[Federal Register Volume 89, Number 20 (Tuesday, January 30, 2024)]
[Notices]
[Pages 5940-5945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-01781]


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LIBRARY OF CONGRESS

Copyright Office

[Docket No. 2024-1]


Periodic Review of the Designations of the Mechanical Licensing 
Collective and Digital Licensee Coordinator

AGENCY: U.S. Copyright Office, Library of Congress.

ACTION: Notification of inquiry.

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SUMMARY: The U.S. Copyright Office is issuing a notification of 
inquiry, as required by the Music Modernization Act, regarding whether 
the existing designations of the mechanical licensing collective and 
digital licensee coordinator should be continued.

DATES: Initial submissions by the currently designated mechanical 
licensing collective and digital licensee coordinator must be received 
no later than 11:59 p.m. Eastern Time on April 1, 2024. Written initial 
public comments must be received no later than 11:59 p.m. Eastern Time 
on May 29, 2024. Written reply public comments must be received no 
later than 11:59 p.m. Eastern Time on June 28, 2024. Reply submissions 
of the currently designated mechanical licensing collective and digital 
licensee coordinator must be received no later than 11:59 p.m. Eastern 
Time on July 29, 2024.

ADDRESSES: For reasons of government efficiency, the Copyright Office 
is using the regulations.gov system for the submission and posting of 
public comments in this proceeding. All public comments in response to 
this notice are therefore to be submitted electronically through 
regulations.gov. Specific instructions for submitting comments are 
available on the Copyright Office's website at https://www.copyright.gov/rulemaking/mma-designations/2024. If electronic 
submission of comments is not feasible due to lack of access to a 
computer or the internet, please contact the Office using the contact 
information below for special instructions. Initial and reply 
submissions by the currently designated mechanical licensing collective 
and digital licensee coordinator should be made by email to the 
Copyright Office's Assistant to the General Counsel.

FOR FURTHER INFORMATION CONTACT: Rhea Efthimiadis, Assistant to the 
General Counsel, by email at <a href="/cdn-cgi/l/email-protection#4d20282b390d2e223d343f242a2539632a223b"><span class="__cf_email__" data-cfemail="137e76756753707c636a617a747b673d747c65">[email protected]</span></a> or telephone at (202) 
707-8350.

SUPPLEMENTARY INFORMATION:

I. Statutory Background

    The Orrin G. Hatch-Bob Goodlatte Music Modernization Act (``MMA'') 
\1\ created a statutory blanket mechanical license for the reproduction 
and distribution of nondramatic musical works by digital music 
providers (``DMPs'') in the form of digital phonorecord deliveries, 
including permanent downloads, limited downloads, and interactive 
streams (the ``blanket license''), and eliminated the song-by-song 
``notice of intention'' process for such uses.
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    \1\ Public Law 115-264, 132 Stat. 3676 (2018).
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    The MMA directed the Copyright Office (``Office'') to designate a 
mechanical licensing collective (``MLC'') to administer the blanket 
license \2\ and a digital licensee coordinator (``DLC'') to represent 
DMPs in matters related to the administration of the blanket license. 
However, if the Office is unable to identify an entity that meets the 
statutory qualifications to serve as the DLC, it may decline to 
designate one.\3\ As discussed further below, the Office made its 
initial MLC and DLC designations in July 2019.\4\ At that time, it 
designated the entity ``Digital Licensee Coordinator, Inc.'' as the DLC 
and the entity ``Mechanical Licensing Collective'' as the MLC.\5\ The 
Office is required to review these designations every five years, with 
the first review to begin in January 2024.\6\ This notice initiates the 
review process.
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    \2\ 17 U.S.C. 115(d)(3)(B); see also id. at 115(e)(15).
    \3\ Id. at 115(d)(3)(D)(i)(IV), (d)(5).
    \4\ 37 CFR 210.23; 84 FR 32274, 32296 (July 8, 2019).
    \5\ 37 CFR 210.23; 84 FR at 32292, 32296. In this notice, the 
currently designated digital licensing coordinator will be 
designated as the ``Digital Licensing Coordinator'' and the 
statutory digital licensing coordinator will be designated in 
lowercase or by using the abbreviated term, ``the DLC.'' Similarly, 
the currently designated mechanical licensing collective will be 
designated via capitalization (the ``Mechanical Licensing 
Collective'') and the statutory mechanical licensing collective will 
be designated in lowercase or by using the abbreviated term, ``the 
MLC.''
    \6\ 17 U.S.C. 115(d)(3)(B)(ii) (noting that the review occurs 
``every 5 years, beginning with the fifth full calendar year to 
commence after the initial designation''); id. at 115(d)(5)(B)(ii) 
(same).
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A. The MLC's Designation Criteria

    The MMA provides that an entity wishing to be designated as the MLC 
must: (1) be a single nonprofit entity, not owned by any other entity, 
created by copyright owners to carry out its statutory 
responsibilities; \7\ (2) be ``endorsed by, and enjoy[] 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''; \8\ and (3) possess the administrative and technological 
capabilities necessary to carry out a wide array of responsibilities 
associated with administering the blanket license.\9\ If no entity 
meets these statutory criteria, the Office must designate an entity as 
the MLC that most nearly fits them.\10\
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    \7\ Id. at 115(d)(3)(A)(i).
    \8\ Id. at 115(d)(3)(A)(ii).
    \9\ Id. at 115(d)(3)(A)(iii); see also id. at 115(d)(3)(C)(i)-
(iii) (enumerating thirteen functions, in addition to the ability to 
administer voluntary licenses).
    \10\ Id. at 115(d)(3)(B)(iii).
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    While the first criterion regarding nonprofit status is 
straightforward, the second and third criteria require more 
explanation. As part of the initial MLC designation proceeding, the 
Office had to address the correct construction and

[[Page 5941]]

application of the statute's endorsement criterion. The Office sought 
public input on this issue.\11\ After considering the relevant comments 
and evaluating the statute, it concluded that the statute's endorsement 
criterion ``mandates that the entity designated as the MLC be endorsed 
and supported by musical work copyright owners that together earned the 
largest aggregate percentage (among MLC candidates) of total royalties 
from the use of their musical works in covered activities in the U.S. 
during the statutory three-year period.'' \12\ It further concluded 
that ``the endorsement criterion is a plurality requirement based on 
market share, measured by applicable licensing revenue.'' \13\
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    \11\ 83 FR 65747, 65753 (Dec. 21, 2018).
    \12\ 84 FR at 32282.
    \13\ Id. For a full discussion of the Office's conclusions 
regarding how the endorsement criterion is applied, interested 
parties should review that portion of the initial designation 
determination. Id. at 32280-86.
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    The third MLC designation criterion addresses the administrative 
and technological capabilities associated with carrying out its 
statutory responsibilities. Those responsibilities are executed by the 
MLC's board of directors and task-specific committees. The MMA provides 
that the MLC's board will consist of 14 voting members and 3 nonvoting 
members.\14\ It also requires the MLC's board to establish three 
committees: an operations advisory committee; an unclaimed royalties 
oversight committee; and a dispute resolution committee.\15\
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    \14\ For the statutory requirements regarding the board 
described in this paragraph, see 17 U.S.C. 115(d)(3)(D)(i).
    \15\ Id. at 115(d)(3)(D)(iv). Further discussion of the MLC's 
board and committees can be found in the Office's initial 
designation notice. 83 FR at 65748-50.
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    The MLC's responsibilities under the MMA include the following 
tasks:
    <bullet> Offering and administering blanket licenses;
    <bullet> Collecting and distributing royalties from DMPs for 
covered activities;
    <bullet> Identifying musical works embodied in sound recordings and 
identifying and locating copyright owners of such musical works; \16\
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    \16\ The statute also mentions ``and shares of such works'' when 
referring to musical works. See, e.g., 17 U.S.C. 
115(d)(3)(C)(i)(III). For brevity's sake, this notice will omit 
references to such shares.
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    <bullet> Establishing and maintaining a musical works database 
relevant to licensing activities under the MMA;
    <bullet> Administering a process by which copyright owners can 
claim ownership of musical works;
    <bullet> Investing in relevant resources, and arranging for 
services of outside vendors and others to support the MLC's activities; 
and
    <bullet> Maintaining records of its activities and engaging in and 
responding to audits.\17\
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    \17\ Id. at 115(d)(3)(C)(i)(I)-(V), (VII), (XII); see also id. 
at 115(d)(3)(C)(i), (iii) (identifying the MLC's additional 
statutory authorities and functions).
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B. The DLC's Designation Criteria, Authorities, and Functions

    Similar to the MLC, the DLC must be a single nonprofit entity that 
is endorsed by and enjoys substantial support from DMPs, and must 
possess the administrative and technological capabilities necessary to 
carry out its responsibilities.\18\ Unlike the MLC, in the event the 
Office is unable to identify an entity that fulfills the criteria for 
the DLC, it may decline to designate one.\19\
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    \18\ Id. at 115(d)(3)(C)(i)-(iii) (enumerating thirteen 
functions, in addition to the ability to administer voluntary 
licenses); see also id. at 115(d)(3)(B)(iii).
    \19\ Id. at 115(d)(5)(B)(iii).
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    The statute authorizes the DLC to perform the following functions: 
(1) establishing a governance structure, criteria for membership, and 
any dues to be paid by its members; (2) engaging in activities related 
to the administrative assessment, including participating in 
administrative assessment proceedings before the Copyright Royalty 
Judges and engaging in efforts to enforce DMPs' notice and payment 
obligations related to the assessment; (3) gathering and providing 
documentation for use in proceedings before the Copyright Royalty 
Judges to set the statutory mechanical license's rates and terms; (4) 
initiating and participating in proceedings before the Copyright Office 
with respect to the blanket license; (5) maintaining records of its 
activities; and (6) assisting in publicizing the MLC's existence and 
functions to copyright owners.\20\
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    \20\ Id. at 115(d)(5)(C)(i). The ``administrative assessment'' 
is the fee paid by digital music providers for the MLC's costs in 
establishing, maintaining, and operating the MLC to fulfill its 
statutory functions, excluding any added costs related to providing 
services under voluntary licenses. Id. at 115(d)(7)(D), (e)(3), 
(e)(6).
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    Further, under the MMA, the DLC is required to ``make reasonable, 
good-faith efforts'' to assist the MLC in its efforts to locate and 
identify copyright owners of unmatched musical works by encouraging 
DMPs to publicize the MLC's existence and the ability of copyright 
owners to claim unclaimed accrued royalties, including by posting 
contact information for the collective at reasonably prominent 
locations on DMP websites and applications and conducting in-person 
outreach activities with songwriters.\21\
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    \21\ Id. at 115(d)(5)(C)(i)(VII), (d)(5)(C)(iii).
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    The DLC also appoints a representative to act as a nonvoting member 
of the MLC's board and DMP representatives to the MLC's operations 
advisory committee.\22\
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    \22\ Id. at 115(d)(3)(D)(iv)(II), (i)(IV).
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II. Regulatory Background

A. Initial Designation

    For the initial MLC and DLC designations, the Office published a 
notice in the Federal Register soliciting proposals from parties who 
wished to be designated as those entities, and requested information 
from those parties regarding governance, administrative and 
technological capabilities to perform the MMA's required functions, and 
indicia of endorsement and support.\23\ The Office also requested 
public comments on the parties' proposals.\24\
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    \23\ 83 FR 65747.
    \24\ Id.
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    The Office received one proposal for designation as the DLC and two 
proposals for designation as the MLC. It received over 600 public 
comments responding to the proposals and held several ex parte meetings 
addressing them.\25\ After considering these comments and the statutory 
designation criteria, the Office concluded that the entity ``Digital 
Licensee Coordinator, Inc.,'' incorporated in Delaware on March 20, 
2019, ``me[t] each of the statutory criteria required of the digital 
licensee coordinator,'' and would be designated as the DLC.\26\ With 
respect to the MLC, the Office concluded that, while both candidates to 
become the MLC ``[met] the statutory criteria to be a nonprofit created 
to carry out its statutory responsibilities,'' the Mechanical Licensing 
Collective ``made a better showing as to its prospective administrative 
and technological capabilities'' and was the only candidate that met 
the statute's ``endorsement'' criteria.\27\ Therefore, it designated 
the entity ``Mechanical Licensing Collective,'' incorporated in 
Delaware on March 5, 2019, as the MLC.\28\
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    \25\ U.S. Copyright Office, Ex Parte Communications, https://www.copyright.gov/rulemaking/mma-designations/ex-parte-communications.html (last visited Jan. 24, 2024) (hosting ex parte 
meeting summary letters related to the Office's initial 
designations).
    \26\ 37 CFR 210.23; 84 FR at 32292, 32296.
    \27\ 84 FR at 32276, 32296.
    \28\ 37 CFR 210.23; 84 FR at 32296.
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B. The Periodic Designation Review Process

    The MMA requires the Office to periodically evaluate whether the 
existing MLC and DLC designations

[[Page 5942]]

should be continued or, if either designation is not continued, whether 
a different entity should be designated instead.\29\ The Office 
commences this process by publication of a notice in the Federal 
Register by the end of January in the relevant year.
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    \29\ 17 U.S.C. 115(d)(3)(B)(ii); id. at 115(d)(5)(B)(ii).
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    For the instant review of the MLC and DLC designations, the Office 
is first soliciting information from the currently designated entities 
regarding their past performance and capabilities, as well as future 
plans. The responses from the Mechanical Licensing Collective and the 
Digital Licensing Coordinator will be available for public review. The 
Office encourages public comments concerning whether the existing MLC 
and DLC designations should be continued, or different entities should 
be designated. Once the public has submitted comments, the currently 
designated entities will be given an opportunity to respond. After the 
time for submissions from the Mechanical Licensing Collective, Digital 
Licensee Coordinator, and the public have expired, the Office may also 
utilize informal meetings to address discrete issues prior to issuing a 
determination. Any such meetings will occur after written comments have 
been submitted and will follow the Office's ex parte meeting 
guidelines.\30\
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    \30\ 37 CFR 205.24. Instructions on how to request an ex parte 
meeting are available on the Office's website at https://www.copyright.gov/ex-parte-meetings/.
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    After evaluating the record in this proceeding, the Office will 
determine whether the current MLC and DLC designations should be 
continued. If it concludes that a designation should be continued, it 
will publish its determination in the Federal Register, ending this 
proceeding.\31\ If the Office decides that either designation should 
not be continued, it will solicit proposals for designation in the 
Federal Register. If the Office ultimately designates a new MLC or DLC, 
it will provide the reasons for such a designation and the 
designation's effective date.\32\ Further, if it designates a new MLC, 
it will ``adopt regulations to govern the transfer of licenses, funds, 
records, data, and administrative responsibilities from the existing 
mechanical licensing collective to the new entity.'' \33\
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    \31\ 17 U.S.C. 115(d)(3)(B)(ii)(I); see also id. at 
115(d)(5)(B)(ii).
    \32\ Id. at 115(d)(3)(B)(ii)(I); see also id. at 
115(d)(5)(B)(ii).
    \33\ Id. at 115(d)(3)(B)(ii)(II).
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III. Request for Information From the Current Designees

    The Copyright Office seeks information to assist its review of the 
existing MLC and DLC designations and whether they should be continued. 
The questions in this notification of inquiry are intended to focus the 
current designees' submissions on the statutory designation criteria 
and certain areas of interest to the Office. The parties also may 
provide additional information they wish the Office to consider in 
deciding whether to continue the current designations.

A. Mechanical Licensing Collective-Directed Inquiries

    The Office requests the following information from the Mechanical 
Licensing Collective, organized by the criteria categories below.
1. Nonprofit Status
    The MLC must be a nonprofit entity, not owned by any other entity, 
that is created by copyright owners to carry out its statutory 
responsibilities. The Office requests proof that the Mechanical 
Licensing Collective continues to meet this criterion.
2. Indicia of Endorsement and Support
    The MLC must be ``endorsed by, and enjoy[] 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.'' \34\ The Office requests information from the Mechanical 
Licensing Collective regarding whether it continues to satisfy the 
endorsement criterion.
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    \34\ Id. at 115(d)(3)(A)(ii).
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3. Administrative and Technological Capabilities
    The MLC must have the administrative and technological capabilities 
to perform its statutorily required functions.\35\ The Office requests 
a detailed description explaining how the Mechanical Licensing 
Collective has the administrative and technological capabilities to 
perform its required functions. It asks that the response address the 
following subjects:
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    \35\ Id. at 115(d)(3)(A)(iii).
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i. Progress Implementing the Recommendations in the Office's 
``Unclaimed Royalties'' Report
    The Office requests an update on the Mechanical Licensing 
Collective's efforts to implement recommendations contained in the 
Office's report ``Unclaimed Royalties: Best Practice Recommendations 
for the Mechanical Licensing Collective,'' \36\ including what 
recommendations have been implemented to date, what efforts are in 
progress, its plans to implement recommendations in the future, and a 
discussion of any recommendations it is not planning to implement, 
including the reasons for such decision(s).
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    \36\ U.S. Copyright Office, Unclaimed Royalties: Best Practice 
Recommendations for the Mechanical Licensing Collective (2021) 
(``Unclaimed Royalties Report''), https://www.copyright.gov/policy/unclaimed-royalties/unclaimed-royalties-final-report.pdf.
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ii. Ownership Identification, Matching, and Claiming Process and 
Maintenance of Musical Works Database
    The Office requests information about the Mechanical Licensing 
Collective's ability to identify musical works embodied in particular 
sound recordings, and to identify and locate the copyright owners of 
such musical works, including the following:
    (a) Please describe how the Mechanical Licensing Collective has 
worked to improve automated and manual matching since the blanket 
license became available and plans to further enhance such matching 
over the next 5 years, including with respect to the matching of 
reported sound recordings to musical works as well as the matching of 
those musical works to identified and located copyright owners;
    (b) Please identify the Mechanical Licensing Collective's target 
goals or estimates, including any relevant industry benchmarks, for 
matching reported sound recordings to musical works and identifying and 
locating copyright owners over the next five years, as expressed in 
terms of (1) a match rate (i.e., the total amount of royalties matched 
to musical works registered in the Mechanical Licensing Collective's 
database, compared to the total royalties reported by DMPs); and (2) a 
distribution rate (i.e., the total amount of royalties matched and paid 
to the Mechanical Licensing Collective's members, compared to the total 
royalties reported by DMPs);
    (c) Please explain how the Mechanical Licensing Collective: (1) is 
using quantifiable measurements to monitor its match rate confidence; 
and (2) tunes confidence levels without using numerical metrics; \37\
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    \37\ See The Mechanical Licensing Collective, 2022 Annual Report 
9 (2022), https://www.themlc.com/hubfs/The%20MLC%202022%20Annual%20Report.pdf (stating that the Mechanical 
Licensing Collective ``does not use numerical metrics to monitor 
match rate confidence''); Designation Proposal of Mechanical 
Licensing Collective at 40, Docket No. 2018-11 (Mar. 21, 2019) 
(``Mechanical Licensing Collective Initial Designation Proposal''), 
https://www.gov/comment/COLC-2018-0011-0012 (``Tuning the confidence 
levels of a matching system is critical to proper functioning.'').

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[[Page 5943]]

    (d) Please address whether the Mechanical Licensing Collective has 
identified any notable trends or patterns in reported usage that it has 
been unable to match through its efforts to date. If it has identified 
such trends or patterns, please describe what targeted efforts have 
been undertaken to date, and are planned to take place over the next 5 
years, to attempt to address these trends or patterns;
    (e) Please describe any efforts the Mechanical Licensing Collective 
has undertaken to enhance database and claiming portal functionality, 
including with respect to searching the database, sorting and filtering 
queries, and sharing and exporting results, as well as specific plans 
to develop additional functionality over the next five years;
    (f) Please describe any plans the Mechanical Licensing Collective's 
has to address disputes and overclaims (or overlapping claims) via a 
module within its portal;
    (g) Please describe the Mechanical Licensing Collective's efforts 
to develop portal access (or a unique portal), or equivalent database 
functionalities, for songwriters who are not self-administered (e.g., 
those represented by a publisher, administrator, or collective 
management organization) to permit them to access, provide, or correct 
information about themselves and their works maintained by the MLC, 
including the ability for such songwriters to flag data issues with 
their publisher or other representative, to provide data directly to 
the MLC, and to have permissions-based access to view information such 
as stream counts and revenue associated with their musical works; \38\
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    \38\ See Unclaimed Royalties Report at 49-51; The Mechanical 
Licensing Collective, Welcome to The MLC's Public Work Search, 
https://portal.themlc.com/search#work (last visited Jan. 24, 2024) 
(``Songwriters, Composers & Lyricists: . . . The MLC is working on 
additional ways to help you flag and report data errors to your 
publisher or administrator. We hope to launch those later this 
year.'').
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    (h) Please describe how the Mechanical Licensing Collective is 
``maintain[ing] at regular intervals historical records of the 
information contained in the public musical works database, including a 
record of changes to such database information and changes to the 
source of information in database fields, in order to allow tracking of 
changes to the ownership of musical works in the database over time,'' 
the length of such ``regular intervals,'' and how it has determined 
``the most appropriate method for archiving and maintaining such 
historical data to track ownership and other information changes in the 
database''; \39\
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    \39\ 37 CFR 210.31(f).
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    (i) The Mechanical Licensing Collective stated that it would employ 
application program interfaces (``APIs'') ``to allow for bulk 
submission and updating of rights data'' and to otherwise support data 
exchange.\40\ Please describe how the Mechanical Licensing Collective 
has employed systems with APIs to support data exchange to date \41\ 
and its plans to implement any additional such systems over the next 
five years.
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    \40\ Mechanical Licensing Collective Initial Designation 
Proposal at 37, 47.
    \41\ See The Mechanical Licensing Collective, Data Programs, 
https://www.themlc.com/dataprograms#public-search-api (last visited 
Jan. 24, 2024) (referencing the beta launch of Mechanical Licensing 
Collective's Public Search API).
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iii. Collection and Distribution of Royalties, Including Unclaimed 
Accrued Royalties
    The Office requests information about the Mechanical Licensing 
Collective's royalty distributions, including the following topics:
    (a) In its initial designation proposal, the Mechanical Licensing 
Collective stated that it ``does not intend to ever distribute the 
entirety of unclaimed royalties simultaneously [and] intends to 
implement policies allowing use of that discretion to retain unclaimed 
accrued royalties and continue matching efforts in situations where 
there is reasonable evidence that this will result in material 
increases in matching success.'' \42\ Please address whether the 
Mechanical Licensing Collective continues to hold these views;
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    \42\ Mechanical Licensing Collective Initial Designation 
Proposal at 52-53.
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    (b) Please provide information regarding: (1) any steps that the 
Mechanical Licensing Collective is taking to protect against the 
incidence of fraudulent ownership claims and frivolous ownership 
disputes; and (2) whether these steps have been successful; and
    (c) Please provide information addressing whether and to what 
extent the Mechanical Licensing Collective is working with DMPs, 
distributors, aggregators, or others to protect against streaming fraud 
and the status of such efforts, including their success or failure.
iv. Investment in Resources and Vendor Engagement
    The Office understands that the Mechanical Licensing Collective is 
relying on third-party vendors, including The Harry Fox Agency and 
ConsenSys, to support its operations and fulfill its statutory 
obligations.\43\ It is also aware that the Mechanical Licensing 
Collective has recently announced a ``Supplemental Matching Network,'' 
consisting of Bl[ograve]kur, Jaxsta, Pex, Salt and SX Works, to improve 
its matching efforts.\44\ Please provide additional information about 
these relationships, including the specific functions that they 
perform, or have been asked to perform, the vendors' relevant 
experience with clients and projects involving similar scale and type, 
or their industry-specific knowledge. Please provide the same 
information with respect to any other vendors that the Mechanical 
Licensing Collective uses, or has plans to use, in performing its 
duties.
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    \43\ The Mechanical Licensing Collective, 2022 Annual Report 36, 
41 (2022), https://www.themlc.com/hubfs/The%20MLC%202022%20Annual%20Report.pdf.
    \44\ See Kristin Robinson, The MLC Partners With 5 Data Matching 
Companies to Increase Royalties Match Rate, Billboard (Dec. 7, 
2023), https://www.billboard.com/business/publishing/the-mlc-improve-royalties-match-rate-new-data-network-1235545949/.
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v. Funding

[[Page 5944]]

    The statute directs the MLC to establish procedures to guard 
against ``abuse, waste, and the unreasonable use of funds.'' \45\ 
Review of the MMA's legislative history instructs the Office to 
consider the Mechanical Licensing Collective's efficiency or, 
conversely, any ``evidence of fraud, waste, or abuse, including the 
failure to follow the relevant regulations adopted by the Copyright 
Office'' in evaluating whether the current MLC designation should be 
continued.\46\ Accordingly the Office requests information about the 
Mechanical Licensing Collective's procedures to safeguard its use of 
the assessment funds against abuse, waste, and other unreasonable 
expenditures.\47\ The Mechanical Licensing Collective should also 
provide information regarding whether it has become more efficient over 
time. It should address with specificity any expenditure categories 
(e.g., personnel costs, information technology, professional fees, 
outreach, education, communication & events, insurance, rent, computer 
equipment & office expenses) that have significantly increased since 
January 2021, and a detailed explanation for the increase.
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    \45\ 17 U.S.C. 115(d)(3)(D)(ix)(II)(bb)(BB). As noted above, the 
DMPs fund the MLC's operations through an administrative assessment 
that is established by the Copyright Royalty Judges.
    \46\ H.R. Rep. No. 115-651, at 6 (2018).
    \47\ Note that the MMA requires the MLC to retain a qualified 
auditor to examine its books, records, and operations and prepare a 
report on these topics for the MLC's board. 17 U.S.C. 
115(d)(3)(D)(ix)(II). The auditor's letter to the MLC's board can be 
found on the Mechanical Licensing Collective's website. Letter from 
WithumSmith+Brown, P.C. to the Board of Directors of the Mechanical 
Licensing Collective (Dec. 22, 2023), https://www.themlc.com/hubfs/Auditor%20Letter%20to%20Board%20re%20MMA%20Audit%20Provision%20(115(d
)(3)(D)(ix)(II)).pdf.
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vi. Governance
    The Office seeks information related to the Mechanical Licensing 
Collective's governance, including:
    (a) A copy of the Mechanical Licensing Collective's current bylaws, 
including a summary of changes made, if any, from its initial bylaws;
    (b) A list of all the committees the Mechanical Licensing 
Collective has created that are not required by statute, the membership 
of those committees, and how it determined the membership of those 
committees;
    (c) Copies of all the Mechanical Licensing Collective's policies 
addressing its statutory duties, procedures, practices, and guidelines 
(e.g., those governing the collection, processing, holding, and 
distribution of royalties, guidelines for adjustments, member 
registration, ownership disputes, automated and manual matching, data 
quality and verification, investments, conflicts of interest), but 
excluding policies unrelated to the MLC's statutory duties (e.g., 
website terms of use, human resources), the location of these policies, 
procedures, and practices on its website if they are currently 
available to the public, and a summary of changes made, if any, from 
earlier versions of these policies, procedures, practices, and 
guidelines; \48\
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    \48\ To the extent that any of these materials contain 
privileged or confidential commercial or financial information or 
trade secrets, it should provide two versions of such documents to 
the Office: one redacted copy appropriate for public viewing and an 
unredacted copy for the Office. See, e.g., Five Years Later--The 
Music Modernization Act: Hearing Before the Subcomm. on Courts, 
Intell. Prop. and the Internet of the H. Comm. on the Judiciary, 
117th Cong. 6 (2023) (responses to questions for the record of Kris 
Ahrend, CEO, the Mechanical Licensing Collective) (``Our financial 
advisors have advised that we not make public any details about 
specific investment solutions [of the Mechanical Licensing 
Collective's investment policy]. Their reasons include security 
concerns and concerns that such information could be used alongside 
our public royalty distribution timelines to engage in market timing 
to the detriment of [the Mechanical Licensing Collective].''); see 
also 5 U.S.C. 552(b)(4) (exempting agencies from requiring 
disclosures if they involve ``trade secrets and commercial or 
financial information obtained from a person and privileged or 
confidential'').
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    (d) The status of any policies or procedures related to the 
distribution of unclaimed accrued royalties and accrued interest;
    (e) An explanation of how the Mechanical Licensing Collective is 
ensuring that: (1) its policies, procedures, and practices are 
transparent and accountable; \49\ and (2) that all board and committee 
members have equal access to information in the Mechanical Licensing 
Collective's possession;
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    \49\ See 17 U.S.C. 115(d)(3)(D)(ix)(I)(aa).
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    (f) The results of the Mechanical Licensing Collective's ``Board 
Diversity Report'' for 2021 and 2023; \50\ and
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    \50\ The Mechanical Licensing Collective's bylaws require a 
biennial ``Board Diversity Report,'' that ``address[es] the extent 
to which the Board fully and fairly represents the whole music 
publishing and songwriting communities, and should specifically note 
any actual or potential concerns or shortcomings.'' It also 
``address[es] diversity in such areas as gender/race/ethnicity, 
income, musical genre, geography and expertise/experience.'' The 
Mechanical Licensing Collective, Bylaws of the Mechanical Licensing 
Collective sec. 4.8, https://f.hubspotuserconte.net/hubfs/8718396/files/2020-05/Bylaws%20of%20The%20MLC.pdf (last visited Jan. 24, 
2024).
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    (g) How the Mechanical Licensing Collective approaches the 
resolution of disputes with other interested parties (e.g., DMPs, 
songwriters, publishers, or record labels) regarding interpretation of 
the MMA or the Office's regulations.\51\
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    \51\ The Office notes that certain stakeholders would welcome 
referring such questions or disputes to the Office. See, e.g., Five 
Years Later--The Music Modernization Act: Hearing Before the 
Subcomm. on Courts, Intell. Prop. and the Internet of the H. Comm. 
on the Judiciary, 117th Cong. 37, 57-58 (2023) (statements of 
Garrett Levin, President and CEO, Digital Media Association and Abby 
North, President, North Music Group).
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vii. Education and Outreach
    The Office requests information regarding the Mechanical Licensing 
Collective's education and outreach efforts, including how it reaches 
diverse audiences to ``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).'' 
\52\ The Office is also interested in how the Mechanical Licensing 
Collective ``tailor[s] its education and outreach activities in 
recognition of the industry's broad and diverse spectrum of songwriters 
and copyright owners, including by stakeholders' varying levels of 
sophistication, geographic location, age, and music genre,'' including 
how it ``employ[s] dedicated, persistent outreach to historically 
underserved groups.'' \53\ The Office is further interested in how the 
Mechanical Licensing Collective is using data in decision-making and 
performance measurement, with respect to its education and outreach 
efforts, for example, how it is using data to evaluate its education 
and outreach efforts (e.g., in-person outreach at events, webinars, 
advertising, interviews for articles and podcasts, partnerships) when 
considering whether to participate in an event or activity. Finally, 
the Office is interested in how the Mechanical Licensing Collective is 
using ``member demographic statistics and DMP usage analytics . . . to 
better target its education and outreach efforts towards under-
participating groups.'' \54\
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    \52\ S. Rep. No. 115-339, at 14 (2018).
    \53\ Unclaimed Royalties Report at 29.
    \54\ Id. at 38.
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    The Mechanical Licensing Collective is encouraged to provide any 
other information that it believes is relevant to demonstrate it 
continues to meet the statutory designation criteria.

B. Digital Licensee Coordinator-Directed Inquiries

    The Office requests the following information from the Digital 
Licensee Coordinator relevant to determining whether its existing 
designation should be continued:
1. Nonprofit Status
    The Office requests proof that Digital Licensee Coordinator is a 
nonprofit entity, not owned by any other entity,

[[Page 5945]]

that is created to carry out its statutory responsibilities.\55\
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    \55\ 17 U.S.C. 115(d)(5)(A)(i).
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2. Indicia of Endorsement and Support
    The Office requests information from the Digital Licensee 
Coordinator regarding whether it continues to be ``endorsed by and 
enjoy[] 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.'' \56\
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    \56\ Id. at 115(d)(5)(A)(ii).
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3. Administrative Capabilities and Governance
    The DLC must have the administrative capabilities to perform its 
statutory functions.\57\ The Office requests a detailed description of 
the Digital Licensee Coordinator's administrative capabilities and its 
performance of the following functions:
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    \57\ Id. at 115(d)(5)(A)(iii).
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i. Governance
    The Office requests a copy of the Digital Licensee Coordinator's 
current bylaws, including a summary of changes made, if any, from its 
initial bylaws. To the extent not addressed by its bylaws, the Office 
also requests a summary of its governance structure, criteria for 
membership, and dues paid by its members. Lastly, the Office requests a 
list of the Digital Licensee Coordinator's current members, and a 
description of its efforts to grow its membership to other DMPs, and 
any challenges related to such efforts.
ii. Notice and Payment Obligations
    The Office requests information addressing the Digital Licensee 
Coordinator's efforts to enforce notice and payment obligations with 
respect to the administrative assessment, including: (1) how it is 
coordinating such efforts with the Mechanical Licensing Collective; and 
(2) the extent to which it is disclosing information to, and receiving 
information from, the Mechanical Licensing Collective on this topic.
iii. Participation in Proceedings Before the Copyright Office and 
Copyright Royalty Judges
    The Office requests a summary of the Digital Licensee Coordinator's 
participation in Office or Copyright Royalty Judge proceedings, 
including: (1) participating in proceedings before the Copyright 
Royalty Judges to establish the administrative assessment; (2) 
gathering and providing documentation for use in proceedings before the 
Copyright Royalty Judges to set rates and terms under the mechanical 
license; and (3) participating in proceedings before the Office with 
respect to activities regarding the blanket license.\58\
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    \58\ Id. at 115(d)(5)(C)(i)(III)-(V).
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iv. Maintaining Records of the Digital Licensee Coordinator's 
Activities
    The Office requests a description of how the Digital Licensee 
Coordinator is maintaining records of its activities, including efforts 
to ensure that confidential, private, proprietary, or privileged 
information contained in its records is not improperly disclosed or 
used.\59\
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    \59\ Id. at 115(d)(5)(C)(i)(VI), (d)(12)(C).
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v. Assistance With Publicity for Unclaimed Royalties
    The MMA directs the DLC to ``make reasonable, good-faith efforts to 
assist the mechanical licensing collective . . . by encouraging digital 
music providers to publicize the existence of the collective and the 
ability of copyright owners to claim unclaimed accrued royalties.'' 
\60\ The Office requests a detailed description of the steps that the 
Digital Licensee Coordinator has taken to fulfill this requirement, 
including whether all its members have posted the MLC's contact 
information in a prominent location on their websites and 
applications.\61\ The Office also requests a summary of the Digital 
Licensee Coordinator's in-person outreach activities with 
songwriters.\62\
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    \60\ See id. at 115(d)(5)(C)(iii).
    \61\ Id. at 115(d)(5)(C)(iii)(I).
    \62\ Id. at 115(d)(5)(C)(iii)(II).
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    The Digital Licensee Coordinator is encouraged to provide any other 
information that it believes is relevant to demonstrate it continues to 
meet the statutory designation criteria.

IV. Public Participation

    Interested members of the public are encouraged to comment on the 
topics addressed in the designees' submissions or raised by the Office 
in this notification of inquiry.\63\ Commenters may also address any 
topics relevant to this periodic review of the MLC and DLC 
designations. Without prejudice to its review of the current 
designations, the Office hopes that this proceeding will serve as an 
opportunity for any songwriter, publisher, or DMP who wishes to express 
concerns, satisfaction, or priorities with respect to the 
administration of the MMA's blanket licensing regime to do so, and that 
any designated MLC or DLC will use that feedback to continually improve 
its services.
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    \63\ Submissions by the Mechanical Licensing Collective and 
Digital Licensee Coordinator will be found on the Office's website 
at https://www.copyright.gov/rulemaking/mma-designations/2024 
approximately sixty days after the publication of this Notification 
of Inquiry.

    Dated: January 25, 2024.
Suzanne V. Wilson,
General Counsel and Associate Register of Copyrights.
[FR Doc. 2024-01781 Filed 1-29-24; 8:45 am]
BILLING CODE 1410-30-P


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