II 

115TH CONGRESS 

2D SESSION S. 2334 

To amend title 17, United States Code, to provide clarity with respect to, 

and to modernize, the licensing system for musical works under section 

115 of that title, to ensure fairness in the establishment of certain 

rates and fees under sections 114 and 115 of that title, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 24, 2018 

Mr. HATCH (for himself, Mr. WHITEHOUSE, Mr. ALEXANDER, Ms. HARRIS, 

Mr. CORKER, Mr. DURBIN, Mr. ISAKSON, Mr. COONS, and Mr. JONES) 

introduced the following bill; which was read twice and referred to the 

Committee on the Judiciary 

A BILL 

To amend title 17, United States Code, to provide clarity 

with respect to, and to modernize, the licensing system 

for musical works under section 115 of that title, to 

ensure fairness in the establishment of certain rates and 

fees under sections 114 and 115 of that title, and for 

other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Music Modernization 

5 Act of 2018’’. 


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1 SEC. 2. BLANKET LICENSE FOR DIGITAL USES AND ME2 CHANICAL LICENSING COLLECTIVE. 

3 (a) AMENDMENT.—Section 115 of title 17, United 

4 States Code, is amended— 

5 (1) in subsection (a)— 

6 (A) by inserting ‘‘IN GENERAL’’ after 

7 ‘‘AVAILABILITY AND SCOPE OF COMPULSORY

8 LICENSE’’; and 

9 (B) by striking paragraph (1) and insert10 ing the following: 

11 ‘‘(1)(A) A person may by complying with the 

12 provisions of this section obtain a compulsory license 

13 to make and distribute phonorecords of a nondra14 matic musical work, including by means of digital 

15 phonorecord delivery. A person may obtain a com16 pulsory license only if the primary purpose in mak17 ing phonorecords of the musical work is to distribute 

18 them to the public for private use, including by 

19 means of digital phonorecord delivery, and— 

20 ‘‘(i) phonorecords of such musical work 

21 have previously been distributed to the public in 

22 the United States under the authority of the 

23 copyright owner of the work; or 

24 ‘‘(ii) in the case of a digital music provider 

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1 ing a musical work under a compulsory li2 cense— 

3 ‘‘(I) the copyright owner of the sound 

4 recording first fixed such sound recording 

5 under the authority of the copyright owner 

6 of the musical work and is further author7 ized by the copyright owner of the musical 

8 work to make and distribute phonorecords 

9 embodying such work to the public in the 

10 United States; and 

11 ‘‘(II) the copyright owner of the 

12 sound recording or its authorized dis13 tributor has authorized the digital music 

14 provider to make and distribute digital 

15 phonorecord deliveries of the sound record16 ing to the public in the United States. 

17 ‘‘(B) A person may not obtain a compulsory li18 cense for the use of the work in the making of 

19 phonorecords duplicating a sound recording fixed by 

20 another, including by means of digital phonorecord 

21 delivery, unless— 

22 ‘‘(i) such sound recording was fixed law23 fully; and 

24 ‘‘(ii) the making of the phonorecords was 

25 authorized by the owner of the copyright in the 


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1 sound recording or, if the sound recording was 

2 fixed before February 15, 1972, by any person 

3 who fixed the sound recording pursuant to an 

4 express license from the owner of the copyright 

5 in the musical work or pursuant to a valid com6 pulsory license for use of such work in a sound 

7 recording.’’; 

8 (2) by striking subsection (b) and inserting the 

9 following: 

10 ‘‘(b) PROCEDURES TO OBTAIN A COMPULSORY LI11 CENSE.— 

12 ‘‘(1) PHONORECORDS OTHER THAN DIGITAL

13 PHONORECORD DELIVERIES.—A person who seeks to 

14 obtain a compulsory license under this section to 

15 make and distribute phonorecords of a musical work 

16 other than by means of digital phonorecord delivery 

17 shall, before or within 30 days after making, and be18 fore distributing, any phonorecord of the work, serve 

19 notice of intention to do so on the copyright owner. 

20 If the registration or other public records of the 

21 Copyright Office do not identify the copyright owner 

22 and include an address at which notice can be 

23 served, it shall be sufficient to file the notice of in24 tention in the Copyright Office. The notice shall 

25 comply, in form, content, and manner of service, 


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1 with requirements that the Register of Copyrights 

2 shall prescribe by regulation. 

3 ‘‘(2) DIGITAL PHONORECORD DELIVERIES.—A 

4 person who seeks to obtain a compulsory license 

5 under this section to make and distribute 

6 phonorecords of a musical work by means of digital 

7 phonorecord delivery— 

8 ‘‘(A) prior to the license availability date 

9 set forth in subsection (e), shall, before or with10 in 30 days after first making any such digital 

11 phonorecord delivery, serve a notice of intention 

12 to do so on the copyright owner. The notice, 

13 which may not be filed with the Copyright Of14 fice, shall comply, in form, content, and manner 

15 of service, with requirements that the Register 

16 of Copyrights shall prescribe by regulation; and 

17 ‘‘(B) on or after the license availability 

18 date, shall, before making any such digital pho19 norecord delivery, follow the procedure set forth 

20 in subsection (d)(2), except as provided in para21 graph (3). 

22 ‘‘(3) RECORD COMPANY DOWNLOAD LI23 CENSES.—Notwithstanding anything to the contrary 

24 in this section, a record company may, on or after 

25 the license availability date, obtain a license to make 


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1 and distribute, or authorize the making and distribu2 tion of, digital phonorecord deliveries of musical 

3 works in the form of permanent downloads in the 

4 manner described in paragraph (2)(A). A record 

5 company that obtains a compulsory license for per6 manent downloads as permitted under this para7 graph shall provide statements of account and pay 

8 royalties as provided in subsection (c)(5). 

9 ‘‘(4) FAILURE TO OBTAIN LICENSE.— 

10 ‘‘(A) PHONORECORDS OTHER THAN DIG11 ITAL PHONORECORD DELIVERIES.—In the case 

12 of phonorecords made and distributed other 

13 than by means of digital phonorecord delivery, 

14 the failure to serve or file the notice of inten15 tion required by paragraph (1) forecloses the 

16 possibility of a compulsory license under para17 graph (1). In the case of phonorecords made 

18 and distributed by means of digital phonorecord 

19 delivery prior to the license availability date, the 

20 failure to serve the notice of intention required 

21 by paragraph (2)(A) forecloses the possibility of 

22 a compulsory license under paragraph (2)(A). 

23 In either case, in the absence of a voluntary li24 cense, the failure to obtain a compulsory license 

25 renders the making and distribution of 


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1 phonorecords, including by means of digital 

2 phonorecord delivery, actionable as acts of in3 fringement under section 501 and subject to the 

4 remedies provided by sections 502 through 506. 

5 ‘‘(B) DIGITAL PHONORECORD DELIV6 ERIES.—In the case of phonorecords made and 

7 distributed by means of digital phonorecord de8 livery on or after the license availability date, 

9 the failure to comply with paragraph (2)(B), or, 

10 if applicable, paragraph (3), forecloses the pos11 sibility of a compulsory license under this sec12 tion. In the absence of a voluntary license, the 

13 failure to obtain a compulsory license renders 

14 the making and distribution of phonorecords by 

15 means of digital phonorecord delivery actionable 

16 as acts of infringement under section 501 and 

17 subject to the remedies provided by sections 

18 502 through 506.’’; 

19 (3) in subsection (c)— 

20 (A) by striking paragraphs (1) and (2) and 

21 inserting the following: 

22 ‘‘(1) To be entitled to receive royalties under a 

23 compulsory license obtained under subsection (b)(1) 

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1 fice. The owner is entitled to royalties for 

2 phonorecords made and distributed after being so 

3 identified, but is not entitled to recover for any 

4 phonorecords previously made and distributed. 

5 ‘‘(2) Except as provided by paragraph (1), for 

6 every phonorecord made and distributed under a 

7 compulsory license under this section other than by 

8 means of digital phonorecord delivery, with respect 

9 to each work embodied in the phonorecord, the roy10 alty shall be the royalty prescribed under subpara11 graphs (B) through (E) of paragraph (3) and chap12 ter 8 of this title. For purposes of this paragraph, 

13 a phonorecord is considered ‘distributed’ if the per14 son exercising the compulsory license has voluntarily 

15 and permanently parted with its possession.’’; 

16 (B) by striking paragraph (3)(A) and in17 serting the following: 

18 ‘‘(3)(A) For every digital phonorecord delivery 

19 of a musical work made under a compulsory license 

20 under this section, the royalty payable shall be the 

21 royalty prescribed under subparagraphs (B) through 

22 (E) and chapter 8 of this title.’’; 

23 (C) in paragraph (3)(C)— 

24 (i) by striking the second sentence; 

25 and 


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1 (ii) by adding at the end the following 

2 new sentence: ‘‘The administrative assess3 ment to be paid by digital music providers 

4 and significant nonblanket licensees under 

5 subsection (d) shall be established in sepa6 rate proceedings before the Copyright Roy7 alty Judges as provided in subsection 

8 (d)(7).’’; 

9 (D) by striking paragraph (3)(D) and in10 serting the following: 

11 ‘‘(D) The schedule of reasonable rates and 

12 terms determined by the Copyright Royalty Judges 

13 shall, subject to subparagraph (E), be binding on all 

14 copyright owners of nondramatic musical works and 

15 persons entitled to obtain a compulsory license under 

16 subsection (a)(1) during the period specified in sub17 paragraph (C), such other period as may be deter18 mined pursuant to subparagraphs (B) and (C), or 

19 such other period as the parties may agree. The 

20 Copyright Royalty Judges shall establish rates and 

21 terms that most clearly represent the rates and 

22 terms that would have been negotiated in the mar23 ketplace between a willing buyer and a willing seller. 

24 In determining such rates and terms for digital pho25 norecord deliveries, the Copyright Royalty Judges 


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1 shall base their decision on economic, competitive, 

2 and programming information presented by the par3 ties, including— 

4 ‘‘(i) whether use of the compulsory licens5 ee’s service may substitute for or may promote 

6 the sales of phonorecords or otherwise may 

7 interfere with or may enhance the musical work 

8 copyright owner’s other streams of revenue 

9 from its musical works; and 

10 ‘‘(ii) the relative roles of the copyright 

11 owner and the compulsory licensee in the copy12 righted work and the service made available to 

13 the public with respect to the relative creative 

14 contribution, technological contribution, capital 

15 investment, cost, and risk.’’; 

16 (E) in paragraph (3)(E)(i), by striking 

17 ‘‘Librarian of Congress and’’; 

18 (F) in paragraph (3)(G)(i)(II)— 

19 (i) by striking ‘‘owner of the copyright 

20 in the sound recording or the’’; and 

21 (ii) by striking ‘‘to distribute or au22 thorize the distribution, by means of a dig23 ital phonorecord delivery’’ and inserting ‘‘, 

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1 tribute phonorecords by means of digital 

2 phonorecord delivery’’; 

3 (G) in paragraph (4), by striking the first 

4 sentence and inserting ‘‘A compulsory license 

5 obtained in accordance with subsection (b)(1) to 

6 make and distribute phonorecords includes the 

7 right of the maker of such a phonorecord to 

8 distribute or authorize distribution of such pho9 norecord, other than by means of a digital pho10 norecord delivery, by rental, lease, or lending 

11 (or by acts or practices in the nature of rental, 

12 lease, or lending).’’; 

13 (H) in paragraph (5), by striking ‘‘Royalty 

14 payments shall’’ and inserting ‘‘Except as pro15 vided in paragraphs (4)(A)(i) and (10)(B) of 

16 subsection (d), royalty payments shall’’; and 

17 (I) in paragraph (6)— 

18 (i) by striking ‘‘If the copyright 

19 owner’’ and inserting ‘‘In the case of a li20 cense obtained under subsection (b)(1), 

21 (b)(2)(A), or (b)(3), if the copyright 

22 owner’’; and 

23 (ii) by adding at the end the following 

24 sentence: ‘‘In the case of a license obtained 

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1 ity under the compulsory license may be 

2 terminated as provided in subsection 

3 (d)(4)(E).’’; 

4 (4) by amending subsection (d) to read as fol5 lows: 

6 ‘‘(d) BLANKET LICENSE FOR DIGITAL USES, ME7 CHANICAL LICENSING COLLECTIVE, AND DIGITAL LI8 CENSEE COORDINATOR.— 

9 ‘‘(1) BLANKET LICENSE FOR DIGITAL USES.— 

10 A digital music provider that qualifies for a compul11 sory license under subsection (a) may, by complying 

12 with the terms and conditions of this subsection, ob13 tain a blanket license from copyright owners through 

14 the mechanical licensing collective designated under 

15 paragraph (3)(B) to make and distribute digital 

16 phonorecord deliveries of musical works through one 

17 or more covered activities. 

18 ‘‘(A) INCLUDED ACTIVITIES.—A blanket li19 cense obtained under this subsection— 

20 ‘‘(i) covers all musical works (or 

21 shares of such works) available for compul22 sory licensing under this section for pur23 poses of engaging in covered activities, ex24 cept as provided in subparagraph (B); 


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1 ‘‘(ii) includes the making and dis2 tribution of server, intermediate, archival, 

3 and incidental reproductions of musical 

4 works that are reasonable and necessary 

5 for the digital music provider to engage in 

6 covered activities licensed under this sub7 section, solely for the purpose of engaging 

8 in such covered activities; and 

9 ‘‘(iii) does not cover or include any 

10 rights or uses other than those set forth in 

11 subsections (d)(1)(A)(i) and (ii). 

12 ‘‘(B) OTHER LICENSES.—A voluntary li13 cense for covered activities entered into between 

14 one or more copyright owners and one or more 

15 digital music providers, or authority to make 

16 and distribute permanent downloads of a musi17 cal work obtained by a digital music provider 

18 from the copyright owner of a sound recording 

19 pursuant to an individual download license, 

20 shall be given effect in lieu of a blanket license 

21 under this subsection with respect to the musi22 cal works (or shares thereof) covered by such 

23 voluntary license or individual download author24 ity; provided, however, that— 


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1 ‘‘(i) where a voluntary or individual 

2 download license applies, the license au3 thority provided under the blanket license 

4 shall exclude any musical works (or shares 

5 thereof) subject to the voluntary or indi6 vidual download license; 

7 ‘‘(ii) an entity engaged in covered ac8 tivities under a voluntary license or author9 ity obtained pursuant to an individual 

10 download license that is a significant non11 blanket licensee shall comply with para12 graph (6)(A); and 

13 ‘‘(iii) the rates and terms of any vol14 untary license shall be subject to the sec15 ond sentence of clause (i) and clause (ii) of 

16 subsection (c)(3)(E) and paragraph (9)(C) 

17 as applicable. 

18 ‘‘(C) PROTECTION AGAINST INFRINGE19 MENT ACTIONS.—A digital music provider that 

20 obtains and complies with the terms of a valid 

21 blanket license under this subsection shall not 

22 be subject to an action for infringement of the 

23 exclusive rights provided by paragraphs (1) and 

24 (3) of section 106 under this title arising from 

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1 gage in covered activities authorized by such li2 cense, subject to paragraph (4)(E). 

3 ‘‘(D) OTHER REQUIREMENTS AND CONDI4 TIONS APPLY.—Except as expressly provided in 

5 this subsection, each requirement, limitation, 

6 condition, privilege, right, and remedy otherwise 

7 applicable to compulsory licenses under this sec8 tion shall apply to compulsory blanket licenses 

9 under this subsection. 

10 ‘‘(2) AVAILABILITY OF BLANKET LICENSE.— 

11 ‘‘(A) PROCEDURE FOR OBTAINING LI12 CENSE.—A digital music provider may obtain a 

13 blanket license under this subsection to engage 

14 in one or more covered activities by submitting 

15 a notice of license to the mechanical licensing 

16 collective described in paragraph (3) that speci17 fies the particular covered activities in which 

18 the digital music provider seeks to engage, as 

19 follows: 

20 ‘‘(i) The notice of license shall comply 

21 in form and substance with requirements 

22 that the Register of Copyrights shall estab23 lish by regulation. 

24 ‘‘(ii) Unless rejected in writing by the 

25 mechanical licensing collective within 30 


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1 days after receipt, the blanket license shall 

2 be effective as of the date the notice of li3 cense was provided by the digital music 

4 provider. 

5 ‘‘(iii) A notice of license shall not be 

6 rejected by the mechanical licensing collec7 tive unless— 

8 ‘‘(I) the digital music provider or 

9 notice of license does not meet all re10 quirements of this section or applica11 ble regulations, in which case the re12 quirements at issue shall be specified 

13 with reasonable particularity in the 

14 notice of rejection, or 

15 ‘‘(II) the digital music provider 

16 has had a license under this sub17 section terminated by the mechanical 

18 licensing collective within the past 3 

19 years pursuant to paragraph (4)(E). 

20 ‘‘(iv) If a notice of license is rejected 

21 under clause (iii), the digital music pro22 vider shall have 30 days after receipt of 

23 the notice of rejection to cure any defi24 ciency and submit an amended notice of li25 cense to the mechanical licensing collective. 


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1 If the deficiency has been cured, the me2 chanical licensing collective shall so con3 firm in writing, and the license shall be ef4 fective as of the date that the original no5 tice of license was provided by the digital 

6 music provider. 

7 ‘‘(B) BLANKET LICENSE EFFECTIVE

8 DATE.—Blanket licenses under this subsection 

9 shall be made available by the mechanical li10 censing collective as of the license availability 

11 date specified in subsection (e)(15). No such li12 cense shall be effective prior to the license avail13 ability date. 

14 ‘‘(3) MECHANICAL LICENSING COLLECTIVE.— 

15 ‘‘(A) IN GENERAL.—The mechanical li16 censing collective shall be a single entity that— 

17 ‘‘(i) is a not-for-profit entity, not 

18 owned by any other entity, that is created 

19 by copyright owners to carry out respon20 sibilities under this subsection; 

21 ‘‘(ii) is endorsed by and enjoys sub22 stantial support from copyright owners of 

23 musical works that together represent the 

24 greatest share of the licensor market for 

25 uses of such works in covered activities, as 


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1 measured over the preceding 3 full cal2 endar years; 

3 ‘‘(iii) is able to demonstrate to the 

4 Register of Copyrights that it has, or will 

5 have prior to the license availability date, 

6 the administrative and technological capa7 bilities to perform the required functions of 

8 the mechanical licensing collective under 

9 this subsection; and 

10 ‘‘(iv) has been designated by the Reg11 ister of Copyrights in accordance with sub12 paragraph (B). 

13 ‘‘(B) DESIGNATION OF MECHANICAL LI14 CENSING COLLECTIVE.— 

15 ‘‘(i) INITIAL DESIGNATION.—The 

16 Register of Copyrights shall initially des17 ignate the mechanical licensing collective 

18 within 9 months of the enactment date as 

19 follows: 

20 ‘‘(I) Within 90 days of the enact21 ment date, the Register shall publish 

22 notice in the Federal Register solic23 iting information to assist in identi24 fying the appropriate entity to serve 

25 as the mechanical licensing collective. 


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1 ‘‘(II) After reviewing the infor2 mation requested under subclause (I) 

3 and making a designation, the Reg4 ister shall publish notice in the Fed5 eral Register setting forth the identity 

6 of and contact information for the me7 chanical licensing collective. 

8 ‘‘(ii) PERIODIC REVIEW OF DESIGNA9 TION.—Following the initial designation of 

10 the mechanical licensing collective, the 

11 Register shall, every 5 years, beginning 

12 with the fifth full calendar year to com13 mence after the initial designation, publish 

14 notice in the Federal Register in the 

15 month of January soliciting information 

16 concerning whether the existing designa17 tion should be continued, or a different en18 tity meeting the criteria set forth in sub19 paragraph (A) should be designated. Fol20 lowing publication of such notice: 

21 ‘‘(I) The Register shall, after re22 viewing the information submitted and 

23 conducting additional proceedings as 

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1 tion or new designation of the me2 chanical licensing collective, as the 

3 case may be, with any new designa4 tion to be effective as of the first day 

5 of a month that is no less than 6 

6 months from the date of publication 

7 of such notice, as specified by the 

8 Register. 

9 ‘‘(II) If a new entity is des10 ignated as a mechanical licensing col11 lective, the Register shall adopt regu12 lations to govern the transfer of li13 censes, funds, records, and adminis14 trative responsibilities from the exist15 ing mechanical licensing collective to 

16 the new entity. 

17 ‘‘(C) AUTHORITIES AND FUNCTIONS.— 

18 ‘‘(i) IN GENERAL.—The mechanical li19 censing collective is authorized to perform 

20 the following functions, subject to more 

21 particular requirements as set forth in this 

22 subsection: 

23 ‘‘(I) Offer and administer blanket 

24 licenses for covered activities, includ25 ing receipt of notices of license and 


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1 reports of usage from digital music 

2 providers. 

3 ‘‘(II) Collect and distribute royal4 ties from digital music providers for 

5 covered activities. 

6 ‘‘(III) Engage in efforts to iden7 tify musical works (and shares of such 

8 works) embodied in particular sound 

9 recordings, and to identify and locate 

10 the copyright owners of such musical 

11 works (and shares of such works). 

12 ‘‘(IV) Maintain a publicly acces13 sible database of musical works (and 

14 shares of such works) and copyright 

15 owners, and other information rel16 evant to the administration of licens17 ing activities under this section. 

18 ‘‘(V) Administer a process by 

19 which copyright owners can claim 

20 ownership of musical works (and 

21 shares of such works), and a process 

22 by which royalties for works for which 

23 the owner is not identified or located 

24 are equitably distributed to known 

25 copyright owners. 


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1 ‘‘(VI) Administer collections of 

2 the administrative assessment from 

3 digital music providers and significant 

4 nonblanket licensees, including receipt 

5 of notices of nonblanket activity. 

6 ‘‘(VII) Invest in relevant re7 sources, and arrange for services of 

8 outside vendors and others, to support 

9 its activities. 

10 ‘‘(VIII) Engage in efforts to en11 force rights and obligations under this 

12 subsection, including in coordination 

13 with the digital licensee coordinator. 

14 ‘‘(IX) Initiate and participate in 

15 proceedings before the Copyright Roy16 alty Judges to establish the adminis17 trative assessment under this sub18 section. 

19 ‘‘(X) Initiate and participate in 

20 proceedings before the Copyright Of21 fice with respect to activities under 

22 this subsection. 

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1 fore the Copyright Royalty Judges to 

2 set rates and terms under this section. 

3 ‘‘(XII) Maintain records of its 

4 activities and engage in and respond 

5 to audits as contemplated under this 

6 subsection. 

7 ‘‘(XIII) Engage in such other ac8 tivities as may be necessary or appro9 priate to fulfill its responsibilities 

10 under this subsection. 

11 ‘‘(ii) ADDITIONAL ADMINISTRATIVE

12 ACTIVITIES.—Subject to paragraph 

13 (11)(C) and subsection (e)(31), the me14 chanical licensing collective may also ad15 minister, or assist in administering, vol16 untary or individual download licenses 

17 issued by copyright owners for uses of mu18 sical works, for which the mechanical li19 censing collective shall charge reasonable 

20 fees for such services. 

21 ‘‘(iii) RESTRICTION ON LOBBYING.— 

22 The mechanical licensing collective shall 

23 not engage in government lobbying activi24 ties; provided, however, that it may engage 


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1 in the activities set forth in subclauses 

2 (IX), (X), and (XI) of clause (i). 

3 ‘‘(D) GOVERNANCE.— 

4 ‘‘(i) BOARD OF DIRECTORS.—The me5 chanical licensing collective shall have a 

6 board of directors consisting of 10 voting 

7 members and 3 nonvoting members, as fol8 lows: 

9 ‘‘(I) Eight voting members shall 

10 be music publishers to which song11 writers have assigned exclusive rights 

12 of reproduction and distribution of 

13 musical works with respect to covered 

14 activities; provided, however, that no 

15 such music publisher member may be 

16 owned by, or under common control 

17 with, any other board member. 

18 ‘‘(II) Two voting members shall 

19 be professional songwriters who have 

20 retained and exercise exclusive rights 

21 of reproduction and distribution with 

22 respect to covered activities with re23 spect to musical works they have au24 thored. 


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1 ‘‘(III) One nonvoting member 

2 shall be a representative of the non3 profit trade association of music pub4 lishers that represents the greatest 

5 share of the licensor market for uses 

6 of musical works in covered activities, 

7 as measured over the preceding 3 full 

8 calendar years. 

9 ‘‘(IV) One nonvoting member 

10 shall be a representative of the digital 

11 licensee coordinator, provided that a 

12 digital licensee coordinator has been 

13 designated pursuant to subsection 

14 (d)(5)(B). Otherwise, the nonvoting 

15 member shall be the nonprofit trade 

16 association of digital licensees that 

17 represents the greatest share of the li18 censee market for uses of musical 

19 works in covered activities, as meas20 ured over the preceding 3 full cal21 endar years. 

22 ‘‘(V) One nonvoting member 

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1 cacy on behalf of American song2 writers. 

3 ‘‘(ii) BOARD MEETINGS.—The board 

4 of directors shall meet no less than 2 times 

5 per year and discuss matters pertinent to 

6 the operations, including the budget, of the 

7 board of directors. 

8 ‘‘(iii) OPERATIONS ADVISORY COM9 MITTEE.—The board of directors of the 

10 mechanical licensing collective shall estab11 lish an operations advisory committee con12 sisting of no fewer than 6 members to 

13 make recommendations to the board of di14 rectors concerning the operations of the 

15 mechanical licensing collective, including 

16 the efficient investment in and deployment 

17 of information technology and data re18 sources. Such committee shall have an 

19 equal number of— 

20 ‘‘(I) copyright owners of musical 

21 works who are appointed by the board 

22 of directors of the mechanical licens23 ing collective; and 


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1 ‘‘(II) representatives of digital 

2 music providers who are appointed by 

3 the digital licensee coordinator. 

4 ‘‘(iv) UNCLAIMED ROYALTIES OVER5 SIGHT COMMITTEE.—The board of direc6 tors of the mechanical licensing collective 

7 shall establish and appoint an unclaimed 

8 royalties oversight committee consisting of 

9 10 members, 6 of which shall be copyright 

10 owners of musical works and 4 of which 

11 shall be professional songwriters whose 

12 works are used in covered activities. 

13 ‘‘(v) DISPUTE RESOLUTION COM14 MITTEE.—The board of directors of the 

15 mechanical licensing collective shall estab16 lish and appoint a dispute resolution com17 mittee consisting of no fewer than 6 mem18 bers, which committee shall include an 

19 equal number of representatives of copy20 right owners of musical works and profes21 sional songwriters. 

22 ‘‘(E) MUSICAL WORKS DATABASE.— 

23 ‘‘(i) ESTABLISHMENT AND MAINTE24 NANCE OF DATABASE.—The mechanical li25 censing collective shall establish and mainVerDate Sep 11 2014 22:34 Jan 24, 2018 Jkt 079200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S2334.IS S2334

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1 tain a database of musical works (and 

2 shares of such works) and, to the extent 

3 known, the identity and location of the 

4 copyright owners of such works (and 

5 shares thereof) and the sound recordings 

6 in which they are embodied. In furtherance 

7 of maintaining such database, the mechan8 ical licensing collective shall engage in ef9 forts to identify the musical works em10 bodied in particular sound recordings, as 

11 well as to identify and locate the copyright 

12 owners of such works (and shares thereof), 

13 and update such data as appropriate. 

14 ‘‘(ii) MATCHED WORKS.—With respect 

15 to musical works (and shares thereof) that 

16 have been matched to copyright owners, 

17 the musical works database shall include— 

18 ‘‘(I) the title of the musical work; 

19 ‘‘(II) the copyright owner of the 

20 work (or share thereof), and such 

21 owner’s ownership percentage; 

22 ‘‘(III) contact information for 

23 such copyright owner; 

24 ‘‘(IV) to the extent available— 


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1 ‘‘(aa) the international 

2 standard musical work code for 

3 the work; and 

4 ‘‘(bb) identifying informa5 tion for sound recordings in 

6 which the musical work is em7 bodied, including the name of the 

8 sound recording, featured artist, 

9 producer, international standard 

10 recording code, and other infor11 mation commonly used to assist 

12 in associating sound recordings 

13 with musical works; and 

14 ‘‘(V) such other information as 

15 the Register of Copyrights may pre16 scribe by regulation. 

17 ‘‘(iii) UNMATCHED WORKS.—With re18 spect to unmatched works (and shares of 

19 works) in the database, the musical works 

20 database shall include— 

21 ‘‘(I) to the extent available— 

22 ‘‘(aa) the title of the musical 

23 work; 


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1 ‘‘(bb) the ownership percent2 age for which an owner has not 

3 been identified; 

4 ‘‘(cc) if a copyright owner 

5 has been identified but not lo6 cated, the identity of such owner 

7 and such owner’s ownership per8 centage; 

9 ‘‘(dd) identifying informa10 tion for sound recordings in 

11 which the work is embodied, in12 cluding sound recording name, 

13 featured artist, producer, inter14 national standard recording code, 

15 and other information commonly 

16 used to assist in associating 

17 sound recordings with musical 

18 works; and 

19 ‘‘(ee) any additional infor20 mation reported to the mechan21 ical licensing collective that may 

22 assist in identifying the work; 

23 and 

24 ‘‘(II) such other information re25 lating to the identity and ownership of 


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1 musical works (and shares of such 

2 works) as the Register of Copyrights 

3 may prescribe by regulation. 

4 ‘‘(iv) SOUND RECORDING INFORMA5 TION.—Each copyright owner of musical 

6 works shall engage in commercially reason7 able efforts to deliver to the mechanical li8 censing collective for use in the musical 

9 works database, to the extent such infor10 mation is not then available in the data11 base, information regarding the names of 

12 the sound recordings in which that copy13 right owner’s musical works (or shares 

14 thereof) are embodied, to the extent prac15 ticable. 

16 ‘‘(v) ACCESSIBILITY OF DATABASE.— 

17 The musical work database shall be acces18 sible to the public in a searchable, online 

19 format free of charge. The mechanical li20 censing collective shall also make such 

21 database available free of charge in a bulk, 

22 machine-readable format, via a widely 

23 available software application, to— 

24 ‘‘(I) digital music providers oper25 ating under valid notices of license; 


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1 ‘‘(II) significant nonblanket li2 censees; and 

3 ‘‘(III) authorized vendors of the 

4 entities described in subclauses (I) 

5 and (II). 

6 ‘‘(vi) ADDITIONAL REQUIREMENTS.— 

7 The Register of Copyrights shall establish 

8 requirements by regulations to ensure the 

9 usability, interoperability, and usage re10 strictions of the musical works database. 

11 ‘‘(F) NOTICES OF LICENSE AND NON12 BLANKET ACTIVITY.— 

13 ‘‘(i) IN GENERAL.—The mechanical li14 censing collective shall receive, review, and 

15 confirm or reject notices of license from 

16 digital music providers, as provided in sub17 section (d)(2)(A). The collective shall 

18 maintain a current, publicly accessible list 

19 of blanket licenses obtained by digital 

20 music providers under this subsection that 

21 includes contact information for the licens22 ees and the effective dates of such licenses. 

23 ‘‘(ii) PUBLIC LIST OF NOTICES.—The 

24 mechanical licensing collective shall receive 

25 notices of nonblanket activity from signifiVerDate Sep 11 2014 22:34 Jan 24, 2018 Jkt 079200 PO 00000 Frm 00032 Fmt 6652 Sfmt 6201 E:\BILLS\S2334.IS S2334

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1 cant nonblanket licensees, as provided in 

2 subsection (d)(6)(A). The collective shall 

3 maintain a current, publicly accessible list 

4 of notices of nonblanket activity submitted 

5 by significant nonblanket licensees that in6 cludes contact information for such licens7 ees and the dates of receipt of such no8 tices. 

9 ‘‘(G) COLLECTION AND DISTRIBUTION OF

10 ROYALTIES.— 

11 ‘‘(i) IN GENERAL.—Upon receiving re12 ports of usage and payments of royalties 

13 from digital music providers for covered 

14 activities, the mechanical licensing collec15 tive shall— 

16 ‘‘(I) engage in efforts to— 

17 ‘‘(aa) identify the musical 

18 works embodied in sound record19 ings reflected in such reports, 

20 and the copyright owners of such 

21 musical works (and shares there22 of); 

23 ‘‘(bb) confirm uses of musi24 cal works subject to voluntary 

25 and individual download licenses, 


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1 and the corresponding pro rata 

2 amounts to be deducted from 

3 royalties that would otherwise be 

4 due under the blanket license; 

5 and 

6 ‘‘(cc) confirm proper pay7 ment of royalties due; 

8 ‘‘(II) distribute royalties to copy9 right owners in accordance with the 

10 usage and other information contained 

11 in such reports, as well as the owner12 ship and other information contained 

13 in its records; and 

14 ‘‘(III) deposit royalties that can15 not be distributed due to an inability 

16 to identify or locate a copyright owner 

17 of a musical work (or share thereof), 

18 or due to a pending dispute before the 

19 dispute resolution committee of the 

20 mechanical licensing collective, in an 

21 interest-bearing account as provided 

22 in subparagraph (H)(ii). 

23 ‘‘(ii) REGULATIONS REQUIRED.—The 

24 Register of Copyrights shall adopt regula25 tions regarding adjustments to reports of 


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1 usage by digital music providers, including 

2 establishing mechanisms to account for 

3 overpayments and underpayments made in 

4 prior periods. 

5 ‘‘(H) HOLDING OF ACCRUED ROYAL6 TIES.— 

7 ‘‘(i) HOLDING PERIOD.—The mechan8 ical licensing collective shall hold accrued 

9 royalties associated with particular musical 

10 works (and shares of works) that remain 

11 unmatched for a period of at least 3 years 

12 from the date on which the funds were re13 ceived by the mechanical licensing collec14 tive, or at least 3 years from the date on 

15 which they were accrued by a digital music 

16 provider that subsequently transferred 

17 such funds to the mechanical licensing col18 lective pursuant to paragraph (10)(B), 

19 whichever period expires sooner. 

20 ‘‘(ii) INTEREST-BEARING ACCOUNT.— 

21 Accrued royalties for unmatched works 

22 (and shares thereof) shall be maintained 

23 by the mechanical licensing collective in an 

24 interest-bearing account that earns month25 ly interest at the Federal, short-term rate, 


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1 such interest to accrue for the benefit of 

2 copyright owners entitled to payment of 

3 such accrued royalties. 

4 ‘‘(I) MUSICAL WORKS CLAIMING PROC5 ESS.—The mechanical licensing collective shall 

6 publicize the existence of accrued royalties for 

7 unmatched musical works (and shares of such 

8 works) within 6 months of receiving a transfer 

9 of accrued royalties for such works by publicly 

10 listing the works and the procedures by which 

11 copyright owners may identify themselves and 

12 provide ownership, contact, and other relevant 

13 information to the mechanical licensing collec14 tive in order to receive payment of accrued roy15 alties. When a copyright owner of an un16 matched work (or share of a work) has been 

17 identified and located in accordance with the 

18 procedures of the mechanical licensing collec19 tive, the collective shall— 

20 ‘‘(i) update the musical works data21 base and its other records accordingly; and 

22 ‘‘(ii) provided that accrued royalties 

23 for the musical work (or share thereof) 

24 have not yet been included in a distribution 

25 pursuant to subparagraph (J)(i), pay such 


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1 accrued royalties and a proportionate share 

2 of accrued interest associated with that 

3 work (or share thereof) to the copyright 

4 owner, accompanied by a cumulative state5 ment of account reflecting usage of such 

6 work and accrued royalties based on infor7 mation provided by digital music providers 

8 to the mechanical licensing collective. 

9 ‘‘(J) DISTRIBUTION OF UNCLAIMED AC10 CRUED ROYALTIES.— 

11 ‘‘(i) DISTRIBUTION PROCEDURES.— 

12 After the expiration of the prescribed hold13 ing period for accrued royalties provided in 

14 subparagraph (H)(i), the mechanical li15 censing collective shall distribute such ac16 crued royalties, along with a proportionate 

17 share of accrued interest, to copyright 

18 owners identified in its records, subject to 

19 the following requirements, and in accord20 ance with the policies and procedures es21 tablished under clause (ii): 

22 ‘‘(I) The first such distribution 

23 shall occur in the first full calendar 

24 year to commence after the license 

25 availability date, with at least one 


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•S 2334 IS

1 such distribution to take place in each 

2 calendar year thereafter. 

3 ‘‘(II) Copyright owners’ payment 

4 shares for unclaimed accrued royalties 

5 for particular reporting periods shall 

6 be determined in a transparent and 

7 equitable manner based on data indi8 cating the relative market shares of 

9 such copyright owners as reflected by 

10 royalty payments made by digital 

11 music providers for covered activities 

12 for the periods in question, including, 

13 in addition to royalty payments made 

14 to the mechanical licensing collective, 

15 royalty payments made to copyright 

16 owners under voluntary and individual 

17 download licenses for covered activi18 ties, to the extent such information is 

19 available to the mechanical licensing 

20 collective. In furtherance of the deter21 mination of equitable market shares 

22 under this paragraph— 

23 ‘‘(aa) the mechanical licens24 ing collective may require copy25 right owners seeking distribuVerDate Sep 11 2014 22:34 Jan 24, 2018 Jkt 079200 PO 00000 Frm 00038 Fmt 6652 Sfmt 6201 E:\BILLS\S2334.IS S2334

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•S 2334 IS

1 tions of unclaimed accrued royal2 ties to provide, or direct the pro3 vision of, information concerning 

4 royalties received under voluntary 

5 and individual download licenses 

6 for covered activities, and 

7 ‘‘(bb) the mechanical licens8 ing collective shall take appro9 priate steps to safeguard the con10 fidentiality and security of finan11 cial and other sensitive data used 

12 to compute market shares in ac13 cordance with the confidentiality 

14 provisions prescribed by the Reg15 ister of Copyrights under sub16 section (d)(12)(C). 

17 ‘‘(ii) ESTABLISHMENT OF DISTRIBU18 TION POLICIES.—The unclaimed royalties 

19 oversight committee established under 

20 paragraph (3)(D)(iv) shall establish poli21 cies and procedures for the distribution of 

22 unclaimed accrued royalties in accordance 

23 with this subparagraph, subject to the ap24 proval of the board of directors of the me25 chanical licensing collective. 


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1 ‘‘(iii) ADVANCE NOTICE OF DISTRIBU2 TIONS.—The mechanical licensing collec3 tive shall publicize a pending distribution 

4 of unclaimed accrued royalties at least 90 

5 days in advance of such distribution. 

6 ‘‘(iv) SONGWRITER PAYMENTS.— 

7 Copyright owners that receive a distribu8 tion of unclaimed accrued royalties and ac9 crued interest shall pay or credit a portion 

10 to songwriters (or the authorized agents of 

11 songwriters) on whose behalf they license 

12 or administer musical works for covered 

13 activities, in accordance with applicable 

14 contractual terms; provided, however, that 

15 notwithstanding any agreement to the con16 trary— 

17 ‘‘(I) such payments and credits 

18 to songwriters shall be allocated in 

19 proportion to reported usage of indi20 vidual musical works by digital music 

21 providers during the reporting periods 

22 covered by the distribution from the 

23 mechanical licensing collective; and 

24 ‘‘(II) in no case shall the pay25 ment or credit to an individual songVerDate Sep 11 2014 22:34 Jan 24, 2018 Jkt 079200 PO 00000 Frm 00040 Fmt 6652 Sfmt 6201 E:\BILLS\S2334.IS S2334

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•S 2334 IS

1 writer be less than 50 percent of the 

2 payment received by the copyright 

3 owner attributable to usage of musical 

4 works (or shares of works) of that 

5 songwriter. 

6 ‘‘(K) DISPUTE RESOLUTION.—The dispute 

7 resolution committee established under para8 graph (3)(D)(v) shall address and resolve in a 

9 timely and equitable manner disputes among 

10 copyright owners relating to ownership interests 

11 in musical works licensed under this section and 

12 allocation and distribution of royalties by the 

13 mechanical licensing collective, according to a 

14 process approved by the board of directors of 

15 the mechanical licensing collective. Such proc16 ess— 

17 ‘‘(i) shall include a mechanism to hold 

18 disputed funds in accordance with the re19 quirements set forth in subparagraph 

20 (H)(ii) pending resolution of the dispute by 

21 the committee, written agreement of the 

22 affected parties, or pursuant to a binding 

23 judicial determination or arbitration; and 

24 ‘‘(ii) except as provided in paragraph 

25 (11)(D), shall not affect any legal or equiVerDate Sep 11 2014 22:34 Jan 24, 2018 Jkt 079200 PO 00000 Frm 00041 Fmt 6652 Sfmt 6201 E:\BILLS\S2334.IS S2334

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1 table rights or remedies available to any 

2 copyright owner or songwriter concerning 

3 ownership of, and entitlement to royalties 

4 for, a musical work. 

5 ‘‘(L) VERIFICATION OF PAYMENTS BY ME6 CHANICAL LICENSING COLLECTIVE.— 

7 ‘‘(i) VERIFICATION PROCESS.—A 

8 copyright owner entitled to receive pay9 ments of royalties for covered activities 

10 from the mechanical licensing collective 

11 may, individually or with other copyright 

12 owners, conduct an audit of the mechanical 

13 licensing collective to verify the accuracy of 

14 royalty payments and distributions by the 

15 mechanical licensing collective to such 

16 copyright owner, as follows: 

17 ‘‘(I) A copyright owner may 

18 audit the mechanical licensing collec19 tive only once in a year for any or all 

20 of the prior 3 calendar years, and may 

21 not audit records for any calendar 

22 year more than once. 

23 ‘‘(II) The audit shall be con24 ducted by a qualified auditor, who 

25 shall perform the audit during the orVerDate Sep 11 2014 22:34 Jan 24, 2018 Jkt 079200 PO 00000 Frm 00042 Fmt 6652 Sfmt 6201 E:\BILLS\S2334.IS S2334

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1 dinary course of business by exam2 ining the books, records and systems 

3 of the mechanical licensing collective, 

4 as well as underlying data, according 

5 to generally accepted auditing stand6 ards and subject to applicable con7 fidentiality requirements prescribed by 

8 the Register of Copyrights under sub9 section (d)(12)(C). 

10 ‘‘(III) The mechanical licensing 

11 collective shall make such books, 

12 records, and data available to the 

13 qualified auditor and respond to rea14 sonable requests for relevant informa15 tion, and shall use commercially rea16 sonable efforts to facilitate access to 

17 relevant information maintained by 

18 third parties. 

19 ‘‘(IV) To commence the audit, 

20 the copyright owner(s) shall file with 

21 the Copyright Office a notice of intent 

22 to conduct an audit of the mechanical 

23 licensing collective, and shall simulta24 neously deliver a copy of such notice 

25 to the mechanical licensing collective. 


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1 The Register of Copyrights shall 

2 cause the notice of audit to be pub3 lished in the Federal Register within 

4 30 days of receipt. 

5 ‘‘(V) The qualified auditor shall 

6 determine the accuracy of royalty pay7 ments, including whether an under8 payment or overpayment of royalties 

9 was made by the mechanical licensing 

10 collective to the auditing copyright 

11 owner(s); provided, however, that be12 fore providing a final audit report to 

13 such copyright owner(s), the qualified 

14 auditor shall provide a tentative draft 

15 of the report to the mechanical licens16 ing collective and allow the mechanical 

17 licensing collective a reasonable oppor18 tunity to respond to the findings, in19 cluding by clarifying issues and cor20 recting factual errors. 

21 ‘‘(VI) The auditing copyright 

22 owner(s) shall bear the cost of the 

23 audit. In case of an underpayment to 

24 the copyright owner(s), the mechan25 ical licensing collective shall pay the 


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1 amounts of any such underpayment to 

2 the auditing copyright owner(s), as 

3 appropriate. In case of an overpay4 ment by the mechanical licensing col5 lective, the mechanical licensing collec6 tive may debit the accounts of the au7 diting copyright owner(s) for such 

8 overpaid amounts, or such owner(s) 

9 shall refund overpaid amounts to the 

10 mechanical licensing collective, as ap11 propriate. 

12 ‘‘(ii) ALTERNATIVE VERIFICATION

13 PROCEDURES.—Nothing in this subpara14 graph shall preclude a copyright owner and 

15 the mechanical licensing collective from 

16 agreeing to audit procedures different from 

17 those set forth herein; provided, however, 

18 that notice of the audit shall still be pro19 vided to and published by the Copyright 

20 Office as set forth in clause (i)(IV). 

21 ‘‘(M) RECORDS OF MECHANICAL LICENS22 ING COLLECTIVE.— 

23 ‘‘(i) RECORDS MAINTENANCE.—The 

24 mechanical licensing collective shall ensure 

25 that all material records of its operations, 


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1 including those relating to notices of li2 cense, the administration of its claims 

3 process, reports of usage, royalty pay4 ments, receipt and maintenance of accrued 

5 royalties, royalty distribution processes, 

6 and legal matters, are preserved and main7 tained in a secure and reliable manner, 

8 with appropriate commercially reasonable 

9 safeguards against unauthorized access, 

10 copying, and disclosure, and subject to the 

11 confidentiality requirements prescribed by 

12 the Register of Copyrights under sub13 section (d)(12)(C) for a period of no less 

14 than 7 years from date of creation or re15 ceipt, whichever occurs later. 

16 ‘‘(ii) RECORDS ACCESS.—The mechan17 ical licensing collective shall provide 

18 prompt access to electronic and other 

19 records pertaining to the administration of 

20 a copyright owner’s musical works upon 

21 reasonable written request of such owner 

22 or the owner’s authorized representative. 

23 ‘‘(4) TERMS AND CONDITIONS OF BLANKET LI24 CENSE.—A blanket license obtained under this subVerDate Sep 11 2014 22:34 Jan 24, 2018 Jkt 079200 PO 00000 Frm 00046 Fmt 6652 Sfmt 6201 E:\BILLS\S2334.IS S2334

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1 section is subject to, and conditioned upon, the fol2 lowing requirements: 

3 ‘‘(A) ROYALTY REPORTING AND PAY4 MENTS.— 

5 ‘‘(i) MONTHLY REPORTS AND PAY6 MENT.—A digital music provider shall re7 port and pay royalties to the mechanical li8 censing collective under the blanket license 

9 on a monthly basis in accordance with 

10 clause (ii) and subsection (c)(5); provided, 

11 however, that monthly reporting shall be 

12 due 45 days, rather than 20 days, after 

13 the end of the monthly reporting period. 

14 ‘‘(ii) DATA TO BE REPORTED.—In re15 porting usage of musical works to the me16 chanical licensing collective, a digital music 

17 provider shall provide usage data for musi18 cal works used under the blanket license 

19 under this subsection as well as usage data 

20 for musical works used in covered activities 

21 under voluntary and individual download 

22 licenses. In its report of usage, the digital 

23 music provider shall— 

24 ‘‘(I) with respect to each musical 

25 work— 


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1 ‘‘(aa) provide identifying in2 formation for the sound record3 ing embodying such work, includ4 ing sound recording name, fea5 tured artist, producer and, to the 

6 extent available, producer, inter7 national standard recording code, 

8 and other information commonly 

9 used in the industry to identify 

10 sound recordings and match 

11 them to the musical works they 

12 embody; 

13 ‘‘(bb) to the extent available, 

14 provide information concerning 

15 authorship and ownership of the 

16 applicable rights in the musical 

17 work, including songwriter(s), 

18 publisher name(s) and respective 

19 ownership share(s), and the 

20 international standard musical 

21 work code; and 

22 ‘‘(cc) provide the number of 

23 digital phonorecord deliveries of 

24 such work, including limited 


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1 downloads and interactive 

2 streams; 

3 ‘‘(II) identify and provide contact 

4 information for all copyright owners 

5 of musical works as to which a vol6 untary license, rather than the blan7 ket license, is in effect with respect to 

8 the uses being reported; and 

9 ‘‘(III) provide such other infor10 mation as the Register of Copyrights 

11 shall require by regulation. 

12 ‘‘(iii) FORMAT AND MAINTENANCE OF

13 REPORTS.—Reports of usage provided by 

14 digital music providers to the mechanical 

15 licensing collective shall be in a machine16 readable format that is compatible with the 

17 information technology systems of the me18 chanical licensing collective and meets the 

19 requirements of regulations adopted by the 

20 Register of Copyrights. The Register shall 

21 also adopt regulations setting forth re22 quirements under which records of use 

23 shall be maintained and made available to 

24 the mechanical licensing collective by digVerDate Sep 11 2014 22:34 Jan 24, 2018 Jkt 079200 PO 00000 Frm 00049 Fmt 6652 Sfmt 6201 E:\BILLS\S2334.IS S2334

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1 ital music providers engaged in covered ac2 tivities under a blanket license. 

3 ‘‘(B) PROCUREMENT OF SOUND RECORD4 ING INFORMATION.—In addition to obtaining 

5 sound recording names and featured artists, a 

6 digital music provider shall engage in good7 faith, commercially reasonable efforts to obtain 

8 from copyright owners of sound recordings 

9 made available through the service of such dig10 ital music provider— 

11 ‘‘(i) producers, international standard 

12 recording codes, and other information 

13 commonly used in the industry to identify 

14 sound recordings and match them to the 

15 musical works they embody; and 

16 ‘‘(ii) information concerning the au17 thorship and ownership of musical works, 

18 including songwriters, publisher names, 

19 ownership shares, and international stand20 ard musical work codes. 

21 ‘‘(C) PAYMENT OF ADMINISTRATIVE AS22 SESSMENT.—A digital music provider and any 

23 significant nonblanket licensee shall pay the ad24 ministrative assessment established under paraVerDate Sep 11 2014 22:34 Jan 24, 2018 Jkt 079200 PO 00000 Frm 00050 Fmt 6652 Sfmt 6201 E:\BILLS\S2334.IS S2334

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1 graph (7)(D) in accordance with this subsection 

2 and applicable regulations. 

3 ‘‘(D) VERIFICATION OF PAYMENTS BY DIG4 ITAL MUSIC PROVIDERS.— 

5 ‘‘(i) VERIFICATION PROCESS.—The 

6 mechanical licensing collective may conduct 

7 an audit of a digital music provider oper8 ating under the blanket license to verify 

9 the accuracy of royalty payments by the 

10 digital music provider to the mechanical li11 censing collective as follows: 

12 ‘‘(I) The mechanical licensing 

13 collective may commence an audit of a 

14 digital music provider no more than 

15 once in any 3-year period to cover a 

16 verification period of no more than 

17 the 3 preceding full calendar years, 

18 and such audit may not audit records 

19 for any such 3-year verification period 

20 more than once. 

21 ‘‘(II) The audit shall be con22 ducted by a qualified auditor, who 

23 shall perform the audit during the or24 dinary course of business by exam25 ining the books, records, and systems 


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1 of the digital music provider, as well 

2 as underlying data, according to gen3 erally accepted auditing standards and 

4 subject to applicable confidentiality 

5 requirements prescribed by the Reg6 ister of Copyrights under subsection 

7 (d)(12)(C). 

8 ‘‘(III) The digital music provider 

9 shall make such books, records, and 

10 data available to the qualified auditor 

11 and respond to reasonable requests 

12 for relevant information, and shall use 

13 commercially reasonable efforts to 

14 provide access to relevant information 

15 maintained with respect to a digital 

16 music provider by third parties. 

17 ‘‘(IV) To commence the audit, 

18 the mechanical licensing collective 

19 shall file with the Copyright Office a 

20 notice of intent to conduct an audit of 

21 the digital music provider, and shall 

22 simultaneously deliver a copy of such 

23 notice to the digital music provider. 

24 The Register of Copyrights shall 

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1 lished in the Federal Register within 

2 30 days of receipt. 

3 ‘‘(V) The qualified auditor shall 

4 determine the accuracy of royalty pay5 ments, including whether an under6 payment or overpayment of royalties 

7 was made by the digital music pro8 vider to the mechanical licensing col9 lective; provided, however, that before 

10 providing a final audit report to the 

11 copyright owner(s), the qualified audi12 tor shall provide a tentative draft of 

13 the report to the digital music pro14 vider and allow the digital music pro15 vider a reasonable opportunity to re16 spond to the findings, including by 

17 clarifying issues and correcting factual 

18 errors. 

19 ‘‘(VI) The mechanical licensing 

20 collective shall pay the cost of the 

21 audit, unless the qualified auditor de22 termines that there was an under23 payment by the digital music provider 

24 of 10 percent or more, in which case 

25 the digital music provider shall bear 


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1 the reasonable costs of the audit, in 

2 addition to paying the amount of any 

3 underpayment to the mechanical li4 censing collective. In case of an over5 payment by the digital music provider, 

6 the mechanical licensing collective 

7 shall provide a credit to the digital 

8 music provider. 

9 ‘‘(VII) A digital music provider 

10 may not assert section 507 or any 

11 other Federal or State statute of limi12 tations, doctrine of laches or estoppel, 

13 or similar provision as a defense to a 

14 legal action arising from an audit 

15 under this subparagraph provided 

16 that such legal action is commenced 

17 no more than 6 years after the com18 mencement of the audit that is the 

19 basis for such action. 

20 ‘‘(ii) ALTERNATIVE VERIFICATION

21 PROCEDURES.—Nothing in this subpara22 graph shall preclude the mechanical licens23 ing collective and a digital music provider 

24 from agreeing to audit procedures different 

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1 ever, that notice of the audit shall still be 

2 provided to and published by the Copyright 

3 Office as set forth in clause (i)(IV). 

4 ‘‘(E) DEFAULT UNDER BLANKET LI5 CENSE.— 

6 ‘‘(i) CONDITION OF DEFAULT.—A dig7 ital music provider shall be considered gen8 erally in default under a blanket license 

9 obtained under this subsection if the dig10 ital music provider— 

11 ‘‘(I) fails to provide one or more 

12 monthly reports of usage to the me13 chanical licensing collective when due; 

14 ‘‘(II) fails to make a monthly 

15 royalty or late fee payment to the me16 chanical licensing collective when due, 

17 in all or material part; 

18 ‘‘(III) provides one or more 

19 monthly reports of usage to the me20 chanical licensing collective that, on 

21 the whole, is or are materially defi22 cient as a result of inaccurate, miss23 ing, or unreadable data, where the 

24 correct data was available to the dig25 ital music provider and required to be 


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1 reported under this section and appli2 cable regulations; 

3 ‘‘(IV) fails to pay the administra4 tive assessment as required under this 

5 subsection and applicable regulations; 

6 or 

7 ‘‘(V) after being provided written 

8 notice by the mechanical licensing col9 lective, refuses to comply with any 

10 other material term or condition of 

11 the blanket license under this section 

12 for a period of 60 days or longer. 

13 ‘‘(ii) NOTICE OF DEFAULT AND TER14 MINATION.—In case of a general default by 

15 a digital music provider, the mechanical li16 censing collective may proceed to terminate 

17 the blanket license of the digital music pro18 vider as follows: 

19 ‘‘(I) The mechanical licensing 

20 collective shall provide written notice 

21 to the digital music provider describ22 ing with reasonable particularity the 

23 default and advising that unless such 

24 default is cured within 60 days from 

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1 cense will automatically terminate at 

2 the end of that period. 

3 ‘‘(II) If the digital music provider 

4 fails to remedy the default within the 

5 60-day period referenced in subclause 

6 (I), the license shall terminate without 

7 any further action on the part of the 

8 mechanical licensing collective. Such 

9 termination renders the making of all 

10 digital phonorecord deliveries of all 

11 musical works (and shares thereof) 

12 covered by the blanket license for 

13 which the royalty or administrative 

14 assessment has not been paid action15 able as acts of infringement under 

16 section 501 and subject to the rem17 edies provided by sections 502 

18 through 506. 

19 ‘‘(iii) NOTICE TO COPYRIGHT OWN20 ERS.—The mechanical licensing collective 

21 shall provide written notice of any termi22 nation under this subparagraph to copy23 right owners of affected works. 

24 ‘‘(5) DIGITAL LICENSEE COORDINATOR.— 


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1 ‘‘(A) IN GENERAL.—The digital licensee 

2 coordinator shall be a single entity that— 

3 ‘‘(i) is a not-for-profit entity, not 

4 owned by any other entity, that is des5 ignated by the Register of Copyrights to 

6 carry out responsibilities under this sub7 section; 

8 ‘‘(ii) is endorsed by and enjoys sub9 stantial support from digital music pro10 viders and significant nonblanket licensees 

11 that together represent the greatest share 

12 of the licensee market for uses of musical 

13 works in covered activities, as measured 

14 over the preceding 3 full calendar years; 

15 ‘‘(iii) is able to demonstrate that it 

16 has, or will have prior to the license avail17 ability date, the administrative capabilities 

18 to perform the required functions of the 

19 digital licensee coordinator under this sub20 section; and 

21 ‘‘(iv) has been designated by the Reg22 ister of Copyrights in accordance with sub23 paragraph (B). 

24 ‘‘(B) DESIGNATION OF DIGITAL LICENSEE

25 COORDINATOR.— 


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1 ‘‘(i) INITIAL DESIGNATION.—The 

2 Register of Copyrights shall initially des3 ignate the digital licensee coordinator with4 in 9 months of the enactment date, in ac5 cordance with the same procedure as set 

6 forth for designation of the mechanical li7 censing collective in paragraph (3)(B)(i). 

8 ‘‘(ii) PERIODIC REVIEW OF DESIGNA9 TION.—Following the initial designation of 

10 the digital licensee coordinator, the Reg11 ister shall, every 5 years, beginning with 

12 the fifth full calendar year to commence 

13 after the initial designation, determine 

14 whether the existing designation should be 

15 continued, or a different entity meeting the 

16 criteria set forth in subparagraph (A) 

17 should be designated, in accordance with 

18 the same procedure as set forth for the 

19 mechanical licensing collective in para20 graph (3)(B)(ii). 

21 ‘‘(iii) INABILITY TO DESIGNATE.—If 

22 the Register is unable to identify an entity 

23 that fulfills the qualifications set forth in 

24 subparagraph (A) that is willing to serve 

25 as digital licensee coordinator, the Register 


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1 shall decline to designate a digital licensee 

2 coordinator. The Register’s inability to 

3 designate a digital licensee coordinator 

4 shall not negate or otherwise affect any 

5 provision of this subsection except to the 

6 limited extent that a provision references 

7 the digital licensee coordinator. In such 

8 case, the reference to the digital licensee 

9 coordinator shall be without effect unless 

10 and until a new digital licensee coordinator 

11 is designated. 

12 ‘‘(C) AUTHORITIES AND FUNCTIONS.— 

13 ‘‘(i) IN GENERAL.—The digital li14 censee coordinator is authorized to perform 

15 the following functions, subject to more 

16 particular requirements as set forth in this 

17 subsection: 

18 ‘‘(I) Establish a governance 

19 structure, criteria for membership, 

20 and any dues to be paid by its mem21 bers. 

22 ‘‘(II) Engage in efforts to enforce 

23 notice and payment obligations with 

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1 tion from and coordinating with the 

2 mechanical licensing collective. 

3 ‘‘(III) Initiate and participate in 

4 proceedings before the Copyright Roy5 alty Judges to establish the adminis6 trative assessment under this sub7 section. 

8 ‘‘(IV) Initiate and participate in 

9 proceedings before the Copyright Of10 fice with respect to activities under 

11 this subsection. 

12 ‘‘(V) Gather and provide docu13 mentation for use in proceedings be14 fore the Copyright Royalty Judges to 

15 set rates and terms under this section. 

16 ‘‘(VI) Maintain records of its ac17 tivities. 

18 ‘‘(VII) Engage in such other ac19 tivities as may be necessary or appro20 priate to fulfill its responsibilities 

21 under this subsection. 

22 ‘‘(ii) RESTRICTION ON LOBBYING.— 

23 The digital licensee coordinator shall not 

24 engage in government lobbying activities; 

25 provided, however, that it may engage in 


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1 the activities set forth in clause (i)(III), 

2 (IV), and (V). 

3 ‘‘(6) REQUIREMENTS FOR SIGNIFICANT NON4 BLANKET LICENSEES.— 

5 ‘‘(A) IN GENERAL.— 

6 ‘‘(i) NOTICE OF ACTIVITY.—Not later 

7 than 45 days after the license availability 

8 date, or 45 days after the end of the first 

9 full calendar month in which an entity ini10 tially qualifies as a significant nonblanket 

11 licensee as defined in subsection (e)(29), 

12 whichever occurs later, a significant non13 blanket licensee shall submit a notice of 

14 nonblanket activity to the mechanical li15 censing collective. The notice of nonblanket 

16 activity shall comply in form and substance 

17 with requirements that the Register of 

18 Copyrights shall establish by regulation, 

19 and a copy shall be made available to the 

20 digital licensee coordinator. 

21 ‘‘(ii) REPORTING AND PAYMENT OBLI22 GATIONS.—The notice of nonblanket activ23 ity submitted to the mechanical licensing 

24 collective shall be accompanied by a report 

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1 scribed in paragraph (4)(A)(ii), as well as 

2 payment of the administrative assessment 

3 as required under this subsection and ap4 plicable regulations. Thereafter, subject to 

5 clause (iii), a significant nonblanket li6 censee shall continue to provide monthly 

7 reports of usage, accompanied by payment 

8 of the administrative assessment, to the 

9 mechanical licensing collective, such re10 ports and payments to be submitted not 

11 later than 45 days after the end of the cal12 endar month being reported. 

13 ‘‘(iii) DISCONTINUATION OF OBLIGA14 TIONS.—An entity that has submitted a 

15 notice of nonblanket activity to the me16 chanical licensing collective that has ceased 

17 to qualify as a significant nonblanket li18 censee may so notify the collective in writ19 ing. In such case, as of the calendar month 

20 in which such notice is provided, such enti21 ty shall no longer be required to provide 

22 reports of usage or pay the administrative 

23 assessment; provided, however, that should 

24 such entity once again qualify as a signifi25 cant nonblanket licensee, it shall again be 


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1 required to comply with clauses (i) and 

2 (ii). 

3 ‘‘(B) REPORTING BY MECHANICAL LICENS4 ING COLLECTIVE TO DIGITAL LICENSEE COOR5 DINATOR.— 

6 ‘‘(i) MONTHLY REPORTS OF NON7 COMPLIANT LICENSEES.—The mechanical 

8 licensing collective shall provide monthly 

9 reports to the digital licensee coordinator 

10 setting forth any significant nonblanket li11 censees of which the collective is aware 

12 that have failed to comply with subpara13 graph (A). 

14 ‘‘(ii) TREATMENT OF CONFIDENTIAL

15 INFORMATION.—The mechanical licensing 

16 collective and digital licensee coordinator 

17 shall take appropriate steps to safeguard 

18 the confidentiality and security of financial 

19 and other sensitive data shared under this 

20 subparagraph, in accordance with the con21 fidentiality requirements prescribed by the 

22 Register of Copyrights under subsection 

23 (d)(12)(C). 

24 ‘‘(C) LEGAL ENFORCEMENT EFFORTS.— 


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1 ‘‘(i) FEDERAL COURT ACTION.— 

2 Should the mechanical licensing collective 

3 or digital licensee coordinator become 

4 aware that a significant nonblanket li5 censee has failed to comply with subpara6 graph (A), either may commence an action 

7 in Federal district court for damages and 

8 injunctive relief. If the significant non9 blanket licensee is found liable, the court 

10 shall, absent a finding of excusable neglect, 

11 award damages in an amount equal to 

12 three times the total amount of the unpaid 

13 administrative assessment and, notwith14 standing anything to the contrary in sec15 tion 505, reasonable attorney’s fees and 

16 costs, as well as such other relief as the 

17 court deems appropriate. In all other 

18 cases, the court shall award relief as ap19 propriate. Any recovery of damages shall 

20 be payable to the mechanical licensing col21 lective as an offset to total costs. 

22 ‘‘(ii) STATUTE OF LIMITATIONS FOR

23 ENFORCEMENT ACTION.—Any action de24 scribed in this subparagraph shall be comVerDate Sep 11 2014 22:34 Jan 24, 2018 Jkt 079200 PO 00000 Frm 00065 Fmt 6652 Sfmt 6201 E:\BILLS\S2334.IS S2334

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1 menced within the time period set forth in 

2 section 507(b). 

3 ‘‘(iii) OTHER RIGHTS AND REMEDIES

4 PRESERVED.—The ability of the mechan5 ical licensing collective or digital licensee 

6 coordinator to bring an action under this 

7 subparagraph shall in no way alter, limit 

8 or negate any other right or remedy that 

9 may be available to any party at law or in 

10 equity. 

11 ‘‘(7) FUNDING OF MECHANICAL LICENSING

12 COLLECTIVE.— 

13 ‘‘(A) IN GENERAL.—The total costs of the 

14 mechanical licensing collective shall be funded 

15 by— 

16 ‘‘(i) an administrative assessment, as 

17 such assessment is established by the 

18 Copyright Royalty Judges pursuant to sub19 paragraph (D) from time to time, to be 

20 paid by— 

21 ‘‘(I) digital music providers that 

22 are engaged, in all or in part, in cov23 ered activities pursuant to a blanket 

24 license under this subsection; and 


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1 ‘‘(II) significant nonblanket li2 censees; and 

3 ‘‘(ii) voluntary contributions from dig4 ital music providers and significant non5 blanket licensees as may be agreed with 

6 copyright owners. 

7 ‘‘(B) VOLUNTARY CONTRIBUTIONS.— 

8 ‘‘(i) AGREEMENTS CONCERNING CON9 TRIBUTIONS.—Except as provided in 

10 clause (ii), any voluntary contributions by 

11 digital music providers and significant non12 blanket licensees shall be determined by 

13 private negotiation and agreement; pro14 vided, however, that— 

15 ‘‘(I) the date and amount of any 

16 voluntary contribution to the mechan17 ical licensing collective shall be docu18 mented in a writing signed by an au19 thorized agent of the mechanical li20 censing collective and the contributing 

21 party, and 

22 ‘‘(II) such agreement shall be 

23 made available as required in pro24 ceedings before the Copyright Royalty 

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1 ministrative assessment in accordance 

2 with applicable statutory and regu3 latory provisions and rulings of the 

4 Copyright Royalty Judges. 

5 ‘‘(ii) TREATMENT OF CONTRIBU6 TIONS.—Any such voluntary contribution 

7 shall be treated for purposes of an admin8 istrative assessment proceeding as a gen9 eral offset to total costs of the mechanical 

10 licensing collective that would otherwise be 

11 recovered through the administrative as12 sessment. Any allocation or reallocation of 

13 voluntary contributions between or among 

14 individual digital music providers or sig15 nificant nonblanket licensees shall be a 

16 matter of private negotiation and agree17 ment among such parties and outside the 

18 scope of the administrative assessment pro19 ceeding. 

20 ‘‘(C) INTERIM APPLICATION OF ACCRUED

21 ROYALTIES.—In the event that the administra22 tive assessment, together with any funding from 

23 voluntary contributions as provided in subpara24 graphs (A) and (B), is inadequate to cover cur25 rent total costs of the mechanical licensing colVerDate Sep 11 2014 22:34 Jan 24, 2018 Jkt 079200 PO 00000 Frm 00068 Fmt 6652 Sfmt 6201 E:\BILLS\S2334.IS S2334

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1 lective, the collective, with approval of its board 

2 of directors, may apply unclaimed accrued roy3 alties on an interim basis to defray such costs, 

4 subject to future reimbursement of such royal5 ties from future collections of the assessment. 

6 ‘‘(D) DETERMINATION OF ADMINISTRA7 TIVE ASSESSMENT.— 

8 ‘‘(i) ADMINISTRATIVE ASSESSMENT TO

9 COVER TOTAL COSTS.—The administrative 

10 assessment shall be used solely and exclu11 sively to fund the total costs of the me12 chanical licensing collective. 

13 ‘‘(ii) SEPARATE PROCEEDING BEFORE

14 COPYRIGHT ROYALTY JUDGES.—The 

15 amount and terms of the administrative 

16 assessment shall be determined and estab17 lished in a separate and independent pro18 ceeding before the Copyright Royalty 

19 Judges, according to the procedures de20 scribed in clauses (iii) and (iv). The admin21 istrative assessment determined in such 

22 proceeding shall— 

23 ‘‘(I) be wholly independent of 

24 royalty rates and terms applicable to 

25 digital music providers, which shall 


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1 not be taken into consideration in any 

2 manner in establishing the adminis3 trative assessment; 

4 ‘‘(II) be established by the Copy5 right Royalty Judges in an amount 

6 that is calculated to defray the rea7 sonable total costs of the mechanical 

8 licensing collective, as such total costs 

9 are defined in subsection (e)(31); 

10 ‘‘(III) be assessed based on usage 

11 of musical works by digital music pro12 viders and significant nonblanket li13 censees in covered activities under 

14 both compulsory and nonblanket li15 censes; 

16 ‘‘(IV) may be in the form of a 

17 percentage of royalties payable under 

18 this section for usage of musical 

19 works in covered activities (regardless 

20 of whether a different rate applies 

21 under a voluntary license), or any 

22 other usage-based metric reasonably 

23 calculated to equitably allocate the 

24 costs of the mechanical licensing col25 lective across digital music providers 


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1 and significant nonblanket licensees 

2 engaged in covered activities, but shall 

3 include as a component a minimum 

4 fee for all digital music providers and 

5 significant nonblanket licensees; and 

6 ‘‘(V) take into consideration not 

7 only anticipated future total costs and 

8 collections of the administrative as9 sessment, but also, as applicable— 

10 ‘‘(aa) any portion of past ac11 tual total costs of the mechanical 

12 licensing collective not funded by 

13 previous collections of the admin14 istrative assessment or voluntary 

15 contributions because such collec16 tions or contributions together 

17 were insufficient to fund such 

18 costs; 

19 ‘‘(bb) any past collections of 

20 the administrative assessment 

21 and voluntary contributions that 

22 exceeded past actual total costs 

23 of the mechanical licensing collec24 tive, resulting in a surplus; and 


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1 ‘‘(cc) the amount of any vol2 untary contributions by digital 

3 music providers or significant 

4 nonblanket licensees in relevant 

5 periods, as described in subpara6 graphs (A) and (B) of paragraph 

7 (7). 

8 ‘‘(iii) INITIAL ADMINISTRATIVE AS9 SESSMENT.—The procedure for estab10 lishing the initial administrative assess11 ment shall be as follows: 

12 ‘‘(I) The Copyright Royalty 

13 Judges shall commence a proceeding 

14 to establish the initial administrative 

15 assessment within one year of the en16 actment date by publishing a notice in 

17 the Federal Register seeking petitions 

18 to participate. 

19 ‘‘(II) The mechanical licensing 

20 collective and digital licensee coordi21 nator shall participate in such pro22 ceeding, along with any interested 

23 copyright owners, digital music pro24 viders or significant nonblanket licens25 ees that have notified the Copyright 


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1 Royalty Judges of their desire to par2 ticipate. 

3 ‘‘(III) The Copyright Royalty 

4 Judges shall establish a schedule for 

5 submission by the parties of informa6 tion that may be relevant to estab7 lishing the administrative assessment, 

8 including actual and anticipated total 

9 costs of the mechanical licensing col10 lective, actual and anticipated collec11 tions from digital music providers and 

12 significant nonblanket licensees, and 

13 documentation of voluntary contribu14 tions, as well as a schedule for further 

15 proceedings, which shall include a 

16 hearing, as they deem appropriate. 

17 ‘‘(IV) The initial administrative 

18 assessment shall be determined, and 

19 such determination shall be published 

20 in the Federal Register by the Copy21 right Royalty Judges, within 9 

22 months of commencement of the pro23 ceeding contemplated by this clause. 

24 The determination shall be supported 

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1 ministrative assessment shall be effec2 tive as of the license availability date, 

3 and shall continue in effect unless and 

4 until an adjusted administrative as5 sessment is established pursuant to an 

6 adjustment proceeding under clause 

7 (iii). 

8 ‘‘(iv) ADJUSTMENT OF ADMINISTRA9 TIVE ASSESSMENT.—The administrative 

10 assessment may be adjusted by the Copy11 right Royalty Judges in a proceeding to 

12 occur no more than once every 2 years, in 

13 accordance with the following procedure: 

14 ‘‘(I) The mechanical licensing 

15 collective, digital licensee coordinator, 

16 or one or more interested copyright 

17 owners, digital music providers or sig18 nificant nonblanket licensees may file 

19 a petition with the Copyright Royalty 

20 Judges in the month of January to 

21 commence a proceeding to adjust the 

22 administrative assessment, if at least 

23 2 years have expired since the date of 

24 the most recent determination of the 


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1 administrative assessment by the 

2 Copyright Royalty Judges. 

3 ‘‘(II) Notice of the commence4 ment of such proceeding shall be pub5 lished in the Federal Register in the 

6 month of February, along with a 

7 schedule of requested information and 

8 additional proceedings, as described in 

9 clause (iii)(III). The mechanical li10 censing collective and digital licensee 

11 coordinator shall participate in such 

12 proceeding, along with any interested 

13 copyright owners, digital music pro14 viders or significant nonblanket licens15 ees that have notified the Copyright 

16 Royalty Judges of their desire to par17 ticipate. 

18 ‘‘(III) The adjusted administra19 tive assessment, which shall be sup20 ported by a written record, shall be 

21 published in the Federal Register no 

22 later than 9 months after the publica23 tion of the notice of commencement of 

24 the adjustment proceeding. The ad25 justed administrative assessment shall 


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1 take effect as of January 1 of the fol2 lowing year. 

3 ‘‘(v) ADOPTION OF VOLUNTARY

4 AGREEMENTS.—In lieu of reaching their 

5 own determination based on evaluation of 

6 relevant data, the Copyright Royalty 

7 Judges shall approve and adopt a nego8 tiated agreement to establish the amount 

9 and terms of the administrative assessment 

10 that has been agreed to by the mechanical 

11 licensing collective, on the one hand, and 

12 the digital licensee coordinator (or if none 

13 has been designated, interested digital 

14 music providers and significant nonblanket 

15 licensees representing more than half of 

16 the market for uses of musical works in 

17 covered activities), on the other; provided, 

18 however, that the Copyright Royalty 

19 Judges shall have the discretion to reject 

20 any such agreement for good cause shown. 

21 An administrative assessment adopted 

22 under this clause shall apply to all digital 

23 music providers and significant nonblanket 

24 licensees engaged in covered activities dur25 ing the period it is in effect. 


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1 ‘‘(vi) CONTINUING AUTHORITY TO

2 AMEND.—The Copyright Royalty Judges 

3 shall retain continuing authority to amend 

4 a determination of an administrative as5 sessment to correct technical or clerical er6 rors, or modify the terms of implementa7 tion, for good cause, with any such amend8 ment to be published in the Federal Reg9 ister. 

10 ‘‘(vii) APPEAL OF ADMINISTRATIVE

11 ASSESSMENT.—The determination of an 

12 administrative assessment by the Copy13 right Royalty Judges shall be appealable, 

14 within 30 days after publication in the 

15 Federal Register, to the Court of Appeals 

16 for the District of Columbia Circuit by any 

17 party that fully participated in the pro18 ceeding. The administrative assessment as 

19 established by the Copyright Royalty 

20 Judges shall remain in effect pending the 

21 final outcome of any such appeal; provided, 

22 however, that the mechanical licensing col23 lective, digital licensee coordinator, digital 

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1 priate financial or other measures within 3 

2 months of any modification of the assess3 ment to reflect and account for such out4 come. 

5 ‘‘(viii) REGULATIONS.—The Copyright 

6 Royalty Judges may adopt regulations to 

7 govern the conduct of proceedings under 

8 this paragraph. 

9 ‘‘(8) ESTABLISHMENT OF RATES AND TERMS

10 UNDER BLANKET LICENSE.— 

11 ‘‘(A) RESTRICTIONS ON RATESETTING

12 PARTICIPATION.—Neither the mechanical li13 censing collective nor the digital licensee coordi14 nator shall be a party to a proceeding to deter15 mine rates and terms for activities under this 

16 section as described in subsection (c)(3)(C); 

17 provided, however, that either may gather and 

18 provide financial and other information for the 

19 use of a party to such a proceeding and comply 

20 with requests for information as required under 

21 applicable statutory and regulatory provisions 

22 and rulings of the Copyright Royalty Judges. 

23 ‘‘(B) APPLICATION OF LATE FEES.—In 

24 any proceeding described in subparagraph (A) 

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1 lish a late fee for late payment of royalties for 

2 uses of musical works under this section, such 

3 fee shall apply to covered activities under blan4 ket licenses under this subsection, as follows: 

5 ‘‘(i) Late fees for past due royalty 

6 payments shall accrue from the due date 

7 for payment until payment is received by 

8 the mechanical licensing collective. 

9 ‘‘(ii) The availability of late fees shall 

10 in no way prevent a copyright owner or the 

11 mechanical licensing collective from assert12 ing any other rights or remedies to which 

13 it may be entitled under this title. 

14 ‘‘(C) INTERIM RATE AGREEMENTS.—For 

15 any covered activity for which no rate or terms 

16 have been established by the Copyright Royalty 

17 Judges, the mechanical licensing collective and 

18 a digital music provider may agree to an in19 terim rate and terms for such activity; provided, 

20 however, that any such interim rate and 

21 terms— 

22 ‘‘(i) shall be treated as nonpreceden23 tial and not cited or relied upon in any 

24 ratesetting proceeding before the Copyright 

25 Royalty Judges or any other tribunal; and 


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1 ‘‘(ii) shall automatically expire upon 

2 the establishment of a rate and terms for 

3 such covered activity by the Copyright 

4 Royalty Judges, except as may otherwise 

5 be agreed by the parties. 

6 ‘‘(9) TRANSITION TO BLANKET LICENSES.— 

7 ‘‘(A) SUBSTITUTION OF BLANKET LI8 CENSE.—As of the license availability date, a 

9 blanket license obtained by a digital music pro10 vider under this subsection shall, without any 

11 interruption in license authority enjoyed by 

12 such digital music provider, be automatically 

13 substituted for and supersede any existing li14 cense previously obtained by the digital music 

15 provider from a copyright owner under this sec16 tion to engage in one or more covered activities 

17 with respect to a musical work; provided, how18 ever, that the foregoing shall not apply to au19 thority obtained from a record company to 

20 make and distribute permanent downloads un21 less and until such record company terminates 

22 such authority in writing as of the end of a 

23 monthly reporting period, with a copy to the 

24 mechanical licensing collective. 


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1 ‘‘(B) EXPIRATION OF EXISTING LI2 CENSES.—Except to the extent provided in sub3 paragraph (A), as of the license availability 

4 date, licenses obtained under this section for 

5 covered activities prior to the license availability 

6 date shall no longer continue in effect. 

7 ‘‘(C) TREATMENT OF VOLUNTARY LI8 CENSES.—A voluntary license for a covered ac9 tivity in effect as of the license availability date 

10 will remain in effect unless and until it expires 

11 according to its terms, or the parties agree to 

12 amend or terminate the license. In a case where 

13 a voluntary license for a covered activity en14 tered into before the license availability date in15 corporates the terms of this section by ref16 erence, the terms so incorporated (but not the 

17 rates) shall be those in effect immediately prior 

18 to the license availability date, and those terms 

19 shall continue to apply unless and until such li20 cense is terminated or amended, or the parties 

21 enter into a new voluntary license. 

22 ‘‘(D) FURTHER ACCEPTANCE OF NOTICES

23 FOR COVERED ACTIVITIES BY COPYRIGHT OF24 FICE.—As of the enactment date— 


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1 ‘‘(i) the Copyright Office shall no 

2 longer accept notices of intention with re3 spect to covered activities; and 

4 ‘‘(ii) previously filed notices of inten5 tion will no longer be effective or provide 

6 license authority with respect to covered 

7 activities; provided, however, that there 

8 shall be no liability pursuant to section 

9 501 for the reproduction or distribution of 

10 a musical work (or share thereof) under a 

11 validly filed notice of intention through the 

12 license availability date. 

13 ‘‘(10) PRIOR UNLICENSED USES.— 

14 ‘‘(A) LIMITATION ON LIABILITY IN GEN15 ERAL.—A copyright owner that commences an 

16 action pursuant to section 501 on or after Jan17 uary 1, 2018, against a digital music provider 

18 for the infringement of the exclusive rights pro19 vided by paragraph (1) or (3) of section 106 

20 arising from the unauthorized reproduction or 

21 distribution of a musical work by such digital 

22 music provider in the course of engaging in cov23 ered activities prior to the license availability 

24 date, shall, as the copyright owner’s sole and 

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1 vider, be eligible to recover the royalty pre2 scribed under subsection (c)(3)(A) and chapter 

3 8 of this title, from the digital music provider, 

4 provided that such digital music provider can 

5 demonstrate compliance with the requirements 

6 of subparagraph (B), as applicable. In all other 

7 cases the limitation on liability under this sub8 paragraph shall not apply. 

9 ‘‘(B) REQUIREMENTS FOR LIMITATION ON

10 LIABILITY.—The following requirements shall 

11 apply as of the enactment date through the li12 cense availability date to digital music providers 

13 seeking to avail themselves of the limitation on 

14 liability described in subparagraph (A): 

15 ‘‘(i) No later than 30 days after first 

16 making a particular sound recording of a 

17 musical work available through its service 

18 via one or more covered activities, or 30 

19 days after the enactment date, whichever 

20 occurs later, a digital music provider shall 

21 engage in good-faith, commercially reason22 able efforts to identify and locate each 

23 copyright owner of such musical work (or 

24 share thereof). Such required matching ef25 forts shall include: 


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1 ‘‘(I) Good-faith, commercially 

2 reasonable efforts to obtain from the 

3 owner of the corresponding sound re4 cording made available through the 

5 digital music provider’s service the fol6 lowing information: 

7 ‘‘(aa) Sound recording 

8 name, featured artist, producer, 

9 international standard recording 

10 code, and other information com11 monly used in the industry to 

12 identify sound recordings and 

13 match them to the musical works 

14 they embody. 

15 ‘‘(bb) Any available musical 

16 work ownership information, in17 cluding songwriter and publisher 

18 name(s), percentage ownership 

19 share(s), and international stand20 ard musical work code. 

21 ‘‘(II) Employment of one or more 

22 bulk electronic matching processes 

23 that are available to the digital music 

24 provider through third-party vendors 

25 on commercially reasonable terms; 


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1 provided, however, that a digital 

2 music provider may rely on its own 

3 bulk electronic matching process if it 

4 has capabilities comparable to or bet5 ter than such third-party offerings. 

6 ‘‘(ii) The required matching efforts 

7 shall be repeated by the digital music pro8 vider no less than once per month for so 

9 long as the copyright owner remains un10 identified or has not been located. 

11 ‘‘(iii) If the required matching efforts 

12 are successful in identifying and locating a 

13 copyright owner of a musical work (or 

14 share thereof) by the end of the calendar 

15 month in which the digital music provider 

16 first makes use of the work, the digital 

17 music provider shall provide statements of 

18 account and pay royalties to such copy19 right owner in accordance with this section 

20 and applicable regulations. 

21 ‘‘(iv) If the copyright owner is not 

22 identified or located by the end of the cal23 endar month in which the digital music 

24 provider first makes use of the work, the 

25 digital music provider shall accrue and 


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1 hold royalties calculated under the applica2 ble statutory rate in accordance with usage 

3 of the work, from initial use of the work 

4 until the accrued royalties can be paid to 

5 the copyright owner or are required to be 

6 transferred to the mechanical licensing col7 lective, as follows: 

8 ‘‘(I) Accrued royalties shall be 

9 maintained by the digital music pro10 vider in accordance with generally ac11 cepted accounting principles. 

12 ‘‘(II) If a copyright owner of an 

13 unmatched work (or share thereof) is 

14 identified and located by or to the dig15 ital music provider before the license 

16 availability date, the digital music 

17 provider shall— 

18 ‘‘(aa) within 45 days after 

19 the end of the calendar month 

20 during which the copyright owner 

21 was identified and located, pay 

22 the copyright owner all accrued 

23 royalties, such payment to be ac24 companied by a cumulative state25 ment of account that includes all 


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1 of the information that would 

2 have been provided to the copy3 right owner had the digital music 

4 provider been providing monthly 

5 statements of account to the 

6 copyright owner from initial use 

7 of the work in accordance with 

8 this section and applicable regu9 lations, including the requisite 

10 certification under subsection 

11 (c)(5); 

12 ‘‘(bb) beginning with the ac13 counting period following the cal14 endar month in which the copy15 right owner was identified and lo16 cated, and for all other account17 ing periods prior to the license 

18 availability date, provide monthly 

19 statements of account and pay 

20 royalties to the copyright owner 

21 as required under this section 

22 and applicable regulations; and 

23 ‘‘(cc) as of the monthly roy24 alty reporting period commencing 

25 on the license availability date, 


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1 begin reporting usage and paying 

2 royalties for such musical work 

3 (or share thereof) for such re4 porting period and reporting pe5 riods thereafter to the mechanical 

6 licensing collective, as required 

7 under this subsection and appli8 cable regulations. 

9 ‘‘(III) If a copyright owner of an 

10 unmatched work (or share thereof) is 

11 not identified and located by the li12 cense availability date, the digital 

13 music provider shall— 

14 ‘‘(aa) within 45 days after 

15 the license availability date, 

16 transfer all accrued royalties to 

17 the mechanical licensing collec18 tive, such payment to be accom19 panied by a cumulative statement 

20 of account that includes all of the 

21 information that would have been 

22 provided to the copyright owner 

23 had the digital music provider 

24 been serving monthly statements 

25 of account on the copyright 


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1 owner from initial use of the 

2 work in accordance with this sec3 tion and applicable regulations, 

4 including the requisite certifi5 cation under subsection (c)(5), 

6 and accompanied by an addi7 tional certification by a duly au8 thorized officer of the digital 

9 music provider that the digital 

10 music provider has fulfilled the 

11 requirements of clauses (i) and 

12 (ii) of subparagraph (B) but has 

13 not been successful in locating or 

14 identifying the copyright owner; 

15 and 

16 ‘‘(bb) as of the monthly roy17 alty reporting period commencing 

18 on the license availability date, 

19 begin reporting usage and paying 

20 royalties for such musical work 

21 (or share thereof) for such period 

22 and reporting periods thereafter 

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1 section and applicable regula2 tions. 

3 ‘‘(v) SUSPENSION OF LATE FEES.—A 

4 digital music provider that complies with 

5 the requirements of this paragraph with 

6 respect to unmatched musical works (or 

7 shares of works) shall not be liable for or 

8 accrue late fees for late payments of royal9 ties for such works until such time as the 

10 digital music provider is required to begin 

11 paying monthly royalties to the copyright 

12 owner or the mechanical licensing collec13 tive, as applicable. 

14 ‘‘(C) ADJUSTED STATUTE OF LIMITA15 TIONS.—Notwithstanding anything to the con16 trary in section 507(b), with respect to any 

17 claim of infringement of the exclusive rights 

18 provided by paragraphs (1) and (3) of section 

19 106 against a digital music provider arising 

20 from the unauthorized reproduction or distribu21 tion of a musical work by such digital music 

22 provider to engage in covered activities that ac23 crued no more than 3 years prior to the license 

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1 crued, or up to 2 years after the license avail2 ability date, whichever is later. 

3 ‘‘(D) OTHER RIGHTS AND REMEDIES PRE4 SERVED.—Except as expressly provided in this 

5 paragraph, nothing in this paragraph shall be 

6 construed to alter, limit, or negate any right or 

7 remedy of a copyright owner with respect to un8 authorized use of a musical work. 

9 ‘‘(11) LEGAL PROTECTIONS FOR LICENSING AC10 TIVITIES.— 

11 ‘‘(A) EXEMPTION FOR COMPULSORY LI12 CENSE ACTIVITIES.—The antitrust exemption 

13 set forth in subsection (c)(3)(B) shall apply to 

14 negotiations and agreements between and 

15 among copyright owners and persons entitled to 

16 obtain a compulsory license for covered activi17 ties under this subsection, and common agents 

18 acting on their behalf, including with respect to 

19 the administrative assessment established under 

20 this subsection. 

21 ‘‘(B) LIMITATION ON COMMON AGENT EX22 EMPTION.—Notwithstanding the antitrust ex23 emption provided in subsection (c)(3)(B) and 

24 subparagraph (A), except for the administrative 

25 assessment, neither the mechanical licensing 


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1 collective nor the digital licensee coordinator 

2 shall serve as a common agent with respect to 

3 the establishment of royalty rates or terms 

4 under this section. 

5 ‘‘(C) ANTITRUST EXEMPTION FOR ADMIN6 ISTRATIVE ACTIVITIES.—Notwithstanding any 

7 provision of the antitrust laws, copyright own8 ers and persons entitled to obtain a compulsory 

9 license under this section may designate the 

10 mechanical licensing collective to administer vol11 untary licenses for the reproduction or distribu12 tion of musical works in covered activities on 

13 their behalf; provided, however, that— 

14 ‘‘(i) each copyright owner shall estab15 lish the royalty rates and material license 

16 terms of any such voluntary license indi17 vidually and not in agreement, combina18 tion, or concert with any other copyright 

19 owner; 

20 ‘‘(ii) each person entitled to obtain a 

21 compulsory license under this section shall 

22 establish the royalty rates and material li23 cense terms of any such voluntary license 

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1 bination, or concert with any other digital 

2 music provider; and 

3 ‘‘(iii) the mechanical licensing collec4 tive shall maintain the confidentiality of 

5 the voluntary licenses in accordance with 

6 the confidentiality provisions prescribed by 

7 the Register of Copyrights under sub8 section (d)(12)(C). 

9 ‘‘(D) LIABILITY FOR GOOD-FAITH ACTIVI10 TIES.—The mechanical licensing collective shall 

11 not be liable to any person or entity based on 

12 a claim arising from its good-faith administra13 tion of policies and procedures adopted and im14 plemented to carry out the responsibilities set 

15 forth in subparagraphs (J) and (K) of para16 graph (3), except to the extent of correcting an 

17 underpayment or overpayment of royalties as 

18 provided in paragraph (3)(L)(i)(VI); provided, 

19 however, that it may be named as a stakeholder 

20 in an action between copyright owners if it is 

21 holding disputed funds that are the subject of 

22 such action. For purposes of this subparagraph, 

23 ‘good-faith administration’ means administra24 tion in a manner that is not grossly negligent. 


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1 ‘‘(E) PREEMPTION OF STATE PROPERTY

2 LAWS.—The holding and distribution of funds 

3 by the mechanical licensing collective in accord4 ance with this subsection shall supersede and 

5 preempt any State law (including common law) 

6 concerning escheatment or abandoned property, 

7 or any analogous provision, that might other8 wise apply. 

9 ‘‘(12) REGULATIONS.— 

10 ‘‘(A) ADOPTION BY REGISTER OF COPY11 RIGHTS AND COPYRIGHT ROYALTY JUDGES.— 

12 The Register of Copyrights may conduct such 

13 proceedings and adopt such regulations as may 

14 be necessary or appropriate to effectuate the 

15 provisions of this subsection, except for regula16 tions concerning proceedings before the Copy17 right Royalty Judges to establish the adminis18 trative assessment, which shall be adopted by 

19 the Copyright Royalty Judges. 

20 ‘‘(B) JUDICIAL REVIEW OF REGULA21 TIONS.—Except as provided in paragraph 

22 (7)(D)(vii), regulations adopted under this sub23 section shall be subject to judicial review pursu24 ant to chapter 7 of title 5. 


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1 ‘‘(C) PROTECTION OF CONFIDENTIAL IN2 FORMATION.—The Register of Copyrights shall 

3 adopt regulations to provide for the appropriate 

4 procedures to ensure that confidential, private, 

5 proprietary, or privileged information contained 

6 in the records of the mechanical licensing collec7 tive and digital license coordinator is not im8 properly disclosed or used, including through 

9 any disclosure or use by the board of directors 

10 or personnel of either entity, and specifically in11 cluding the unclaimed royalties oversight com12 mittee and the dispute resolution committee of 

13 the mechanical licensing collective. 

14 ‘‘(13) SAVINGS CLAUSES.— 

15 ‘‘(A) LIMITATION ON ACTIVITIES AND

16 RIGHTS COVERED.—This subsection applies 

17 solely to uses of musical works subject to licens18 ing under this section. The blanket compulsory 

19 license established hereunder shall not be con20 strued to extend or apply to activities other 

21 than covered activities or to rights other than 

22 the exclusive rights of reproduction and dis23 tribution licensed under this section, or serve or 

24 act as the basis to extend or expand the com25 pulsory license under this section to activities 


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1 and rights not covered by this section as of the 

2 enactment date. 

3 ‘‘(B) RIGHTS OF PUBLIC PERFORMANCE

4 NOT AFFECTED.—The rights, protections, and 

5 immunities granted under this subsection, the 

6 data concerning musical works collected and 

7 made available under this subsection, and the 

8 definitions set forth in subsection (e) shall not 

9 extend to, limit, or otherwise affect any right of 

10 public performance in a musical work.’’; and 

11 (5) by adding at the end the following new sub12 section: 

13 ‘‘(e) DEFINITIONS.—As used in this section: 

14 ‘‘(1) ACCRUED INTEREST.—The term ‘accrued 

15 interest’ means interest accrued on accrued royal16 ties, as described in subsection (d)(3)(I)(ii). 

17 ‘‘(2) ACCRUED ROYALTIES.—The term ‘accrued 

18 royalties’ means royalties accrued for the reproduc19 tion or distribution of a musical work (or share 

20 thereof) in a covered activity, calculated in accord21 ance with the applicable rate under this section. 

22 ‘‘(3) ADMINISTRATIVE ASSESSMENT.—The term 

23 ‘administrative assessment’ means the fee to be paid 

24 by digital music providers and significant nonblanket 


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1 licensees that is established pursuant to subsection 

2 (d)(7)(D). 

3 ‘‘(4) BLANKET LICENSE.—The term ‘blanket li4 cense’ means a compulsory license to engage in cov5 ered activities as described in subsection (d)(1). 

6 ‘‘(5) BUDGET.—The term ‘budget’ means a 

7 statement of the financial position of the mechanical 

8 licensing collective for a fiscal year or quarter there9 of based on estimates of expenditures during the pe10 riod and proposals for financing them, including a 

11 calculation of total costs. 

12 ‘‘(6) COPYRIGHT OWNER.—The term ‘copyright 

13 owner’— 

14 ‘‘(A) means the owner of the exclusive 

15 right of reproduction or distribution in a musi16 cal work, in all or in part, as provided in sec17 tion 201 of this title; and 

18 ‘‘(B) does not refer to ownership of any 

19 other right. 

20 ‘‘(7) COVERED ACTIVITY.—The term ‘covered 

21 activity’ means the activity of making a digital pho22 norecord delivery of a musical work, including in the 

23 form of a permanent download, limited download, or 

24 interactive stream, where such activity is subject to 

25 compulsory licensing under this section. 


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1 ‘‘(8) DIGITAL MUSIC PROVIDER.—The term 

2 ‘digital music provider’ means a person (or persons 

3 operating under the authority of that person) that, 

4 with respect to a service engaged in covered activi5 ties licensed under this subsection— 

6 ‘‘(A) has a direct contractual, subscription, 

7 or other economic relationship with end users of 

8 the service, or, if no such relationship with end 

9 users exists, exercises direct control over the 

10 provision of the service to end users; 

11 ‘‘(B) is able to fully report on any revenues 

12 and consideration generated by the service; and 

13 ‘‘(C) is able to fully report on usage of 

14 sound recordings of musical works by the serv15 ice (or procure such reporting). 

16 ‘‘(9) DIGITAL LICENSEE COORDINATOR.—The 

17 term ‘digital licensee coordinator’ means the entity 

18 described in subsection (d)(5). 

19 ‘‘(10) DIGITAL PHONORECORD DELIVERY.—The 

20 term ‘digital phonorecord delivery’ means each indi21 vidual delivery of a phonorecord by digital trans22 mission of a sound recording that results in a spe23 cifically identifiable reproduction by or for any 

24 transmission recipient of a phonorecord of that 

25 sound recording, regardless of whether the digital 


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1 transmission is also a public performance of the 

2 sound recording or any musical work embodied 

3 therein, and includes a permanent download, a lim4 ited download, or an interactive stream. A digital 

5 phonorecord delivery does not result from a real6 time, noninteractive subscription transmission of a 

7 sound recording where no reproduction of the sound 

8 recording or the musical work embodied therein is 

9 made from the inception of the transmission through 

10 to its receipt by the transmission recipient in order 

11 to make the sound recording audible. A digital pho12 norecord delivery does not include the digital trans13 mission of sounds accompanying a motion picture or 

14 other audiovisual work as defined in section 101 of 

15 this title. 

16 ‘‘(11) ENACTMENT DATE.—The term ‘enact17 ment date’ means the date of enactment of the 

18 Music Modernization Act of 2018. 

19 ‘‘(12) INDIVIDUAL DOWNLOAD LICENSE.—The 

20 term ‘individual download license’ means a license 

21 obtained by a record company under subsection 

22 (b)(3) to make and distribute, or authorize the mak23 ing and distribution of, permanent downloads em24 bodying a specific musical work (or share of a work). 


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1 ‘‘(13) INTERACTIVE STREAM.—The term ‘inter2 active stream’ means a digital transmission of a 

3 sound recording of a musical work in the form of a 

4 stream, where the performance of the sound record5 ing by means of such transmission is not exempt 

6 under section 114(d)(1) and does not in itself, or as 

7 a result of a program in which it is included, qualify 

8 for statutory licensing under section 114(d)(2). An 

9 interactive stream is a digital phonorecord delivery. 

10 ‘‘(14) INTERESTED.—The term ‘interested’, as 

11 applied to a party seeking to participate in a pro12 ceeding under subsection (d)(7)(D), is a party as to 

13 which the Copyright Royalty Judges have not deter14 mined that the party lacks a significant interest in 

15 such proceeding. 

16 ‘‘(15) LICENSE AVAILABILITY DATE.—The term 

17 ‘license availability date’ means January 1 following 

18 the second anniversary of the enactment of Music 

19 Modernization Act of 2018. 

20 ‘‘(16) LIMITED DOWNLOAD.—The term ‘limited 

21 download’ means a digital transmission of a sound 

22 recording of a musical work in the form of a 

23 download, where such sound recording is accessible 

24 for listening only for a limited amount of time or 

25 specified number of times. 


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1 ‘‘(17) MATCHED.—The term ‘matched’, as ap2 plied to a musical work (or share thereof), means 

3 that the copyright owner of such work (or share 

4 thereof) has been identified and located. 

5 ‘‘(18) MECHANICAL LICENSING COLLECTIVE.— 

6 The term ‘mechanical licensing collective’ means the 

7 entity described in subsection (d)(3)(A). 

8 ‘‘(19) MUSICAL WORKS DATABASE.—The term 

9 ‘musical works database’ means the database de10 scribed in subsection (d)(3)(E). 

11 ‘‘(20) NOTICE OF LICENSE.—The term ‘notice 

12 of license’ means a notice from a digital music pro13 vider provided under subsection (d)(2)(A) for pur14 poses of obtaining a blanket license to engage in cov15 ered activities under subsection (d). 

16 ‘‘(21) NOTICE OF NONBLANKET ACTIVITY.— 

17 The term ‘notice of nonblanket activity’ means a no18 tice from a significant nonblanket licensee provided 

19 under subsection (d)(6)(A) for purposes of notifying 

20 the mechanical licensing collective that it has been 

21 engaging in covered activities. 

22 ‘‘(22) PERMANENT DOWNLOAD.—The term 

23 ‘permanent download’ means a digital transmission 

24 of a sound recording of a musical work in the form 

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1 sible for listening without restriction as to the 

2 amount of time or number of times it may be 

3 accessed. 

4 ‘‘(23) QUALIFIED AUDITOR.—The term ‘quali5 fied auditor’ means an independent, certified public 

6 accountant with experience performing music royalty 

7 audits. 

8 ‘‘(24) RECORD COMPANY.—The term ‘record 

9 company’ means an entity that invests in, produces, 

10 and markets sound recordings of musical works, and 

11 distributes such sound recordings for remuneration 

12 through multiple sales channels. 

13 ‘‘(25) REPORT OF USAGE.—The term ‘report of 

14 usage’ means a report reflecting an entity’s usage of 

15 musical works in covered activities as described in 

16 subsection (d)(4)(A). 

17 ‘‘(26) REQUIRED MATCHING EFFORTS.—The 

18 term ‘required matching efforts’ means efforts to 

19 identify and locate copyright owners of musical 

20 works as described in subsection (d)(10)(B)(i). 

21 ‘‘(27) SERVICE.—The term ‘service’, as used in 

22 relation to covered activities, means any site or other 

23 facility through which sound recordings of musical 

24 works are made available by digital transmission to 

25 members of the public. 


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1 ‘‘(28) SHARE.—The term ‘share’, as applied to 

2 a musical work, means a fractional ownership inter3 est in such work. 

4 ‘‘(29) SIGNIFICANT NONBLANKET LICENSEE.— 

5 The term ‘significant nonblanket licensee’ means an 

6 entity, including a group of entities under common 

7 ownership or control that, acting under the authority 

8 of one or more voluntary or individual download li9 censes, offers a service engaged in covered activities, 

10 where such entity or group of entities— 

11 ‘‘(A) is not currently operating under a 

12 blanket license obtained under this subsection 

13 and therefore is not obligated to provide reports 

14 of usage reflecting covered activities under sub15 section (d)(4)(A); 

16 ‘‘(B) has a direct contractual, subscription, 

17 or other economic relationship with end users of 

18 the service or, if no such relationship with end 

19 users exists, exercises direct control over the 

20 provision of the service to end users; and 

21 ‘‘(C) either— 

22 ‘‘(i) at any time in a calendar month, 

23 makes more than 5,000 different sound re24 cordings of musical works available 

25 through its service; or 


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1 ‘‘(ii) derives revenue or other consid2 eration in connection with such covered ac3 tivities greater than 50,000 dollars in a 

4 calendar month, or total revenue or other 

5 consideration greater than 500,000 dollars 

6 during the preceding 12 calendar months. 

7 ‘‘(30) SONGWRITER.—The term ‘songwriter’ 

8 means the author of all or part of a musical work, 

9 including a composer or lyricist. 

10 ‘‘(31) TOTAL COSTS.—The term ‘total costs’ 

11 means the total costs of establishing, maintaining, 

12 and operating the mechanical licensing collective to 

13 fulfill its statutory functions, including startup costs; 

14 financing, legal, and insurance costs; investments in 

15 information technology, infrastructure, and other 

16 long-term resources; outside vendor costs; costs of li17 censing, royalty administration, and enforcement of 

18 rights; costs of bad debt; and costs of automated 

19 and manual efforts to identify and locate copyright 

20 owners of musical works (and shares thereof) and 

21 match sound recordings to the musical works they 

22 embody; provided, however, that total costs shall not 

23 include any added costs incurred by the mechanical 

24 licensing collective to provide services under vol25 untary licenses. 


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1 ‘‘(32) UNCLAIMED ACCRUED ROYALTIES.—The 

2 term ‘unclaimed accrued royalties’ means accrued 

3 royalties eligible for distribution under subsection 

4 (d)(3)(J). 

5 ‘‘(33) UNMATCHED.—The term ‘unmatched’, as 

6 applied to a musical work (or share thereof), means 

7 that the copyright owner of such work (or share 

8 thereof) has not been identified or located. 

9 ‘‘(34) VOLUNTARY LICENSE.—The term ‘vol10 untary license’ means a license for use of a musical 

11 work (or share thereof) other than a compulsory li12 cense obtained under this section.’’. 

13 (b) TECHNICAL AND CONFORMING AMENDMENTS TO

14 SECTION 801.—Section 801(b) of title 17, United States 

15 Code, is amended— 

16 (1) in paragraph (1), by striking ‘‘The rates ap17 plicable under sections 114(f)(1)(B), 115, and 116 

18 shall be calculated to achieve the following objec19 tives’’ and inserting ‘‘The rates applicable under sec20 tions 114(f)(1)(B) and 116 shall be calculated to 

21 achieve the following objectives’’; 

22 (2) by redesignating paragraph (8) as para23 graph (9); and 

24 (3) by inserting after paragraph (7) the fol25 lowing new paragraph: 


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1 ‘‘(8) To determine the administrative assess2 ment to be paid by digital music providers under 

3 section 115(d). The provisions of section 115(d) 

4 shall apply to the conduct of proceedings by the 

5 Copyright Royalty Judges under section 115(d) and 

6 not the procedures set forth in this section, or sec7 tion 803, 804, or 805.’’. 

8 (c) EFFECTIVE DATE OF AMENDED RATE SETTING

9 STANDARD.—The amendments made by subsections 

10 (a)(3)(D) and (b)(1) shall apply to any proceeding before 

11 the Copyright Royalty Judges that is pending on, or com12 menced on or after, the date of the enactment of this Act. 

13 (d) TECHNICAL AND CONFORMING AMENDMENTS TO

14 TITLE 37, PART 385 OF THE CODE OF FEDERAL REGU15 LATIONS.—Within 9 months after the date of the enact16 ment of this Act, the Copyright Royalty Judges shall 

17 amend the existing regulations for section 115 in part 385 

18 of title 17, Code of Federal Regulations, to conform defini19 tions used in such part to the definitions of the same 

20 terms set forth in section 115(e) of title 17, United States 

21 Code, as amended by subsection (a). In so doing, the 

22 Copyright Royalty Judges shall make adjustments to the 

23 language of the regulations as necessary to achieve the 

24 same purpose and effect as the original regulations with 


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1 respect to the rates and terms previously adopted by the 

2 Copyright Royalty Judges. 

3 (e) BEST PRACTICES WORKING GROUP.—Not later 

4 than 1 year after the date of the enactment of this Act, 

5 the Register of Copyrights shall establish a working group 

6 consisting of representatives of the mechanical licensing 

7 collective, the digital licensee coordinator, copyright own8 ers, digital music providers, sound recording owners, and 

9 performing rights societies to consider and advise on best 

10 practices to minimize the incidence of unidentified and un11 matched musical works and facilitate and encourage the 

12 exchange of ownership information and prompt access to 

13 such information by and among such parties. 

14 SEC. 3. AMENDMENT TO SECTION 114. 

15 (a) REPEAL.—Subsection (i) of section 114 of title 

16 17, United States Code, is repealed. 

17 (b) PROCEEDINGS NOT AFFECTED.—The repeal of 

18 section 114(i) of title 17, United States Code, by sub19 section (a) shall not be taken into account in any pro20 ceeding to set or adjust the rates and fees payable for the 

21 use of sound recordings under section 112(e) or section 

22 114(f) of such title that is pending on, or commenced on 

23 or after, the date of the enactment of this Act. 

24 (c) DECISIONS AND PRECEDENTS NOT AFFECTED.— 

25 The repeal of section 114(i) of title 17, United States 


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1 Code, by subsection (a) shall not have any effect upon the 

2 decisions, or the precedents established or relied upon, in 

3 any proceeding to set or adjust the rates and fees payable 

4 for the use of sound recordings under section 112(e) or 

5 section 114(f) of such title before the date of the enact6 ment of this Act. 

7 SEC. 4. RANDOM ASSIGNMENT OF RATE COURT PRO8 CEEDINGS. 

9 Section 137 of title 28, United States Code, is 

10 amended— 

11 (1) by striking ‘‘The business’’ and inserting 

12 ‘‘(a) The business’’; and 

13 (2) by adding at the end the following new sub14 section: 

15 ‘‘(b)(1) In the case of any performing rights society 

16 subject to a consent decree, any application for the deter17 mination of a license fee for the public performance of 

18 music in accordance with the applicable consent decree 

19 shall be made in the district court with jurisdiction over 

20 that consent decree and assigned by lot to a judge of that 

21 district court according to that court’s rules for the divi22 sion of business among district judges currently in effect 

23 or as may be amended from time to time, provided that 

24 any such application shall not be assigned to (A) a judge 

25 to whom continuing jurisdiction over any performing 


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1 rights society for any performing rights society consent 

2 decree is assigned or has previously been assigned, or (B) 

3 a judge to whom another proceeding concerning an appli4 cation for the determination of a reasonable license fee 

5 is assigned at the time of the filing of the application. This 

6 provision does not apply to applications to determine rea7 sonable license fees made by individual proprietors under 

8 section 513 of title 17. 

9 ‘‘(2) Nothing in paragraph (1) shall abrogate the 

10 right of any party to the applicable consent decree to make 

11 an application for a construction of any provision of the 

12 applicable consent decree to the judge to whom continuing 

13 jurisdiction over the applicable consent decree is currently 

14 assigned. If a party to a consent decree makes such an 

15 application in connection with any rate proceeding, such 

16 proceeding shall be stayed until the final determination of 

17 the construction application.’’. 

Æ 


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