ii)(II) that is payable by a compulsory 

licensee under that clause and under chapter 8. The Register of Copyrights shall issue regulations to carry out the 

purpose of this subparagraph. 

(I) PAYMENT OF ROYALTIES AND STATEMENTS OF AC- COUNT.—Except as provided in paragraphs (4)(A)(i) and 

(10)(B) of subsection (d), royalty payments shall be made on 

or before the twentieth day of each month and shall include 

all royalties for the month next preceding. Each monthly 

payment shall be made under oath and shall comply with 

requirements that the Register of Copyrights shall prescribe 

by regulation. The Register shall also prescribe regulations 

under which detailed cumulative annual statements of account, certified by a certified public accountant, shall be 

filed for every compulsory license under subsection (a). The 

regulations covering both the monthly and the annual 

statements of account shall prescribe the form, content, and 

manner of certification with respect to the number of 

records made and the number of records distributed. 

(J) NOTICE OF DEFAULT AND TERMINATION OF COMPUL- SORY LICENSE.—In the case of a license obtained under 

paragraph (1), (2)(A), or (3) of subsection (b), if the copyright owner does not receive the monthly payment and the 

monthly and annual statements of account when due, the 

owner may give written notice to the licensee that, unless 

the default is remedied not later than 30 days after the 

date on which the notice is sent, the compulsory license will 

be automatically terminated. Such termination renders either the making or the distribution, or both, of all 

phonorecords for which the royalty has not been paid, actionable as acts of infringement under section 501 and fully 

subject to the remedies provided by sections 502 through 

506. In the case of a license obtained under subsection 

(b)(2)(B), license authority under the compulsory license 

may be terminated as provided in subsection (d)(4)(E). 

(d) BLANKET LICENSE FOR DIGITAL USES, MECHANICAL LICENSING

COLLECTIVE, AND DIGITAL LICENSEE COORDINATOR.— 

(1) BLANKET LICENSE FOR DIGITAL USES.— 


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(A) IN GENERAL.—A digital music provider that qualifies 

for a compulsory license under subsection (a) may, by complying with the terms and conditions of this subsection, obtain a blanket license from copyright owners through the 

mechanical licensing collective to make and distribute digital phonorecord deliveries of musical works through one or 

more covered activities. 

(B) INCLUDED ACTIVITIES.—A blanket license— 

(i) covers all musical works (or shares of such works) 

available for compulsory licensing under this section 

for purposes of engaging in covered activities, except as 

provided in subparagraph (C); 

(ii) includes the making and distribution of server, 

intermediate, archival, and incidental reproductions of 

musical works that are reasonable and necessary for 

the digital music provider to engage in covered activities licensed under this subsection, solely for the purpose of engaging in such covered activities; and 

(iii) does not cover or include any rights or uses other 

than those described in clauses (i) and (ii). 

(C) OTHER LICENSES.—A voluntary license for covered activities entered into by or under the authority of 1 or more 

copyright owners and 1 or more digital music providers, or 

authority to make and distribute permanent downloads of 

a musical work obtained by a digital music provider from 

a sound recording copyright owner pursuant to an individual download license, shall be given effect in lieu of a 

blanket license under this subsection with respect to the 

musical works (or shares thereof) covered by such voluntary 

license or individual download authority and the following 

conditions apply: 

(i) Where a voluntary license or individual download 

license applies, the license authority provided under 

the blanket license shall exclude any musical works (or 

shares thereof) subject to the voluntary license or individual download license. 

(ii) An entity engaged in covered activities under a 

voluntary license or authority obtained pursuant to an 

individual download license that is a significant nonblanket licensee shall comply with paragraph (6)(A). 

(iii) The rates and terms of any voluntary license 

shall be subject to the second sentence of clause (i) and 

clause (ii) of subsection (c)(2)(A) and paragraph (9)(C), 

as applicable. 

(D) PROTECTION AGAINST INFRINGEMENT ACTIONS.—A 

digital music provider that obtains and complies with the 

terms of a valid blanket license under this subsection shall 

not be subject to an action for infringement of the exclusive 

rights provided by paragraphs (1) and (3) of section 106 

under this title arising from use of a musical work (or 

share thereof) to engage in covered activities authorized by 

such license, subject to paragraph (4)(E). 

(E) OTHER REQUIREMENTS AND CONDITIONS APPLY.—Except as expressly provided in this subsection, each requirement, limitation, condition, privilege, right, and remedy 


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otherwise applicable to compulsory licenses under this section shall apply to compulsory blanket licenses under this 

subsection. 

(2) AVAILABILITY OF BLANKET LICENSE.— 

(A) PROCEDURE FOR OBTAINING LICENSE.—A digital 

music provider may obtain a blanket license by submitting 

a notice of license to the mechanical licensing collective that 

specifies the particular covered activities in which the digital music provider seeks to engage, as follows: 

(i) The notice of license shall comply in form and 

substance with requirements that the Register of Copyrights shall establish by regulation. 

(ii) Unless rejected in writing by the mechanical licensing collective not later than 30 calendar days after 

the date on which the mechanical licensing collective 

receives the notice, the blanket license shall be effective 

as of the date on which the notice of license was sent 

by the digital music provider as shown by a physical 

or electronic record. 

(iii) A notice of license may only be rejected by the 

mechanical licensing collective if— 

(I) the digital music provider or notice of license 

does not meet the requirements of this section or 

applicable regulations, in which case the requirements at issue shall be specified with reasonable 

particularity in the notice of rejection; or 

(II) the digital music provider has had a blanket 

license terminated by the mechanical licensing collective during the 3-year period preceding the date 

on which the mechanical licensing collectice receives the notice pursuant to paragraph (4)(E). 

(iv) If a notice of license is rejected under clause 

(iii)(I), the digital music provider shall have 30 calendar days after receipt of the notice of rejection to cure 

any deficiency and submit an amended notice of license 

to the mechanical licensing collective. If the deficiency 

has been cured, the mechanical licensing collective 

shall so confirm in writing, and the license shall be effective as of the date that the original notice of license 

was provided by the digital music provider. 

(v) A digital music provider that believes a notice of 

license was improperly rejected by the mechanical licensing collective may seek review of such rejection in 

an appropriate district court of the United States. The 

district court shall determine the matter de novo based 

on the record before the mechanical licensing collective 

and any additional evidence presented by the parties. 

(B) BLANKET LICENSE EFFECTIVE DATE.—Blanket licenses 

shall be made available by the mechanical licensing collective on and after the license availability date. No such license shall be effective prior to the license availability date. 

(3) MECHANICAL LICENSING COLLECTIVE.— 

(A) IN GENERAL.—The mechanical licensing collective 

shall be a single entity that— 


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(i) is a nonprofit entity, not owned by any other entity, that is created by copyright owners to carry out responsibilities under this subsection; 

(ii) is endorsed by and enjoys substantial support 

from musical work copyright owners that together represent the greatest percentage of the licensor market for 

uses of such works in covered activities, as measured 

over the preceding 3 full calendar years; 

(iii) is able to demonstrate to the Register of Copyrights that the entity has, or will have prior to the license availability date, the administrative and technological capabilities to perform the required functions of 

the mechanical licensing collective under this subsection and that is governed by a board of directors in 

accordance with subparagraph (D)(i); and 

(iv) has been designated by the Register of Copyrights, with the approval of the Librarian of Congress 

pursuant to section 702, in accordance with subparagraph (B). 

(B) DESIGNATION OF MECHANICAL LICENSING COLLEC- TIVE.— 

(i) INITIAL DESIGNATION.—Not later than 270 days 

after the enactment date, the Register of Copyrights 

shall initially designate the mechanical licensing collective as follows: 

(I) Not later than 90 calendar days after the enactment date, the Register shall publish notice in 

the Federal Register soliciting information to assist 

in identifying the appropriate entity to serve as the 

mechanical licensing collective, including the name 

and affiliation of each member of the board of directors described under subparagraph (D)(i) and 

each committee established pursuant to clauses 

(iii), (iv), and (v) of subparagraph (D). 

(II) After reviewing the information requested 

under subclause (I) and making a designation, the 

Register shall publish notice in the Federal Register setting forth— 

(aa) the identity of and contact information 

for the mechanical licensing collective; and 

(bb) the reasons for the designation. 

(ii) PERIODIC REVIEW OF DESIGNATION.—Following 

the initial designation of the mechanical licensing collective, the Register shall, every 5 years, beginning with 

the fifth full calendar year to commence after the initial designation, publish notice in the Federal Register 

in the month of January soliciting information concerning whether the existing designation should be continued, or a different entity meeting the criteria described in clauses (i) through (iii) of subparagraph (A) 

shall be designated. Following publication of such notice, the Register shall— 

(I) after reviewing the information submitted 

and conducting additional proceedings as appropriate, publish notice in the Federal Register of a 


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continuing designation or new designation of the 

mechanical licensing collective, as the case may be, 

and the reasons for such a designation with any 

new designation to be effective as of the first day 

of a month that is not less than 6 months and not 

longer than 9 months after the date on which the 

Register publishes the notice, as specified by the 

Register; and 

(II) if a new entity is designated as the mechanical licensing collective, adopt regulations to govern the transfer of licenses, funds, records, data, 

and administrative responsibilities from the existing mechanical licensing collective to the new entity. 

(iii) CLOSEST ALTERNATIVE DESIGNATION.—If the 

Register is unable to identify an entity that fulfills each 

of the qualifications set forth in clauses (i) through (iii) 

of subparagraph (A), the Register shall designate the 

entity that most nearly fulfills such qualifications for 

purposes of carrying out the responsibilities of the mechanical licensing collective. 

(C) AUTHORITIES AND FUNCTIONS.— (i) IN GENERAL.—The mechanical licensing collective 

is authorized to perform the following functions, subject to more particular requirements as described in 

this subsection: 

(I) Offer and administer blanket licenses, including receipt of notices of license and reports of usage 

from digital music providers. 

(II) Collect and distribute royalties from digital 

music providers for covered activities. 

(III) Engage in efforts to identify musical works 

(and shares of such works) embodied in particular 

sound recordings, and to identify and locate the 

copyright owners of such musical works (and 

shares of such works). 

(IV) Maintain the musical works database and 

other information relevant to the administration of 

licensing activities under this section. 

(V) Administer a process by which copyright 

owners can claim ownership of musical works (and 

shares of such works), and a process by which royalties for works for which the owner is not identified or located are equitably distributed to known 

copyright owners. 

(VI) Administer collections of the administrative 

assessment from digital music providers and significant nonblanket licensees, including receipt of 

notices of nonblanket activity. 

(VII) Invest in relevant resources, and arrange 

for services of outside vendors and others, to support the activities of the mechanical licensing collective. 

(VIII) Engage in legal and other efforts to enforce rights and obligations under this subsection, 


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including by filing bankruptcy proofs of claims for 

amounts owed under licenses, and acting in coordination with the digital licensee coordinator. 

(IX) Initiate and participate in proceedings before the Copyright Royalty Judges to establish the 

administrative assessment under this subsection. 

(X) Initiate and participate in proceedings before 

the Copyright Office with respect to activities 

under this subsection. 

(XI) Gather and provide documentation for use 

in proceedings before the Copyright Royalty Judges 

to set rates and terms under this section. 

(XII) Maintain records of the activities of the mechanical licensing collective and engage in and respond to audits described in this subsection. 

(XIII) Engage in such other activities as may be 

necessary or appropriate to fulfill the responsibilities of the mechanical licensing collectuive under 

this subsection. 

(ii) ADDITIONAL ADMINISTRATIVE ACTIVITIES.—Subject to clause (iii) and paragraph (11)(C), the mechanical licensing collective may also administer, or assist 

in administering, voluntary licenses issued by or individual download licenses obtained from copyright owners for uses of musical works, for which the mechanical 

licensing collective shall charge reasonable fees for 

such services. 

(iii) RESTRICTION CONCERNING PUBLIC PERFORMANCE

RIGHTS.—The mechanical licensing collective— 

(I) may, pursuant to clause (ii), provide administration services with respect to voluntary licenses 

that include the right of public performance in musical works; and 

(II) may not— 

(aa) negotiate or grant licenses for the right 

of public performance in musical works; or 

(bb) be the exclusive or nonexclusive assignee or grantee of the right of public performance in musical works. 

(iv) RESTRICTION ON LOBBYING.—The mechanical licensing collective may not engage in government lobbying activities, but may engage in the activities described in subclauses (IX), (X), and (XI) of clause (i). 

(D) GOVERNANCE.— 

(i) BOARD OF DIRECTORS.—The mechanical licensing 

collective shall have a board of directors consisting of 

14 voting members and 3 nonvoting members, as follows: 

(I) Ten voting members shall be representatives 

of music publishers— 

(aa) to which songwriters have assigned exclusive rights of reproduction and distribution 

of musical works with respect to covered activities; and 


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(bb) none of which may be owned by, or 

under common control with, any other board 

member. 

(II) Four voting members shall be professional 

songwriters who have retained and exercise exclusive rights of reproduction and distribution with 

respect to covered activities with respect to musical 

works they have authored. 

(III) One nonvoting member shall be a representative of the nonprofit trade association of music 

publishers that represents the greatest percentage 

of the licensor market for uses of musical works in 

covered activities, as measured for the 3-year period preceding the date on which the member is 

appointed. 

(IV) One nonvoting member shall be a representative of the digital licensee coordinator, provided 

that a digital licensee coordinator has been designated pursuant to paragraph (5)(B). Otherwise, 

the nonvoting member shall be the nonprofit trade 

association of digital licensees that represents the 

greatest percentage of the licensee market for uses 

of musical works in covered activities, as measured 

over the preceding 3 full calendar years. 

(V) One nonvoting member shall be a representative of a nationally recognized nonprofit trade association whose primary mission is advocacy on 

behalf of songwriters in the United States. 

(ii) BYLAWS.— (I) ESTABLISHMENT.—Not later than 1 year after 

the date on which the mechanical licensing collective is initially designated by the Register of Copyrights under subparagraph (B)(i), the collective 

shall establish bylaws to determine issues relating 

to the governance of the collective, including, but 

not limited to— 

(aa) the length of the term for each member 

of the board of directors; 

(bb) the staggering of the terms of the members of the board of directors; 

(cc) a process for filling a seat on the board 

of directors that is vacated before the end of 

the term with respect to that seat; 

(dd) a process for electing a member to the 

board of directors; and 

(ee) a management structure for daily operations of the collective. 

(II) PUBLIC AVAILABILITY.—The mechanical 

licesing collective shall make the bylaws established under subclause (I) available to the public. 

(iii) BOARD MEETINGS.—The board of directors shall 

meet not less frequently than biannually and discuss 

matters pertinent to the operations of the mechanical 

licensing collective, including the mechanical licensing 

collective budget. 


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(iv) OPERATIONS ADVISORY COMMITTEE.—The board 

of directors of the mechanical licensing collective shall 

establish an operations advisory committee consisting 

of not fewer than 6 members to make recommendations 

to the board of directors concerning the operations of 

the mechanical licensing collective, including the efficient investment in and deployment of information 

technology and data resources. Such committee shall 

have an equal number of members of the committee 

who are— 

(I) musical work copyright owners who are appointed by the board of directors of the mechanical 

licensing collective; and 

(II) representatives of digital music providers 

who are appointed by the digital licensee coordinator. 

(v) UNCLAIMED ROYALTIES OVERSIGHT COMMITTEE.— 

The board of directors of the mechanical licensing collective shall establish and appoint an unclaimed royalties oversight committee consisting of 10 members, 5 of 

which shall be musical work copyright owners and 5 of 

which shall be professional songwriters whose works 

are used in covered activities. 

(vi) DISPUTE RESOLUTION COMMITTEE.—The board of 

directors of the mechanical licensing collective shall establish and appoint a dispute resolution committee 

that shall 

(I) consist of not fewer than 6 members; and 

(II) include an equal number of representatives 

of musical work copyright owners and professional 

songwriters. 

(vii) MECHANICAL LICENSING COLLECTIVE ANNUAL

REPORT.— 

(I) IN GENERAL.—Not later than June 30 of each 

year commencing after the license availability 

date, the mechanical licensing collective shall post, 

and make available online for a period of not less 

than 3 years, an annual report that sets forth information regarding— 

(aa) the operational and licensing practices 

of the collective; 

(bb) how royalties are collected and distributed, and ; 

(cc) budgeting and expenditures; 

(dd) the collective total costs for the preceding calendar year; 

(ee) the projected annual mechanical licensing collective budget; 

(ff) aggregated royalty receipts and payments; 

(gg) expenses that are more than 10 percent 

of the annual mechanical licensing collective 

budget; and 


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(hh) the efforts of the collective to locate and 

identify copyright owners of unmatched musical works (and shares of works). 

(II) SUBMISSION.—On the date on which the mechanical licensing collective posts each report required under subclause (I), the collective shall provide a copy of the report to the Register of Copyrights. 

(viii) INDEPENDENT OFFICERS.—An individual serving as an officer of the mechanical licensing collective 

may not, at the same time, also be an employee or 

agent of any member of the board of directors of the 

collective or any entity represented by a member of the 

board of directors, as described in clause (i). 

(ix) OVERSIGHT AND ACCOUNTABILITY.— 

(I) IN GENERAL.—The mechanical licensing collective shall— 

(aa) ensure that the policies and practices of 

the collective are transparent and accountable; 

(bb) identify a point of contact for publisher 

inquiries and complaints with timely redress; 

and 

(cc) establish an anti-comingling policy for 

funds not collected under this section and royalties collected under this section. 

(II) AUDITS.— 

(aa) IN GENERAL.—Beginning in the fourth 

full calendar year that begins after the initial 

designation of the mechanical licensing collective by the Register of Copyrights under subparagraph (B)(i), and in every fifth calendar 

year thereafter, the collective shall retain a 

qualified auditor that shall— 

(AA) examine the books, records, and 

operations of the collective; 

(BB) prepare a report for the board of 

directors of the collective with respect to 

the matters described in item (bb); and 

(CC) not later than December 31 of the 

year in which the qualified auditor is retained, deliver the report described in 

subitem (BB) to the board of directors of 

the collective. 

(bb) MATTERS ADDRESSED.—Each report 

prepared under item (aa) shall address the implementation and efficacy of procedures of the 

mechanical licensing collective— 

(AA) for the receipt, handling, and distribution of royalty funds, including any 

amounts held as unclaimed royalties; 

(BB) to guard against fraud, abuse, 

waste, and the unreasonable use of funds; 

and 


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(CC) to protect the confidentiality of financial, proprietary, and other sensitive 

information. 

(cc) PUBLIC AVAILABILITY.—With respect to 

each report prepared under item (aa), the mechanical licensing collective shall— 

(AA) submit the report to the Register of 

Copyrights; and 

(BB) make the report available to the 

public. 

(E) MUSICAL WORKS DATABASE.— 

(i) ESTABLISHMENT AND MAINTENANCE OF DATABASE.—The mechanical licensing collective shall establish and maintain a database containing information 

relating to musical works (and shares of such works) 

and, to the extent known, the identity and location of 

the copyright owners of such works (and shares thereof) 

and the sound recordings in which the musical works 

are embodied. In furtherance of maintaining such 

database, the mechanical licensing collective shall engage in efforts to identify the musical works embodied 

in particular sound recordings, as well as to identify 

and locate the copyright owners of such works (and 

shares thereof), and update such data as appropriate. 

(ii) MATCHED WORKS.—With respect to musical works 

(and shares thereof) that have been matched to copyright owners, the musical works database shall include— 

(I) the title of the musical work; 

(II) the copyright owner of the work (or share 

thereof), and the ownership percentage of that 

owner; 

(III) contact information for such copyright 

owner; 

(IV) to the extent reasonably available to the mechanical licensing collective— 

(aa) the international standard musical 

work code for the work; and 

(bb) identifying information for sound recordings in which the musical work is embodied, including the name of the sound recording, featured artist, sound recording copyright owner, producer, international standard 

recording code, and other information commonly used to assist in associating sound recordings with musical works; and 

(V) such other information as the Register of 

Copyrights may prescribe by regulation. 

(iii) UNMATCHED WORKS.—With respect to unmatched musical works (and shares of works) in the 

database, the musical works database shall include— 

(I) to the extent reasonably available to the mechanical licensing collective— 

(aa) the title of the musical work; 


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(bb) the ownership percentage for which an 

owner has not been identified; 

(cc) if a copyright owner has been identified 

but not located, the identity of such owner and 

the ownership percentage of that owner; 

(dd) identifying information for sound recordings in which the work is embodied, including sound recording name, featured artist, 

sound recording copyright owner, producer, 

international standard recording code, and 

other information commonly used to assist in 

associating sound recordings with musical 

works; and 

(ee) any additional information reported to 

the mechanical licensing collective that may 

assist in identifying the work; and 

(II) such other information relating to the identity 

and ownership of musical works (and shares of such 

works) as the Register of Copyrights may prescribe by 

regulation. 

(iv) SOUND RECORDING INFORMATION.—Each musical 

work copyright owner with any musical work listed in 

the musical works database shall engage in commercially reasonable efforts to deliver to the mechanical licensing collective, including for use in the musical 

works database, to the extent such information is not 

then available in the database, information regarding 

the names of the sound recordings in which that copyright owner’s musical works (or shares thereof) are embodied, to the extent practicable. 

(v) ACCESSIBILITY OF DATABASE.—The musical works 

database shall be made available to members of the 

public in a searchable, online format, free of charge. 

The mechanical licensing collective shall make such 

database available in a bulk, machine-readable format, 

through a widely available software application, to the 

following entities: 

(I) Digital music providers operating under the 

authority of valid notices of license, free of charge. 

(II) Significant nonblanket licensees in compliance with their obligations under paragraph (6), 

free of charge. 

(III) Authorized vendors of the entities described 

in subclauses (I) and (II), free of charge. 

(IV) The Register of Copyrights, free of charge 

(but the Register shall not treat such database or 

any information therein as a Government record). 

(V) Any member of the public, for a fee not to exceed the marginal cost to the mechanical licensing 

collective of providing the database to such person. 

(vi) ADDITIONAL REQUIREMENTS.—The Register of 

Copyrights shall establish requirements by regulations 

to ensure the usability, interoperability, and usage restrictions of the musical works database. 

(F) NOTICES OF LICENSE AND NONBLANKET ACTIVITY.— 


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(i) NOTICES OF LICENSES.—The mechanical licensing 

collective shall receive, review, and confirm or reject 

notices of license from digital music providers, as provided in paragraph (2)(A). The collective shall maintain a current, publicly accessible list of blanket licenses that includes contact information for the licensees and the effective dates of such licenses. 

(ii) NOTICES OF NONBLANKET ACTIVITY.—The mechanical licensing collective shall receive notices of 

nonblanket activity from significant nonblanket licensees, as provided in paragraph (6)(A). The collective 

shall maintain a current, publicly accessible list of notices of nonblanket activity that includes contact information for significant nonblanket licensees and the 

dates of receipt of such notices. 

(G) COLLECTION AND DISTRIBUTION OF ROYALTIES.— (i) IN GENERAL.—Upon receiving reports of usage 

and payments of royalties from digital music providers 

for covered activities, the mechanical licensing collective shall— 

(I) engage in efforts to— 

(aa) identify the musical works embodied in 

sound recordings reflected in such reports, and 

the copyright owners of such musical works 

(and shares thereof); 

(bb) confirm uses of musical works subject to 

voluntary licenses and individual download licenses, and the corresponding pro rata 

amounts to be deducted from royalties that 

would otherwise be due under the blanket license; and 

(cc) confirm proper payment of royalties due; 

(II) distribute royalties to copyright owners in 

accordance with the usage and other information 

contained in such reports, as well as the ownership 

and other information contained in the records of 

the collective; and 

(III) deposit into an interest-bearing account, as 

provided in subparagraph (H)(ii), royalties that 

cannot be distributed due to— 

(aa) an inability to identify or locate a copyright owner of a musical work (or share thereof); or 

(bb) a pending dispute before the dispute 

resolution committee of the mechanical licensing collective. 

(ii) OTHER COLLECTION EFFORTS.—Any royalties recovered by the mechanical licensing collective as a result of efforts to enforce rights or obligations under a 

blanket license, including through a bankruptcy proceeding or other legal action, shall be distributed to 

copyright owners based on available usage information 

and in accordance with the procedures described in 

subclauses (I) and (II) of clause (i), on a pro rata basis 

in proportion to the overall percentage recovery of the 


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total royalties owed, with any pro rata share of royalties that cannot be distributed deposited in an 

interestbearing account as provided in subparagraph 

(H)(ii). 

(H) HOLDING OF ACCRUED ROYALTIES.— (i) HOLDING PERIOD.—The mechanical licensing collective shall hold accrued royalties associated with particular musical works (and shares of works) that remain unmatched for a period not less than 3 years 

after the date on which the funds were received by the 

mechanical licensing collective, or not less than 3 years 

after the date on which the funds were accrued by a 

digital music provider that subsequently transferred 

such funds to the mechanical licensing collective pursuant to paragraph (10)(B), whichever period expires 

sooner. 

(ii) INTEREST-BEARING ACCOUNT.—Accrued royalties 

for unmatched works (and shares thereof) shall be 

maintained by the mechanical licensing collective in an 

interest-bearing account that earns monthly interest— 

(I) at the Federal, short-term rate; and 

(II) that accrues for the benefit of copyright owners entitled to payment of such accrued royalties. 

(I) MUSICAL WORKS CLAIMING PROCESS.—When a copyright owner of an unmatched work (or share of a work) has 

been identified and located in accordance with the procedures of the mechanical licensing collective, the collective 

shall— 

(i) update the musical works database and the other 

records of the collective accordingly; and 

(ii) provided that accrued royalties for the musical 

work (or share thereof) have not yet been included in 

a distribution pursuant to subparagraph (J)(i), pay 

such accrued royalties and a proportionate amount of 

accrued interest associated with that work (or share 

thereof) to the copyright owner, accompanied by a cumulative statement of account reflecting usage of such 

work and accrued royalties based on information provided by digital music providers to the mechanical licensing collective. 

(J) DISTRIBUTION OF UNCLAIMED ACCRUED ROYALTIES.— 

(i) DISTRIBUTION PROCEDURES.—After the expiration 

of the prescribed holding period for accrued royalties 

provided in subparagraph (H)(i), the mechanical licensing collective shall distribute such accrued royalties, along with a proportionate share of accrued interest, to copyright owners identified in the records of the 

collective, subject to the following requirements, and in 

accordance with the policies and procedures established under clause (ii): 

(I) The first such distribution shall occur on or 

after January 1 of the second full calendar year to 

commence after the license availability date, with 

not less than 1 such distribution to take place during each calendar year thereafter. 


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(II) Copyright owners’ payment shares for unclaimed accrued royalties for particular reporting 

periods shall be determined in a transparent and 

equitable manner based on data indicating the relative market shares of such copyright owners as reflected in reports of usage provided by digital 

music providers for covered activities for the periods in question, including, in addition to usage 

data provided to the mechanical licensing collective, usage data provided to copyright owners 

under voluntary licenses and individual download 

licenses for covered activities, to the extent such information is available to the mechanical licensing 

collective. In furtherance of the determination of 

equitable market shares under this subparagraph— 

(aa) the mechanical licensing collective may 

require copyright owners seeking distributions 

of unclaimed accrued royalties to provide, or 

direct the provision of, information concerning 

the usage of musical works under voluntary licenses and individual download licenses for 

covered activities, and 

(bb) the mechanical licensing collective shall 

take appropriate steps to safeguard the confidentiality and security of usage, financial 

and other sensitive data used to compute market shares in accordance with the confidentiality provisions prescribed by the Register of 

Copyrights under paragraph (12)(C). 

(ii) ESTABLISHMENT OF DISTRIBUTION POLICIES.—The 

unclaimed royalties oversight committee established 

under subparagraph (D)(v) shall establish policies and 

procedures for the distribution of unclaimed accrued 

royalties and accrued interest in accordance with this 

subparagraph, including the provision of usage data to 

copyright owners to allocate payments and credits to 

songwriters pursuant to clause (v) subject to the approval of the board of directors of the mechanical licensing collective. 

(iii) PUBLIC NOTICE OF UNCLAIMED ACCRUED ROYALTIES.—The mechanical licensing collective shall— 

(I) maintain a publicly accessible online facility 

with contact information for the collective that lists 

unmatched musical works (and shares of works), 

through which a copyright owner may assert an 

ownership claim with respect to such a work (and 

a share of such a work); 

(II) engage in diligent, good-faith efforts to publicize, throughout the music industry— 

(aa) the existence of the collective and the 

ability to claim unclaimed accrued royalties 

for unmatched musical works (and shares of 

such works) held by the collective; 


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(bb) the procedures by which copyright owners may identify themselves and provide contact, ownership, and other relevant information to the collective in order to receive payments of accrued royalties; 

(cc) any transfer of accrued royalties for musical works under paragraph (10)(B), not later 

than 180 days after the date on which the 

transfer is received; and 

(dd) any pending distribution of unclaimed 

accrued royalties and accrued interest, not less 

than 90 days before the date on which the distribution is made; and 

(III) as appropriate, participate in music industry conferences and events for the purpose of publicizing the matters described in subclause (II). 

(iv) SONGWRITER PAYMENTS.—Copyright owners that 

receive a distribution of unclaimed accrued royalties 

and accrued interest shall pay or credit a portion to 

songwriters (or the authorized agents of songwriters) 

on whose behalf the copyright owners license or administer musical works for covered activities, in accordance 

with applicable contractual terms, but notwithstanding 

any agreement to the contrary— 

(I) such payments and credits to songwriters 

shall be allocated in proportion to reported usage 

of individual musical works by digital music providers during the reporting periods covered by the 

distribution from the mechanical licensing collective; and 

(II) in no case shall the payment or credit to an 

individual songwriter be less than 50 percent of 

the payment received by the copyright owner attributable to usage of musical works (or shares of 

works) of that songwriter. 

(K) DISPUTE RESOLUTION.—The dispute resolution committee established under subparagraph (D)(vi) shall establish policies and procedures— 

(i) for compyright owners to address in a timely and 

equitable manner disputes relating to ownership interests in musical works licensed under this section and 

allocation and distribution of royalties by the mechanical licensing collective, subject to the approval of the 

board of directors of the mechanical licensing collective.— 

(ii) that shall include a mechanism to hold disputed 

funds in accordance with the requirements described in 

subparagraph (H)(ii) pending resolution of the dispute; 

and 

(iii) except as provided in paragraph (11)(D), that 

shall not affect any legal or equitable rights or remedies available to any copyright owner or songwriter 

concerning ownership of, and entitlement to royalties 

for, a musical work. 


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(L) VERIFICATION OF PAYMENTS BY MECHANICAL LICENS- ING COLLECTIVE.— (i) VERIFICATION PROCESS.—A copyright owner entitled to receive payments of royalties for covered activities from the mechanical licensing collective may, individually or with other copyright owners, conduct an 

audit of the mechanical licensing collective to verify the 

accuracy of royalty payments by the mechanical licensing collective to such copyright owner, as follows: 

(I) A copyright owner may audit the mechanical 

licensing collective only once in a year for any or 

all of the 3 calendar years preceding the year in 

which the audit is commenced, and may not audit 

records for any calendar year more than once. 

(II) The audit shall be conducted by a qualified 

auditor, who shall perform the audit during the 

ordinary course of business by examining the 

books, records, and data of the mechanical licensing collective, according to generally accepted auditing standards and subject to applicable confidentiality requirements prescribed by the Register 

of Copyrights under paragraph (12)(C). 

(III) The mechanical licensing collective shall 

make such books, records, and data available to 

the qualified auditor and respond to reasonable requests for relevant information, and shall use commercially reasonable efforts to facilitate access to 

relevant information maintained by third parties. 

(IV) To commence the audit, any copyright 

owner shall file with the Copyright Office a notice 

of intent to conduct an audit of the mechanical licensing collective, identifying the period of time to 

be audited, and shall simultaneously deliver a 

copy of such notice to the mechanical licensing collective. The Register of Copyrights shall cause the 

notice of audit to be published in the Federal Register not later than 45 calendar days after the date 

on which the notice is received. 

(V) The qualified auditor shall determine the accuracy of royalty payments, including whether an 

underpayment or overpayment of royalties was 

made by the mechanical licensing collective to each 

auditing copyright owner, except that before providing a final audit report to any such copyright 

owner, the qualified auditor shall provide a tentative draft of the report to the mechanical licensing collective and allow the mechanical licensing 

collective a reasonable opportunity to respond to 

the findings, including by clarifying issues and 

correcting factual errors. 

(VI) The auditing copyright owner or owners 

shall bear the cost of the audit. In case of an underpayment to any copyright owner, the mechanical licensing collective shall pay the amounts of 

any such underpayment to such auditing copyright 


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owner, as appropriate. In case of an overpayment 

by the mechanical licensing collective, the mechanical licensing collective may debit the account of 

the auditing copyright owner or owners for such 

overpaid amounts, or such owner or owners shall 

refund overpaid amounts to the mechanical licensing collective, as appropriate. 

(ii) ALTERNATIVE VERIFICATION PROCEDURES.—Nothing in this subparagraph shall preclude a copyright 

owner and the mechanical licensing collective from 

agreeing to audit procedures different from those described in this subparagraph, except that, a notice of 

the audit shall be provided to and published by the 

Copyright Office as described in clause (i)(IV). 

(M) RECORDS OF MECHANICAL LICENSING COLLECTIVE.— 

(i) RECORDS MAINTENANCE.—The mechanical licensing collective shall ensure that all material records of 

the operations of the mechanical licensing collective, including those relating to notices of license, the administration of the claims process of the mechanical licensing collective, reports of usage, royalty payments, receipt and maintenance of accrued royalties, royalty distribution processes, and legal matters, are preserved 

and maintained in a secure and reliable manner, with 

appropriate commercially reasonable safeguards 

against unauthorized access, copying, and disclosure, 

and subject to the confidentiality requirements prescribed by the Register of Copyrights under paragraph 

(12)(C) for a period of not less than 7 years after the 

date of creation or receipt, whichever occurs later. 

(ii) RECORDS ACCESS.—The mechanical licensing collective shall provide prompt access to electronic and 

other records pertaining to the administration of a 

copyright owner’s musical works upon reasonable written request of the owner or the authorized representative of the owner. 

(4) TERMS AND CONDITIONS OF BLANKET LICENSE.—A blanket 

license is subject to, and conditioned upon, the following requirements: 

(A) ROYALTY REPORTING AND PAYMENTS.— 

(i) MONTHLY REPORTS AND PAYMENT.—A digital 

music provider shall report and pay royalties to the 

mechanical licensing collective under the blanket license on a monthly basis in accordance with clause (ii) 

and subsection (c)(2)(I), except that the monthly reporting shall be due on the date that is 45 calendar days, 

rather than 20 calendar days, after the end of the 

monthly reporting period. 

(ii) DATA TO BE REPORTED.—In reporting usage of 

musical works to the mechanical licensing collective, a 

digital music provider shall provide usage data for 

musical works used under the blanket license and 

usage data for musical works used in covered activities 

under voluntary licenses and individual download liVerDate Sep 11 2014 05:56 Sep 20, 2018 Jkt 079010 PO 00000 Frm 00083 Fmt 6659 Sfmt 6603 E:\HR\OC\SR339.XXX SR339

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censes. In the report of usage, the digital music provider shall— 

(I) with respect to each sound recording embodying a musical work— 

(aa) provide identifying information for the 

sound recording, including sound recording 

name, featured artist, and, to the extent reasonably acquired by the digital music provider 

in connection with its use of sound recordings 

of musical works to engage in covered activities, including pursuant to subparagraph (B), 

sound recording copyright owner, producer, 

international standard recording code, and 

other information commonly used in the industry to identify sound recordings and match 

them to the musical works the sound recordings embody; 

(bb) to the extent reasonably acquired by the 

digital music provider in the metadata provided by sound recording copyright owners or 

other licensors of sound recordings in connection with the use of sound recordings of musical works to engage in covered activities, including pursuant to subparagraph (B), provide information concerning authorship and 

ownership of the applicable rights in the musical work embodied in the sound recording (including each songwriter, publisher name, and 

respective ownership share) and the international standard musical workcode; 

(cc) provide the number of digital phonorecord deliveries of the sound recording, including limited downloads and interactive 

streams; 

(II) identify and provide contact information for 

all musical work copyright owners for works embodied in sound recordings as to which a voluntary license, rather than the blanket license, is 

in effect with respect to the uses being reported; 

and 

(III) provide such other information as the Register of Copyrights shall require by regulation. 

(iii) FORMAT AND MAINTENANCE OF REPORTS.—Reports of usage provided by digital music providers to 

the mechanical licensing collective shall be in a machine-readable format that is compatible with the information technology systems of the mechanical licensing collective and meets the requirements of regulations 

adopted by the Register of Copyrights. The Register 

shall also adopt regulations setting forth requirements 

under which records of use shall be maintained and 

made available to the mechanical licensing collective 

by digital music providers engaged in covered activities 

under a blanket license. 


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(iv) ADOPTION OF REGULATIONS.—The Register of 

Copyrights shall adopt regulations— 

(I) setting forth requirements under which 

records of use shall be maintained and made 

available to the mechanical licensing collective by 

digital music providers engaged in covered activities under a blanket license; and 

(II) regarding adjustments to reports of usage by 

digital music providers, including mechanisms to 

account for overpayment and underpayment of royalties in prior periods. 

(B) COLLECTION OF SOUND RECORDING INFORMATION.—A 

digital music provider shall engage in good-faith, commercially reasonable efforts to obtain from sound recording 

copyright owners and other licensors of sound recordings 

made available through the service of such digital music 

provider information concerning— 

(i) sound recording copyright owners, international 

standard recording codes, and other information commonly used in the industry to identify sound recordings 

and match them to the musical works the sound recordings embody; and 

(ii) the authorship and ownership of musical works, 

including songwriters, publisher names, ownership 

shares, and international standard musical work 

codes. 

(C) PAYMENT OF ADMINISTRATIVE ASSESSMENT.—A digital music provider and any significant nonblanket licensee 

shall pay the administrative assessment established under 

paragraph (7)(D) in accordance with this subsection and 

applicable regulations. 

(D) VERIFICATION OF PAYMENTS BY DIGITAL MUSIC PRO- VIDERS.— 

(i) VERIFICATION PROCESS.—The mechanical licensing collective may conduct an audit of a digital music 

provider operating under the blanket license to verify 

the accuracy of royalty payments by the digital music 

provider to the mechanical licensing collective as follows: 

(I) The mechanical licensing collective may commence an audit of a digital music provider not 

more frequently than once in any 3-calendar-year 

period to cover a verification period of not more 

than the 3 full calendar years preceding the date 

of commencement of the audit, and such audit may 

not audit records for any such 3-year verification 

period more than once. 

(II) The audit shall be conducted by a qualified 

auditor, who shall perform the audit during the 

ordinary course of business by examining the 

books, records, and data of the digital music provider, according to generally accepted auditing 

standards and subject to applicable confidentiality 

requirements prescribed by the Register of Copyrights under paragraph (12)(C). 


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(III) The digital music provider shall make such 

books, records, and data available to the qualified 

auditor and respond to reasonable requests for relevant information, and shall use commercially reasonable efforts to provide access to relevant information maintained with respect to a digital music 

provider by third parties. 

(IV) To commence the audit, the mechanical licensing collective shall file with the Copyright Office a notice of intent to conduct an audit of the 

digital music provider, identifying the period of 

time to be audited, and shall simultaneously deliver a copy of such notice to the digital music provider. The Register of Copyrights shall cause the 

notice of audit to be published in the Federal Register not later than 45 calendar days after the date 

on which notice is received. 

(V) The qualified auditor shall determine the accuracy of royalty payments, including whether an 

underpayment or overpayment of royalties was 

made by the digital music provider to the mechanical licensing collective, except that before providing a final audit report to the mechanical licensing collective, the qualified auditor shall provide a tentative draft of the report to the digital 

music provider and allow the digital music provider a reasonable opportunity to respond to the 

findings, including by clarifying issues and correcting factual errors. 

(VI) The mechanical licensing collective shall 

pay the cost of the audit, unless the qualified auditor determines that there was an underpayment by 

the digital music provider of not less than 10 percent, in which case the digital music provider shall 

bear the reasonable costs of the audit, in addition 

to paying the amount of any underpayment to the 

mechanical licensing collective. In case of an overpayment by the digital music provider, the mechanical licensing collective shall provide a credit 

to the account of the digital music provider. 

(VII) A digital music provider may not assert 

section 507 or any other Federal or State statute of 

limitations, doctrine of laches or estoppel, or similar provision as a defense to a legal action arising 

from an audit under this subparagraph if such 

legal action is commenced not more than 6 years 

after the commencement of the audit that is the 

basis for such action. 

(ii) ALTERNATIVE VERIFICATION PROCEDURES.—Nothing in this subparagraph shall preclude the mechanical licensing collective and a digital music provider 

from agreeing to audit procedures different from those 

described in this subparagraph, except that a notice of 

the audit shall be provided to and published by the 

Copyright Office as described in clause (i)(IV). 


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(E) DEFAULT UNDER BLANKET LICENSE.— (i) CONDITIONS OF DEFAULT.—A digital music provider shall be in default under a blanket license if the 

digital music provider— 

(I) fails to provide 1 or more monthly reports of 

usage to the mechanical licensing collective when 

due; 

(II) fails to make a monthly royalty or late fee 

payment to the mechanical licensing collective 

when due, in all or material part; 

(III) provides 1 or more monthly reports of usage 

to the mechanical licensing collective that, on the 

whole, is or are materially deficient as a result of 

inaccurate, missing, or unreadable data, where the 

correct data was available to the digital music provider and required to be reported under this section and applicable regulations; 

(IV) fails to pay the administrative assessment 

as required under this subsection and applicable 

regulations; or 

(V) after being provided written notice by the mechanical licensing collective, refuses to comply with 

any other material term or condition of the blanket 

license under this section for a period of not less 

than 60 calendar days. 

(ii) NOTICE OF DEFAULT AND TERMINATION.—In case 

of a default by a digital music provider, the mechanical licensing collective may proceed to terminate the 

blanket license of the digital music provider as follows: 

(I) The mechanical licensing collective shall provide written notice to the digital music provider 

describing with reasonable particularity the default and advising that unless such default is 

cured not later than 60 calendar days after the 

date of the notice, the blanket license will automatically terminate at the end of that period. 

(II) If the digital music provider fails to remedy 

the default before the end of the 60-day period described in subclause (I), the license shall terminate 

without any further action on the part of the mechanical licensing collective. Such termination renders the making of all digital phonorecord deliveries of all musical works (and shares thereof) covered by the blanket license for which the royalty or 

administrative assessment has not been paid actionable as acts of infringement under section 501 

and subject to the remedies provided by sections 

502 through 506. 

(iii) NOTICE TO COPYRIGHT OWNERS.—The mechanical licensing collective shall provide written notice of 

any termination under this subparagraph to copyright 

owners of affected works. 

(iv) REVIEW BY FEDERAL DISTRICT COURT.—A digital 

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tive may seek review of such termination in an appropriate district court of the United States. The district 

court shall determine the matter de novo based on the 

record before the mechanical licensing collective and 

any additional supporting evidence presented by the 

parties. 

(5) DIGITAL LICENSEE COORDINATOR.— (A) IN GENERAL.—The digital licensee coordinator shall 

be a single entity that— 

(i) is a nonprofit, not owned by any other entity, that 

is created to carry out responsibilities under this subsection; 

(ii) is endorsed by and enjoys substantial support 

from digital music providers and significant nonblanket licensees that together represent the greatest 

percentage of the licensee market for uses of musical 

works in covered activities, as measured over the preceding 3 calendar years; 

(iii) is able to demonstrate that it has, or will have 

prior to the license availability date, the administrative 

capabilities to perform the required functions of the 

digital licensee coordinator under this subsection; and 

(iv) has been designated by the Register of Copyrights, with the approval of the Librarian of Congress 

pursuant to section 702, in accordance with subparagraph (B). 

(B) DESIGNATION OF DIGITAL LICENSEE COORDINATOR.— (i) INITIAL DESIGNATION.—The Register of Copyrights 

shall initially designate the digital licensee coordinator 

not later than 270 days after the enactment date, in accordance with the same procedure described for designation of the mechanical licensing collective in paragraph (3)(B)(i). 

(ii) PERIODIC REVIEW OF DESIGNATION.—Following 

the initial designation of the digital licensee coordinator, the Register of Copyrights shall, every 5 years, 

beginning with the fifth full calendar year to commence 

after the initial designation, determine whether the existing designation should be continued, or a different 

entity meeting the criteria described in clauses (i) 

through (iii) of subparagraph (A) should be designated, 

in accordance with the same procedure described for 

the mechanical licensing collective in paragraph 

(3)(B)(ii). 

(iii) INABILITY TO DESIGNATE.—If the Register of 

Copyrights is unable to identify an entity that fulfills 

each of the qualifications described in clauses (i) 

through (iii) of subparagraph (A) to serve as the digital 

licensee coordinator, the Register may decline to designate a digital licensee coordinator. The determination 

of the Register not to designate a digital licensee coordinator shall not negate or otherwise affect any provision of this subsection except to the limited extent that 

a provision references the digital licensee coordinator. 

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nator shall be without effect unless and until a new 

digital licensee coordinator is designated. 

(C) AUTHORITIES AND FUNCTIONS.— (i) IN GENERAL.—The digital licensee coordinator is 

authorized to perform the following functions, subject 

to more particular requirements as described in this 

subsection: 

(I) Establish a governance structure, criteria for 

membership, and any dues to be paid by its members. 

(II) Engage in efforts to enforce notice and payment obligations with respect to the administrative 

assessment, including by receiving information 

from and coordinating with the mechanical licensing collective. 

(III) Initiate and participate in proceedings before the Copyright Royalty Judges to establish the 

administrative assessment under this subsection. 

(IV) Initiate and participate in proceedings before the Copyright Office with respect to activities 

under this subsection. 

(V) Gather and provide documentation for use in 

proceedings before the Copyright Royalty Judges to 

set rates and terms under this section. 

(VI) Maintain records of its activities. 

(VII) Assist in publicizing the existence of the 

mechanical licensing collective and the ability of 

copyright owners to claim royalites for unmatched 

musical works (and shares of works) through the 

collective 

(VIII) Engage in such other activities as may be 

necessary or appropriate to fulfill its responsibilities under this subsection. 

(ii) RESTRICTION ON LOBBYING.—The digital licensee 

coordinator may not engage in government lobbying activities, but may engage in the activities described in 

subclauses (III), (IV), and (V) of clause (i). 

(iii) ASSISTANCE WITH PUBLICITY FOR UNCLAIMED

ROYALTIES.—The digital licensee coordinator shall 

make reasonable, good-faith efforts to assist the mechanical licensing collective in the efforts of the collective to locate and identify copyright owners of unmatched musical works (and shares of such works) by 

encouraging digital music providers to publicize the existence of the collective and the ability of copyright 

owners to claim unclaimed accrued royalties, including 

by— 

(I) posting contact information for the collective 

at reasonably prominent locations on digital music 

provider websites and applications; and 

(II) conducting in-person outreach activities with 

songwriters. 

(6) REQUIREMENTS FOR SIGNIFICANT NONBLANKET LICENS- EES.— 

(A) IN GENERAL.— 


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(i) NOTICE OF ACTIVITY.—Not later than 45 calendar 

days after the license availability date, or 45 calendar 

days after the end of the first full calendar month in 

which an entity initially qualifies as a significant nonblanket licensee, whichever occurs later, a significant 

nonblanket licensee shall submit a notice of nonblanket 

activity to the mechanical licensing collective. The notice of nonblanket activity shall comply in form and 

substance with requirements that the Register of Copyrights shall establish by regulation, and a copy shall 

be made available to the digital licensee coordinator. 

(ii) REPORTING AND PAYMENT OBLIGATIONS.—The notice of nonblanket activity submitted to the mechanical 

licensing collective shall be accompanied by a report of 

usage that contains the information described in paragraph (4)(A)(ii), as well as any payment of the administrative assessment required under this subsection and 

applicable regulations. Thereafter, subject to clause 

(iii), a significant nonblanket licensee shall continue to 

provide monthly reports of usage, accompanied by any 

required payment of the administrative assessment, to 

the mechanical licensing collective. Such reports and 

payments shall be submitted not later than 45 calendar days after the end of the calendar month being 

reported. 

(iii) DISCONTINUATION OF OBLIGATIONS.—An entity 

that has submitted a notice of nonblanket activity to 

the mechanical licensing collective that has ceased to 

qualify as a significant nonblanket licensee may so notify the collective in writing. In such case, as of the calendar month in which such notice is provided, such entity shall no longer be required to provide reports of 

usage or pay the administrative assessment, but if such 

entity later qualifies as a significant nonblanket licensee, such entity shall again be required to comply 

with clauses (i) and (ii). 

(B) REPORTING BY MECHANICAL LICENSING COLLECTIVE

TO DIGITAL LICENSEE COORDINATOR.— (i) MONTHLY REPORTS OF NONCOMPLIANT LICENS- EES.—The mechanical licensing collective shall provide 

monthly reports to the digital licensee coordinator setting forth any significant nonblanket licensees of which 

the collective is aware that have failed to comply with 

subparagraph (A). 

(ii) TREATMENT OF CONFIDENTIAL INFORMATION.— 

The mechanical licensing collective and digital licensee 

coordinator shall take appropriate steps to safeguard 

the confidentiality and security of financial and other 

sensitive data shared under this subparagraph, in accordance with the confidentiality requirements prescribed by the Register of Copyrights under paragraph 

(12)(C). 

(C) LEGAL ENFORCEMENT EFFORTS.— 

(i) FEDERAL COURT ACTION.—Should the mechanical 

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come aware that a significant nonblanket licensee has 

failed to comply with subparagraph (A), either may 

commence an action in an appropriate district court of 

the United States for damages and injunctive relief. If 

the significant nonblanket licensee is found liable, the 

court shall, absent a finding of excusable neglect, 

award damages in an amount equal to three times the 

total amount of the unpaid administrative assessment 

and, notwithstanding anything to the contrary in section 505, reasonable attorney’s fees and costs, as well 

as such other relief as the court determines appropriate. In all other cases, the court shall award relief 

as appropriate. Any recovery of damages shall be payable to the mechanical licensing collective as an offset 

to the collective total costs. 

(ii) STATUTE OF LIMITATIONS FOR ENFORCEMENT ACTION.—Any action described in this subparagraph 

shall be commenced within the time period described 

in section 507(b). 

(iii) OTHER RIGHTS AND REMEDIES PRESERVED.—The 

ability of the mechanical licensing collective or digital 

licensee coordinator to bring an action under this subparagraph shall in no way alter, limit or negate any 

other right or remedy that may be available to any 

party at law or in equity. 

(7) FUNDING OF MECHANICAL LICENSING COLLECTIVE.— 

(A) IN GENERAL.—The collective total costs shall be funded by— 

(i) an administrative assessment, as such assessment 

is established by the Copyright Royalty Judges pursuant to subparagraph (D) from time to time, to be paid 

by— 

(I) digital music providers that are engaged, in 

all or in part, in covered activities pursuant to a 

blanket license; and 

(II) significant nonblanket licensees; and 

(ii) voluntary contributions from digital music providers and significant nonblanket licensees as may be 

agreed with copyright owners. 

(B) VOLUNTARY CONTRIBUTIONS.— 

(i) AGREEMENTS CONCERNING CONTRIBUTIONS.—Except as provided in clause (ii), voluntary contributions 

by digital music providers and significant nonblanket 

licensees shall be determined by private negotiation 

and agreement, and the following conditions apply: 

(I) The date and amount of each voluntary contribution to the mechanical licensing collective 

shall be documented in a writing signed by an authorized agent of the mechanical licensing collective and the contributing party. 

(II) Such agreement shall be made available as 

required in proceedings before the Copyright Royalty Judges to establish or adjust the administrative assessment in accordance with applicable statVerDate Sep 11 2014 05:56 Sep 20, 2018 Jkt 079010 PO 00000 Frm 00091 Fmt 6659 Sfmt 6603 E:\HR\OC\SR339.XXX SR339

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utory and regulatory provisions and rulings of the 

Copyright Royalty Judges. 

(ii) TREATMENT OF CONTRIBUTIONS.—Each voluntary 

contribution described in clause (i) shall be treated for 

purposes of an administrative assessment proceeding 

as an offset to the collective total costs that would otherwise be recovered through the administrative assessment. Any allocation or reallocation of voluntary contributions between or among individual digital music 

providers or significant nonblanket licensees shall be a 

matter of private negotiation and agreement among 

such parties and outside the scope of the administrative assessment proceeding. 

(C) INTERIM APPLICATION OF ACCRUED ROYALTIES.—In 

the event that the administrative assessment, together with 

any funding from voluntary contributions as provided in 

subparagraphs (A) and (B), is inadequate to cover current 

collective total costs, the collective, with approval of its 

board of directors, may apply unclaimed accrued royalties 

on an interim basis to defray such costs, subject to future 

reimbursement of such royalties from future collections of 

the assessment. 

(D) DETERMINATION OF ADMINISTRATIVE ASSESSMENT.— 

(i) ADMINISTRATIVE ASSESSMENT TO COVER COLLECTIVE TOTAL COSTS.—The administrative assessment 

shall be used solely and exclusively to fund the collective total costs. 

(ii) SEPARATE PROCEEDING BEFORE COPYRIGHT ROYALTY JUDGES.—The amount and terms of the administrative assessment shall be determined and established 

in a separate and independent proceeding before the 

Copyright Royalty Judges, according to the procedures 

described in clauses (iii) and (iv). The administrative 

assessment determined in such proceeding shall— 

(I) be wholly independent of royalty rates and 

terms applicable to digital music providers, which 

shall not be taken into consideration in any manner in establishing the administrative assessment; 

(II) be established by the Copyright Royalty 

Judges in an amount that is calculated to defray 

the reasonable collective total costs; 

(III) be assessed based on usage of musical 

works by digital music providers and significant 

nonblanket licensees in covered activities under 

both compulsory and nonblanket licenses; 

(IV) may be in the form of a percentage of royalties payable under this section for usage of musical 

works in covered activities (regardless of whether a 

different rate applies under a voluntary license), or 

any other usage-based metric reasonably calculated to equitably allocate the collective total 

costs across digital music providers and significant nonblanket licensees engaged in covered activities, and shall include as a component a minVerDate Sep 11 2014 05:56 Sep 20, 2018 Jkt 079010 PO 00000 Frm 00092 Fmt 6659 Sfmt 6603 E:\HR\OC\SR339.XXX SR339

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imum fee for all digital music providers and significant nonblanket licensees; and 

(V) take into consideration anticipated future 

collective total costs and collections of the administrative assessment, including, as applicable— 

(aa) any portion of past actual collective 

total costs of the mechanical licensing collective not funded by previous collections of the 

administrative assessment or voluntary contributions because such collections or contributions together were insufficient to fund such 

costs; 

(bb) any past collections of the administrative assessment and voluntary contributions 

that exceeded past actual collective total costs, 

resulting in a surplus; and 

(cc) the amount of any voluntary contributions by digital music providers or significant 

nonblanket licensees in relevant periods, described in subparagraphs (A) and (B) of paragraph (7). 

(iii) INITIAL ADMINISTRATIVE ASSESSMENT.—The procedure for establishing the initial administrative assessment shall be as follows: 

(I) Not later than 270 days after the enactment 

of the date, the Copyright Royalty Judges shall 

commence a proceeding to establish the initial administrative assessment by publishing a notice in 

the Federal Register seeking petitions to participate. 

(II) The mechanical licensing collective and digital licensee coordinator shall participate in the 

proceeding described in subclause (I), along with 

any interested copyright owners, digital music providers or significant nonblanket licensees that have 

notified the Copyright Royalty Judges of their desire to participate. 

(III) The Copyright Royalty Judges shall establish a schedule for submission by the parties of information that may be relevant to establishing the 

administrative assessment, including actual and 

anticipated collective total costs of the mechanical 

licensing collective, actual and anticipated collections from digital music providers and significant 

nonblanket licensees, and documentation of voluntary contributions, as well as a schedule for further proceedings, which shall include a hearing, as 

the Copyright Royalty Judges determine appropriate. 

(IV) The initial administrative assessment shall 

be determined, and such determination shall be 

published in the Federal Register by the Copyright 

Royalty Judges, not later than 1 year after commencement of the proceeding described in this 

clause. The determination shall be supported by a 


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written record. The initial administrative assessment shall be effective as of the license availability 

date, and shall continue in effect unless and until 

an adjusted administrative assessment is established pursuant to an adjustment proceeding 

under clause (iv). 

(iv) ADJUSTMENT OF ADMINISTRATIVE ASSESSMENT.— The administrative assessment may be adjusted by the 

Copyright Royalty Judges periodically, in accordance 

with the following procedures: 

(I) Not earlier than one year after the most recent publication of a determination of the administrative assessment by the Copyright Royalty 

Judges, the mechanical licensing collective, the 

digital licensee coordinator, or one or more interested copyright owners, digital music providers, or 

significant nonblanket licensees, may file a petition 

with the Copyright Royalty Judges in the month of 

May to commence a proceeding to adjust the administrative assessment. 

(II) Notice of the commencement of such proceeding shall be published in the Federal Register 

in the month of June following the filing of any petition, with a schedule of requested information 

and additional proceedings, as described in clause 

(iii)(III). The mechanical licensing collective and 

digital licensee coordinator shall participate in 

such proceeding, along with any interested copyright owners, digital music providers, or significant nonblanket licensees that have notified the 

Copyright Royalty Judges of their desire to participate. 

(III) The determination of the adjusted administrative assessment, which shall be supported by a 

written record, shall be published in the Federal 

Register during June of the calendar year following the commencement of the proceeding. The 

adjusted administrative assessment shall take effect January 1 of the year following such publication. 

(v) ADOPTION OF VOLUNTARY AGREEMENTS.—In lieu 

of reaching their own determination based on evaluation of relevant data, the Copyright Royalty Judges 

shall approve and adopt a negotiated agreement to establish the amount and terms of the administrative assessment that has been agreed to by the mechanical licensing collective and the digital licensee coordinator 

(or if none has been designated, interested digital 

music providers and significant nonblanket licensees 

representing more than half of the market for uses of 

musical works in covered activities), except that the 

Copyright Royalty Judges shall have the discretion to 

reject any such agreement for good cause shown. An 

administrative assessment adopted under this clause 

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cant nonblanket licensees engaged in covered activities 

during the period the administrative assessment is in 

effect. 

(vi) CONTINUING AUTHORITY TO AMEND.—The Copyright Royalty Judges shall retain continuing authority 

to amend a determination of an administrative assessment to correct technical or clerical errors, or modify 

the terms of implementation, for good cause, with any 

such amendment to be published in the Federal Register. 

(vii) APPEAL OF ADMINISTRATIVE ASSESSMENT.—The 

determination of an administrative assessment by the 

Copyright Royalty Judges shall be appealable, not later 

than 30 calendar days after publication in the Federal 

Register, to the Court of Appeals for the District of Columbia Circuit by any party that fully participated in 

the proceeding. The administrative assessment as established by the Copyright Royalty Judges shall remain in effect pending the final outcome of any such 

appeal, and the mechanical licensing collective, digital 

licensee coordinator, digital music providers, and significant nonblanket licensees shall implement appropriate financial or other measures not later than 90 

days after any modification of the assessment to reflect 

and account for such outcome. 

(viii) REGULATIONS.—The Copyright Royalty Judges 

may adopt regulations to govern the conduct of proceedings under this paragraph. 

(8) ESTABLISHMENT OF RATES AND TERMS UNDER BLANKET LICENSE.— 

(A) RESTRICTIONS ON RATESETTING PARTICIPATION.—Neither the mechanical licensing collective nor the digital licensee coordinator shall be a party to a proceeding described in subsection (c)(1)(E), except that the mechanical 

licensing collective or the digital licensee coordinator may 

gather and provide financial and other information for the 

use of a party to such a proceeding and comply with requests for information as required under applicable statutory and regulatory provisions and rulings of the Copyright 

Royalty Judges. 

(B) APPLICATION OF LATE FEES.—In any proceeding described in subparagraph (A) in which the Copyright Royalty Judges establish a late fee for late payment of royalties 

for uses of musical works under this section, such fee shall 

apply to covered activities under blanket licenses, as follows: 

(i) Late fees for past due royalty payments shall accrue from the due date for payment until payment is 

received by the mechanical licensing collective. 

(ii) The availability of late fees shall in no way prevent a copyright owner or the mechanical licensing collective from asserting any other rights or remedies to 

which such copyright owner or the mechanical licensing collective may be entitled under this title. 


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(C) INTERIM RATE AGREEMENTS IN GENERAL.—For any 

covered activity for which no rate or terms have been established by the Copyright Royalty Judges, the mechanical licensing collective and any digital music provider may agree 

to an interim rate and terms for such activity under the 

blanket license, and any such rate and terms— 

(i) shall be treated as nonprecedential and not cited 

or relied upon in any ratesetting proceeding before the 

Copyright Royalty Judges or any other tribunal; and 

(ii) shall automatically expire upon the establishment 

of a rate and terms for such covered activity by the 

Copyright Royalty Judges, under subsection (c)(1)(E). 

(D) ADJUSTMENTS FOR INTERIM RATES.—The rate and 

terms established by the Copyright Royalty Judges for a 

covered activity to which an interim rate and terms have 

been agreed under subparagraph (C) shall supersede the 

interim rate and terms and apply retroactively to the inception of the activity under the blanket license. In such case, 

not later than 90 days after the effective date of the rate 

and terms established by the Copyright Royalty Judges— 

(i) if the rate established by the Copyright Royalty 

Judges exceeds the interim rate, the digital music provider shall pay to the mechanical licensing collective 

the amount of any underpayment of royalties due; or 

(ii) if the interim rate exceeds the rate established by 

the Copyright Royalty Judges, the mechanical licensing 

collective shall credit the account of the digital music 

provider for the amount of any overpayment of royalties due. 

(9) TRANSITION TO BLANKET LICENSES.— (A) SUBSTITUTION OF BLANKET LICENSE.—On the license 

availability date, a blanket license shall, without any interruption in license authority enjoyed by such digital music 

provider, be automatically substituted for and supersede 

any existing compulsory license previously obtained under 

this section by the digital music provider from a copyright 

owner to engage in 1 or more covered activities with respect 

to a musical work, except that such substitution shall not 

apply to any authority obtained from a record company 

pursuant to a compulsory license to make and distribute 

permanent downloads unless and until such record company terminates such authority in writing to take effect at 

the end of a monthly reporting period, with a copy to the 

mechanical licensing collective. 

(B) EXPIRATION OF EXISTING LICENSES.—Except to the extent provided in subparagraph (A), on and after the license 

availability date, licenses other than individual download 

licenses obtained under this section for covered activities 

prior to the license availability date shall no longer continue in effect. 

(C) TREATMENT OF VOLUNTARY LICENSES.—A voluntary 

license for a covered activity in effect on the license availability date will remain in effect unless and until the voluntary license expires according to the terms of the voluntary license, or the parties agree to amend or terminate 


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the voluntary license. In a case where a voluntary license 

for a covered activity entered into before the license availability date incorporates the terms of this section by reference, the terms so incorporated (but not the rates) shall 

be those in effect immediately prior to the license availability date, and those terms shall continue to apply unless 

and until such voluntary license is terminated or amended, 

or the parties enter into a new voluntary license. 

(D) FURTHER ACCEPTANCE OF NOTICES FOR COVERED AC- TIVITIES BY COPYRIGHT OFFICE.—On and after the enactment date— 

(i) the Copyright Office shall no longer accept notices 

of intention with respect to covered activities; and 

(ii) notices of intention filed before the enactment 

date will no longer be effective or provide license authority with respect to covered activities, except that before the license availability date there shall be no liability under section 501 for the reproduction or distribution of a musical work (or share thereof) in covered activities if a valid notice of intention was filed for 

such work (or share) before the enactment date. 

(10) PRIOR UNLICENSED USES.— (A) LIMITATION ON LIABILITY IN GENERAL.—A copyright 

owner that commences an action under section 501 on or 

after January 1, 2018, against a digital music provider for 

the infringement of the exclusive rights provided by paragraph (1) or (3) of section 106 arising from the unauthorized reproduction or distribution of a musical work by such 

digital music provider in the course of engaging in covered 

activities prior to the license availability date, shall, as the 

copyright owner’s sole and exclusive remedy against the 

digital music provider, be eligible to recover the royalty prescribed under subsection (c)(1)(C) and chapter 8 of this 

title, from the digital music provider, provided that such 

digital music provider can demonstrate compliance with 

the requirements of subparagraph (B), as applicable. In all 

other cases the limitation on liability under this subparagraph shall not apply. 

(B) REQUIREMENTS FOR LIMITATION ON LIABILITY.—The 

following requirements shall apply on the enactment date 

and through the end of the period that expires 90 days after 

the license availability date to digital music providers seeking to avail themselves of the limitation on liability described in subparagraph (A): 

(i) Not later than 30 calendar days after first making 

a particular sound recording of a musical work available through its service via one or more covered activities, or 30 calendar days after the enactment date, 

whichever occurs later, a digital music provider shall 

engage in good-faith, commercially reasonable efforts to 

identify and locate each copyright owner of such musical work (or share thereof). Such required matching efforts shall include the following: 

(I) Good-faith, commercially reasonable efforts to 

obtain from the owner of the corresponding sound 


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recording made available through the digital 

music provider’s service the following information: 

(aa) Sound recording name, featured artist, 

sound recording copyright owner, international standard recording code, and other 

information commonly used in the industry to 

identify sound recordings and match them to 

the musical works they embody. 

(bb) Any available musical work 

ownershipinformation, including each songwriter and publisher name, percentage ownership share, and international standard musical work code. 

(II) Employment of 1 or more bulk electronic 

matching processes that are available to the digital 

music provider through a third-party vendor on 

commercially reasonable terms, except that a digital music provider may rely on its own bulk electronic matching process if that process has capabilities comparable to or better than those available from a third-party vendor on commercially 

reasonable terms. 

(ii) The required matching efforts shall be repeated 

by the digital music provider not less than once per 

month for so long as the copyright owner remains unidentified or has not been located. 

(iii) If the required matching efforts are successful in 

identifying and locating a copyright owner of a musical 

work (or share thereof) by the end of the calendar 

month in which the digital music provider first makes 

use of the work, the digital music provider shall provide statements of account and pay royalties to such 

copyright owner in accordance with this section and 

applicable regulations. 

(iv) If the copyright owner is not identified or located 

by the end of the calendar month in which the digital 

music provider first makes use of the work, the digital 

music provider shall accrue and hold royalties calculated under the applicable statutory rate in accordance with usage of the work, from initial use of the 

work until the accrued royalties can be paid to the 

copyright owner or are required to be transferred to the 

mechanical licensing collective, as follows: 

(I) Accrued royalties shall be maintained by the 

digital music provider in accordance with generally accepted accounting principles. 

(II) If a copyright owner of an unmatched musical work (or share thereof) is identified and located 

by or to the digital music provider before the license availability date, the digital music provider 

shall— 

(aa) not later than 45 calendar days after 

the end of the calendar month during which 

the copyright owner was identified and located, pay the copyright owner all accrued royVerDate Sep 11 2014 05:56 Sep 20, 2018 Jkt 079010 PO 00000 Frm 00098 Fmt 6659 Sfmt 6603 E:\HR\OC\SR339.XXX SR339

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alties, such payment to be accompanied by a 

cumulative statement of account that includes 

all of the information that would have been 

provided to the copyright owner had the digital music provider been providing monthly 

statements of account to the copyright owner 

from initial use of the work in accordance with 

this section and applicable regulations, including the requisite certification under subsection 

(c)(2)(I); 

(bb) beginning with the accounting period 

following the calendar month in which the 

copyright owner was identified and located, 

and for all other accounting periods prior to 

the license availability date, provide monthly 

statements of account and pay royalties to the 

copyright owner as required under this section 

and applicable regulations; and 

(cc) beginning with the monthly royalty reporting period commencing on the license 

availability date, report usage and pay royalties for such musical work (or share thereof) 

for such reporting period and reporting periods thereafter to the mechanical licensing collective, as required under this subsection and 

applicable regulations. 

(III) If a copyright owner of an unmatched musical work (or share thereof) is not identified and located by the license availability date, the digital 

music provider shall— 

(aa) not later than 45 calendar days after 

the license availability date, transfer all accrued royalties to the mechanical licensing collective, such payment to be accompanied by a 

cumulative statement of account that includes 

all of the information that would have been 

provided to the copyright owner had the digital music provider been serving monthly 

statements of account on the copyright owner 

from initial use of the work in accordance with 

this section and applicable regulations, including the requisite certification under subsection 

(c)(2)(I), and accompanied by an additional 

certification by a duly authorized officer of the 

digital music provider that the digital music 

provider has fulfilled the requirements of 

clauses (i) and (ii) of subparagraph (B) but 

has not been successful in locating or identifying the copyright owner; and 

(bb) beginning with the monthly royalty reporting period commencing on the license 

availability date, report usage and pay royalties for such musical work (or share thereof) 

for such period and reporting periods thereafter to the mechanical licensing collective, as 


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required under this subsection and applicable 

regulations. 

(v) A digital music provider that complies with the 

requirements of this subparagraph with respect to unmatched musical works (or shares of works) shall not 

be liable for or accrue late fees for late payments of royalties for such works until such time as the digital 

music provider is required to begin paying monthly 

royalties to the copyright owner or the mechanical licensing collective, as applicable. 

(C) ADJUSTED STATUTE OF LIMITATIONS.—Notwithstanding anything to the contrary in section 507(b), with 

respect to any claim of infringement of the exclusive rights 

provided by paragraphs (1) and (3) of section 106 against 

a digital music provider arising from the unauthorized reproduction or distribution of a musical work by such digital music provider in the course of engaging in covered activities that accrued not more than 3 years prior to the license availability date, such action may be commenced not 

later than the later of— 

(i) 3 years after the date on which the claim accrued; 

or 

(ii) 2 years after the license availability date. 

(D) OTHER RIGHTS AND REMEDIES PRESERVED.—Except as 

expressly provided in this paragraph, nothing in this paragraph shall be construed to alter, limit, or negate any right 

or remedy of a copyright owner with respect to unauthorized use of a musical work. 

(E) REMEDY IN FEDERAL DISTRICT COURT.—A person may 

bring a claim in a Federal district court of competent jurisdiction for an issue that is not adequately resolved by the 

board of directors or a committee of the mechanical licensing collective, as applicable. 

(11) LEGAL PROTECTIONS FOR LICENSING ACTIVITIES.— 

(A) EXEMPTION FOR COMPULSORY LICENSE ACTIVITIES.— The antitrust exemption described in subsection (c)(1)(D) 

shall apply to negotiations and agreements between and 

among copyright owners and persons entitled to obtain a 

compulsory license for covered activities, and common 

agents acting on behalf of such copyright owners or persons, including with respect to the administrative assessment established under this subsection. 

(B) LIMITATION ON COMMON AGENT EXEMPTION.—Notwithstanding the antitrust exemption provided in subsection (c)(1)(D) and subparagraph (A) of this paragraph 

(except for the administrative assessment referenced in such 

subpargraph (A) and except as provided in paragraph 

(8)(C)), neither the mechanical licensing collective nor the 

digital licensee coordinator shall serve as a common agent 

with respect to the establishment of royalty rates or terms 

under this section. 

(C) ANTITRUST EXEMPTION FOR ADMINISTRATIVE ACTIVI- TIES.—Notwithstanding any provision of the antitrust laws, 

copyright owners and persons entitled to obtain a compulsory license under this section may designate the mechanVerDate Sep 11 2014 05:56 Sep 20, 2018 Jkt 079010 PO 00000 Frm 00100 Fmt 6659 Sfmt 6603 E:\HR\OC\SR339.XXX SR339

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ical licensing collective to administer voluntary licenses for 

the reproduction or distribution of musical works in covered activities on behalf of such copyright owners and persons, subject to the following conditions: 

(i) Each copyright owner shall establish the royalty 

rates and material terms of any such voluntary license 

individually and not in agreement, combination, or 

concert with any other copyright owner. 

(ii) Each person entitled to obtain a compulsory license under this section shall establish the royalty 

rates and material terms of any such voluntary license 

individually and not in agreement, combination, or 

concert with any other digital music provider. 

(iii) The mechanical licensing collective shall maintain the confidentiality of the voluntary licenses in accordance with the confidentiality provisions prescribed 

by the Register of Copyrights under paragraph (12)(C). 

(D) LIABILITY FOR GOOD-FAITH ACTIVITIES.—The mechanical licensing collective shall not be liable to any person or 

entity based on a claim arising from its good-faith administration of policies and procedures adopted and implemented to carry out the responsibilities described in subparagraphs (J) and (K) of paragraph (3), except to the extent of correcting an underpayment or overpayment of royalties as provided in paragraph (3)(L)(i)(VI), but the collective may participate in a legal proceeding as a stakeholder 

party if the collective is holding funds that are the subject 

of a dispute between copyright owners. For purposes of this 

subparagraph, the term ‘‘good-faith administration’’ means 

administration in a manner that is not grossly negligent. 

(E) PREEMPTION OF STATE PROPERTY LAWS.—The holding 

and distribution of funds by the mechanical licensing collective in accordance with this subsection shall supersede 

and preempt any State law (including common law) concerning escheatment or abandoned property, or any analogous provision, that might otherwise apply. 

(12) REGULATIONS.— (A) ADOPTION BY REGISTER OF COPYRIGHTS AND COPY- RIGHT ROYALTY JUDGES.—The Register of Copyrights may 

conduct such proceedings and adopt such regulations as 

may be necessary or appropriate to effectuate the provisions 

of this subsection, except for regulations concerning proceedings before the Copyright Royalty Judges to establish 

the administrative assessment, which shall be adopted by 

the Copyright Royalty Judges. 

(B) JUDICIAL REVIEW OF REGULATIONS.—Except as provided in paragraph (7)(D)(vii), regulations adopted under 

this subsection shall be subject to judicial review pursuant 

to chapter 7 of title 5. 

(C) PROTECTION OF CONFIDENTIAL INFORMATION.—The 

Register of Copyrights shall adopt regulations to provide 

for the appropriate procedures to ensure that confidential, 

private, proprietary, or privileged information contained in 

the records of the mechanical licensing collective and digital licensee coordinator is not improperly disclosed or 


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used, including through any disclosure or use by the board 

of directors or personnel of either entity, and specifically including the unclaimed royalties oversight committee and 

the dispute resolution committee of the mechanical licensing collective. 

(13) SAVINGS CLAUSES.— 

(A) LIMITATION ON ACTIVITIES AND RIGHTS COVERED.— 

This subsection applies solely to uses of musical works subject to licensing under this section. The blanket license 

shall not be construed to extend or apply to activities other 

than covered activities or to rights other than the exclusive 

rights of reproduction and distribution licensed under this 

section, or serve or act as the basis to extend or expand the 

compulsory license under this section to activities and 

rights not covered by this section on the day before the enactment date. 

(B) RIGHTS OF PUBLIC PERFORMANCE NOT AFFECTED.— 

The rights, protections, and immunities granted under this 

subsection, the data concerning musical works collected 

and made available under this subsection, and the definitions under subsection (e) shall not extend to, limit, or otherwise affect any right of public performance in a musical 

work; and 

(5) by adding at the end the following 

(e) DEFINITIONS.—As used in this section: 

(1) ACCRUED INTEREST.—The term ‘‘accrued interest’’ means 

interest accrued on accrued royalties, as described in subsection 

(d)(3)(H)(ii). 

(2) ACCRUED ROYALTIES.—The term ‘‘accrued royalties’’ means 

royalties accrued for the reproduction or distribution of a musical work (or share thereof) in a covered activity, calculated in 

accordance with the applicable royalty rate under this section. 

(3) ADMINISTRATIVE ASSESSMENT.—The term ‘‘administrative 

assessment’’ means the fee established pursuant to subsection 

(d)(7)(D). 

(4) AUDIT.—The term ‘‘audit’’ means a royalty compliance examination to verify the accuracy of royalty payments, or the 

conduct of such an examination, as applicable. 

(5) BLANKET LICENSE.—The term ‘‘blanket license’’ means a 

compulsory license described in subsection (d)(1)(A) to engage in 

covered activities. 

(6) COLLECTIVE TOTAL COSTS.—The term ‘‘collective total 

costs’’— 

(A) means the total costs of establishing, maintaining, 

and operating the mechanical licensing collective to fulfill 

its statutory functions, including— 

(i) startup costs; 

(ii) financing, legal, audit, and insurance costs; 

(iii) investments in information technology, infrastructure, and other long-term resources; 

(iv) outside vendor costs; 

(v) costs of licensing, royalty administration, and enforcement of rights; 

(vi) costs of bad debt; and 


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(vii) costs of automated and manual efforts to identify and locate copyright owners of musical works (and 

shares of such musical works) and match sound recordings to the musical works the sound recordings 

embody; and 

(B) does not include any added costs incurred by the mechanical licensing collective to provide services under voluntary licenses. 

(7) COVERED ACTIVITY.—The term ‘‘covered activity’’ means 

the activity of making a digital phonorecord delivery of a musical work, including in the form of a permanent download, limited download, or interactive stream, where such activity qualifies for a compulsory license under this section. 

(8) DIGITAL MUSIC PROVIDER.—The term ‘‘digital music provider’’ means a person (or persons operating under the authority 

of that person) that, with respect to a service engaged in covered 

activities— 

(A) has a direct contractual, subscription, or other economic relationship with end users of the service, or, if no 

such relationship with end users exists, exercises direct control over the provision of the service to end users; 

(B) is able to fully report on any revenues and consideration generated by the service; and 

(C) is able to fully report on usage of sound recordings 

of musical works by the service (or procure such reporting). 

(9) DIGITAL LICENSEE COORDINATOR.—The term ‘‘digital licensee coordinator’’ means the entity most recently designated 

pursuant to subsection (d)(5). 

(10) DIGITAL PHONORECORD DELIVERY.—The term ‘‘digital 

phonorecord delivery’’ means each individual delivery of a phonorecord by digital transmission of a sound recording that results in a specifically identifiable reproduction by or for any 

transmission recipient of a phonorecord of that sound recording, regardless of whether the digital transmission is also a 

public performance of the sound recording or any musical work 

embodied therein, and includes a permanent download, a limited download, or an interactive stream. A digital phonorecord 

delivery does not result from a real-time, noninteractive subscription transmission of a sound recording where no reproduction of the sound recording or the musical work embodied therein is made from the inception of the transmission through to its 

receipt by the transmission recipient in order to make the sound 

recording audible. A digital phonorecord delivery does not include the digital transmission of sounds accompanying a motion picture or other audiovisual work as defined in section 101. 

(11) ENACTMENT DATE.—The term ‘‘enactment date’’ means 

the date of the enactment of the Musical Works Modernization 

Act. 

(12) INDIVIDUAL DOWNLOAD LICENSE.—The term ‘‘individual 

download license’’ means a compulsory license obtained by a 

record company to make and distribute, or authorize the making and distribution of, permanent downloads embodying a specific individual musical work. 

(13) INTERACTIVE STREAM.—The term ‘‘interactive stream’’ 

means a digital transmission of a sound recording of a musical 


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work in the form of a stream, where the performance of the 

sound recording by means of such transmission is not exempt 

under section 114(d)(1) and does not in itself, or as a result of 

a program in which it is included, qualify for statutory licensing under section 114(d)(2). An interactive stream is a digital 

phonorecord delivery. 

(14) INTERESTED.—The term ‘‘interested’’, as applied to a 

party seeking to participate in a proceeding under subsection 

(d)(7)(D), is a party as to which the Copyright Royalty Judges 

have not determined that the party lacks a significant interest 

in such proceeding. 

(15) LICENSE AVAILABILITY DATE.—The term ‘‘license availability date’’ means January 1 following the expiration of the 

two-year period beginning on the enactment date. 

(16) LIMITED DOWNLOAD.—The term ‘‘limited download’’ 

means a digital transmission of a sound recording of a musical 

work in the form of a download, where such sound recording 

is accessible for listening only for a limited amount of time or 

specified number of times. 

(17) MATCHED.—The term ‘‘matched’’, as applied to a musical 

work (or share thereof), means that the copyright owner of such 

work (or share thereof) has been identified and located. 

(18) MECHANICAL LICENSING COLLECTIVE.—The term ‘‘mechanical licensing collective’’ means the entity most recently designated as such by the Register of Copyrights under subsection 

(d)(3). 

(19) MECHANICAL LICENSING COLLECTIVE BUDGET.—The term 

‘‘mechanical licensing collective budget’’ means a statement of 

the financial position of the mechanical licensing collective for 

a fiscal year or quarter thereof based on estimates of expenditures during the period and proposals for financing those expenditures, including a calculation of the collective total costs. 

(20) MUSICAL WORKS DATABASE.—The term ‘‘musical works 

database’’ means the database described in subsection (d)(3)(E). 

(21) NONPROFIT.—The term ‘‘nonprofit’’ means a nonprofit 

created or organized in a State. 

(22) NOTICE OF LICENSE.—The term ‘‘notice of license’’ means 

a notice from a digital music provider provided under subsection (d)(2)(A) for purposes of obtaining a blanket license. 

(23) NOTICE OF NONBLANKET ACTIVITY.—The term ‘‘notice of 

nonblanket activity’’ means a notice from a significant nonblanket licensee provided under subsection (d)(6)(A) for purposes of notifying the mechanical licensing collective that the licensee has been engaging in covered activities. 

(24) PERMANENT DOWNLOAD.—The term ‘‘permanent 

download’’ means a digital transmission of a sound recording 

of a musical work in the form of a download, where such sound 

recording is accessible for listening without restriction as to the 

amount of time or number of times it may be accessed. 

(25) QUALIFIED AUDITOR.—The term ‘‘qualified auditor’’ 

means an independent, certified public accountant with experience performing music royalty audits. 

(26) RECORD COMPANY.—The term ‘‘record company’’ means 

an entity that invests in, produces, and markets sound recordings of musical works, and distributes such sound recordings 


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for remuneration through multiple sales channels, including a 

corporate affiliate of such an entity engaged in distribution of 

sound recordings. 

(27) REPORT OF USAGE.—The term ‘‘report of usage’’ means a 

report reflecting an entity’s usage of musical works in covered 

activities described in subsection (d)(4)(A). 

(28) REQUIRED MATCHING EFFORTS.—The term ‘‘required 

matching efforts’’ means efforts to identify and locate copyright 

owners of musical works as described in subsection (d)(10)(B)(i). 

(29) SERVICE.—The term ‘‘service’’, as used in relation to covered activities, means any site, facility, or offering by or through 

which sound recordings of musical works are digitally transmitted to members of the public. 

(30) SHARE.—The term ‘‘share’’, as applied to a musical work, 

means a fractional ownership interest in such work. 

(31) SIGNIFICANT NONBLANKET LICENSEE.—The term ‘‘significant nonblanket licensee’’— 

(A) means an entity, including a group of entities under 

common ownership or control that, acting under the authority of one or more voluntary licenses or individual 

download licenses, offers a service engaged in covered activities, and such entity or group of entities— 

(i) is not currently operating under a blanket license 

and is not obligated to provide reports of usage reflecting covered activities under subsection (d)(4)(A); 

(ii) has a direct contractual, subscription, or other 

economic relationship with end users of the service or, 

if no such relationship with end users exists, exercises 

direct control over the provision of the service to end 

users; and 

(iii) either— 

(I) on any day in a calendar month, makes more 

than 5,000 different sound recordings of musical 

works available through such service; or 

(II) derives revenue or other consideration in 

connection with such covered activities greater 

than $50,000 in a calendar month, or total revenue 

or other consideration greater than $500,000 during the preceding 12 calendar months; and 

(B) does not include— 

(i) an entity whose covered activity consists solely of 

free-to-the-user streams of segments of sound recordings of musical works that do not exceed 90 seconds in 

length, are offered only to facilitate a licensed use of 

musical works that is not a covered activity, and have 

no revenue directly attributable to such streams constituting the covered activity; or 

(ii) a ‘‘public broadcasting entity’’ as defined in section 118(f). 

(32) SONGWRITER.—The term ‘‘songwriter’’ means the author 

of all or part of a musical work, including a composer or lyricist. 

(33) STATE.—The term ‘‘State’’ means each State of the 

United States, the District of Columbia, and each territory or 

possession of the United States. 


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(34) UNCLAIMED ACCRUED ROYALTIES.—The term ‘‘unclaimed 

accrued royalties’’ means accrued royalties eligible for distribution under subsection (d)(3)(J). 

(35) UNMATCHED.—The term ‘‘unmatched’’, as applied to a 

musical work (or share thereof), means that the copyright owner 

of such work (or share thereof) has not been identified or located. 

(36) VOLUNTARY LICENSE.—The term ‘‘voluntary license’’ 

means a license for use of a musical work (or share thereof) 

other than a compulsory license obtained under this section. 

* * * * * * * 

CHAPTER 8—PROCEEDINGS BY COPYRIGHT ROYALTY 

JUDGES 

Sec. 

801. Copyright Royalty Judges; appointment and functions. 

802. Copyright Royalty Judgeships; staff. 

803. Proceedings of Copyright Royalty Judges. 

804. Institution of proceedings. 

805. General rule for voluntarily negotiated agreements. 

§ 801. Copyright Royalty Judges; appointment and functions 

(a) APPOINTMENT.—The Librarian of Congress shall appoint 3 

full-time Copyright Royalty Judges, and shall appoint 1 of the 3 as 

the Chief Copyright Royalty Judge. The Librarian shall make appointments to such positions after consultation with the Register of 

Copyrights. 

(b) FUNCTIONS.—Subject to the provisions of this chapter, the 

functions of the Copyright Royalty Judges shall be as follows: 

(1) To make determinations and adjustments of reasonable 

terms and rates of royalty payments as provided in sections 

112(e), 114, 115, 116, 118, 119, and 1004. øThe rates applicable 

under sections 114(f)(1)(B), 115, and 116 shall be calculated to 

achieve the following objectives:¿ 

ø(A) To maximize the availability of creative works to 

the public. 

ø(B) To afford the copyright owner a fair return for his 

or her creative work and the copyright user a fair income 

under existing economic conditions. 

ø(C) To reflect the relative roles of the copyright owner 

and the copyright user in the product made available to 

the public with respect to relative creative contribution, 

technological contribution, capital investment, cost, risk, 

and contribution to the opening of new markets for creative expression and media for their communication. 

ø(D) To minimize any disruptive impact on the structure 

of the industries involved and on generally prevailing industry practices¿. 

(2) To make determinations concerning the adjustment of the 

copyright royalty rates under section 111 solely in accordance 

with the following provisions: 

(A) The rates established by section 111(d)(1)(B) may be 

adjusted to reflect— 

(i) national monetary inflation or deflation; or 


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(ii) changes in the average rates charged cable subscribers for the basic service of providing secondary 

transmissions to maintain the real constant dollar 

level of the royalty fee per subscriber which existed as 

of the date of October 19, 1976, except that— 

(I) if the average rates charged cable system 

subscribers for the basic service of providing secondary transmissions are changed so that the average rates exceed national monetary inflation, no 

change in the rates established by section 

111(d)(1)(B) shall be permitted; and 

(II) no increase in the royalty fee shall be permitted based on any reduction in the average 

number of distant signal equivalents per subscriber. The Copyright Royalty Judges may consider all factors relating to the maintenance of 

such level of payments, including, as an extenuating factor, whether the industry has been restrained by subscriber rate regulating authorities 

from increasing the rates for the basic service of 

providing secondary transmissions. 

(B) In the event that the rules and regulations of the 

Federal Communications Commission are amended at any 

time after April 15, 1976, to permit the carriage by cable 

systems of additional television broadcast signals beyond 

the local service area of the primary transmitters of such 

signals, the royalty rates established by section 

111(d)(1)(B) may be adjusted to ensure that the rates for 

the additional distant signal equivalents resulting from 

such carriage are reasonable in the light of the changes effected by the amendment to such rules and regulations. In 

determining the reasonableness of rates proposed following 

an amendment of Federal Communications Commission 

rules and regulations, the Copyright Royalty Judges shall 

consider, among other factors, the economic impact on 

copyright owners and users; except that no adjustment in 

royalty rates shall be made under this subparagraph with 

respect to any distant signal equivalent or fraction thereof 

represented by— 

(i) carriage of any signal permitted under the rules 

and regulations of the Federal Communications Commission in effect on April 15, 1976, or the carriage of 

a signal of the same type (that is, independent, network, or noncommercial educational) substituted for 

such permitted signal; or 

(ii) a television broadcast signal first carried after 

April 15, 1976, pursuant to an individual waiver of the 

rules and regulations of the Federal Communications 

Commission, as such rules and regulations were in effect on April 15, 1976. 

(C) In the event of any change in the rules and regulations of the Federal Communications Commission with respect to syndicated and sports program exclusivity after 

April 15, 1976, the rates established by section 

111(d)(1)(B) may be adjusted to assure that such rates are 


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reasonable in light of the changes to such rules and regulations, but any such adjustment shall apply only to the affected television broadcast signals carried on those systems 

affected by the change. 

(D) The gross receipts limitations established by section 

111(d)(1)(C) and (D) shall be adjusted to reflect national 

monetary inflation or deflation or changes in the average 

rates charged cable system subscribers for the basic service of providing secondary transmissions to maintain the 

real constant dollar value of the exemption provided by 

such section, and the royalty rate specified therein shall 

not be subject to adjustment. 

(3)(A) To authorize the distribution, under sections 111, 119, 

and 1007, of those royalty fees collected under sections 111, 

119, and 1005, as the case may be, to the extent that the Copyright Royalty Judges have found that the distribution of such 

fees is not subject to controversy. 

(B) In cases where the Copyright Royalty Judges determine 

that controversy exists, the Copyright Royalty Judges shall determine the distribution of such fees, including partial distributions, in accordance with section 111, 119, or 1007, as the case 

may be. 

(C) Notwithstanding section 804(b)(8), the Copyright Royalty 

Judges, at any time after the filing of claims under section 111, 

119, or 1007, may, upon motion of one or more of the claimants 

and after publication in the Federal Register of a request for 

responses to the motion from interested claimants, make a partial distribution of such fees, if, based upon all responses received during the 30-day period beginning on the date of such 

publication, the Copyright Royalty Judges conclude that no 

claimant entitled to receive such fees has stated a reasonable 

objection to the partial distribution, and all such claimants— 

(i) agree to the partial distribution; 

(ii) sign an agreement obligating them to return any excess amounts to the extent necessary to comply with the 

final determination on the distribution of the fees made 

under subparagraph (B); 

(iii) file the agreement with the Copyright Royalty 

Judges; and 

(iv) agree that such funds are available for distribution. 

(D) The Copyright Royalty Judges and any other officer or 

employee acting in good faith in distributing funds under subparagraph (C) shall not be held liable for the payment of any 

excess fees under subparagraph (C). The Copyright Royalty 

Judges shall, at the time the final determination is made, calculate any such excess amounts. 

(4) To accept or reject royalty claims filed under sections 111, 

119, and 1007, on the basis of timeliness or the failure to establish the basis for a claim. 

(5) To accept or reject rate adjustment petitions as provided 

in section 804 and petitions to participate as provided in section 803(b) (1) and (2). 

(6) To determine the status of a digital audio recording device or a digital audio interface device under sections 1002 and 

1003, as provided in section 1010. 


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(7)(A) To adopt as a basis for statutory terms and rates or 

as a basis for the distribution of statutory royalty payments, 

an agreement concerning such matters reached among some or 

all of the participants in a proceeding at any time during the 

proceeding, except that— 

(i) the Copyright Royalty Judges shall provide to those 

that would be bound by the terms, rates, or other determination set by any agreement in a proceeding to determine royalty rates an opportunity to comment on the 

agreement and shall provide to participants in the proceeding under section 803(b)(2) that would be bound by the 

terms, rates, or other determination set by the agreement 

an opportunity to comment on the agreement and object to 

its adoption as a basis for statutory terms and rates; and 

(ii) the Copyright Royalty Judges may decline to adopt 

the agreement as a basis for statutory terms and rates for 

participants that are not parties to the agreement, if any 

participant described in clause (i) objects to the agreement 

and the Copyright Royalty Judges conclude, based on the 

record before them if one exists, that the agreement does 

not provide a reasonable basis for setting statutory terms 

or rates. 

(B) License agreements voluntarily negotiated pursuant to 

section 112(e)(5), ø114(f)(3)¿ 114(f)(2), 115(c)(3)(E)(i), 116(c), or 

118(b)(2) that do not result in statutory terms and rates shall 

not be subject to clauses (i) and (ii) of subparagraph (A). 

(C) Interested parties may negotiate and agree to, and the 

Copyright Royalty Judges may adopt, an agreement that specifies as terms notice and recordkeeping requirements that apply 

in lieu of those that would otherwise apply under regulations. 

(8) To determine the administrative assessment to be paid by 

digital music providers under section 115(d). The provisions of 

section 115(d) shall apply to the conduct of proceedings by the 

Copyright Royalty Judges under section 115(d) and not the procedures described in this section, or section 803, 804, or 805. 

ø(8)¿ (9) To perform other duties, as assigned by the Register 

of Copyrights within the Library of Congress, except as provided in section 802(g), at times when Copyright Royalty 

Judges are not engaged in performing the other duties set 

forth in this section. 

(c) RULINGS.—The Copyright Royalty Judges may make any necessary procedural or evidentiary rulings in any proceeding under 

this chapter and may, before commencing a proceeding under this 

chapter, make any such rulings that would apply to the proceedings conducted by the Copyright Royalty Judges. 

(d) ADMINISTRATIVE SUPPORT.—The Librarian of Congress shall 

provide the Copyright Royalty Judges with the necessary administrative services related to proceedings under this chapter. 

(e) LOCATION IN LIBRARY OF CONGRESS.—The offices of the Copyright Royalty Judges and staff shall be in the Library of Congress. 

(f) EFFECTIVE DATE OF ACTIONS.—On and after the date of the enactment of the Copyright Royalty and Distribution Reform Act of 

2004, in any case in which time limits are prescribed under this 

title for performance of an action with or by the Copyright Royalty 

Judges, and in which the last day of the prescribed period falls on 


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a Saturday, Sunday, holiday, or other nonbusiness day within the 

District of Columbia or the Federal Government, the action may be 

taken on the next succeeding business day, and is effective as of 

the date when the period expired. 

* * * * * * * 

§ 803. Proceedings of Copyright Royalty Judges 

(a) PROCEEDINGS.— 

(1) IN GENERAL.—The Copyright Royalty Judges shall act in 

accordance with this title, and to the extent not inconsistent 

with this title, in accordance with subchapter II of chapter 5 

of title 5, in carrying out the purposes set forth in section 801. 

The Copyright Royalty Judges shall act in accordance with regulations issued by the Copyright Royalty Judges and the Librarian of Congress, and on the basis of a written record, prior 

determinations and interpretations of the Copyright Royalty 

Tribunal, Librarian of Congress, the Register of Copyrights, 

copyright arbitration royalty panels (to the extent those 

detrminations are not inconsistent with a decision of the Librarian of Congress or the Register of Copyrights), and the 

Copyright Royalty Judges (to the extent those determinations 

are not inconsistent with a decision of the Register of Copyrights that was timely delivered to the Copyright Royalty 

Judges pursuant to section 802(f)(1) (A) or (B), or with a decision of the Register of Copyrights pursuant to section 

802(f)(1)(D)), under this chapter, and decisions of the court of 

appeals under this chapter before, on, or after the effective 

date of the Copyright Royalty and Distribution Reform Act of 

2004. 

* * * * * * * 

(E) CONTINUITY OF RATES AND TERMS.— 

(i) If the decision of the Copyright Royalty Judges on 

any motion for a rehearing is not rendered before the 

expiration of the statutory rates and terms that were 

previously in effect, in the case of a proceeding to determine successors to rates and terms that expire on 

a specified date, then— 

(I) the intitial determination of the Copyright 

Royalty Judges that is the subject of the rehearing 

motion shall be effective as of the day following 

the date on which the rates and terms that were 

previously in effect expire; and 

(II) in the case of a proceeding under section 

114(f)(1)(C) øor 114(f)(2)(C)¿, royalty rates and 

terms shall, for purposes of section ø114(f)(4)(B)¿ 

114(f)(3)(B), be deemed to have been set at those 

rates and terms contained in the initial determination of the Copyright Royalty Judges that is 

the subject of the rehearing motion, as of the date 

of that determination. 

* * * * * * * 


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§ 804. Institution of proceedings 

(a) FILING OF PETITION.—With respect to proceedings referred to 

in paragraphs (1) and (2) of section 801(b) concerning the determination or adjustment of royalty rates as provided in sections 111, 

112, 114, 115, 116, 118, 119, and 1004, during the calendar years 

specified in the schedule set forth in subsection (b), any owner or 

user of a copyrighted work whose royalty rates are specified by this 

title, or are established under this chapter before or after the enactment of the Copyright Royalty and Distribution Reform Act of 

2004, may file a petition with the Copyright Royalty Judges declaring that the petitioner requests a determination or adjustment of 

the rate. The Copyright Royalty Judges shall make a determination 

as to whether the petitioner has such a significant interest in the 

royalty rate in which a determination or adjustment is requested. 

If the Copyright Royalty Judges determine that the petitioner has 

such a significant interest, the Copyright Royalty Judges shall 

cause notice of this determination, with the reasons for such determination, to be published in the Federal Register, together with 

the notice of commencement of proceedings under this chapter. 

With respect to proceedings under paragraph (1) of section 801(b) 

concerning the determination or adjustment of royalty rates as provided in sections 112 and 114, during the calendar years specified 

in the schedule set forth in subsection (b), the Copyright Royalty 

Judges shall cause notice of commencement of proceedings under 

this chapter to be published in the Federal Register as provided in 

section 803(b)(1)(A). 

(b) TIMING OF PROCEEDINGS.— (1) SECTION 111 PROCEEDINGS.—(A) A petition described in 

subsection (a) to initiate proceedings under section 801(b)(2) 

concerning the adjustment of royalty rates under section 111 

to which subparagraph (A) or (D) of section 801(b)(2) applies 

may be filed during the year 2015 and in each subsequent fifth 

calendar year. 

(B) In order to initiate proceedings under section 801(b)(2) 

concerning the adjustment of royalty rates under section 111 

to which subparagraph (B) or (C) of section 801(b)(2) applies, 

within 12 months after an event described in either of those 

subsections, any owner or user of a copyrighted work whose 

royalty rates are specified by section 111, or by a rate established under this chapter before or after the enactment of the 

Copyright Royalty and Distribution Reform Act of 2004, may 

file a petition with the Copyright Royalty Judges declaring 

that the petitioner requests an adjustment of the rate. The 

Copyright Royalty Judges shall then proceed as set forth in 

subsection (a) of this section. Any change in royalty rates made 

under this chapter pursuant to this subparagraph may be reconsidered in the year 2015, and each fifth calendar year 

thereafter, in accordance with the provisions in section 

801(b)(2)(B) or (C), as the case may be. A petition for adjustment of rates established by section 111(d)(1)(B) as a result of 

a change in the rules and regulations of the Federal Communications Commission shall set forth the change on which the 

petition is based. 

(C) Any adjustment of royalty rates under section 111 shall 

take effect as of the first accounting period commencing after 


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112 

the publication of the determination of the Copyright Royalty 

Judges in the Federal Register, or on such other date as is 

specified in that determination. 

(2) CERTAIN SECTION 112 PROCEEDINGS.—Proceedings under 

this chapter shall be commenced in the year 2007 to determine 

reasonable terms and rates of royalty payments for the activities described in section 112(e)(1) relating to the limitation on 

exclusive rights specified by section 114(d)(1)(C)(iv), to become 

effective on January 1, 2009. Such proceedings shall be repeated in each subsequent fifth calendar year. 

(3) SECTION 114 AND CORRESPONDING 112 PROCEEDINGS.— (A) FOR ELIGIBLE NONSUBSCRIPTION SERVICES AND NEW

SUBSCRIPTION SERVICES.—Proceedings under this chapter 

shall be commenced as soon as practicable after the date 

of enactment of the Copyright Royalty and Distribution 

Reform Act of 2004 to determine reasonable terms and 

rates of royalty payments under sections 114 and 112 for 

the activities of eligible nonsubscription transmission services and new subscription services, to be effective for the 

period beginning on January 1, 2006, and ending on December 31, 2010. Such proceedings shall next be commenced in January 2009 to determine reasonable terms 

and rates of royalty payments, to become effective on January 1, 2011. Thereafter, such proceedings shall be repeated in each subsequent fifth calendar year. 

(B) FOR PREEXISTING SUBSCRIPTION AND SATELLITE DIG- ITAL AUDIO RADIO SERVICES.—Proceedings under this chapter shall be commenced in January 2006 to determine reasonable terms and rates of royalty payments under sections 114 and 112 for the activities of preexisting subscription services, to be effective during the period beginning on 

January 1, 2008, and ending on December 31, 2012, and 

preexisting satellite digital audio radio services, to be effective during the period beginning on January 1, 2007, 

and ending on December 31, 2012. Such proceedings shall 

next be commenced in 2011 to determine reasonable terms 

and rates of royalty payments, to become effective on January 1, 2013. Thereafter, such proceedings shall be repeated in each subsequent fifth calendar year. 

(C)(i) Notwithstanding any other provision of this chapter, this subparagraph shall govern proceedings commenced pursuant to section 114(f)(1)(C) øand 114(f)(2)(C)¿ 

concerning new types of services. 

(ii) Not later than 30 days after a petition to determine 

rates and terms for a new type of service is filed by any 

copyright owner of sound recordings, or such new type of 

service, indicating that such new type of service is or is 

about to become operational, the Copyright Royalty Judges 

shall issue a notice for a proceeding to determine rates and 

terms for such service. 

(iii) The proceeding shall follow the schedule set forth in 

subsections (b), (c), and (d) of section 803, except that— 

(I) the determination shall be issued by not later 

than 24 months after the publication of the notice 

under clause (ii); and 


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113 

(II) the decision shall take effect as provided in subsections (c)(2) and (d)(2) of section 803 and section 

ø114(f)(4)(B)(ii)¿ 114(f)(3)(B)(ii) and (C). 

(iv) The rates and terms shall remain in effect for the 

period set forth in section 114(f)(1)(C) øor 114(f)(2)(C), as 

the case may be¿. 

(4) SECTION 115 PROCEEDINGS.—A petition described in subsection (a) to initiate proceedings under section 801(b)(1) concerning the adjustment or determination of royalty rates as 

provided in section 115 may be filed in the year 2006 and in 

each subsequent fifth calendar year, or at such other times as 

the parties have agreed under section 115(c)(3) (B) and (C). 

(5) SECTION 116 PROCEEDINGS.—(A) A petition described in 

subsection (a) to initiate proceedings under section 801(b) concerning the determination of royalty rates and terms as provided in section 116 may be filed at any time within 1 year 

after negotiated licenses authorized by section 116 are terminated or expire and are not replaced by subsequent agreements. 

(B) If a negotiated license authorized by section 116 is terminated or expires and is not replaced by another such license 

agreement which provides permission to use a quantity of musical works not substantially smaller than the quantity of such 

works performed on coin-operated phonorecord players during 

the 1-year period ending March 1, 1989, the Copyright Royalty 

Judges shall, upon petition filed under paragraph (1) within 1 

year after such termination or expiration, commence a proceeding to promptly establish an interim royalty rate or rates 

for the public performance by means of a coin-operated phonorecord player of nondramatic musical works embodied in 

phonorecords which had been subject to the terminated or expired negotiated license agreement. Such rate or rates shall be 

the same as the last such rate or rates and shall remain in 

force until the conclusion of proceedings by the Copyright Royalty Judges, in accordance with section 803, to adjust the royalty rates applicable to such works, or until superseded by a 

new negotiated license agreement, as provided in section 

116(b). 

(6) SECTION 118 PROCEEDINGS.—A petition described in subsection (a) to initiate proceedings under section 801(b)(1) concerning the determination of reasonable terms and rates of royalty payments as provided in section 118 may be filed in the 

year 2006 and in each subsequent fifth calendar year. 

(7) SECTION 1004 PROCEEDINGS.—A petition described in subsection (a) to initiate proceedings under section 801(b)(1) concerning the adjustment of reasonable royalty rates under section 1004 may be filed as provided in section 1004(a)(3). 

(8) PROCEEDINGS CONCERNING DISTRIBUTION OF ROYALTY

FEES.—With respect to proceedings under section 801(b)(3) concerning the distribution of royalty fees in certain circumstances 

under section 111, 119, or 1007, the Copyright Royalty Judges 

shall, upon a determination that a controversy exists concerning such distribution, cause to be published in the Federal 


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114 

Register notice of commencement of proceedings under this 

chapter. 

* * * * * * * 

CHAPTER 14—UNAUTHORIZED DIGITAL PERFORMANCE 

OF PRE-1972 SOUND RECORDINGS 

Sec. 

1401. Unauthorized Digital Performance of Pre-1972 Sound Recordings. 

§ 1401. Unauthorized Digital Performance of Pre-1972 Sound 

Recordings 

(a) UNAUTHORIZED ACTS.—Anyone who, before February 15, 2067, 

and without the consent of the rights owner, performs publicly, by 

means of a digital audio transmission, a sound recording fixed on 

or after January 1, 1923, and before February 15, 1972, shall be 

subject to the remedies provided in sections 502 through 505 to the 

same extent as an infringer of copyright. 

(b) CERTAIN AUTHORIZED TRANSMISSIONS.—A digital audio transmission of a sound recording fixed on or after January 1, 1923, and 

before February 15, 1972, shall, for purposes of subsection (a), be 

considered to be authorized and made with the consent of the rights 

owner if— 

(1) the transmission is made by a transmitting entity that is 

publicly performing sound recordings fixed on or after February 

15, 1972, by means of digital audio transmissions subject to 

section 114; 

(2) the transmission would satisfy the requirements for statutory licensing under section 114(d)(2), or would be exempt 

under section 114(d)(1), if the sound recording were fixed on or 

after February 15, 1972; 

(3) in the case of a transmission that would not be exempt 

under section 114(d)(1) as described in paragraph (2), the 

transmitting entity pays statutory royalties and provides notice 

of its use of the relevant sound recording in the same manner 

as is required by regulations adopted by the Copyright Royalty 

Judges for sound recordings fixed on or after February 15, 

1972; and 

(4) in the case of a transmission that would not be exempt 

under section 114(d)(1) as described in paragraph (2), the 

transmitting entity otherwise satisfies the requirements for statutory licensing under section 114(f)(3)(B). 

(c) TRANSMISSIONS BY DIRECT LICENSING OF STATUTORY SERVICES.— 

(1) IN GENERAL.—A transmission of a sound recording fixed 

on or after January 1, 1923, and before February 15, 1972, 

shall, for purposes of subsection (a), be considered to be authorized and made with the consent of the rights owner if such 

transmission is included in a license agreement voluntarily negotiated at any time between the rights owner and the entity 

performing the sound recording. 

(2) PAYMENT OF ROYALTIES TO NONPROFIT COLLECTIVE.—To 

the extent that a license agreement described in paragraph (1) 

and entered into on or after the date of the enactment of this 

section extends to digital audio transmissions of a sound reVerDate Sep 11 2014 05:56 Sep 20, 2018 Jkt 079010 PO 00000 Frm 00114 Fmt 6659 Sfmt 6603 E:\HR\OC\SR339.XXX SR339

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cording fixed on or after January 1, 1923, and before February 

15, 1972, that meet the conditions of subsection (b), the licensee 

shall pay, to the collective designated to distribute receipts from 

the licensing of transmissions in accordance with section 114(f), 

50 percent of the performance royalties for the transmissions 

due under the license, with such royalties fully credited as payments due under the license. 

(3) DISTRIBUTION OF ROYALTIES BY COLLECTIVE.—The collective described in paragraph (2) shall, in accordance with subparagraphs (B) through (D) of section 114(g)(2), and paragraphs (5) and (6) of section 114(g)), distribute the royalties received under paragraph (2) under the license described in paragraph (2). Such payments shall be the only payments to which 

featured and nonfeatured artists are entitled by virtue of the 

transmissions described in paragraph (2) under the license. 

(4) RULE OF CONSTRUCTION.—This subsection does not prohibit any other license from directing the licensee to pay other 

royalties due to featured and nonfeatured artists for such transmissions to the collective designated to distribute receipts from 

the licensing of transmissions in accordance with section 114(f). 

(d) RELATIONSHIP TO STATE LAW.— (1) IN GENERAL.—Nothing in this section shall be construed 

to annul or limit any rights or remedies under the common law 

or statutes of any State for sound recordings fixed before February 15, 1972, except, notwithstanding section 301(c), for the 

following: 

(A) This section preempts any claim of common law copyright or equivalent right under the laws of any State arising from any digital audio transmission that is made, on 

and after the date of the enactment of this section, of a 

sound recording fixed on or after January 1, 1923, and before February 15, 1972. 

(B) This section preempts any claim of common law copyright or equivalent right under the laws of any State arising from any reproduction that is made, on and after the 

date of the enactment of this section, of a sound recording 

fixed on or after January 1, 1923, and before February 15, 

1972, and that would satisfy the requirements for statutory 

licensing under paragraphs (1) and (6) of section 112(e), if 

the sound recording were fixed on or after February 15, 

1972. 

(C) This section preempts any claim of common law copyright or equivalent right under the laws of any State arising from any digital audio transmission or reproduction 

that is made, before the date of the enactment of this section, of a sound recording fixed on or after January 1, 

1923, and before February 15, 1972, if— 

(i) the digital audio transmission would have satisfied the requirements for statutory licensing under section 114(d)(2) or been exempt under section 114(d)(1), 

or the reproduction would have satisfied the requirements of section 112(e)(1), as the case may be, if the 

sound recording were fixed on or after February 15, 

1972; and 

(ii) either— 


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116 

(I) except in the case of a transmission that 

would have been exempt under section 114(d)(1), 

the transmitting entity, not later than 270 days 

after the date of the enactment of this section, pays 

statutory royalties and provides notice of the use of 

the relevant sound recordings in the same manner 

as is required by regulations adopted by the Copyright Royalty Judges for sound recordings that are 

protected under this title for all the digital audio 

transmissions and reproductions satisfying the requirements for statutory licensing under sections 

112(e)(1) and 114(d)(2) during the 3 year period 

ending on the date of the enactment of this section; 

or 

(II) an agreement voluntarily negotiated between 

the rights owner and the entity performing the 

sound recording authorizes or waives liability for 

any such transmission or reproduction and the 

transmitting entity has complied with all provisions of such agreement for any such transmission 

or reproduction. 

(2) RULE OF CONSTRUCTION FOR COMMON LAW COPYRIGHT.— 

For purposes of subparagraphs (A) through (C) of paragraph 

(1), a claim of common law copyright or equivalent right under 

the laws of any State includes a claim that characterizes conduct subject to such subparagraphs as an unlawful distribution, act of record piracy, or similar violation. 

(3) RULE OF CONSTRUCTION FOR PUBLIC PERFORMANCE

RIGHTS.—Nothing in this section shall be construed to recognize 

or negate the existence of public performance rights in sound recordings under the laws of any State. 

(e) LIMITATIONS ON REMEDIES.— 

(1) FAIR USE; USES BY LIBRARIES, ARCHIVES, AND EDUCATIONAL INSTITUTIONS.— 

‘‘(A) IN GENERAL.—The limitations on the exclusive rights 

of a copyright owner described in sections 107, 108, and 

110 shall apply to a claim under subsection (a) of this section for the unauthorized performance of a sound recording 

fixed on or after January 1, 1923, and before February 15, 

1972. 

(B) RULE OF CONSTRUCTION FOR SECTION 108(H).—With 

respect to the application of section 108(h) to a claim for 

unauthorized performance of a sound recording first fixed 

on or after January 1, 1923, and before February 15, 1972, 

under subsection (a) of this section, the phrase ‘during the 

last 20 years of any term of copyright of a published work’ 

in such section 108(h) shall be construed to mean at any 

time after the effective date of this section. 

(2) ACTIONS.—The limitations on actions described in section 

507 shall apply to a claim under subsection (a) of this section 

for the unauthorized performance of a sound recording fixed on 

or after January 1, 1923, and before February 15, 1972. 

(3) MATERIAL ONLINE.—Section 512 shall apply to a claim 

under subsection (a) for the unauthorized performance of a 


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117 

sound recording fixed on or after January 1, 1923, and before 

February 15, 1972. 

(4) PRINCIPLES OF EQUITY.—Principles of equity apply to remedies for a violation of this section to the same extent as such 

principles apply to remedies for infringement of copyright. 

(5) FILING REQUIREMENT FOR STATUTORY DAMAGES AND AT- TORNEYS’ FEES.— (A) FILING OF INFORMATION ON SOUND RECORDINGS.— (i) FILING REQUIREMENT.—Except in the case of a 

transmitting entity that has filed contact information 

for that transmitting entity under subparagraph (B), in 

any action under this section, an award of statutory 

damages or of attorneys’ fees under section 504 or 505 

may be made with respect to an unauthorized transmission of a sound recording under subsection (a) of 

this section only if— 

(I) the rights owner has filed with the Copyright 

Office a schedule that specifies the title, artist, and 

rights owner of the sound recording and contains 

such other information, as practicable, as the Register of Copyrights prescribes by regulation; and 

(II) the transmission is made after the end of the 

90-day period beginning on the date on which the 

information filed under subclause (I) is indexed 

into the public records of the Copyright Office. 

(ii) REGULATIONS.—Not later than 180 days after the 

date of enactment of this section, the Register of Copyrights shall issue regulations establishing the form, 

content, and procedures for the filing of schedules 

under clause (i). Such regulations shall provide that 

persons may request that they receive timely notification of such filings, and shall set forth the manner in 

which such requests may be made. 

(B) FILING OF CONTACT INFORMATION FOR TRANSMITTING

ENTITIES.— (i) REQUIREMENT.—Not later than 30 days after the 

date of enactment of this section, the Register of Copyrights shall issue regulations establishing the form, 

content, and procedures for the filing, by any entity 

that, as of the date of the enactment of this section, performs sound recordings fixed before February 15, 1972, 

by means of digital audio transmissions, of contact information for such entity. 

(ii) TIME LIMIT ON FILINGS.—The Register of Copyrights may not accept filings under clause (i) after the 

date that is 180 days after the date of enactment of this 

section. 

(iii) LIMITATION ON STATUTORY DAMAGES AND ATTORNEYS’ FEES.— (I) LIMITATION.—An award of statutory damages 

or of attorneys’ fees under section 504 or 505 may 

not be made, against an entity that has filed contact information for that entity under clause (i) of 

this subparagraph, with respect to an unauthorized transmission by that entity of a sound recordVerDate Sep 11 2014 05:56 Sep 20, 2018 Jkt 079010 PO 00000 Frm 00117 Fmt 6659 Sfmt 6603 E:\HR\OC\SR339.XXX SR339

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ing under subsection (a) of this section if the transmission is made not later than 90 days after the 

date on which the entity receives a notice that— 

(aa) is sent by or on behalf of the rights 

owner of the sound recording; 

(bb) states that the entity is not legally authorized to transmit that sound recording 

under subsection (a); and 

(cc) identifies the sound recording in a 

schedule conforming to the requirements prescribed by the regulations issued under subparagraph (A)(ii). 

(II) UNDELIVERABLE NOTICES.—In any case in 

which a notice under subclause (I) is sent to an entity by mail or courier service and the notice is returned to the sender because the entity either is no 

longer located at the address provided in the contact information filed under clause (i) or has refused to accept delivery, or the notice is sent by 

electronic mail and is undeliverable, the 90-day period under subclause (I) shall begin on the date of 

the attempted delivery. 

(C) SECTION 412.—Section 412 shall not limit an award 

of statutory damages under section 504(c) or attorneys’ fees 

under section 505 with respect to an unauthorized transmission of a sound recording under subsection (a) of this 

section. 

(6) APPLICABILITY OF OTHER PROVISIONS.— 

(A) IN GENERAL.—Subject to subparagraph (B), no provision of this title shall apply to or limit the remedies available under this section except as otherwise provided in this 

section. 

(B) APPLICABILITY OF DEFINITIONS.—Any term used in 

this section that is defined in section 101 shall have the 

meaning given that term in section 101. 

(f) APPLICATION OF SECTION 230 SAFE HARBOR.—For purposes of 

section 230 of the Communications Act of 1934 (47 U.S.C. 230), subsection (a) of this section shall be considered to be a ‘‘law pertaining 

to intellectual property’’ under subsection (e)(2) of such section 230. 

(g) RIGHTS OWNER DEFINED.—In this section, the term ‘‘rights 

owner’’ means the person who has the exclusive right to reproduce 

a sound recording under the laws of any State. 

TITLE 28, UNITED STATES CODE 

* * * * * * * 

PART I—ORGANIZATION OF COURTS 

* * * * * * * 

CHAPTER 5—DISTRICT COURTS 

* * * * * * * 


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119 

§ 137. Division of business among district judges 

øThe business¿ (a) IN GENERAL.—The business of a court having 

more than one judge shall be divided among the judges as provided 

by the rules and orders of the court. 

The chief judge of the district court shall be responsible for the 

observance of such rules and orders, and shall divide the business 

and assign the cases so far as such rules and orders do not otherwise prescribe. 

If the district judges in any district are unable to agree upon the 

adoption of rules or orders for that purpose the judicial council of 

the circuit shall make the necessary orders. 

(b) RANDOM ASSIGNMENT OF RATE COURT PROCEEDINGS.— 

(1) IN GENERAL.— 

(A) DETERMINATION OF LICENSE FEE.—Except as provided in subparagraph (B), in the case of any performing 

rights society subject to a consent decree, any application 

for the determination of a license fee for the public performance of music in accordance with the applicable consent decree shall be made in the district court with jurisdiction 

over that consent decree and randomly assigned to a judge 

of that district court according to the rules of that court for 

the division of business among district judges, provided 

that any such application shall not be assigned to— 

(i) a judge to whom continuing jurisdiction over any 

performing rights society for any performing rights society consent decree is assigned or has previously been 

assigned; or 

(ii) a judge to whom another proceeding concerning 

an application for the determination of a reasonable license fee is assigned at the time of the filing of the application. 

(B) EXCEPTION.—Subparagraph (A) does not apply to an 

application to determine reasonable license fees made by individual proprietors under section 513 of title 17. 

(2) RULE OF CONSTRUCTION.—Nothing in paragraph (1) shall 

modify the rights of any party to a consent decree or to a proceeding to determine reasonable license fees, to make an application for the construction of any provision of the applicable 

consent decree. Such application shall be referred to the judge 

to whom continuing jurisdiction over the applicable consent decree is currently assigned. If any such application is made in 

connection with a rate proceeding, such rate proceeding shall be 

stayed until the final determination of the construction application. Disputes in connection with a rate proceeding about 

whether a licensee is similarly situated to another licensee shall 

not be subject to referral to the judge with continuing jurisdiction over the applicable consent decree. 

* * * * * * * 

Æ 


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