H. R. 1551—3 
(C) in paragraph (2), by striking ‘‘A compulsory license’’ 
and inserting ‘‘MUSICAL
ARRANGEMENT.—A compulsory 
license’’; 
(2) by striking subsection (b) and inserting the following: 
‘‘(b) PROCEDURES TO OBTAIN A COMPULSORY LICENSE.— 
‘‘(1) PHONORECORDS
OTHER
THAN
DIGITAL
PHONORECORD 
DELIVERIES.—A person who seeks to obtain a compulsory license 
under subsection (a) to make and distribute phonorecords of 
a musical work other than by means of digital phonorecord 
delivery shall, before, or not later than 30 calendar days after, 
making, and before distributing, any phonorecord of the work, 
serve notice of intention to do so on the copyright owner. 
If the registration or other public records of the Copyright 
Office do not identify the copyright owner and include an 
address at which notice can be served, it shall be sufficient 
to file the notice of intention with the Copyright Office. The 
notice shall comply, in form, content, and manner of service, 
with requirements that the Register of Copyrights shall pre-
scribe by regulation. 
‘‘(2) DIGITAL
PHONORECORD
DELIVERIES.—A person who 
seeks to obtain a compulsory license under subsection (a) to 
make and distribute phonorecords of a musical work by means 
of digital phonorecord delivery— 
‘‘(A) prior to the license availability date, shall, before, 
or not later than 30 calendar days after, first making 
any such digital phonorecord delivery, serve a notice of 
intention to do so on the copyright owner (but may not 
file the notice with the Copyright Office, even if the public 
records of the Office do not identify the owner or the 
owner’s address), and such notice shall comply, in form, 
content, and manner of service, with requirements that 
the Register of Copyrights shall prescribe by regulation; 
or 
‘‘(B) on or after the license availability date, shall, 
before making any such digital phonorecord delivery, follow 
the procedure described in subsection (d)(2), except as pro-
vided in paragraph (3). 
‘‘(3) RECORD COMPANY INDIVIDUAL DOWNLOAD LICENSES.— 
Notwithstanding paragraph (2)(B), a record company may, on 
or after the license availability date, obtain an individual 
download license in accordance with the notice requirements 
described in paragraph (2)(A) (except for the requirement that 
notice occur prior to the license availability date). A record 
company that obtains an individual download license as per-
mitted under this paragraph shall provide statements of 
account and pay royalties as provided in subsection (c)(2)(I). 
‘‘(4) FAILURE TO OBTAIN LICENSE.— 
‘‘(A) PHONORECORDS
OTHER
THAN
DIGITAL
PHONO-
RECORD
DELIVERIES.—In the case of phonorecords made 
and distributed other than by means of digital phonorecord 
delivery, the failure to serve or file the notice of intention 
required by paragraph (1) forecloses the possibility of a 
compulsory license under paragraph (1). In the absence 
of a voluntary license, the failure to obtain a compulsory 
license 
renders 
the 
making 
and 
distribution 
of
H. R. 1551—4 
phonorecords actionable as acts of infringement under sec-
tion 501 and subject to the remedies provided by sections 
502 through 506. 
‘‘(B) DIGITAL PHONORECORD DELIVERIES.— 
‘‘(i) IN GENERAL.—In the case of phonorecords made 
and distributed by means of digital phonorecord 
delivery: 
‘‘(I) The failure to serve the notice of intention 
required by paragraph (2)(A) or paragraph (3), as 
applicable, forecloses the possibility of a compul-
sory license under such paragraph. 
‘‘(II) The failure to comply with paragraph 
(2)(B) forecloses the possibility of a blanket license 
for a period of 3 years after the last calendar 
day on which the notice of license was required 
to be submitted to the mechanical licensing collec-
tive under such paragraph. 
‘‘(ii) EFFECT OF FAILURE.—In either case described 
in subclause (I) or (II) of clause (i), in the absence 
of a voluntary license, the failure to obtain a compul-
sory license renders the making and distribution of 
phonorecords by means of digital phonorecord delivery 
actionable as acts of infringement under section 501 
and subject to the remedies provided by sections 502 
through 506.’’; 
(3) by amending subsection (c) to read as follows: 
‘‘(c) 
GENERAL
CONDITIONS
APPLICABLE
TO
COMPULSORY 
LICENSE.— 
‘‘(1) ROYALTY PAYABLE UNDER COMPULSORY LICENSE.— 
‘‘(A) IDENTIFICATION REQUIREMENT.—To be entitled to 
receive royalties under a compulsory license obtained under 
subsection (b)(1) the copyright owner must be identified 
in the registration or other public records of the Copyright 
Office. The owner is entitled to royalties for phonorecords 
made and distributed after being so identified, but is not 
entitled to recover for any phonorecords previously made 
and distributed. 
‘‘(B) ROYALTY FOR PHONORECORDS OTHER THAN DIGITAL 
PHONORECORD
DELIVERIES.—Except 
as 
provided 
by 
subparagraph (A), for every phonorecord made and distrib-
uted under a compulsory license under subsection (a) other 
than by means of digital phonorecord delivery, with respect 
to each work embodied in the phonorecord, the royalty 
shall be the royalty prescribed under subparagraphs (D) 
through (F), paragraph (2)(A), and chapter 8. For purposes 
of this subparagraph, a phonorecord is considered ‘distrib-
uted’ if the person exercising the compulsory license has 
voluntarily and permanently parted with its possession. 
‘‘(C) ROYALTY FOR DIGITAL PHONORECORD DELIVERIES.— 
For every digital phonorecord delivery of a musical work 
made under a compulsory license under this section, the 
royalty payable shall be the royalty prescribed under sub-
paragraphs (D) through (F), paragraph (2)(A), and chapter 
8. 
‘‘(D) AUTHORITY TO NEGOTIATE.—Notwithstanding any 
provision of the antitrust laws, any copyright owners of 
nondramatic musical works and any persons entitled to
H. R. 1551—5 
obtain a compulsory license under subsection (a) may nego-
tiate and agree upon the terms and rates of royalty pay-
ments under this section and the proportionate division 
of fees paid among copyright owners, and may designate 
common agents on a nonexclusive basis to negotiate, agree 
to, pay or receive such royalty payments. Such authority 
to negotiate the terms and rates of royalty payments 
includes, but is not limited to, the authority to negotiate 
the year during which the royalty rates prescribed under 
this subparagraph, subparagraphs (E) and (F), paragraph 
(2)(A), and chapter 8 shall next be determined. 
‘‘(E) DETERMINATION
OF
REASONABLE
RATES
AND 
TERMS.—Proceedings under chapter 8 shall determine 
reasonable rates and terms of royalty payments for the 
activities specified by this section during the period begin-
ning with the effective date of such rates and terms, but 
not earlier than January 1 of the second year following 
the year in which the petition requesting the proceeding 
is filed, and ending on the effective date of successor rates 
and terms, or such other period as the parties may agree. 
Any copyright owners of nondramatic musical works and 
any persons entitled to obtain a compulsory license under 
subsection (a) may submit to the Copyright Royalty Judges 
licenses covering such activities. The parties to each pro-
ceeding shall bear their own costs. 
‘‘(F) SCHEDULE OF REASONABLE RATES.—The schedule 
of reasonable rates and terms determined by the Copyright 
Royalty Judges shall, subject to paragraph (2)(A), be 
binding on all copyright owners of nondramatic musical 
works and persons entitled to obtain a compulsory license 
under subsection (a) during the period specified in subpara-
graph (E), such other period as may be determined pursu-
ant to subparagraphs (D) and (E), or such other period 
as the parties may agree. The Copyright Royalty Judges 
shall establish rates and terms that most clearly represent 
the rates and terms that would have been negotiated in 
the marketplace between a willing buyer and a willing 
seller. In determining such rates and terms for digital 
phonorecord deliveries, the Copyright Royalty Judges shall 
base their decision on economic, competitive, and program-
ming information presented by the parties, including— 
‘‘(i) whether use of the compulsory licensee’s 
service may substitute for or may promote the sales 
of phonorecords or otherwise may interfere with or 
may enhance the musical work copyright owner’s other 
streams of revenue from its musical works; and 
‘‘(ii) the relative roles of the copyright owner and 
the compulsory licensee in the copyrighted work and 
the service made available to the public with respect 
to the relative creative contribution, technological con-
tribution, capital investment, cost, and risk. 
‘‘(2) ADDITIONAL TERMS AND CONDITIONS.— 
‘‘(A) VOLUNTARY LICENSES AND CONTRACTUAL ROYALTY 
RATES.— 
‘‘(i) IN GENERAL.—License agreements voluntarily 
negotiated at any time between one or more copyright 
owners of nondramatic musical works and one or more
H. R. 1551—6 
persons entitled to obtain a compulsory license under 
subsection (a) shall be given effect in lieu of any deter-
mination by the Copyright Royalty Judges. Subject 
to clause (ii), the royalty rates determined pursuant 
to subparagraphs (E) and (F) of paragraph (1) shall 
be given effect as to digital phonorecord deliveries in 
lieu of any contrary royalty rates specified in a contract 
pursuant to which a recording artist who is the author 
of a nondramatic musical work grants a license under 
that person’s exclusive rights in the musical work 
under paragraphs (1) and (3) of section 106 or commits 
another person to grant a license in that musical work 
under paragraphs (1) and (3) of section 106, to a person 
desiring to fix in a tangible medium of expression 
a sound recording embodying the musical work. 
‘‘(ii) APPLICABILITY.—The second sentence of clause 
(i) shall not apply to— 
‘‘(I) a contract entered into on or before June 
22, 1995, and not modified thereafter for the pur-
pose of reducing the royalty rates determined 
pursuant to subparagraphs (E) and (F) of para-
graph (1) or of increasing the number of musical 
works within the scope of the contract covered 
by the reduced rates, except if a contract entered 
into on or before June 22, 1995, is modified there-
after for the purpose of increasing the number 
of musical works within the scope of the contract, 
any contrary royalty rates specified in the contract 
shall be given effect in lieu of royalty rates deter-
mined pursuant to subparagraphs (E) and (F) of 
paragraph (1) for the number of musical works 
within the scope of the contract as of June 22, 
1995; and 
‘‘(II) a contract entered into after the date 
that the sound recording is fixed in a tangible 
medium of expression substantially in a form 
intended for commercial release, if at the time 
the contract is entered into, the recording artist 
retains the right to grant licenses as to the musical 
work under paragraphs (1) and (3) of section 106. 
‘‘(B) SOUND RECORDING INFORMATION.—Except as pro-
vided in section 1002(e), a digital phonorecord delivery 
licensed under this paragraph shall be accompanied by 
the information encoded in the sound recording, if any, 
by or under the authority of the copyright owner of that 
sound recording, that identifies the title of the sound 
recording, the featured recording artist who performs on 
the sound recording, and related information, including 
information concerning the underlying musical work and 
its writer. 
‘‘(C) INFRINGEMENT REMEDIES.— 
‘‘(i) IN GENERAL.—A digital phonorecord delivery 
of a sound recording is actionable as an act of infringe-
ment under section 501, and is fully subject to the 
remedies provided by sections 502 through 506, 
unless—
H. R. 1551—7 
‘‘(I) the digital phonorecord delivery has been 
authorized by the sound recording copyright 
owner; and 
‘‘(II) the entity making the digital phonorecord 
delivery has obtained a compulsory license under 
subsection (a) or has otherwise been authorized 
by the musical work copyright owner, or by a 
record 
company 
pursuant 
to 
an 
individual 
download 
license, 
to 
make 
and 
distribute 
phonorecords of each musical work embodied in 
the sound recording by means of digital phono-
record delivery. 
‘‘(ii) OTHER REMEDIES.—Any cause of action under 
this subparagraph shall be in addition to those avail-
able to the owner of the copyright in the nondramatic 
musical work under subparagraph (J) and section 
106(4) and the owner of the copyright in the sound 
recording under section 106(6). 
‘‘(D) LIABILITY
OF
SOUND
RECORDING
OWNERS.—The 
liability of the copyright owner of a sound recording for 
infringement of the copyright in a nondramatic musical 
work embodied in the sound recording shall be determined 
in accordance with applicable law, except that the owner 
of a copyright in a sound recording shall not be liable 
for a digital phonorecord delivery by a third party if the 
owner of the copyright in the sound recording does not 
license the distribution of a phonorecord of the nondramatic 
musical work. 
‘‘(E) RECORDING DEVICES AND MEDIA.—Nothing in sec-
tion 1008 shall be construed to prevent the exercise of 
the rights and remedies allowed by this paragraph, 
subparagraph (J), and chapter 5 in the event of a digital 
phonorecord delivery, except that no action alleging 
infringement of copyright may be brought under this title 
against a manufacturer, importer or distributor of a digital 
audio recording device, a digital audio recording medium, 
an analog recording device, or an analog recording medium, 
or against a consumer, based on the actions described 
in such section. 
‘‘(F) PRESERVATION OF RIGHTS.—Nothing in this section 
annuls or limits— 
‘‘(i) the exclusive right to publicly perform a sound 
recording or the musical work embodied therein, 
including by means of a digital transmission, under 
paragraphs (4) and (6) of section 106; 
‘‘(ii) except for compulsory licensing under the 
conditions specified by this section, the exclusive rights 
to reproduce and distribute the sound recording and 
the musical work embodied therein under paragraphs 
(1) and (3) of section 106, including by means of a 
digital phonorecord delivery; or 
‘‘(iii) any other rights under any other provision 
of section 106, or remedies available under this title, 
as such rights or remedies exist before, on, or after 
the date of enactment of the Digital Performance Right 
in Sound Recordings Act of 1995.
H. R. 1551—8 
‘‘(G) EXEMPT TRANSMISSIONS AND RETRANSMISSIONS.— 
The provisions of this section concerning digital phono-
record deliveries shall not apply to any exempt trans-
missions or retransmissions under section 114(d)(1). The 
exemptions created in section 114(d)(1) do not expand or 
reduce the rights of copyright owners under paragraphs 
(1) through (5) of section 106 with respect to such trans-
missions and retransmissions. 
‘‘(H) DISTRIBUTION BY RENTAL, LEASE, OR LENDING.— 
A compulsory license obtained under subsection (b)(1) to 
make and distribute phonorecords includes the right of 
the maker of such a phonorecord to distribute or authorize 
distribution of such phonorecord, other than by means of 
a digital phonorecord delivery, by rental, lease, or lending 
(or by acts or practices in the nature of rental, lease, 
or lending). With respect to each nondramatic musical work 
embodied in the phonorecord, the royalty shall be a propor-
tion of the revenue received by the compulsory licensee 
from every such act of distribution of the phonorecord 
under this clause equal to the proportion of the revenue 
received by the compulsory licensee from distribution of 
the phonorecord under subsection (a)(1)(A)(ii)(II) that is 
payable by a compulsory licensee under that clause and 
under chapter 8. The Register of Copyrights shall issue 
regulations to carry out the purpose of this subparagraph. 
‘‘(I) PAYMENT
OF
ROYALTIES
AND
STATEMENTS
OF 
ACCOUNT.—Except as provided in paragraphs (4)(A)(i) and 
(10)(B) of subsection (d), royalty payments shall be made 
on or before the twentieth day of each month and shall 
include all royalties for the month next preceding. Each 
monthly payment shall be made under oath and shall 
comply with requirements that the Register of Copyrights 
shall prescribe by regulation. The Register shall also pre-
scribe regulations under which detailed cumulative annual 
statements of account, certified by a certified public 
accountant, shall be filed for every compulsory license 
under subsection (a). The regulations covering both the 
monthly and the annual statements of account shall pre-
scribe the form, content, and manner of certification with 
respect to the number of records made and the number 
of records distributed. 
‘‘(J) NOTICE OF DEFAULT AND TERMINATION OF COMPUL-
SORY LICENSE.—In the case of a license obtained under 
paragraph (1), (2)(A), or (3) of subsection (b), if the copy-
right owner does not receive the monthly payment and 
the monthly and annual statements of account when due, 
the owner may give written notice to the licensee that, 
unless the default is remedied not later than 30 days 
after the date on which the notice is sent, the compulsory 
license will be automatically terminated. Such termination 
renders either the making or the distribution, or both, 
of all phonorecords for which the royalty has not been 
paid, actionable as acts of infringement under section 501 
and fully subject to the remedies provided by sections 502 
through 506. In the case of a license obtained under sub-
section (b)(2)(B), license authority under the compulsory
H. R. 1551—9 
license may be terminated as provided in subsection 
(d)(4)(E).’’; 
(4) by amending subsection (d) to read as follows: 
‘‘(d) BLANKET
LICENSE
FOR
DIGITAL
USES, MECHANICAL 
LICENSING COLLECTIVE, AND DIGITAL LICENSEE COORDINATOR.— 
‘‘(1) BLANKET LICENSE FOR DIGITAL USES.— 
‘‘(A) IN GENERAL.—A digital music provider that quali-
fies for a compulsory license under subsection (a) may, 
by complying with the terms and conditions of this sub-
section, obtain a blanket license from copyright owners 
through the mechanical licensing collective to make and 
distribute digital phonorecord deliveries of musical works 
through one or more covered activities. 
‘‘(B) INCLUDED ACTIVITIES.—A blanket license— 
‘‘(i) covers all musical works (or shares of such 
works) available for compulsory licensing under this 
section for purposes of engaging in covered activities, 
except as provided in subparagraph (C); 
‘‘(ii) includes the making and distribution of server, 
intermediate, archival, and incidental reproductions of 
musical works that are reasonable and necessary for 
the digital music provider to engage in covered activi-
ties licensed under this subsection, solely for the pur-
pose of engaging in such covered activities; and 
‘‘(iii) does not cover or include any rights or uses 
other than those described in clauses (i) and (ii). 
‘‘(C) OTHER LICENSES.—A voluntary license for covered 
activities entered into by or under the authority of 1 or 
more copyright owners and 1 or more digital music pro-
viders, or authority to make and distribute permanent 
downloads of a musical work obtained by a digital music 
provider from a sound recording copyright owner pursuant 
to an individual download license, shall be given effect 
in lieu of a blanket license under this subsection with 
respect to the musical works (or shares thereof) covered 
by such voluntary license or individual download authority 
and the following conditions apply: 
‘‘(i) Where a voluntary license or individual 
download license applies, the license authority provided 
under the blanket license shall exclude any musical 
works (or shares thereof) subject to the voluntary 
license or individual download license. 
‘‘(ii) An entity engaged in covered activities under 
a voluntary license or authority obtained pursuant to 
an individual download license that is a significant 
nonblanket licensee shall comply with paragraph 
(6)(A). 
‘‘(iii) The rates and terms of any voluntary license 
shall be subject to the second sentence of clause (i) 
and clause (ii) of subsection (c)(2)(A) and paragraph 
(9)(C), as applicable. 
‘‘(D) PROTECTION
AGAINST
INFRINGEMENT
ACTIONS.— 
A digital music provider that obtains and complies with 
the terms of a valid blanket license under this subsection 
shall not be subject to an action for infringement of the 
exclusive rights provided by paragraphs (1) and (3) of sec-
tion 106 under this title arising from use of a musical
H. R. 1551—10 
work (or share thereof) to engage in covered activities 
authorized by such license, subject to paragraph (4)(E). 
‘‘(E) OTHER REQUIREMENTS AND CONDITIONS APPLY.— 
Except as expressly provided in this subsection, each 
requirement, limitation, condition, privilege, right, and 
remedy otherwise applicable to compulsory licenses under 
this section shall apply to compulsory blanket licenses 
under this subsection. 
‘‘(2) AVAILABILITY OF BLANKET LICENSE.— 
‘‘(A) PROCEDURE
FOR
OBTAINING
LICENSE.—A digital 
music provider may obtain a blanket license by submitting 
a notice of license to the mechanical licensing collective 
that specifies the particular covered activities in which 
the digital music provider seeks to engage, as follows: 
‘‘(i) The notice of license shall comply in form and 
substance with requirements that the Register of Copy-
rights shall establish by regulation. 
‘‘(ii) Unless rejected in writing by the mechanical 
licensing collective not later than 30 calendar days 
after the date on which the mechanical licensing collec-
tive receives the notice, the blanket license shall be 
effective as of the date on which the notice of license 
was sent by the digital music provider, as shown by 
a physical or electronic record. 
‘‘(iii) A notice of license may only be rejected by 
the mechanical licensing collective if— 
‘‘(I) the digital music provider or notice of 
license does not meet the requirements of this 
section or applicable regulations, in which case 
the requirements at issue shall be specified with 
reasonable particularity in the notice of rejection; 
or 
‘‘(II) the digital music provider has had a 
blanket license terminated by the mechanical 
licensing collective during the 3-year period pre-
ceding the date on which the mechanical licensing 
collective receives the notice pursuant to para-
graph (4)(E). 
‘‘(iv) If a notice of license is rejected under clause 
(iii)(I), the digital music provider shall have 30 cal-
endar days after receipt of the notice of rejection to 
cure any deficiency and submit an amended notice 
of license to the mechanical licensing collective. If the 
deficiency has been cured, the mechanical licensing 
collective shall so confirm in writing, and the license 
shall be effective as of the date that the original notice 
of license was provided by the digital music provider. 
‘‘(v) A digital music provider that believes a notice 
of license was improperly rejected by the mechanical 
licensing collective may seek review of such rejection 
in an appropriate district court of the United States. 
The district court shall determine the matter de novo 
based on the record before the mechanical licensing 
collective and any additional evidence presented by 
the parties. 
‘‘(B) BLANKET
LICENSE
EFFECTIVE
DATE.—Blanket 
licenses shall be made available by the mechanical licensing
H. R. 1551—11 
collective on and after the license availability date. No 
such license shall be effective prior to the license avail-
ability date. 
‘‘(3) MECHANICAL LICENSING COLLECTIVE.— 
‘‘(A) IN GENERAL.—The mechanical licensing collective 
shall be a single entity that— 
‘‘(i) is a nonprofit entity, not owned by any other 
entity, that is created by copyright owners to carry 
out responsibilities under this subsection; 
‘‘(ii) is endorsed by, and enjoys substantial support 
from, musical work copyright owners that together rep-
resent the greatest percentage of the licensor market 
for uses of such works in covered activities, as meas-
ured over the preceding 3 full calendar years; 
‘‘(iii) is able to demonstrate to the Register of Copy-
rights that the entity has, or will have prior to the 
license availability date, the administrative and 
technological capabilities to perform the required func-
tions of the mechanical licensing collective under this 
subsection and that is governed by a board of directors 
in accordance with subparagraph (D)(i); and 
‘‘(iv) has been designated by the Register of Copy-
rights, with the approval of the Librarian of Congress 
pursuant to section 702, in accordance with subpara-
graph (B). 
‘‘(B) DESIGNATION OF MECHANICAL LICENSING COLLEC-
TIVE.— 
‘‘(i) INITIAL DESIGNATION.—Not later than 270 days 
after the enactment date, the Register of Copyrights 
shall initially designate the mechanical licensing collec-
tive as follows: 
‘‘(I) Not later than 90 calendar days after the 
enactment date, the Register shall publish notice 
in the Federal Register soliciting information to 
assist in identifying the appropriate entity to serve 
as the mechanical licensing collective, including 
the name and affiliation of each member of the 
board of directors described under subparagraph 
(D)(i) and each committee established pursuant 
to clauses (iii), (iv), and (v) of subparagraph (D). 
‘‘(II) After reviewing the information requested 
under subclause (I) and making a designation, the 
Register shall publish notice in the Federal Reg-
ister setting forth— 
‘‘(aa) the identity of and contact informa-
tion for the mechanical licensing collective; 
and 
‘‘(bb) the reasons for the designation. 
‘‘(ii) PERIODIC REVIEW OF DESIGNATION.—Following 
the initial designation of the mechanical licensing 
collective, the Register shall, every 5 years, beginning 
with the fifth full calendar year to commence after 
the initial designation, publish notice in the Federal 
Register in the month of January soliciting information 
concerning whether the existing designation should be 
continued, or a different entity meeting the criteria 
described in clauses (i) through (iii) of subparagraph
H. R. 1551—12 
(A) shall be designated. Following publication of such 
notice, the Register shall— 
‘‘(I) after reviewing the information submitted 
and conducting additional proceedings as appro-
priate, publish notice in the Federal Register of 
a continuing designation or new designation of 
the mechanical licensing collective, as the case 
may be, and the reasons for such a designation, 
with any new designation to be effective as of 
the first day of a month that is not less than 
6 months and not longer than 9 months after 
the date on which the Register publishes the 
notice, as specified by the Register; and 
‘‘(II) if a new entity is designated as the 
mechanical licensing collective, adopt regulations 
to govern the transfer of licenses, funds, records, 
data, and administrative responsibilities from the 
existing mechanical licensing collective to the new 
entity. 
‘‘(iii) CLOSEST ALTERNATIVE DESIGNATION.—If the 
Register is unable to identify an entity that fulfills 
each of the qualifications set forth in clauses (i) through 
(iii) of subparagraph (A), the Register shall designate 
the entity that most nearly fulfills such qualifications 
for purposes of carrying out the responsibilities of the 
mechanical licensing collective. 
‘‘(C) AUTHORITIES AND FUNCTIONS.— 
‘‘(i) IN GENERAL.—The mechanical licensing collec-
tive is authorized to perform the following functions, 
subject to more particular requirements as described 
in this subsection: 
‘‘(I) Offer and administer blanket licenses, 
including receipt of notices of license and reports 
of usage from digital music providers. 
‘‘(II) Collect and distribute royalties from dig-
ital music providers for covered activities. 
‘‘(III) Engage in efforts to identify musical 
works (and shares of such works) embodied in 
particular sound recordings, and to identify and 
locate the copyright owners of such musical works 
(and shares of such works). 
‘‘(IV) Maintain the musical works database 
and other information relevant to the administra-
tion of licensing activities under this section. 
‘‘(V) Administer a process by which copyright 
owners can claim ownership of musical works (and 
shares of such works), and a process by which 
royalties for works for which the owner is not 
identified or located are equitably distributed to 
known copyright owners. 
‘‘(VI) Administer collections of the administra-
tive assessment from digital music providers and 
significant nonblanket licensees, including receipt 
of notices of nonblanket activity. 
‘‘(VII) Invest in relevant resources, and 
arrange for services of outside vendors and others,
H. R. 1551—13 
to support the activities of the mechanical licensing 
collective. 
‘‘(VIII) Engage in legal and other efforts to 
enforce rights and obligations under this sub-
section, including by filing bankruptcy proofs of 
claims for amounts owed under licenses, and acting 
in coordination with the digital licensee coordi-
nator. 
‘‘(IX) Initiate and participate in proceedings 
before the Copyright Royalty Judges to establish 
the administrative assessment under this sub-
section. 
‘‘(X) Initiate and participate in proceedings 
before the Copyright Office with respect to activi-
ties under this subsection. 
‘‘(XI) Gather and provide documentation for 
use in proceedings before the Copyright Royalty 
Judges to set rates and terms under this section. 
‘‘(XII) Maintain records of the activities of the 
mechanical licensing collective and engage in and 
respond to audits described in this subsection. 
‘‘(XIII) Engage in such other activities as may 
be necessary or appropriate to fulfill the respon-
sibilities of the mechanical licensing collective 
under this subsection. 
‘‘(ii) RESTRICTIONS
CONCERNING
LICENSING
AND 
ADMINISTRATIVE
ACTIVITIES.—With respect to the 
administration of licenses, except as provided in 
clauses (i) and (iii) and subparagraph (E)(v), the 
mechanical licensing collective may only— 
‘‘(I) issue blanket licenses pursuant to sub-
section (d)(1); and 
‘‘(II) administer blanket licenses for reproduc-
tion or distribution rights in musical works for 
covered activities, including collecting and distrib-
uting royalties, pursuant to blanket licenses. 
‘‘(iii) ADDITIONAL
ADMINISTRATIVE
ACTIVITIES.— 
Subject to paragraph (11)(C), the mechanical licensing 
collective may also administer, including by collecting 
and distributing royalties, voluntary licenses issued 
by, or individual download licenses obtained from, 
copyright owners only for reproduction or distribution 
rights in musical works for covered activities, for which 
the mechanical licensing collective shall charge reason-
able fees for such services. 
‘‘(iv) RESTRICTION ON LOBBYING.—The mechanical 
licensing collective may not engage in government lob-
bying activities, but may engage in the activities 
described in subclauses (IX), (X), and (XI) of clause 
(i). 
‘‘(D) GOVERNANCE.— 
‘‘(i) 
BOARD
OF
DIRECTORS.—The 
mechanical 
licensing collective shall have a board of directors con-
sisting of 14 voting members and 3 nonvoting members, 
as follows: 
‘‘(I) Ten voting members shall be representa-
tives of music publishers—
H. R. 1551—14 
‘‘(aa) to which songwriters have assigned 
exclusive rights of reproduction and distribu-
tion of musical works with respect to covered 
activities; and 
‘‘(bb) none of which may be owned by, 
or under common control with, any other board 
member. 
‘‘(II) Four voting members shall be professional 
songwriters who have retained and exercise exclu-
sive rights of reproduction and distribution with 
respect to covered activities with respect to musical 
works they have authored. 
‘‘(III) One nonvoting member shall be a rep-
resentative of the nonprofit trade association of 
music publishers that represents the greatest 
percentage of the licensor market for uses of 
musical works in covered activities, as measured 
for the 3-year period preceding the date on which 
the member is appointed. 
‘‘(IV) One nonvoting member shall be a rep-
resentative of the digital licensee coordinator, pro-
vided that a digital licensee coordinator has been 
designated pursuant to paragraph (5)(B). Other-
wise, the nonvoting member shall be the nonprofit 
trade association of digital licensees that rep-
resents the greatest percentage of the licensee 
market for uses of musical works in covered activi-
ties, as measured over the preceding 3 full calendar 
years. 
‘‘(V) One nonvoting member shall be a rep-
resentative of a nationally recognized nonprofit 
trade association whose primary mission is 
advocacy on behalf of songwriters in the United 
States. 
‘‘(ii) BYLAWS.— 
‘‘(I) ESTABLISHMENT.—Not later than 1 year 
after the date on which the mechanical licensing 
collective is initially designated by the Register 
of Copyrights under subparagraph (B)(i), the collec-
tive shall establish bylaws to determine issues 
relating to the governance of the collective, 
including, but not limited to— 
‘‘(aa) the length of the term for each 
member of the board of directors; 
‘‘(bb) the staggering of the terms of the 
members of the board of directors; 
‘‘(cc) a process for filling a seat on the 
board of directors that is vacated before the 
end of the term with respect to that seat; 
‘‘(dd) a process for electing a member to 
the board of directors; and 
‘‘(ee) a management structure for daily 
operation of the collective. 
‘‘(II) PUBLIC
AVAILABILITY.—The mechanical 
licensing collective shall make the bylaws estab-
lished under subclause (I) available to the public.
H. R. 1551—15 
‘‘(iii) BOARD
MEETINGS.—The board of directors 
shall meet not less frequently than biannually and 
discuss matters pertinent to the operations of the 
mechanical licensing collective, including the mechan-
ical licensing collective budget. 
‘‘(iv) 
OPERATIONS
ADVISORY
COMMITTEE.—The 
board of directors of the mechanical licensing collective 
shall establish an operations advisory committee con-
sisting of not fewer than 6 members to make rec-
ommendations to the board of directors concerning the 
operations of the mechanical licensing collective, 
including the efficient investment in and deployment 
of information technology and data resources. Such 
committee shall have an equal number of members 
of the committee who are— 
‘‘(I) musical work copyright owners who are 
appointed by the board of directors of the mechan-
ical licensing collective; and 
‘‘(II) representatives of digital music providers 
who are appointed by the digital licensee coordi-
nator. 
‘‘(v) 
UNCLAIMED
ROYALTIES
OVERSIGHT
COM-
MITTEE.—The board of directors of the mechanical 
licensing collective shall establish and appoint an 
unclaimed royalties oversight committee consisting of 
10 members, 5 of which shall be musical work copy-
right owners and 5 of which shall be professional song-
writers whose works are used in covered activities. 
‘‘(vi) DISPUTE RESOLUTION COMMITTEE.—The board 
of directors of the mechanical licensing collective shall 
establish and appoint a dispute resolution committee 
that shall— 
‘‘(I) consist of not fewer than 6 members; and 
‘‘(II) include an equal number of representa-
tives of musical work copyright owners and profes-
sional songwriters. 
‘‘(vii) MECHANICAL LICENSING COLLECTIVE ANNUAL 
REPORT.— 
‘‘(I) IN GENERAL.—Not later than June 30 of 
each year commencing after the license availability 
date, the mechanical licensing collective shall post, 
and make available online for a period of not less 
than 3 years, an annual report that sets forth 
information regarding— 
‘‘(aa) the operational and licensing prac-
tices of the collective; 
‘‘(bb) how royalties are collected and 
distributed; 
‘‘(cc) budgeting and expenditures; 
‘‘(dd) the collective total costs for the pre-
ceding calendar year; 
‘‘(ee) the projected annual mechanical 
licensing collective budget; 
‘‘(ff) aggregated royalty receipts and pay-
ments;
H. R. 1551—16 
‘‘(gg) expenses that are more than 10 per-
cent of the annual mechanical licensing collec-
tive budget; and 
‘‘(hh) the efforts of the collective to locate 
and identify copyright owners of unmatched 
musical works (and shares of works). 
‘‘(II) SUBMISSION.—On the date on which the 
mechanical licensing collective posts each report 
required under subclause (I), the collective shall 
provide a copy of the report to the Register of 
Copyrights. 
‘‘(viii) 
INDEPENDENT
OFFICERS.—An 
individual 
serving as an officer of the mechanical licensing collec-
tive may not, at the same time, also be an employee 
or agent of any member of the board of directors of 
the collective or any entity represented by a member 
of the board of directors, as described in clause (i). 
‘‘(ix) OVERSIGHT AND ACCOUNTABILITY.— 
‘‘(I) IN
GENERAL.—The mechanical licensing 
collective shall— 
‘‘(aa) ensure that the policies and practices 
of the collective are transparent and account-
able; 
‘‘(bb) identify a point of contact for pub-
lisher inquiries and complaints with timely 
redress; and 
‘‘(cc) establish an anti-comingling policy 
for funds not collected under this section and 
royalties collected under this section. 
‘‘(II) AUDITS.— 
‘‘(aa) IN
GENERAL.—Beginning in the 
fourth full calendar year that begins after the 
initial designation of the mechanical licensing 
collective by the Register of Copyrights under 
subparagraph (B)(i), and in every fifth cal-
endar year thereafter, the collective shall 
retain a qualified auditor that shall— 
‘‘(AA) examine the books, records, and 
operations of the collective; 
‘‘(BB) prepare a report for the board 
of directors of the collective with respect 
to the matters described in item (bb); and 
‘‘(CC) not later than December 31 of 
the year in which the qualified auditor 
is retained, deliver the report described 
in subitem (BB) to the board of directors 
of the collective. 
‘‘(bb) MATTERS ADDRESSED.—Each report 
prepared under item (aa) shall address the 
implementation and efficacy of procedures of 
the mechanical licensing collective— 
‘‘(AA) for the receipt, handling, and 
distribution of royalty funds, including 
any amounts held as unclaimed royalties; 
‘‘(BB) to guard against fraud, abuse, 
waste, and the unreasonable use of funds; 
and
H. R. 1551—17 
‘‘(CC) to protect the confidentiality of 
financial, proprietary, and other sensitive 
information. 
‘‘(cc) PUBLIC AVAILABILITY.—With respect 
to each report prepared under item (aa), the 
mechanical licensing collective shall— 
‘‘(AA) submit the report to the Reg-
ister of Copyrights; and 
‘‘(BB) make the report available to 
the public. 
‘‘(E) MUSICAL WORKS DATABASE.— 
‘‘(i) ESTABLISHMENT AND MAINTENANCE OF DATA-
BASE.—The mechanical licensing collective shall estab-
lish and maintain a database containing information 
relating to musical works (and shares of such works) 
and, to the extent known, the identity and location 
of the copyright owners of such works (and shares 
thereof) and the sound recordings in which the musical 
works are embodied. In furtherance of maintaining 
such database, the mechanical licensing collective shall 
engage in efforts to identify the musical works 
embodied in particular sound recordings, as well as 
to identify and locate the copyright owners of such 
works (and shares thereof), and update such data as 
appropriate. 
‘‘(ii) MATCHED WORKS.—With respect to musical 
works (and shares thereof) that have been matched 
to copyright owners, the musical works database shall 
include— 
‘‘(I) the title of the musical work; 
‘‘(II) the copyright owner of the work (or share 
thereof), and the ownership percentage of that 
owner; 
‘‘(III) contact information for such copyright 
owner; 
‘‘(IV) to the extent reasonably available to the 
mechanical licensing collective— 
‘‘(aa) the international standard musical 
work code for the work; and 
‘‘(bb) identifying information for sound 
recordings in which the musical work is 
embodied, including the name of the sound 
recording, featured artist, sound recording 
copyright 
owner, 
producer, 
international 
standard recording code, and other informa-
tion commonly used to assist in associating 
sound recordings with musical works; and 
‘‘(V) such other information as the Register 
of Copyrights may prescribe by regulation. 
‘‘(iii) 
UNMATCHED
WORKS.—With 
respect 
to 
unmatched musical works (and shares of works) in 
the database, the musical works database shall 
include— 
‘‘(I) to the extent reasonably available to the 
mechanical licensing collective— 
‘‘(aa) the title of the musical work;
H. R. 1551—18 
‘‘(bb) the ownership percentage for which 
an owner has not been identified; 
‘‘(cc) if a copyright owner has been identi-
fied but not located, the identity of such owner 
and the ownership percentage of that owner; 
‘‘(dd) identifying information for sound 
recordings in which the work is embodied, 
including sound recording name, featured 
artist, sound recording copyright owner, pro-
ducer, international standard recording code, 
and other information commonly used to assist 
in associating sound recordings with musical 
works; and 
‘‘(ee) any additional information reported 
to the mechanical licensing collective that may 
assist in identifying the work; and 
‘‘(II) such other information relating to the 
identity and ownership of musical works (and 
shares of such works) as the Register of Copyrights 
may prescribe by regulation. 
‘‘(iv) 
SOUND
RECORDING
INFORMATION.—Each 
musical work copyright owner with any musical work 
listed in the musical works database shall engage in 
commercially reasonable efforts to deliver to the 
mechanical licensing collective, including for use in 
the musical works database, to the extent such 
information is not then available in the database, 
information regarding the names of the sound 
recordings in which that copyright owner’s musical 
works (or shares thereof) are embodied, to the extent 
practicable. 
‘‘(v) ACCESSIBILITY
OF
DATABASE.—The musical 
works database shall be made available to members 
of the public in a searchable, online format, free of 
charge. The mechanical licensing collective shall make 
such database available in a bulk, machine-readable 
format, through a widely available software applica-
tion, to the following entities: 
‘‘(I) Digital music providers operating under 
the authority of valid notices of license, free of 
charge. 
‘‘(II) 
Significant 
nonblanket 
licensees 
in 
compliance with their obligations under paragraph 
(6), free of charge. 
‘‘(III) Authorized vendors of the entities 
described in subclauses (I) and (II), free of charge. 
‘‘(IV) The Register of Copyrights, free of charge 
(but the Register shall not treat such database 
or any information therein as a Government 
record). 
‘‘(V) Any other person or entity for a fee not 
to exceed the marginal cost to the mechanical 
licensing collective of providing the database to 
such person or entity. 
‘‘(vi) ADDITIONAL REQUIREMENTS.—The Register of 
Copyrights shall establish requirements by regulations
H. R. 1551—19 
to ensure the usability, interoperability, and usage 
restrictions of the musical works database. 
‘‘(F) NOTICES OF LICENSE AND NONBLANKET ACTIVITY.— 
‘‘(i) 
NOTICES
OF
LICENSES.—The 
mechanical 
licensing collective shall receive, review, and confirm 
or reject notices of license from digital music providers, 
as provided in paragraph (2)(A). The collective shall 
maintain a current, publicly accessible list of blanket 
licenses that includes contact information for the 
licensees and the effective dates of such licenses. 
‘‘(ii) NOTICES
OF
NONBLANKET
ACTIVITY.—The 
mechanical licensing collective shall receive notices of 
nonblanket 
activity 
from 
significant 
nonblanket 
licensees, as provided in paragraph (6)(A). The collec-
tive shall maintain a current, publicly accessible list 
of notices of nonblanket activity that includes contact 
information for significant nonblanket licensees and 
the dates of receipt of such notices. 
‘‘(G) COLLECTION AND DISTRIBUTION OF ROYALTIES.— 
‘‘(i) IN GENERAL.—Upon receiving reports of usage 
and payments of royalties from digital music providers 
for covered activities, the mechanical licensing collec-
tive shall— 
‘‘(I) engage in efforts to— 
‘‘(aa) identify the musical works embodied 
in sound recordings reflected in such reports, 
and the copyright owners of such musical 
works (and shares thereof); 
‘‘(bb) confirm uses of musical works sub-
ject to voluntary licenses and individual 
download licenses, and the corresponding pro 
rata amounts to be deducted from royalties 
that would otherwise be due under the blanket 
license; and 
‘‘(cc) confirm proper payment of royalties 
due; 
‘‘(II) distribute royalties to copyright owners 
in accordance with the usage and other informa-
tion contained in such reports, as well as the 
ownership and other information contained in the 
records of the collective; and 
‘‘(III) deposit into an interest-bearing account, 
as provided in subparagraph (H)(ii), royalties that 
cannot be distributed due to— 
‘‘(aa) an inability to identify or locate a 
copyright owner of a musical work (or share 
thereof); or 
‘‘(bb) a pending dispute before the dispute 
resolution 
committee 
of 
the 
mechanical 
licensing collective. 
‘‘(ii) OTHER COLLECTION EFFORTS.—Any royalties 
recovered by the mechanical licensing collective as a 
result of efforts to enforce rights or obligations under 
a blanket license, including through a bankruptcy pro-
ceeding or other legal action, shall be distributed to 
copyright owners based on available usage information 
and in accordance with the procedures described in
H. R. 1551—20 
subclauses (I) and (II) of clause (i), on a pro rata 
basis in proportion to the overall percentage recovery 
of the total royalties owed, with any pro rata share 
of royalties that cannot be distributed deposited in 
an interest-bearing account as provided in subpara-
graph (H)(ii). 
‘‘(H) HOLDING OF ACCRUED ROYALTIES.— 
‘‘(i) HOLDING
PERIOD.—The mechanical licensing 
collective shall hold accrued royalties associated with 
particular musical works (and shares of works) that 
remain unmatched for a period of not less than 3 
years after the date on which the funds were received 
by the mechanical licensing collective, or not less than 
3 years after the date on which the funds were accrued 
by a digital music provider that subsequently trans-
ferred such funds to the mechanical licensing collective 
pursuant to paragraph (10)(B), whichever period 
expires sooner. 
‘‘(ii) INTEREST-BEARING ACCOUNT.—Accrued royal-
ties for unmatched works (and shares thereof) shall 
be maintained by the mechanical licensing collective 
in an interest-bearing account that earns monthly 
interest— 
‘‘(I) at the Federal, short-term rate; and 
‘‘(II) that accrues for the benefit of copyright 
owners entitled to payment of such accrued royal-
ties. 
‘‘(I) MUSICAL WORKS CLAIMING PROCESS.—When a copy-
right owner of an unmatched work (or share of a work) 
has been identified and located in accordance with the 
procedures of the mechanical licensing collective, the collec-
tive shall— 
‘‘(i) update the musical works database and the 
other records of the collective accordingly; and 
‘‘(ii) provided that accrued royalties for the musical 
work (or share thereof) have not yet been included 
in a distribution pursuant to subparagraph (J)(i), pay 
such accrued royalties and a proportionate amount 
of accrued interest associated with that work (or share 
thereof) to the copyright owner, accompanied by a 
cumulative statement of account reflecting usage of 
such work and accrued royalties based on information 
provided by digital music providers to the mechanical 
licensing collective. 
‘‘(J) DISTRIBUTION
OF
UNCLAIMED
ACCRUED
ROYAL-
TIES.— 
‘‘(i) DISTRIBUTION PROCEDURES.—After the expira-
tion of the prescribed holding period for accrued royal-
ties provided in subparagraph (H)(i), the mechanical 
licensing collective shall distribute such accrued royal-
ties, along with a proportionate share of accrued 
interest, to copyright owners identified in the records 
of the collective, subject to the following requirements, 
and in accordance with the policies and procedures 
established under clause (ii): 
‘‘(I) The first such distribution shall occur on 
or after January 1 of the second full calendar
H. R. 1551—21 
year to commence after the license availability 
date, with not less than 1 such distribution to 
take place during each calendar year thereafter. 
‘‘(II) Copyright owners’ payment shares for 
unclaimed 
accrued 
royalties 
for 
particular 
reporting periods shall be determined in a trans-
parent and equitable manner based on data indi-
cating the relative market shares of such copyright 
owners as reflected in reports of usage provided 
by digital music providers for covered activities 
for the periods in question, including, in addition 
to usage data provided to the mechanical licensing 
collective, usage data provided to copyright owners 
under voluntary licenses and individual download 
licenses for covered activities, to the extent such 
information 
is 
available 
to 
the 
mechanical 
licensing collective. In furtherance of the deter-
mination of equitable market shares under this 
subparagraph— 
‘‘(aa) the mechanical licensing collective 
may require copyright owners seeking dis-
tributions of unclaimed accrued royalties to 
provide, or direct the provision of, information 
concerning the usage of musical works under 
voluntary licenses and individual download 
licenses for covered activities; and 
‘‘(bb) the mechanical licensing collective 
shall take appropriate steps to safeguard the 
confidentiality and security of usage, financial, 
and other sensitive data used to compute 
market shares in accordance with the con-
fidentiality provisions prescribed by the Reg-
ister of Copyrights under paragraph (12)(C). 
‘‘(ii) ESTABLISHMENT OF DISTRIBUTION POLICIES.— 
The unclaimed royalties oversight committee estab-
lished under subparagraph (D)(v) shall establish poli-
cies and procedures for the distribution of unclaimed 
accrued royalties and accrued interest in accordance 
with this subparagraph, including the provision of 
usage data to copyright owners to allocate payments 
and credits to songwriters pursuant to clause (iv), sub-
ject to the approval of the board of directors of the 
mechanical licensing collective. 
‘‘(iii) PUBLIC
NOTICE
OF
UNCLAIMED
ACCRUED 
ROYALTIES.—The 
mechanical 
licensing 
collective 
shall— 
‘‘(I) maintain a publicly accessible online 
facility with contact information for the collective 
that lists unmatched musical works (and shares 
of works), through which a copyright owner may 
assert an ownership claim with respect to such 
a work (and a share of such a work); 
‘‘(II) engage in diligent, good-faith efforts to 
publicize, throughout the music industry—
H. R. 1551—22 
‘‘(aa) the existence of the collective and 
the ability to claim unclaimed accrued royal-
ties for unmatched musical works (and shares 
of such works) held by the collective; 
‘‘(bb) the procedures by which copyright 
owners may identify themselves and provide 
contact, 
ownership, 
and 
other 
relevant 
information to the collective in order to receive 
payments of accrued royalties; 
‘‘(cc) any transfer of accrued royalties for 
musical works under paragraph (10)(B), not 
later than 180 days after the date on which 
the transfer is received; and 
‘‘(dd) 
any 
pending 
distribution 
of 
unclaimed accrued royalties and accrued 
interest, not less than 90 days before the date 
on which the distribution is made; and 
‘‘(III) as appropriate, participate in music 
industry conferences and events for the purpose 
of publicizing the matters described in subclause 
(II). 
‘‘(iv) SONGWRITER
PAYMENTS.—Copyright owners 
that receive a distribution of unclaimed accrued royal-
ties and accrued interest shall pay or credit a portion 
to songwriters (or the authorized agents of songwriters) 
on whose behalf the copyright owners license or admin-
ister musical works for covered activities, in accordance 
with applicable contractual terms, but notwithstanding 
any agreement to the contrary— 
‘‘(I) such payments and credits to songwriters 
shall be allocated in proportion to reported usage 
of individual musical works by digital music pro-
viders during the reporting periods covered by the 
distribution from the mechanical licensing collec-
tive; and 
‘‘(II) in no case shall the payment or credit 
to an individual songwriter be less than 50 percent 
of the payment received by the copyright owner 
attributable to usage of musical works (or shares 
of works) of that songwriter. 
‘‘(K) DISPUTE
RESOLUTION.—The dispute resolution 
committee established under subparagraph (D)(vi) shall 
establish policies and procedures— 
‘‘(i) for copyright owners to address in a timely 
and equitable manner disputes relating to ownership 
interests in musical works licensed under this section 
and allocation and distribution of royalties by the 
mechanical licensing collective, subject to the approval 
of the board of directors of the mechanical licensing 
collective; 
‘‘(ii) that shall include a mechanism to hold dis-
puted funds in accordance with the requirements 
described in subparagraph (H)(ii) pending resolution 
of the dispute; and 
‘‘(iii) except as provided in paragraph (11)(D), that 
shall not affect any legal or equitable rights or rem-
edies available to any copyright owner or songwriter
H. R. 1551—23 
concerning ownership of, and entitlement to royalties 
for, a musical work. 
‘‘(L) VERIFICATION
OF
PAYMENTS
BY
MECHANICAL 
LICENSING COLLECTIVE.— 
‘‘(i) VERIFICATION
PROCESS.—A copyright owner 
entitled to receive payments of royalties for covered 
activities from the mechanical licensing collective may, 
individually or with other copyright owners, conduct 
an audit of the mechanical licensing collective to verify 
the accuracy of royalty payments by the mechanical 
licensing collective to such copyright owner, as follows: 
‘‘(I) A copyright owner may audit the mechan-
ical licensing collective only once in a year for 
any or all of the 3 calendar years preceding the 
year in which the audit is commenced, and may 
not audit records for any calendar year more than 
once. 
‘‘(II) The audit shall be conducted by a quali-
fied auditor, who shall perform the audit during 
the ordinary course of business by examining the 
books, records, and data of the mechanical 
licensing collective, according to generally accepted 
auditing standards and subject to applicable con-
fidentiality requirements prescribed by the Reg-
ister of Copyrights under paragraph (12)(C). 
‘‘(III) The mechanical licensing collective shall 
make such books, records, and data available to 
the qualified auditor and respond to reasonable 
requests for relevant information, and shall use 
commercially reasonable efforts to facilitate access 
to relevant information maintained by third par-
ties. 
‘‘(IV) To commence the audit, any copyright 
owner shall file with the Copyright Office a notice 
of intent to conduct an audit of the mechanical 
licensing collective, identifying the period of time 
to be audited, and shall simultaneously deliver 
a copy of such notice to the mechanical licensing 
collective. The Register of Copyrights shall cause 
the notice of audit to be published in the Federal 
Register not later than 45 calendar days after 
the date on which the notice is received. 
‘‘(V) The qualified auditor shall determine the 
accuracy of royalty payments, including whether 
an underpayment or overpayment of royalties was 
made by the mechanical licensing collective to each 
auditing copyright owner, except that, before pro-
viding a final audit report to any such copyright 
owner, the qualified auditor shall provide a ten-
tative draft of the report to the mechanical 
licensing collective and allow the mechanical 
licensing collective a reasonable opportunity to 
respond to the findings, including by clarifying 
issues and correcting factual errors. 
‘‘(VI) The auditing copyright owner or owners 
shall bear the cost of the audit. In case of an 
underpayment 
to 
any 
copyright 
owner, 
the
H. R. 1551—24 
mechanical licensing collective shall pay the 
amounts of any such underpayment to such 
auditing copyright owner, as appropriate. In case 
of an overpayment by the mechanical licensing 
collective, the mechanical licensing collective may 
debit the account of the auditing copyright owner 
or owners for such overpaid amounts, or such 
owner or owners shall refund overpaid amounts 
to the mechanical licensing collective, as appro-
priate. 
‘‘(ii) ALTERNATIVE
VERIFICATION
PROCEDURES.— 
Nothing in this subparagraph shall preclude a copy-
right owner and the mechanical licensing collective 
from agreeing to audit procedures different from those 
described in this subparagraph, except that a notice 
of the audit shall be provided to and published by 
the Copyright Office as described in clause (i)(IV). 
‘‘(M) RECORDS
OF
MECHANICAL
LICENSING
COLLEC-
TIVE.— 
‘‘(i) 
RECORDS
MAINTENANCE.—The 
mechanical 
licensing collective shall ensure that all material 
records of the operations of the mechanical licensing 
collective, including those relating to notices of license, 
the administration of the claims process of the mechan-
ical licensing collective, reports of usage, royalty pay-
ments, receipt and maintenance of accrued royalties, 
royalty distribution processes, and legal matters, are 
preserved and maintained in a secure and reliable 
manner, with appropriate commercially reasonable 
safeguards against unauthorized access, copying, and 
disclosure, and subject to the confidentiality require-
ments prescribed by the Register of Copyrights under 
paragraph (12)(C) for a period of not less than 7 years 
after the date of creation or receipt, whichever occurs 
later. 
‘‘(ii) RECORDS ACCESS.—The mechanical licensing 
collective shall provide prompt access to electronic and 
other records pertaining to the administration of a 
copyright owner’s musical works upon reasonable writ-
ten request of the owner or the authorized representa-
tive of the owner. 
‘‘(4) TERMS
AND
CONDITIONS
OF
BLANKET
LICENSE.—A 
blanket license is subject to, and conditioned upon, the following 
requirements: 
‘‘(A) ROYALTY REPORTING AND PAYMENTS.— 
‘‘(i) MONTHLY REPORTS AND PAYMENT.—A digital 
music provider shall report and pay royalties to the 
mechanical licensing collective under the blanket 
license on a monthly basis in accordance with clause 
(ii) and subsection (c)(2)(I), except that the monthly 
reporting shall be due on the date that is 45 calendar 
days, rather than 20 calendar days, after the end of 
the monthly reporting period. 
‘‘(ii) DATA TO BE REPORTED.—In reporting usage 
of musical works to the mechanical licensing collective, 
a digital music provider shall provide usage data for 
musical works used under the blanket license and
H. R. 1551—25 
usage data for musical works used in covered activities 
under voluntary licenses and individual download 
licenses. In the report of usage, the digital music pro-
vider shall— 
‘‘(I) with respect to each sound recording 
embodying a musical work— 
‘‘(aa) provide identifying information for 
the sound recording, including sound recording 
name, featured artist, and, to the extent 
acquired by the digital music provider in 
connection with its use of sound recordings 
of musical works to engage in covered activi-
ties, including pursuant to subparagraph (B), 
sound recording copyright owner, producer, 
international standard recording code, and 
other information commonly used in the 
industry to identify sound recordings and 
match them to the musical works the sound 
recordings embody; 
‘‘(bb) to the extent acquired by the digital 
music provider in the metadata provided by 
sound recording copyright owners or other 
licensors of sound recordings in connection 
with the use of sound recordings of musical 
works 
to 
engage 
in 
covered 
activities, 
including pursuant to subparagraph (B), pro-
vide information concerning authorship and 
ownership of the applicable rights in the 
musical work embodied in the sound recording 
(including each songwriter, publisher name, 
and respective ownership share) and the inter-
national standard musical work code; and 
‘‘(cc) provide the number of digital phono-
record deliveries of the sound recording, 
including limited downloads and interactive 
streams; 
‘‘(II) identify and provide contact information 
for all musical work copyright owners for works 
embodied in sound recordings as to which a vol-
untary license, rather than the blanket license, 
is in effect with respect to the uses being reported; 
and 
‘‘(III) provide such other information as the 
Register of Copyrights shall require by regulation. 
‘‘(iii) FORMAT
AND
MAINTENANCE
OF
REPORTS.— 
Reports of usage provided by digital music providers 
to the mechanical licensing collective shall be in a 
machine-readable format that is compatible with the 
information technology systems of the mechanical 
licensing collective and meets the requirements of regu-
lations adopted by the Register of Copyrights. The 
Register shall also adopt regulations setting forth 
requirements under which records of use shall be main-
tained and made available to the mechanical licensing 
collective by digital music providers engaged in covered 
activities under a blanket license.
H. R. 1551—26 
‘‘(iv) ADOPTION OF REGULATIONS.—The Register of 
Copyrights shall adopt regulations— 
‘‘(I) setting forth requirements under which 
records of use shall be maintained and made avail-
able to the mechanical licensing collective by dig-
ital music providers engaged in covered activities 
under a blanket license; and 
‘‘(II) regarding adjustments to reports of usage 
by digital music providers, including mechanisms 
to account for overpayment and underpayment of 
royalties in prior periods. 
‘‘(B) COLLECTION OF SOUND RECORDING INFORMATION.— 
A digital music provider shall engage in good-faith, 
commercially reasonable efforts to obtain from sound 
recording copyright owners and other licensors of sound 
recordings made available through the service of such dig-
ital music provider information concerning— 
‘‘(i) sound recording copyright owners, producers, 
international standard recording codes, and other 
information commonly used in the industry to identify 
sound recordings and match them to the musical works 
the sound recordings embody; and 
‘‘(ii) the authorship and ownership of musical 
works, including songwriters, publisher names, owner-
ship shares, and international standard musical work 
codes. 
‘‘(C) PAYMENT OF ADMINISTRATIVE ASSESSMENT.—A dig-
ital music provider and any significant nonblanket licensee 
shall pay the administrative assessment established under 
paragraph (7)(D) in accordance with this subsection and 
applicable regulations. 
‘‘(D) VERIFICATION OF PAYMENTS BY DIGITAL MUSIC PRO-
VIDERS.— 
‘‘(i) 
VERIFICATION
PROCESS.—The 
mechanical 
licensing collective may conduct an audit of a digital 
music provider operating under the blanket license 
to verify the accuracy of royalty payments by the digital 
music provider to the mechanical licensing collective 
as follows: 
‘‘(I) The mechanical licensing collective may 
commence an audit of a digital music provider 
not more frequently than once in any 3-calendar- 
year period to cover a verification period of not 
more than the 3 full calendar years preceding the 
date of commencement of the audit, and such audit 
may not audit records for any such 3-year 
verification period more than once. 
‘‘(II) The audit shall be conducted by a quali-
fied auditor, who shall perform the audit during 
the ordinary course of business by examining the 
books, records, and data of the digital music pro-
vider, according to generally accepted auditing 
standards and subject to applicable confidentiality 
requirements prescribed by the Register of Copy-
rights under paragraph (12)(C). 
‘‘(III) The digital music provider shall make 
such books, records, and data available to the
H. R. 1551—27 
qualified auditor and respond to reasonable 
requests for relevant information, and shall use 
commercially reasonable efforts to provide access 
to relevant information maintained with respect 
to a digital music provider by third parties. 
‘‘(IV) To commence the audit, the mechanical 
licensing collective shall file with the Copyright 
Office a notice of intent to conduct an audit of 
the digital music provider, identifying the period 
of time to be audited, and shall simultaneously 
deliver a copy of such notice to the digital music 
provider. The Register of Copyrights shall cause 
the notice of audit to be published in the Federal 
Register not later than 45 calendar days after 
the date on which notice is received. 
‘‘(V) The qualified auditor shall determine the 
accuracy of royalty payments, including whether 
an underpayment or overpayment of royalties was 
made by the digital music provider to the mechan-
ical licensing collective, except that, before pro-
viding a final audit report to the mechanical 
licensing collective, the qualified auditor shall pro-
vide a tentative draft of the report to the digital 
music provider and allow the digital music pro-
vider a reasonable opportunity to respond to the 
findings, including by clarifying issues and cor-
recting factual errors. 
‘‘(VI) The mechanical licensing collective shall 
pay the cost of the audit, unless the qualified 
auditor determines that there was an under-
payment by the digital music provider of not less 
than 10 percent, in which case the digital music 
provider shall bear the reasonable costs of the 
audit, in addition to paying the amount of any 
underpayment to the mechanical licensing collec-
tive. In case of an overpayment by the digital 
music provider, the mechanical licensing collective 
shall provide a credit to the account of the digital 
music provider. 
‘‘(VII) A digital music provider may not assert 
section 507 or any other Federal or State statute 
of limitations, doctrine of laches or estoppel, or 
similar provision as a defense to a legal action 
arising from an audit under this subparagraph 
if such legal action is commenced not more than 
6 years after the commencement of the audit that 
is the basis for such action. 
‘‘(ii) ALTERNATIVE
VERIFICATION
PROCEDURES.— 
Nothing in this subparagraph shall preclude the 
mechanical licensing collective and a digital music pro-
vider from agreeing to audit procedures different from 
those described in this subparagraph, except that a 
notice of the audit shall be provided to and published 
by the Copyright Office as described in clause (i)(IV). 
‘‘(E) DEFAULT UNDER BLANKET LICENSE.—
H. R. 1551—28 
‘‘(i) CONDITIONS OF DEFAULT.—A digital music pro-
vider shall be in default under a blanket license if 
the digital music provider— 
‘‘(I) fails to provide 1 or more monthly reports 
of usage to the mechanical licensing collective 
when due; 
‘‘(II) fails to make a monthly royalty or late 
fee payment to the mechanical licensing collective 
when due, in all or material part; 
‘‘(III) provides 1 or more monthly reports of 
usage to the mechanical licensing collective that, 
on the whole, is or are materially deficient as 
a result of inaccurate, missing, or unreadable data, 
where the correct data was available to the digital 
music provider and required to be reported under 
this section and applicable regulations; 
‘‘(IV) fails to pay the administrative assess-
ment as required under this subsection and 
applicable regulations; or 
‘‘(V) after being provided written notice by the 
mechanical licensing collective, refuses to comply 
with any other material term or condition of the 
blanket license under this section for a period of 
not less than 60 calendar days. 
‘‘(ii) NOTICE
OF
DEFAULT
AND
TERMINATION.—In 
case of a default by a digital music provider, the 
mechanical licensing collective may proceed to termi-
nate the blanket license of the digital music provider 
as follows: 
‘‘(I) The mechanical licensing collective shall 
provide written notice to the digital music provider 
describing 
with 
reasonable 
particularity 
the 
default and advising that unless such default is 
cured not later than 60 calendar days after the 
date of the notice, the blanket license will auto-
matically terminate at the end of that period. 
‘‘(II) If the digital music provider fails to 
remedy the default before the end of the 60-day 
period described in subclause (I), the license shall 
terminate without any further action on the part 
of the mechanical licensing collective. Such termi-
nation renders the making of all digital phono-
record deliveries of all musical works (and shares 
thereof) covered by the blanket license for which 
the royalty or administrative assessment has not 
been paid actionable as acts of infringement under 
section 501 and subject to the remedies provided 
by sections 502 through 506. 
‘‘(iii) NOTICE TO COPYRIGHT OWNERS.—The mechan-
ical licensing collective shall provide written notice 
of any termination under this subparagraph to copy-
right owners of affected works. 
‘‘(iv) REVIEW BY FEDERAL DISTRICT COURT.—A dig-
ital music provider that believes a blanket license was 
improperly terminated by the mechanical licensing 
collective may seek review of such termination in an 
appropriate district court of the United States. The
H. R. 1551—29 
district court shall determine the matter de novo based 
on the record before the mechanical licensing collective 
and any additional supporting evidence presented by 
the parties. 
‘‘(5) DIGITAL LICENSEE COORDINATOR.— 
‘‘(A) IN
GENERAL.—The digital licensee coordinator 
shall be a single entity that— 
‘‘(i) is a nonprofit, not owned by any other entity, 
that is created to carry out responsibilities under this 
subsection; 
‘‘(ii) is endorsed by and enjoys substantial support 
from digital music providers and significant nonblanket 
licensees that together represent the greatest percent-
age of the licensee market for uses of musical works 
in covered activities, as measured over the preceding 
3 calendar years; 
‘‘(iii) is able to demonstrate that it has, or will 
have prior to the license availability date, the adminis-
trative capabilities to perform the required functions 
of the digital licensee coordinator under this sub-
section; and 
‘‘(iv) has been designated by the Register of Copy-
rights, with the approval of the Librarian of Congress 
pursuant to section 702, in accordance with subpara-
graph (B). 
‘‘(B) DESIGNATION
OF
DIGITAL
LICENSEE
COORDI-
NATOR.— 
‘‘(i) INITIAL DESIGNATION.—The Register of Copy-
rights shall initially designate the digital licensee 
coordinator not later than 270 days after the enactment 
date, in accordance with the same procedure described 
for designation of the mechanical licensing collective 
in paragraph (3)(B)(i). 
‘‘(ii) PERIODIC REVIEW OF DESIGNATION.—Following 
the initial designation of the digital licensee coordi-
nator, the Register of Copyrights shall, every 5 years, 
beginning with the fifth full calendar year to commence 
after the initial designation, determine whether the 
existing designation should be continued, or a different 
entity meeting the criteria described in clauses (i) 
through (iii) of subparagraph (A) should be designated, 
in accordance with the same procedure described for 
the mechanical licensing collective in paragraph 
(3)(B)(ii). 
‘‘(iii) INABILITY TO DESIGNATE.—If the Register of 
Copyrights is unable to identify an entity that fulfills 
each of the qualifications described in clauses (i) 
through (iii) of subparagraph (A) to serve as the digital 
licensee coordinator, the Register may decline to des-
ignate a digital licensee coordinator. The determination 
of the Register not to designate a digital licensee 
coordinator shall not negate or otherwise affect any 
provision of this subsection except to the limited extent 
that a provision references the digital licensee coordi-
nator. In such case, the reference to the digital licensee 
coordinator shall be without effect unless and until 
a new digital licensee coordinator is designated.
H. R. 1551—30 
‘‘(C) AUTHORITIES AND FUNCTIONS.— 
‘‘(i) IN GENERAL.—The digital licensee coordinator 
is authorized to perform the following functions, subject 
to more particular requirements as described in this 
subsection: 
‘‘(I) Establish a governance structure, criteria 
for membership, and any dues to be paid by its 
members. 
‘‘(II) Engage in efforts to enforce notice and 
payment obligations with respect to the adminis-
trative assessment, including by receiving informa-
tion from and coordinating with the mechanical 
licensing collective. 
‘‘(III) Initiate and participate in proceedings 
before the Copyright Royalty Judges to establish 
the administrative assessment under this sub-
section. 
‘‘(IV) Initiate and participate in proceedings 
before the Copyright Office with respect to activi-
ties under this subsection. 
‘‘(V) Gather and provide documentation for use 
in proceedings before the Copyright Royalty Judges 
to set rates and terms under this section. 
‘‘(VI) Maintain records of its activities. 
‘‘(VII) Assist in publicizing the existence of 
the mechanical licensing collective and the ability 
of 
copyright 
owners 
to 
claim 
royalties 
for 
unmatched musical works (and shares of works) 
through the collective. 
‘‘(VIII) Engage in such other activities as may 
be necessary or appropriate to fulfill its respon-
sibilities under this subsection. 
‘‘(ii) 
RESTRICTION
ON
LOBBYING.—The 
digital 
licensee coordinator may not engage in government 
lobbying activities, but may engage in the activities 
described in subclauses (III), (IV), and (V) of clause 
(i). 
‘‘(iii) ASSISTANCE WITH PUBLICITY FOR UNCLAIMED 
ROYALTIES.—The digital licensee coordinator shall 
make reasonable, good-faith efforts to assist the 
mechanical licensing collective in the efforts of the 
collective to locate and identify copyright owners of 
unmatched musical works (and shares of such works) 
by encouraging digital music providers to publicize the 
existence of the collective and the ability of copyright 
owners to claim unclaimed accrued royalties, including 
by— 
‘‘(I) posting contact information for the collec-
tive at reasonably prominent locations on digital 
music provider websites and applications; and 
‘‘(II) conducting in-person outreach activities 
with songwriters. 
‘‘(6) 
REQUIREMENTS
FOR
SIGNIFICANT
NONBLANKET 
LICENSEES.— 
‘‘(A) IN GENERAL.— 
‘‘(i) NOTICE OF ACTIVITY.—Not later than 45 cal-
endar days after the license availability date, or 45
H. R. 1551—31 
calendar days after the end of the first full calendar 
month in which an entity initially qualifies as a signifi-
cant nonblanket licensee, whichever occurs later, a 
significant nonblanket licensee shall submit a notice 
of nonblanket activity to the mechanical licensing 
collective. The notice of nonblanket activity shall 
comply in form and substance with requirements that 
the Register of Copyrights shall establish by regulation, 
and a copy shall be made available to the digital 
licensee coordinator. 
‘‘(ii) REPORTING AND PAYMENT OBLIGATIONS.—The 
notice of nonblanket activity submitted to the mechan-
ical licensing collective shall be accompanied by a 
report of usage that contains the information described 
in paragraph (4)(A)(ii), as well as any payment of the 
administrative assessment required under this sub-
section and applicable regulations. Thereafter, subject 
to clause (iii), a significant nonblanket licensee shall 
continue to provide monthly reports of usage, accom-
panied by any required payment of the administrative 
assessment, to the mechanical licensing collective. Such 
reports and payments shall be submitted not later 
than 45 calendar days after the end of the calendar 
month being reported. 
‘‘(iii) 
DISCONTINUATION
OF
OBLIGATIONS.—An 
entity that has submitted a notice of nonblanket 
activity to the mechanical licensing collective that has 
ceased to qualify as a significant nonblanket licensee 
may so notify the collective in writing. In such case, 
as of the calendar month in which such notice is pro-
vided, such entity shall no longer be required to provide 
reports of usage or pay the administrative assessment, 
but if such entity later qualifies as a significant non-
blanket licensee, such entity shall again be required 
to comply with clauses (i) and (ii). 
‘‘(B) REPORTING BY MECHANICAL LICENSING COLLECTIVE 
TO DIGITAL LICENSEE COORDINATOR.— 
‘‘(i) 
MONTHLY
REPORTS
OF
NONCOMPLIANT 
LICENSEES.—The mechanical licensing collective shall 
provide monthly reports to the digital licensee coordi-
nator setting forth any significant nonblanket licensees 
of which the collective is aware that have failed to 
comply with subparagraph (A). 
‘‘(ii) TREATMENT OF CONFIDENTIAL INFORMATION.— 
The mechanical licensing collective and digital licensee 
coordinator shall take appropriate steps to safeguard 
the confidentiality and security of financial and other 
sensitive data shared under this subparagraph, in 
accordance with the confidentiality requirements pre-
scribed by the Register of Copyrights under paragraph 
(12)(C). 
‘‘(C) LEGAL ENFORCEMENT EFFORTS.— 
‘‘(i) FEDERAL COURT ACTION.—Should the mechan-
ical licensing collective or digital licensee coordinator 
become aware that a significant nonblanket licensee 
has failed to comply with subparagraph (A), either 
may commence an action in an appropriate district
H. R. 1551—32 
court of the United States for damages and injunctive 
relief. If the significant nonblanket licensee is found 
liable, the court shall, absent a finding of excusable 
neglect, award damages in an amount equal to three 
times the total amount of the unpaid administrative 
assessment and, notwithstanding anything to the con-
trary in section 505, reasonable attorney’s fees and 
costs, as well as such other relief as the court deter-
mines appropriate. In all other cases, the court shall 
award relief as appropriate. Any recovery of damages 
shall be payable to the mechanical licensing collective 
as an offset to the collective total costs. 
‘‘(ii) STATUTE OF LIMITATIONS FOR ENFORCEMENT 
ACTION.—Any action described in this subparagraph 
shall be commenced within the time period described 
in section 507(b). 
‘‘(iii) OTHER RIGHTS AND REMEDIES PRESERVED.— 
The ability of the mechanical licensing collective or 
digital licensee coordinator to bring an action under 
this subparagraph shall in no way alter, limit or negate 
any other right or remedy that may be available to 
any party at law or in equity. 
‘‘(7) FUNDING OF MECHANICAL LICENSING COLLECTIVE.— 
‘‘(A) IN GENERAL.—The collective total costs shall be 
funded by— 
‘‘(i) an administrative assessment, as such assess-
ment is established by the Copyright Royalty Judges 
pursuant to subparagraph (D) from time to time, to 
be paid by— 
‘‘(I) digital music providers that are engaged, 
in all or in part, in covered activities pursuant 
to a blanket license; and 
‘‘(II) significant nonblanket licensees; and 
‘‘(ii) voluntary contributions from digital music pro-
viders and significant nonblanket licensees as may be 
agreed with copyright owners. 
‘‘(B) VOLUNTARY CONTRIBUTIONS.— 
‘‘(i) AGREEMENTS
CONCERNING
CONTRIBUTIONS.— 
Except as provided in clause (ii), voluntary contribu-
tions by digital music providers and significant non-
blanket licensees shall be determined by private nego-
tiation and agreement, and the following conditions 
apply: 
‘‘(I) The date and amount of each voluntary 
contribution to the mechanical licensing collective 
shall be documented in a writing signed by an 
authorized agent of the mechanical licensing collec-
tive and the contributing party. 
‘‘(II) Such agreement shall be made available 
as required in proceedings before the Copyright 
Royalty Judges to establish or adjust the adminis-
trative assessment in accordance with applicable 
statutory and regulatory provisions and rulings 
of the Copyright Royalty Judges. 
‘‘(ii) TREATMENT
OF
CONTRIBUTIONS.—Each vol-
untary contribution described in clause (i) shall be 
treated for purposes of an administrative assessment
H. R. 1551—33 
proceeding as an offset to the collective total costs 
that would otherwise be recovered through the 
administrative assessment. Any allocation or realloca-
tion of voluntary contributions between or among indi-
vidual digital music providers or significant nonblanket 
licensees shall be a matter of private negotiation and 
agreement among such parties and outside the scope 
of the administrative assessment proceeding. 
‘‘(C) INTERIM APPLICATION OF ACCRUED ROYALTIES.— 
In the event that the administrative assessment, together 
with any funding from voluntary contributions as provided 
in subparagraphs (A) and (B), is inadequate to cover cur-
rent collective total costs, the collective, with approval of 
its board of directors, may apply unclaimed accrued royal-
ties on an interim basis to defray such costs, subject to 
future reimbursement of such royalties from future collec-
tions of the assessment. 
‘‘(D) 
DETERMINATION
OF
ADMINISTRATIVE
ASSESS-
MENT.— 
‘‘(i) 
ADMINISTRATIVE
ASSESSMENT
TO
COVER 
COLLECTIVE TOTAL COSTS.—The administrative assess-
ment shall be used solely and exclusively to fund the 
collective total costs. 
‘‘(ii) SEPARATE
PROCEEDING
BEFORE
COPYRIGHT 
ROYALTY
JUDGES.—The amount and terms of the 
administrative assessment shall be determined and 
established in a separate and independent proceeding 
before the Copyright Royalty Judges, according to the 
procedures described in clauses (iii) and (iv). The 
administrative assessment determined in such pro-
ceeding shall— 
‘‘(I) be wholly independent of royalty rates and 
terms applicable to digital music providers, which 
shall not be taken into consideration in any 
manner in establishing the administrative assess-
ment; 
‘‘(II) be established by the Copyright Royalty 
Judges in an amount that is calculated to defray 
the reasonable collective total costs; 
‘‘(III) be assessed based on usage of musical 
works by digital music providers and significant 
nonblanket licensees in covered activities under 
both compulsory and nonblanket licenses; 
‘‘(IV) may be in the form of a percentage of 
royalties payable under this section for usage of 
musical works in covered activities (regardless of 
whether a different rate applies under a voluntary 
license), or any other usage-based metric reason-
ably calculated to equitably allocate the collective 
total costs across digital music providers and 
significant nonblanket licensees engaged in cov-
ered activities, and shall include as a component 
a minimum fee for all digital music providers and 
significant nonblanket licensees; and 
‘‘(V) take into consideration anticipated future 
collective total costs and collections of the adminis-
trative assessment, including, as applicable—
H. R. 1551—34 
‘‘(aa) any portion of past actual collective 
total costs of the mechanical licensing collec-
tive not funded by previous collections of the 
administrative assessment or voluntary con-
tributions because such collections or contribu-
tions together were insufficient to fund such 
costs; 
‘‘(bb) any past collections of the adminis-
trative assessment and voluntary contribu-
tions that exceeded past actual collective total 
costs, resulting in a surplus; and 
‘‘(cc) the amount of any voluntary con-
tributions by digital music providers or signifi-
cant nonblanket licensees in relevant periods, 
described in subparagraphs (A) and (B) of 
paragraph (7). 
‘‘(iii) INITIAL
ADMINISTRATIVE
ASSESSMENT.—The 
procedure for establishing the initial administrative 
assessment shall be as follows: 
‘‘(I) Not later than 270 days after the enact-
ment date, the Copyright Royalty Judges shall 
commence a proceeding to establish the initial 
administrative assessment by publishing a notice 
in the Federal Register seeking petitions to partici-
pate. 
‘‘(II) The mechanical licensing collective and 
digital licensee coordinator shall participate in the 
proceeding described in subclause (I), along with 
any interested copyright owners, digital music pro-
viders or significant nonblanket licensees that 
have notified the Copyright Royalty Judges of their 
desire to participate. 
‘‘(III) The Copyright Royalty Judges shall 
establish a schedule for submission by the parties 
of information that may be relevant to establishing 
the administrative assessment, including actual 
and anticipated collective total costs of the 
mechanical licensing collective, actual and antici-
pated collections from digital music providers and 
significant nonblanket licensees, and documenta-
tion of voluntary contributions, as well as a 
schedule for further proceedings, which shall 
include a hearing, as the Copyright Royalty Judges 
determine appropriate. 
‘‘(IV) The initial administrative assessment 
shall be determined, and such determination shall 
be published in the Federal Register by the Copy-
right Royalty Judges, not later than 1 year after 
commencement of the proceeding described in this 
clause. The determination shall be supported by 
a written record. The initial administrative assess-
ment shall be effective as of the license availability 
date, and shall continue in effect unless and until 
an adjusted administrative assessment is estab-
lished pursuant to an adjustment proceeding under 
clause (iv).
H. R. 1551—35 
‘‘(iv) ADJUSTMENT
OF
ADMINISTRATIVE
ASSESS-
MENT.—The 
administrative 
assessment 
may 
be 
adjusted by the Copyright Royalty Judges periodically, 
in accordance with the following procedures: 
‘‘(I) Not earlier than 1 year after the most 
recent publication of a determination of the 
administrative assessment by the Copyright Roy-
alty Judges, the mechanical licensing collective, 
the digital licensee coordinator, or one or more 
interested copyright owners, digital music pro-
viders, or significant nonblanket licensees, may 
file a petition with the Copyright Royalty Judges 
in the month of May to commence a proceeding 
to adjust the administrative assessment. 
‘‘(II) Notice of the commencement of such pro-
ceeding shall be published in the Federal Register 
in the month of June following the filing of any 
petition, with a schedule of requested information 
and additional proceedings, as described in clause 
(iii)(III). The mechanical licensing collective and 
digital licensee coordinator shall participate in 
such proceeding, along with any interested copy-
right owners, digital music providers, or significant 
nonblanket licensees that have notified the Copy-
right Royalty Judges of their desire to participate. 
‘‘(III) The determination of the adjusted 
administrative assessment, which shall be sup-
ported by a written record, shall be published in 
the Federal Register during June of the calendar 
year following the commencement of the pro-
ceeding. The adjusted administrative assessment 
shall take effect January 1 of the year following 
such publication. 
‘‘(v) ADOPTION
OF
VOLUNTARY
AGREEMENTS.—In 
lieu of reaching their own determination based on 
evaluation of relevant data, the Copyright Royalty 
Judges shall approve and adopt a negotiated agreement 
to establish the amount and terms of the administra-
tive assessment that has been agreed to by the mechan-
ical licensing collective and the digital licensee coordi-
nator (or if none has been designated, interested digital 
music providers and significant nonblanket licensees 
representing more than half of the market for uses 
of musical works in covered activities), except that 
the Copyright Royalty Judges shall have the discretion 
to reject any such agreement for good cause shown. 
An administrative assessment adopted under this 
clause shall apply to all digital music providers and 
significant nonblanket licensees engaged in covered 
activities during the period the administrative assess-
ment is in effect. 
‘‘(vi) CONTINUING
AUTHORITY
TO
AMEND.—The 
Copyright Royalty Judges shall retain continuing 
authority to amend a determination of an administra-
tive assessment to correct technical or clerical errors, 
or modify the terms of implementation, for good cause,
H. R. 1551—36 
with any such amendment to be published in the Fed-
eral Register. 
‘‘(vii) APPEAL OF ADMINISTRATIVE ASSESSMENT.— 
The determination of an administrative assessment 
by the Copyright Royalty Judges shall be appealable, 
not later than 30 calendar days after publication in 
the Federal Register, to the Court of Appeals for the 
District of Columbia Circuit by any party that fully 
participated in the proceeding. The administrative 
assessment as established by the Copyright Royalty 
Judges shall remain in effect pending the final outcome 
of any such appeal, and the mechanical licensing collec-
tive, digital licensee coordinator, digital music pro-
viders, and significant nonblanket licensees shall 
implement appropriate financial or other measures not 
later than 90 days after any modification of the assess-
ment to reflect and account for such outcome. 
‘‘(viii) 
REGULATIONS.—The 
Copyright 
Royalty 
Judges may adopt regulations to govern the conduct 
of proceedings under this paragraph. 
‘‘(8) ESTABLISHMENT OF RATES AND TERMS UNDER BLANKET 
LICENSE.— 
‘‘(A) RESTRICTIONS ON RATESETTING PARTICIPATION.— 
Neither the mechanical licensing collective nor the digital 
licensee coordinator shall be a party to a proceeding 
described in subsection (c)(1)(E), except that the mechanical 
licensing collective or the digital licensee coordinator may 
gather and provide financial and other information for 
the use of a party to such a proceeding and comply with 
requests for information as required under applicable statu-
tory and regulatory provisions and rulings of the Copyright 
Royalty Judges. 
‘‘(B) APPLICATION OF LATE FEES.—In any proceeding 
described in subparagraph (A) in which the Copyright Roy-
alty Judges establish a late fee for late payment of royalties 
for uses of musical works under this section, such fee 
shall apply to covered activities under blanket licenses, 
as follows: 
‘‘(i) Late fees for past due royalty payments shall 
accrue from the due date for payment until payment 
is received by the mechanical licensing collective. 
‘‘(ii) The availability of late fees shall in no way 
prevent a copyright owner or the mechanical licensing 
collective from asserting any other rights or remedies 
to which such copyright owner or the mechanical 
licensing collective may be entitled under this title. 
‘‘(C) INTERIM RATE AGREEMENTS IN GENERAL.—For any 
covered activity for which no rate or terms have been 
established by the Copyright Royalty Judges, the mechan-
ical licensing collective and any digital music provider may 
agree to an interim rate and terms for such activity under 
the blanket license, and any such rate and terms— 
‘‘(i) shall be treated as nonprecedential and not 
cited or relied upon in any ratesetting proceeding 
before the Copyright Royalty Judges or any other tri-
bunal; and
H. R. 1551—37 
‘‘(ii) shall automatically expire upon the establish-
ment of a rate and terms for such covered activity 
by the Copyright Royalty Judges, under subsection 
(c)(1)(E). 
‘‘(D) ADJUSTMENTS FOR INTERIM RATES.—The rate and 
terms established by the Copyright Royalty Judges for 
a covered activity to which an interim rate and terms 
have been agreed under subparagraph (C) shall supersede 
the interim rate and terms and apply retroactively to the 
inception of the activity under the blanket license. In such 
case, not later than 90 days after the effective date of 
the rate and terms established by the Copyright Royalty 
Judges— 
‘‘(i) if the rate established by the Copyright Royalty 
Judges exceeds the interim rate, the digital music pro-
vider shall pay to the mechanical licensing collective 
the amount of any underpayment of royalties due; 
or 
‘‘(ii) if the interim rate exceeds the rate established 
by the Copyright Royalty Judges, the mechanical 
licensing collective shall credit the account of the dig-
ital music provider for the amount of any overpayment 
of royalties due. 
‘‘(9) TRANSITION TO BLANKET LICENSES.— 
‘‘(A) SUBSTITUTION
OF
BLANKET
LICENSE.—On the 
license availability date, a blanket license shall, without 
any interruption in license authority enjoyed by such digital 
music provider, be automatically substituted for and super-
sede any existing compulsory license previously obtained 
under this section by the digital music provider from a 
copyright owner to engage in 1 or more covered activities 
with respect to a musical work, except that such substi-
tution shall not apply to any authority obtained from a 
record company pursuant to a compulsory license to make 
and distribute permanent downloads unless and until such 
record company terminates such authority in writing to 
take effect at the end of a monthly reporting period, with 
a copy to the mechanical licensing collective. 
‘‘(B) EXPIRATION OF EXISTING LICENSES.—Except to the 
extent provided in subparagraph (A), on and after the 
license availability date, licenses other than individual 
download licenses obtained under this section for covered 
activities prior to the license availability date shall no 
longer continue in effect. 
‘‘(C) TREATMENT
OF
VOLUNTARY
LICENSES.—A vol-
untary license for a covered activity in effect on the license 
availability date will remain in effect unless and until 
the voluntary license expires according to the terms of 
the voluntary license, or the parties agree to amend or 
terminate the voluntary license. In a case where a vol-
untary license for a covered activity entered into before 
the license availability date incorporates the terms of this 
section by reference, the terms so incorporated (but not 
the rates) shall be those in effect immediately prior to 
the license availability date, and those terms shall continue
H. R. 1551—38 
to apply unless and until such voluntary license is termi-
nated or amended, or the parties enter into a new voluntary 
license. 
‘‘(D) FURTHER ACCEPTANCE OF NOTICES FOR COVERED 
ACTIVITIES BY COPYRIGHT OFFICE.—On and after the enact-
ment date— 
‘‘(i) the Copyright Office shall no longer accept 
notices of intention with respect to covered activities; 
and 
‘‘(ii) notices of intention filed before the enactment 
date will no longer be effective or provide license 
authority with respect to covered activities, except that, 
before the license availability date, there shall be no 
liability under section 501 for the reproduction or dis-
tribution of a musical work (or share thereof) in covered 
activities if a valid notice of intention was filed for 
such work (or share) before the enactment date. 
‘‘(10) PRIOR UNLICENSED USES.— 
‘‘(A) LIMITATION ON LIABILITY IN GENERAL.—A copyright 
owner that commences an action under section 501 on 
or after January 1, 2018, against a digital music provider 
for the infringement of the exclusive rights provided by 
paragraph (1) or (3) of section 106 arising from the 
unauthorized reproduction or distribution of a musical work 
by such digital music provider in the course of engaging 
in covered activities prior to the license availability date, 
shall, as the copyright owner’s sole and exclusive remedy 
against the digital music provider, be eligible to recover 
the royalty prescribed under subsection (c)(1)(C) and 
chapter 8, from the digital music provider, provided that 
such digital music provider can demonstrate compliance 
with the requirements of subparagraph (B), as applicable. 
In all other cases the limitation on liability under this 
subparagraph shall not apply. 
‘‘(B) REQUIREMENTS
FOR
LIMITATION
ON
LIABILITY.— 
The following requirements shall apply on the enactment 
date and through the end of the period that expires 90 
days after the license availability date to digital music 
providers seeking to avail themselves of the limitation on 
liability described in subparagraph (A): 
‘‘(i) Not later than 30 calendar days after first 
making a particular sound recording of a musical work 
available through its service via one or more covered 
activities, or 30 calendar days after the enactment 
date, whichever occurs later, a digital music provider 
shall engage in good-faith, commercially reasonable 
efforts to identify and locate each copyright owner of 
such musical work (or share thereof). Such required 
matching efforts shall include the following: 
‘‘(I) 
Good-faith, 
commercially 
reasonable 
efforts to obtain from the owner of the cor-
responding 
sound 
recording 
made 
available 
through the digital music provider’s service the 
following information: 
‘‘(aa) Sound recording name, featured 
artist, sound recording copyright owner, pro-
ducer, international standard recording code,
H. R. 1551—39 
and other information commonly used in the 
industry to identify sound recordings and 
match them to the musical works they 
embody. 
‘‘(bb) Any available musical work owner-
ship information, including each songwriter 
and publisher name, percentage ownership 
share, and international standard musical 
work code. 
‘‘(II) Employment of 1 or more bulk electronic 
matching processes that are available to the digital 
music provider through a third-party vendor on 
commercially reasonable terms, except that a dig-
ital music provider may rely on its own bulk elec-
tronic matching process if that process has 
capabilities comparable to or better than those 
available from a third-party vendor on commer-
cially reasonable terms. 
‘‘(ii) The required matching efforts shall be 
repeated by the digital music provider not less than 
once per month for so long as the copyright owner 
remains unidentified or has not been located. 
‘‘(iii) If the required matching efforts are successful 
in identifying and locating a copyright owner of a 
musical work (or share thereof) by the end of the 
calendar month in which the digital music provider 
first makes use of the work, the digital music provider 
shall provide statements of account and pay royalties 
to such copyright owner in accordance with this section 
and applicable regulations. 
‘‘(iv) If the copyright owner is not identified or 
located by the end of the calendar month in which 
the digital music provider first makes use of the work, 
the digital music provider shall accrue and hold royal-
ties calculated under the applicable statutory rate in 
accordance with usage of the work, from initial use 
of the work until the accrued royalties can be paid 
to the copyright owner or are required to be transferred 
to the mechanical licensing collective, as follows: 
‘‘(I) Accrued royalties shall be maintained by 
the digital music provider in accordance with gen-
erally accepted accounting principles. 
‘‘(II) If a copyright owner of an unmatched 
musical work (or share thereof) is identified and 
located by or to the digital music provider before 
the license availability date, the digital music pro-
vider shall— 
‘‘(aa) not later than 45 calendar days after 
the end of the calendar month during which 
the copyright owner was identified and 
located, pay the copyright owner all accrued 
royalties, such payment to be accompanied by 
a cumulative statement of account that 
includes all of the information that would have 
been provided to the copyright owner had the 
digital music provider been providing monthly 
statements of account to the copyright owner
H. R. 1551—40 
from initial use of the work in accordance 
with this section and applicable regulations, 
including the requisite certification under sub-
section (c)(2)(I); 
‘‘(bb) beginning with the accounting period 
following the calendar month in which the 
copyright owner was identified and located, 
and for all other accounting periods prior to 
the license availability date, provide monthly 
statements of account and pay royalties to 
the copyright owner as required under this 
section and applicable regulations; and 
‘‘(cc) beginning with the monthly royalty 
reporting period commencing on the license 
availability date, report usage and pay royal-
ties for such musical work (or share thereof) 
for such reporting period and reporting periods 
thereafter to the mechanical licensing collec-
tive, as required under this subsection and 
applicable regulations. 
‘‘(III) If a copyright owner of an unmatched 
musical work (or share thereof) is not identified 
and located by the license availability date, the 
digital music provider shall— 
‘‘(aa) not later than 45 calendar days after 
the license availability date, transfer all 
accrued royalties to the mechanical licensing 
collective, such payment to be accompanied 
by a cumulative statement of account that 
includes all of the information that would have 
been provided to the copyright owner had the 
digital music provider been serving monthly 
statements of account on the copyright owner 
from initial use of the work in accordance 
with this section and applicable regulations, 
including the requisite certification under sub-
section (c)(2)(I), and accompanied by an addi-
tional certification by a duly authorized officer 
of the digital music provider that the digital 
music provider has fulfilled the requirements 
of clauses (i) and (ii) of subparagraph (B) but 
has not been successful in locating or identi-
fying the copyright owner; and 
‘‘(bb) beginning with the monthly royalty 
reporting period commencing on the license 
availability date, report usage and pay royal-
ties for such musical work (or share thereof) 
for such period and reporting periods there-
after to the mechanical licensing collective, as 
required under this subsection and applicable 
regulations. 
‘‘(v) A digital music provider that complies with 
the requirements of this subparagraph with respect 
to unmatched musical works (or shares of works) shall 
not be liable for or accrue late fees for late payments 
of royalties for such works until such time as the 
digital music provider is required to begin paying
H. R. 1551—41 
monthly royalties to the copyright owner or the 
mechanical licensing collective, as applicable. 
‘‘(C) ADJUSTED
STATUTE
OF
LIMITATIONS.—Notwith-
standing anything to the contrary in section 507(b), with 
respect to any claim of infringement of the exclusive rights 
provided by paragraphs (1) and (3) of section 106 against 
a digital music provider arising from the unauthorized 
reproduction or distribution of a musical work by such 
digital music provider in the course of engaging in covered 
activities that accrued not more than 3 years prior to 
the license availability date, such action may be commenced 
not later than the later of— 
‘‘(i) 3 years after the date on which the claim 
accrued; or 
‘‘(ii) 2 years after the license availability date. 
‘‘(D) OTHER RIGHTS AND REMEDIES PRESERVED.—Except 
as expressly provided in this paragraph, nothing in this 
paragraph shall be construed to alter, limit, or negate 
any right or remedy of a copyright owner with respect 
to unauthorized use of a musical work. 
‘‘(11) LEGAL PROTECTIONS FOR LICENSING ACTIVITIES.— 
‘‘(A) EXEMPTION
FOR
COMPULSORY
LICENSE
ACTIVI-
TIES.—The antitrust exemption described in subsection 
(c)(1)(D) shall apply to negotiations and agreements 
between and among copyright owners and persons entitled 
to obtain a compulsory license for covered activities, and 
common agents acting on behalf of such copyright owners 
or persons, including with respect to the administrative 
assessment established under this subsection. 
‘‘(B) LIMITATION ON COMMON AGENT EXEMPTION.—Not-
withstanding the antitrust exemption provided in sub-
section (c)(1)(D) and subparagraph (A) of this paragraph 
(except for the administrative assessment referenced in 
such subparagraph (A) and except as provided in paragraph 
(8)(C)), neither the mechanical licensing collective nor the 
digital licensee coordinator shall serve as a common agent 
with respect to the establishment of royalty rates or terms 
under this section. 
‘‘(C) ANTITRUST EXEMPTION FOR ADMINISTRATIVE ACTIVI-
TIES.—Notwithstanding any provision of the antitrust laws, 
copyright owners and persons entitled to obtain a compul-
sory license under this section may designate the mechan-
ical licensing collective to administer voluntary licenses 
for the reproduction or distribution of musical works in 
covered activities on behalf of such copyright owners and 
persons, subject to the following conditions: 
‘‘(i) Each copyright owner shall establish the roy-
alty rates and material terms of any such voluntary 
license individually and not in agreement, combination, 
or concert with any other copyright owner. 
‘‘(ii) Each person entitled to obtain a compulsory 
license under this section shall establish the royalty 
rates and material terms of any such voluntary license 
individually and not in agreement, combination, or 
concert with any other digital music provider. 
‘‘(iii) The mechanical licensing collective shall 
maintain the confidentiality of the voluntary licenses
H. R. 1551—42 
in accordance with the confidentiality provisions pre-
scribed by the Register of Copyrights under paragraph 
(12)(C). 
‘‘(D) 
LIABILITY
FOR
GOOD-FAITH
ACTIVITIES.—The 
mechanical licensing collective shall not be liable to any 
person or entity based on a claim arising from its good- 
faith administration of policies and procedures adopted 
and implemented to carry out the responsibilities described 
in subparagraphs (J) and (K) of paragraph (3), except to 
the extent of correcting an underpayment or overpayment 
of royalties as provided in paragraph (3)(L)(i)(VI), but the 
collective may participate in a legal proceeding as a stake-
holder party if the collective is holding funds that are 
the subject of a dispute between copyright owners. For 
purposes of this subparagraph, the term ‘good-faith 
administration’ means administration in a manner that 
is not grossly negligent. 
‘‘(E) PREEMPTION
OF
STATE
PROPERTY
LAWS.—The 
holding and distribution of funds by the mechanical 
licensing collective in accordance with this subsection shall 
supersede and preempt any State law (including common 
law) concerning escheatment or abandoned property, or 
any analogous provision, that might otherwise apply. 
‘‘(F) RULE OF CONSTRUCTION.—Except as expressly pro-
vided in this subsection, nothing in this subsection shall 
negate or limit the ability of any person to pursue an 
action in Federal court against the mechanical licensing 
collective or any other person based upon a claim arising 
under this title or other applicable law. 
‘‘(12) REGULATIONS.— 
‘‘(A) ADOPTION BY REGISTER OF COPYRIGHTS AND COPY-
RIGHT ROYALTY JUDGES.—The Register of Copyrights may 
conduct such proceedings and adopt such regulations as 
may be necessary or appropriate to effectuate the provisions 
of this subsection, except for regulations concerning pro-
ceedings before the Copyright Royalty Judges to establish 
the administrative assessment, which shall be adopted by 
the Copyright Royalty Judges. 
‘‘(B) JUDICIAL REVIEW OF REGULATIONS.—Except as pro-
vided in paragraph (7)(D)(vii), regulations adopted under 
this subsection shall be subject to judicial review pursuant 
to chapter 7 of title 5. 
‘‘(C) PROTECTION OF CONFIDENTIAL INFORMATION.—The 
Register of Copyrights shall adopt regulations to provide 
for the appropriate procedures to ensure that confidential, 
private, proprietary, or privileged information contained 
in the records of the mechanical licensing collective and 
digital licensee coordinator is not improperly disclosed or 
used, including through any disclosure or use by the board 
of directors or personnel of either entity, and specifically 
including the unclaimed royalties oversight committee and 
the dispute resolution committee of the mechanical 
licensing collective. 
‘‘(13) SAVINGS CLAUSES.— 
‘‘(A) LIMITATION ON ACTIVITIES AND RIGHTS COVERED.— 
This subsection applies solely to uses of musical works 
subject to licensing under this section. The blanket license
H. R. 1551—43 
shall not be construed to extend or apply to activities 
other than covered activities or to rights other than the 
exclusive rights of reproduction and distribution licensed 
under this section, or serve or act as the basis to extend 
or expand the compulsory license under this section to 
activities and rights not covered by this section on the 
day before the enactment date. 
‘‘(B) RIGHTS OF PUBLIC PERFORMANCE NOT AFFECTED.— 
The rights, protections, and immunities granted under this 
subsection, the data concerning musical works collected 
and made available under this subsection, and the defini-
tions under subsection (e) shall not extend to, limit, or 
otherwise affect any right of public performance in a 
musical work.’’; and 
(5) by adding at the end the following: 
‘‘(e) DEFINITIONS.—As used in this section: 
‘‘(1) ACCRUED INTEREST.—The term ‘accrued interest’ means 
interest accrued on accrued royalties, as described in subsection 
(d)(3)(H)(ii). 
‘‘(2) ACCRUED
ROYALTIES.—The term ‘accrued royalties’ 
means royalties accrued for the reproduction or distribution 
of a musical work (or share thereof) in a covered activity, 
calculated in accordance with the applicable royalty rate under 
this section. 
‘‘(3) ADMINISTRATIVE ASSESSMENT.—The term ‘administra-
tive assessment’ means the fee established pursuant to sub-
section (d)(7)(D). 
‘‘(4) AUDIT.—The term ‘audit’ means a royalty compliance 
examination to verify the accuracy of royalty payments, or 
the conduct of such an examination, as applicable. 
‘‘(5) BLANKET LICENSE.—The term ‘blanket license’ means 
a compulsory license described in subsection (d)(1)(A) to engage 
in covered activities. 
‘‘(6) COLLECTIVE TOTAL COSTS.—The term ‘collective total 
costs’— 
‘‘(A) means the total costs of establishing, maintaining, 
and operating the mechanical licensing collective to fulfill 
its statutory functions, including— 
‘‘(i) startup costs; 
‘‘(ii) financing, legal, audit, and insurance costs; 
‘‘(iii) investments in information technology, infra-
structure, and other long-term resources; 
‘‘(iv) outside vendor costs; 
‘‘(v) costs of licensing, royalty administration, and 
enforcement of rights; 
‘‘(vi) costs of bad debt; and 
‘‘(vii) costs of automated and manual efforts to 
identify and locate copyright owners of musical works 
(and shares of such musical works) and match sound 
recordings to the musical works the sound recordings 
embody; and 
‘‘(B) does not include any added costs incurred by the 
mechanical licensing collective to provide services under 
voluntary licenses. 
‘‘(7) COVERED ACTIVITY.—The term ‘covered activity’ means 
the activity of making a digital phonorecord delivery of a 
musical work, including in the form of a permanent download,
H. R. 1551—44 
limited download, or interactive stream, where such activity 
qualifies for a compulsory license under this section. 
‘‘(8) DIGITAL MUSIC PROVIDER.—The term ‘digital music pro-
vider’ means a person (or persons operating under the authority 
of that person) that, with respect to a service engaged in 
covered activities— 
‘‘(A) has a direct contractual, subscription, or other 
economic relationship with end users of the service, or, 
if no such relationship with end users exists, exercises 
direct control over the provision of the service to end users; 
‘‘(B) is able to fully report on any revenues and consid-
eration generated by the service; and 
‘‘(C) is able to fully report on usage of sound recordings 
of musical works by the service (or procure such reporting). 
‘‘(9) DIGITAL
LICENSEE
COORDINATOR.—The term ‘digital 
licensee coordinator’ means the entity most recently designated 
pursuant to subsection (d)(5). 
‘‘(10) DIGITAL PHONORECORD DELIVERY.—The term ‘digital 
phonorecord delivery’ means each individual delivery of a 
phonorecord by digital transmission of a sound recording that 
results in a specifically identifiable reproduction by or for any 
transmission recipient of a phonorecord of that sound recording, 
regardless of whether the digital transmission is also a public 
performance of the sound recording or any musical work 
embodied therein, and includes a permanent download, a lim-
ited download, or an interactive stream. A digital phonorecord 
delivery does not result from a real-time, noninteractive 
subscription transmission of a sound recording where no repro-
duction of the sound recording or the musical work embodied 
therein is made from the inception of the transmission through 
to its receipt by the transmission recipient in order to make 
the sound recording audible. A digital phonorecord delivery 
does not include the digital transmission of sounds accom-
panying a motion picture or other audiovisual work as defined 
in section 101. 
‘‘(11) ENACTMENT DATE.—The term ‘enactment date’ means 
the date of the enactment of the Musical Works Modernization 
Act. 
‘‘(12) INDIVIDUAL
DOWNLOAD
LICENSE.—The term ‘indi-
vidual download license’ means a compulsory license obtained 
by a record company to make and distribute, or authorize 
the 
making 
and 
distribution 
of, 
permanent 
downloads 
embodying a specific individual musical work. 
‘‘(13) INTERACTIVE STREAM.—The term ‘interactive stream’ 
means a digital transmission of a sound recording of a musical 
work in the form of a stream, where the performance of the 
sound recording by means of such transmission is not exempt 
under section 114(d)(1) and does not in itself, or as a result 
of a program in which it is included, qualify for statutory 
licensing under section 114(d)(2). An interactive stream is a 
digital phonorecord delivery. 
‘‘(14) INTERESTED.—The term ‘interested’, as applied to a 
party seeking to participate in a proceeding under subsection 
(d)(7)(D), is a party as to which the Copyright Royalty Judges 
have not determined that the party lacks a significant interest 
in such proceeding.
H. R. 1551—45 
‘‘(15) LICENSE AVAILABILITY DATE.—The term ‘license avail-
ability date’ means January 1 following the expiration of the 
2-year period beginning on the enactment date. 
‘‘(16) LIMITED
DOWNLOAD.—The term ‘limited download’ 
means a digital transmission of a sound recording of a musical 
work in the form of a download, where such sound recording 
is accessible for listening only for a limited amount of time 
or specified number of times. 
‘‘(17) MATCHED.—The term ‘matched’, as applied to a 
musical work (or share thereof), means that the copyright owner 
of such work (or share thereof) has been identified and located. 
‘‘(18) MECHANICAL
LICENSING
COLLECTIVE.—The term 
‘mechanical licensing collective’ means the entity most recently 
designated as such by the Register of Copyrights under sub-
section (d)(3). 
‘‘(19) MECHANICAL
LICENSING
COLLECTIVE
BUDGET.—The 
term ‘mechanical licensing collective budget’ means a statement 
of the financial position of the mechanical licensing collective 
for a fiscal year or quarter thereof based on estimates of 
expenditures during the period and proposals for financing 
those expenditures, including a calculation of the collective 
total costs. 
‘‘(20) MUSICAL WORKS DATABASE.—The term ‘musical works 
database’ means the database described in subsection (d)(3)(E). 
‘‘(21) NONPROFIT.—The term ‘nonprofit’ means a nonprofit 
created or organized in a State. 
‘‘(22) NOTICE
OF
LICENSE.—The term ‘notice of license’ 
means a notice from a digital music provider provided under 
subsection (d)(2)(A) for purposes of obtaining a blanket license. 
‘‘(23) NOTICE OF NONBLANKET ACTIVITY.—The term ‘notice 
of nonblanket activity’ means a notice from a significant non-
blanket licensee provided under subsection (d)(6)(A) for pur-
poses of notifying the mechanical licensing collective that the 
licensee has been engaging in covered activities. 
‘‘(24) 
PERMANENT
DOWNLOAD.—The 
term 
‘permanent 
download’ means a digital transmission of a sound recording 
of a musical work in the form of a download, where such 
sound recording is accessible for listening without restriction 
as to the amount of time or number of times it may be accessed. 
‘‘(25) QUALIFIED
AUDITOR.—The term ‘qualified auditor’ 
means an independent, certified public accountant with experi-
ence performing music royalty audits. 
‘‘(26) RECORD COMPANY.—The term ‘record company’ means 
an entity that invests in, produces, and markets sound 
recordings of musical works, and distributes such sound 
recordings for remuneration through multiple sales channels, 
including a corporate affiliate of such an entity engaged in 
distribution of sound recordings. 
‘‘(27) REPORT OF USAGE.—The term ‘report of usage’ means 
a report reflecting an entity’s usage of musical works in covered 
activities described in subsection (d)(4)(A). 
‘‘(28) REQUIRED MATCHING EFFORTS.—The term ‘required 
matching efforts’ means efforts to identify and locate copyright 
owners of musical works as described in subsection (d)(10)(B)(i). 
‘‘(29) SERVICE.—The term ‘service’, as used in relation to 
covered activities, means any site, facility, or offering by or
H. R. 1551—64 
royalties payable to the featured recording artist 
or artists; and 
‘‘(II) during the period beginning on the date 
on which that person began the reasonable efforts 
described in subclause (I) and ending on the date 
of that person’s certification to the collective, the 
artist payee did not affirm or deny in writing 
the request for a letter of direction. 
‘‘(ii) COLLECTIVE ATTEMPT TO CONTACT ARTIST.— 
After receipt of the certification described in clause 
(i) and for a period of not less than 120 days before 
the first distribution by the collective to the person 
described in subparagraph (B), the collective attempts, 
in a reasonable manner as determined by the collective, 
to notify the artist payee of the certification made 
by the person described in subparagraph (B). 
‘‘(iii) NO OBJECTION RECEIVED.—The artist payee 
does not, as of the date that was 10 business days 
before the date on which the first distribution is made, 
submit to the collective in writing an objection to the 
distribution. 
‘‘(B) ELIGIBILITY
FOR
PAYMENT.—A person shall be 
eligible for payment under subparagraph (A) if the person— 
‘‘(i) is a producer, mixer, or sound engineer of 
the sound recording; 
‘‘(ii) has entered into a written contract with a 
record company involved in the creation or lawful 
exploitation of the sound recording, or with the 
recording artist or artists featured on the sound 
recording (or the persons conveying rights in the art-
ists’ performance in the sound recording), under which 
the person seeking payment is entitled to participate 
in royalty payments that are based on the exploitation 
of the sound recording and are payable from royalties 
otherwise payable to the recording artist or artists 
featured on the sound recording (or the persons con-
veying rights in the artists’ performance in the sound 
recording); 
‘‘(iii) made a creative contribution to the creation 
of the sound recording; and 
‘‘(iv) submits to the collective— 
‘‘(I) a written certification stating, under pen-
alty of perjury, that the person meets the require-
ments in clauses (i) through (iii); and 
‘‘(II) a true copy of the contract described in 
clause (ii). 
‘‘(C) MULTIPLE CERTIFICATIONS.—Subject to subpara-
graph (D), in a case in which more than 1 person described 
in subparagraph (B) has met the requirements for a dis-
tribution under subparagraph (A) with respect to a sound 
recording as of the date that is 10 business days before 
the date on which the distribution is made, the collective 
shall divide the 2 percent distribution equally among all 
such persons. 
‘‘(D) OBJECTION TO PAYMENT.—Not later than 10 busi-
ness days after the date on which the collective receives 
from the artist payee a written objection to a distribution