IB 
Union Calendar No. 499 
115TH CONGRESS 
2D SESSION 
H. R. 5447 
[Report No. 115–651] 
To modernize copyright law, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 10, 2018 
Mr. GOODLATTE (for himself, Mr. NADLER, Mr. COLLINS of Georgia, Mr. 
JEFFRIES, Mr. ISSA, Mr. DEUTCH, Mr. THOMAS J. ROONEY of Florida, 
Mr. CROWLEY, Ms. BASS, Mrs. BLACKBURN, Mr. CHABOT, Mr. COHEN, 
Mr. COOPER, Mrs. DEMINGS, Mr. JOHNSON of Georgia, Mr. JOHNSON of 
Louisiana, Ms. JACKSON LEE, Mr. TED LIEU of California, Mr. MARINO, 
Mr. PAYNE, Mrs. ROBY, Mr. SCHIFF, Mr. SCHNEIDER, Mr. SHERMAN, 
Mr. SMITH of Texas, Mr. SWALWELL of California, Mr. RASKIN, Mr. 
CICILLINE, Ms. JUDY CHU of California, Ms. JAYAPAL, and Mr. BIGGS) 
introduced the following bill; which was referred to the Committee on the 
Judiciary 
APRIL 25, 2018 
Additional sponsors: Mr. MCCARTHY, Mr. HOYER, Mr. BUCK, Mr. ESTES of 
Kansas, Mrs. HANDEL, Mr. RUTHERFORD, Mr. YOHO, Mrs. BROOKS of 
Indiana, Mr. HURD, Ms. ESHOO, Mr. CA´RDENAS, Mr. GOMEZ, Ms. 
SA´NCHEZ, Mr. DUNCAN of Tennessee, Mr. CRAMER, Mr. GROTHMAN, Mr. 
SCALISE, Mr. LAMALFA, and Mr. DESAULNIER 
APRIL 25, 2018 
Committed to the Committee of the Whole House on the State of the Union 
and ordered to be printed 
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A BILL 
To modernize copyright law, and for other purposes. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Music Modernization Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—MUSIC LICENSING MODERNIZATION 
Sec. 101. Short title. 
Sec. 102. Blanket license for digital uses and mechanical licensing collective. 
Sec. 103. Amendments to section 114. 
Sec. 104. Random assignment of rate court proceedings. 
TITLE II—COMPENSATING LEGACY ARTISTS FOR THEIR SONGS, 
SERVICE, AND IMPORTANT CONTRIBUTIONS TO SOCIETY 
Sec. 201. Short title. 
Sec. 202. Unauthorized digital performance of pre-1972 sound recordings. 
Sec. 203. Effective date. 
TITLE III—ALLOCATION FOR MUSIC PRODUCERS 
Sec. 301. Short title. 
Sec. 302. Payment of statutory performance royalties. 
Sec. 303. Effective date. 
TITLE I—MUSIC LICENSING 
MODERNIZATION 
SEC. 101. SHORT TITLE. 
This title may be cited as the ‘‘Musical Works Mod-
ernization Act’’. 
SEC. 102. BLANKET LICENSE FOR DIGITAL USES AND ME-
CHANICAL LICENSING COLLECTIVE. 
(a) AMENDMENT.—Section 115 of title 17, United 
States Code, is amended— 
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(1) in subsection (a)— 
(A) by inserting ‘‘IN
GENERAL’’ after 
‘‘AVAILABILITY
AND SCOPE
OF COMPULSORY 
LICENSE’’; 
(B) by striking paragraph (1) and insert-
ing the following new paragraph: 
‘‘(1) 
ELIGIBILITY
FOR
COMPULSORY
LI-
CENSE.— 
‘‘(A) CONDITIONS
FOR
COMPULSORY
LI-
CENSE.—A person may by complying with the 
provisions of this section obtain a compulsory li-
cense to make and distribute phonorecords of a 
nondramatic musical work, including by means 
of digital phonorecord delivery. A person may 
obtain a compulsory license only if the primary 
purpose in making phonorecords of the musical 
work is to distribute them to the public for pri-
vate use, including by means of digital phono-
record delivery, and— 
‘‘(i) phonorecords of such musical 
work have previously been distributed to 
the public in the United States under the 
authority of the copyright owner of the 
work, including by means of digital phono-
record delivery; or 
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‘‘(ii) in the case of a digital music 
provider seeking to make and distribute 
digital phonorecord deliveries of a sound 
recording embodying a musical work under 
a compulsory license for which clause (i) 
does not apply— 
‘‘(I) the first fixation of such 
sound recording was made under the 
authority of the musical work copy-
right owner, and sound recording 
copyright owner has the authority of 
the musical work copyright owner to 
make and distribute digital phono-
record deliveries embodying such work 
to the public in the United States; 
and 
‘‘(II) the sound recording copy-
right owner or its authorized dis-
tributor has authorized the digital 
music provider to make and distribute 
digital phonorecord deliveries of the 
sound recording to the public in the 
United States. 
‘‘(B) DUPLICATION
OF
SOUND
RECORD-
ING.—A person may not obtain a compulsory li-
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cense for the use of the work in the making of 
phonorecords duplicating a sound recording 
fixed by another, including by means of digital 
phonorecord delivery, unless— 
‘‘(i) such sound recording was fixed 
lawfully; and 
‘‘(ii) the making of the phonorecords 
was authorized by the owner of the copy-
right in the sound recording or, if the 
sound recording was fixed before February 
15, 1972, by any person who fixed the 
sound recording pursuant to an express li-
cense from the owner of the copyright in 
the musical work or pursuant to a valid 
compulsory license for use of such work in 
a sound recording.’’; and 
(C) in paragraph (2), by striking ‘‘A com-
pulsory license’’ and inserting ‘‘MUSICAL AR-
RANGEMENT.—A compulsory license’’; 
(2) by striking subsection (b) and inserting the 
following: 
‘‘(b) PROCEDURES TO OBTAIN A COMPULSORY LI-
CENSE.— 
‘‘(1) PHONORECORDS
OTHER
THAN
DIGITAL 
PHONORECORD DELIVERIES.—A person who seeks to 
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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 within 30 calendar days after mak-
ing, and before distributing, any phonorecord of the 
work, serve notice of intention to do so on the copy-
right owner. If the registration or other public 
records of the Copyright Office do not identify the 
copyright owner and include an address at which no-
tice 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 Copy-
rights shall prescribe by regulation. 
‘‘(2) DIGITAL PHONORECORD DELIVERIES.—A 
person who seeks to obtain a compulsory license 
under subsection (a) to make and distribute 
phonorecords of a musical work by means of digital 
phonorecord delivery— 
‘‘(A) prior to the license availability date, 
shall, before or within 30 calendar days after 
first making any such digital phonorecord deliv-
ery, 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 
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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 serv-
ice, 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 pho-
norecord delivery, follow the procedure de-
scribed in subsection (d)(2), except as provided 
in paragraph (3). 
‘‘(3) RECORD COMPANY INDIVIDUAL DOWNLOAD 
LICENSES.—Notwithstanding paragraph (2)(B), a 
record company may, on or after the license avail-
ability date, obtain an individual download license in 
accordance with the notice requirements described in 
paragraph (2)(A) (except for the requirement that 
notice occur prior to the license availability date). A 
record company that obtains an individual download 
license as permitted under this paragraph shall pro-
vide statements of account and pay royalties as pro-
vided in subsection (c)(2)(I). 
‘‘(4) FAILURE TO OBTAIN LICENSE.— 
‘‘(A) PHONORECORDS OTHER THAN DIG-
ITAL PHONORECORD DELIVERIES.—In the case 
of phonorecords made and distributed other 
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than by means of digital phonorecord delivery, 
the failure to serve or file the notice of inten-
tion required by paragraph (1) forecloses the 
possibility of a compulsory license under para-
graph (1). In the absence of a voluntary license, 
the failure to obtain a compulsory license ren-
ders the making and distribution of phonore-
cords actionable as acts of infringement under 
section 501 and subject to the remedies pro-
vided by sections 502 through 506. 
‘‘(B) 
DIGITAL
PHONORECORD
DELIV-
ERIES.— 
‘‘(i) In the case of phonorecords made 
and distributed by means of digital phono-
record delivery: 
‘‘(I) The failure to serve the no-
tice of intention required by para-
graph (2)(A) or paragraph (3), as ap-
plicable, forecloses the possibility of a 
compulsory license under such para-
graph. 
‘‘(II) The failure to comply with 
paragraph (2)(B) forecloses the possi-
bility of a blanket license for a period 
of 3 years after the last calendar day 
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on which the notice of license was re-
quired to be submitted to the mechan-
ical licensing collective under such 
paragraph. 
‘‘(ii) In either case described in clause 
(i), in the absence of a voluntary license, 
the failure to obtain a compulsory license 
renders the making and distribution of 
phonorecords by means of digital phono-
record delivery actionable as acts of in-
fringement under section 501 and subject 
to the remedies provided by sections 502 
through 506.’’; 
(3) by amending subsection (c) to read as fol-
lows: 
‘‘(c) GENERAL CONDITIONS APPLICABLE TO COM-
PULSORY LICENSE.— 
‘‘(1) ROYALTY PAYABLE UNDER COMPULSORY 
LICENSE.— 
‘‘(A) IDENTIFICATION REQUIREMENT.—To 
be entitled to receive royalties under a compul-
sory license obtained under subsection (b)(1) 
the copyright owner must be identified in the 
registration or other public records of the Copy-
right Office. The owner is entitled to royalties 
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for phonorecords made and distributed after 
being so identified, but is not entitled to recover 
for any phonorecords previously made and dis-
tributed. 
‘‘(B) 
ROYALTY
FOR
PHONORECORDS 
OTHER
THAN
DIGITAL
PHONORECORD
DELIV-
ERIES.—Except as provided by subparagraph 
(A), for every phonorecord made and distrib-
uted under a compulsory license under sub-
section (a) other than by means of digital pho-
norecord delivery, with respect to each work 
embodied in the phonorecord, the royalty shall 
be the royalty prescribed under subparagraphs 
(D) through (F) and paragraph (2)(A) and 
chapter 8 of this title. For purposes of this sub-
paragraph, a phonorecord is considered ‘distrib-
uted’ if the person exercising the compulsory li-
cense has voluntarily and permanently parted 
with its possession. 
‘‘(C) ROYALTY
FOR
DIGITAL
PHONO-
RECORD DELIVERIES.—For every digital phono-
record delivery of a musical work made under 
a compulsory license under this section, the roy-
alty payable shall be the royalty prescribed 
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under subparagraphs (D) through (F) and 
paragraph (2)(A) and chapter 8 of this title. 
‘‘(D) AUTHORITY
TO
NEGOTIATE.—Not-
withstanding any provision of the antitrust 
laws, any copyright owners of nondramatic mu-
sical works and any persons entitled to obtain 
a compulsory license under subsection (a) may 
negotiate and agree upon the terms and rates 
of royalty payments under this section and the 
proportionate division of fees paid among copy-
right owners, and may designate common 
agents on a nonexclusive basis to negotiate, 
agree to, pay or receive such royalty payments. 
Such authority to negotiate the terms and rates 
of royalty payments includes, but is not limited 
to, the authority to negotiate the year during 
which the royalty rates prescribed under this 
subparagraph and subparagraphs (E) and (F) 
and paragraph (2)(A) and chapter 8 of this 
title shall next be determined. 
‘‘(E) DETERMINATION
OF
REASONABLE 
RATES AND TERMS.—Proceedings under chap-
ter 8 shall determine reasonable rates and 
terms of royalty payments for the activities 
specified by this section during the period be-
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ginning 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 nondra-
matic musical works and any persons entitled 
to obtain a compulsory license under subsection 
(a) may submit to the Copyright Royalty 
Judges licenses covering such activities. The 
parties to each proceeding shall bear their own 
costs. 
‘‘(F) 
SCHEDULE
OF
REASONABLE 
RATES.—The schedule of reasonable rates and 
terms determined by the Copyright Royalty 
Judges shall, subject to paragraph (2)(A), be 
binding on all copyright owners of nondramatic 
musical works and persons entitled to obtain a 
compulsory license under subsection (a) during 
the period specified in subparagraph (E), such 
other period as may be determined pursuant to 
subparagraphs (D) and (E), or such other pe-
riod as the parties may agree. The Copyright 
Royalty Judges shall establish rates and terms 
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that most clearly represent the rates and terms 
that would have been negotiated in the market-
place between a willing buyer and a willing sell-
er. In determining such rates and terms for dig-
ital phonorecord deliveries, the Copyright Roy-
alty Judges shall base their decision on eco-
nomic, competitive, and programming informa-
tion presented by the parties, including— 
‘‘(i) whether use of the compulsory li-
censee’s service may substitute for or may 
promote the sales of phonorecords or oth-
erwise may interfere with or may enhance 
the musical work copyright owner’s other 
streams of revenue from its musical works; 
and 
‘‘(ii) the relative roles of the copyright 
owner and the compulsory licensee in the 
copyrighted work and the service made 
available to the public with respect to the 
relative creative contribution, technological 
contribution, capital investment, cost, and 
risk. 
‘‘(2) ADDITIONAL TERMS AND CONDITIONS.— 
‘‘(A) VOLUNTARY
LICENSES
AND
CON-
TRACTUAL ROYALTY RATES.— 
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‘‘(i) License agreements voluntarily 
negotiated at any time between one or 
more copyright owners of nondramatic mu-
sical works and one or more persons enti-
tled to obtain a compulsory license under 
subsection (a) shall be given effect in lieu 
of any determination by the Copyright 
Royalty Judges. Subject to clause (ii), the 
royalty rates determined pursuant to sub-
paragraphs (E) and (F) of paragraph (1) 
shall be given effect as to digital phono-
record deliveries in lieu of any contrary 
royalty rates specified in a contract pursu-
ant to which a recording artist who is the 
author of a nondramatic musical work 
grants a license under that person’s exclu-
sive rights in the musical work under para-
graphs (1) and (3) of section 106 or com-
mits another person to grant a license in 
that musical work under paragraphs (1) 
and (3) of section 106, to a person desir-
ing to fix in a tangible medium of expres-
sion a sound recording embodying the mu-
sical work. 
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‘‘(ii) The second sentence of clause (i) 
shall not apply to— 
‘‘(I) a contract entered into on or 
before June 22, 1995, and not modi-
fied thereafter for the purpose of re-
ducing the royalty rates determined 
pursuant to subparagraphs (E) and 
(F) of paragraph (1) or of increasing 
the number of musical works within 
the scope of the contract covered by 
the reduced rates, except if a contract 
entered into on or before June 22, 
1995, is modified thereafter for the 
purpose of increasing the number of 
musical works within the scope of the 
contract, any contrary royalty rates 
specified in the contract shall be given 
effect in lieu of royalty rates 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 record-
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ing is fixed in a tangible medium of 
expression substantially in a form in-
tended for commercial release, if at 
the time the contract is entered into, 
the recording artist retains the right 
to grant licenses as to the musical 
work under paragraphs (1) and (3) of 
section 106. 
‘‘(B) SOUND RECORDING INFORMATION.— 
Except as provided in section 1002(e) of this 
title, a digital phonorecord delivery licensed 
under this paragraph shall be accompanied by 
the information encoded in the sound recording, 
if any, by or under the authority of the copy-
right owner of that sound recording, that iden-
tifies the title of the sound recording, the fea-
tured recording artist who performs on the 
sound recording, and related information, in-
cluding information concerning the underlying 
musical work and its writer. 
‘‘(C) INFRINGEMENT REMEDIES.— 
‘‘(i) A digital phonorecord delivery of 
a sound recording is actionable as an act 
of infringement under section 501, and is 
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fully subject to the remedies provided by 
sections 502 through 506, unless— 
‘‘(I) the digital phonorecord de-
livery has been authorized by the 
sound recording copyright owner; and 
‘‘(II) the entity making the dig-
ital phonorecord delivery has obtained 
a compulsory license under subsection 
(a) or has otherwise been authorized 
by the musical work copyright owner, 
or by a record company pursuant to 
an individual download license, to 
make and distribute phonorecords of 
each musical work embodied in the 
sound recording by means of digital 
phonorecord delivery. 
‘‘(ii) Any cause of action under this 
subparagraph shall be in addition to those 
available to the owner of the copyright in 
the nondramatic musical work under sub-
paragraph (J) and section 106(4) and the 
owner of the copyright in the sound record-
ing under section 106(6). 
‘‘(D) LIABILITY
OF
SOUND
RECORDING 
OWNERS.—The liability of the copyright owner 
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of a sound recording for infringement of the 
copyright in a nondramatic musical work em-
bodied in the sound recording shall be deter-
mined in accordance with applicable law, except 
that the owner of a copyright in a sound re-
cording shall not be liable for a digital phono-
record delivery by a third party if the owner of 
the copyright in the sound recording does not 
license the distribution of a phonorecord of the 
nondramatic musical work. 
‘‘(E) RECORDING DEVICES AND MEDIA.— 
Nothing in section 1008 shall be construed to 
prevent the exercise of the rights and remedies 
allowed by this paragraph, subparagraph (J), 
and chapter 5 in the event of a digital phono-
record delivery, except that no action alleging 
infringement of copyright may be brought 
under this title against a manufacturer, im-
porter 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.—Noth-
ing in this section annuls or limits (i) the exclu-
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‘‘(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 em-
bodied in the phonorecord, the royalty shall be 
a proportion of the revenue received by the 
compulsory licensee from every such act of dis-
tribution 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 regula-
tions to carry out the purpose of this clause. 
‘‘(I) PAYMENT OF ROYALTIES AND STATE-
MENTS OF ACCOUNT.—Except as provided in 
paragraphs (4)(A)(i) and (10)(B) of subsection 
(d), royalty payments shall be made on or be-
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fore the twentieth day of each month and shall 
include all royalties for the month next pre-
ceding. Each monthly payment shall be made 
under oath and shall comply with requirements 
that the Register of Copyrights shall prescribe 
by regulation. The Register shall also prescribe 
regulations under which detailed cumulative an-
nual statements of account, certified by a cer-
tified public accountant, shall be filed for every 
compulsory license under subsection (a). The 
regulations covering both the monthly and the 
annual statements of account shall prescribe 
the form, content, and manner of certification 
with respect to the number of records made and 
the number of records distributed. 
‘‘(J) NOTICE
OF
DEFAULT
AND
TERMI-
NATION
OF
COMPULSORY
LICENSE.—In the 
case of a license obtained under subsection 
(b)(1), (b)(2)(A), or (b)(3), if the copyright 
owner does not receive the monthly payment 
and the monthly and annual statements of ac-
count when due, the owner may give written no-
tice to the licensee that, unless the default is 
remedied within thirty days from the date of 
the notice, the compulsory license will be auto-
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matically 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 infringe-
ment 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 license may be terminated as pro-
vided in subsection (d)(4)(E).’’; 
(4) by amending subsection (d) to read as fol-
lows: 
‘‘(d) BLANKET LICENSE FOR DIGITAL USES, ME-
CHANICAL LICENSING COLLECTIVE, AND DIGITAL LI-
CENSEE COORDINATOR.— 
‘‘(1) BLANKET LICENSE FOR DIGITAL USES.— 
‘‘(A) IN GENERAL.—A digital music pro-
vider that qualifies for a compulsory license 
under subsection (a) may, by complying with 
the terms and conditions of this subsection, ob-
tain a blanket license from copyright owners 
through the mechanical licensing collective to 
make and distribute digital phonorecord deliv-
eries of musical works through one or more cov-
ered activities. 
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‘‘(B) INCLUDED ACTIVITIES.—A blanket li-
cense— 
‘‘(i) covers all musical works (or 
shares of such works) available for compul-
sory licensing under this section for pur-
poses of engaging in covered activities, ex-
cept as provided in subparagraph (C); 
‘‘(ii) includes the making and dis-
tribution of server, intermediate, archival, 
and incidental reproductions of musical 
works that are reasonable and necessary 
for the digital music provider to engage in 
covered activities licensed under this sub-
section, solely for the purpose of engaging 
in such covered activities; and 
‘‘(iii) does not cover or include any 
rights or uses other than those described 
in clauses (i) and (ii). 
‘‘(C) OTHER
LICENSES.—A voluntary li-
cense for covered activities entered into by or 
under the authority of one or more copyright 
owners and one or more digital music providers, 
or authority to make and distribute permanent 
downloads of a musical work obtained by a dig-
ital music provider from a sound recording 
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copyright owner pursuant to an individual 
download license, shall be given effect in lieu of 
a blanket license under this subsection with re-
spect 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 indi-
vidual download license applies, the license 
authority provided under the blanket li-
cense shall exclude any musical works (or 
shares thereof) subject to the voluntary li-
cense or individual download license. 
‘‘(ii) An entity engaged in covered ac-
tivities under a voluntary license or author-
ity obtained pursuant to an individual 
download license that is a significant non-
blanket licensee shall comply with para-
graph (6)(A). 
‘‘(iii) The rates and terms of any vol-
untary license shall be subject to the sec-
ond sentence of clause (i) and clause (ii) of 
subsection (c)(2)(A) and paragraph (9)(C), 
as applicable. 
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‘‘(D) PROTECTION
AGAINST
INFRINGE-
MENT ACTIONS.—A digital music provider that 
obtains and complies with the terms of a valid 
blanket license under this subsection shall not 
be subject to an action for infringement of the 
exclusive rights provided by paragraphs (1) and 
(3) of section 106 under this title arising from 
use of a musical work (or share thereof) to en-
gage in covered activities authorized by such li-
cense, subject to paragraph (4)(E). 
‘‘(E) OTHER REQUIREMENTS AND CONDI-
TIONS APPLY.—Except as expressly provided in 
this subsection, each requirement, limitation, 
condition, privilege, right, and remedy otherwise 
applicable to compulsory licenses under this sec-
tion shall apply to compulsory blanket licenses 
under this subsection. 
‘‘(2) AVAILABILITY OF BLANKET LICENSE.— 
‘‘(A) PROCEDURE
FOR
OBTAINING
LI-
CENSE.—A digital music provider may obtain a 
blanket license by submitting a notice of license 
to the mechanical licensing collective that speci-
fies the particular covered activities in which 
the digital music provider seeks to engage, as 
follows: 
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within the past 3 years pursuant to 
paragraph (4)(E). 
‘‘(iv) If a notice of license is rejected 
under clause (iii)(I), the digital music pro-
vider shall have 30 calendar days after re-
ceipt of the notice of rejection to cure any 
deficiency and submit an amended notice 
of license to the mechanical licensing col-
lective. 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 dig-
ital music provider. 
‘‘(v) A digital music provider that be-
lieves a notice of license was improperly re-
jected by the mechanical licensing collec-
tive may seek review of such rejection in 
Federal district court. The district court 
shall determine the matter de novo based 
on the record before the mechanical licens-
ing collective and any additional evidence 
presented by the parties. 
‘‘(B) 
BLANKET
LICENSE
EFFECTIVE 
DATE.—Blanket licenses shall be made available 
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by the mechanical licensing collective on and 
after the license availability date. No such li-
cense shall be effective prior to the license avail-
ability date. 
‘‘(3) MECHANICAL LICENSING COLLECTIVE.— 
‘‘(A) IN
GENERAL.—The mechanical li-
censing collective shall be a single entity that— 
‘‘(i) is a nonprofit, 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 sub-
stantial support from musical work copy-
right owners that together represent the 
greatest percentage of the licensor market 
for uses of such works in covered activities, 
as measured over the preceding 3 full cal-
endar years; 
‘‘(iii) is able to demonstrate to the 
Register of Copyrights that it has, or will 
have prior to the license availability date, 
the administrative and technological capa-
bilities to perform the required functions of 
the mechanical licensing collective under 
this subsection; and 
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‘‘(iv) has been designated by the Reg-
ister of Copyrights in accordance with sub-
paragraph (B). 
‘‘(B) DESIGNATION
OF
MECHANICAL
LI-
CENSING COLLECTIVE.— 
‘‘(i) 
INITIAL
DESIGNATION.—The 
Register of Copyrights shall initially des-
ignate the mechanical licensing collective 
within 9 months after the enactment date 
as follows: 
‘‘(I) Within 90 calendar days 
after the enactment date, the Register 
shall publish notice in the Federal 
Register soliciting information to as-
sist in identifying the appropriate en-
tity to serve as the mechanical licens-
ing collective, including the name and 
affiliation of each member of the 
board of directors described under 
subparagraph (D)(i) and each com-
mittee established pursuant to clauses 
(iii), (iv), and (v) of subparagraph 
(D). 
‘‘(II) After reviewing the infor-
mation requested under subclause (I) 
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and making a designation, the Reg-
ister shall publish notice in the Fed-
eral Register setting forth the identity 
of and contact information for the me-
chanical licensing collective. 
‘‘(ii) PERIODIC REVIEW OF DESIGNA-
TION.—Following the initial designation of 
the mechanical licensing collective, the 
Register shall, every 5 years, beginning 
with the fifth full calendar year to com-
mence after the initial designation, publish 
notice in the Federal Register in the 
month of January soliciting information 
concerning whether the existing designa-
tion should be continued, or a different en-
tity meeting the criteria described in 
clauses (i) through (iii) of subparagraph 
(A) shall be designated. Following publica-
tion of such notice: 
‘‘(I) The Register shall, after re-
viewing the information submitted and 
conducting additional proceedings as 
appropriate, publish notice in the Fed-
eral Register of a continuing designa-
tion or new designation of the me-
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chanical licensing collective, as the 
case may be, with any new designa-
tion to be effective as of the first day 
of a month that is no less than 6 
months and no longer than 9 months 
after the date of publication of such 
notice, as specified by the Register. 
‘‘(II) If a new entity is des-
ignated as a mechanical licensing col-
lective, the Register shall adopt regu-
lations to govern the transfer of li-
censes, funds, records, data, and ad-
ministrative responsibilities from the 
existing mechanical licensing collective 
to the new entity. 
‘‘(iii) CLOSEST
ALTERNATIVE
DES-
IGNATION.—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 Reg-
ister shall designate the entity that most 
nearly fulfills such qualifications for pur-
poses of carrying out the responsibilities of 
the mechanical licensing collective. 
‘‘(C) AUTHORITIES AND FUNCTIONS.— 
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‘‘(i) IN GENERAL.—The mechanical li-
censing collective is authorized to perform 
the following functions, subject to more 
particular requirements as described in 
this subsection: 
‘‘(I) Offer and administer blanket 
licenses, including receipt of notices of 
license and reports of usage from dig-
ital music providers. 
‘‘(II) Collect and distribute royal-
ties from digital music providers for 
covered activities. 
‘‘(III) Engage in efforts to iden-
tify musical works (and shares of such 
works) embodied in particular sound 
recordings, and to identify and locate 
the copyright owners of such musical 
works (and shares of such works). 
‘‘(IV) 
Maintain 
the 
musical 
works database and other information 
relevant to the administration of li-
censing activities under this section. 
‘‘(V) Administer a process by 
which copyright owners can claim 
ownership of musical works (and 
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shares of such works), and a process 
by which royalties for works for which 
the owner is not identified or located 
are equitably distributed to known 
copyright owners. 
‘‘(VI) Administer collections of 
the administrative assessment from 
digital music providers and significant 
nonblanket licensees, including receipt 
of notices of nonblanket activity. 
‘‘(VII) Invest in relevant re-
sources, and arrange for services of 
outside vendors and others, to support 
its activities. 
‘‘(VIII) Engage in legal and 
other efforts to enforce rights and ob-
ligations under this subsection, includ-
ing by filing bankruptcy proofs of 
claims for amounts owed under li-
censes, and acting in coordination 
with the digital licensee coordinator.. 
‘‘(IX) Initiate and participate in 
proceedings before the Copyright Roy-
alty Judges to establish the adminis-
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trative assessment under this sub-
section. 
‘‘(X) Initiate and participate in 
proceedings before the Copyright Of-
fice with respect to activities under 
this subsection. 
‘‘(XI) Gather and provide docu-
mentation for use in proceedings be-
fore the Copyright Royalty Judges to 
set rates and terms under this section. 
‘‘(XII) Maintain records of its 
activities and engage in and respond 
to audits described under this sub-
section. 
‘‘(XIII) Engage in such other ac-
tivities as may be necessary or appro-
priate to fulfill its responsibilities 
under this subsection. 
‘‘(ii) ADDITIONAL
ADMINISTRATIVE 
ACTIVITIES.—Subject 
to 
paragraph 
(11)(C) and clause (iii), the mechanical li-
censing collective may also administer, or 
assist in administering, voluntary licenses 
issued by or individual download licenses 
obtained from copyright owners for uses of 
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musical works, for which the mechanical li-
censing collective shall charge reasonable 
fees for such services. 
‘‘(iii) RESTRICTION CONCERNING PUB-
LIC PERFORMANCE RIGHTS.—The mechan-
ical licensing collective may, pursuant to 
clause (ii), provide administration services 
with respect to voluntary licenses that in-
clude the right of public performance in 
musical works, but may not itself negotiate 
or grant licenses for the right of public 
performance in musical works, and may 
not be the exclusive or nonexclusive as-
signee or grantee of the right of public per-
formance in musical works. 
‘‘(iv) RESTRICTION
ON
LOBBYING.— 
The mechanical licensing collective may 
not engage in government lobbying activi-
ties, but may engage in the activities de-
scribed in subclauses (IX), (X), and (XI) 
of clause (i). 
‘‘(D) GOVERNANCE.— 
‘‘(i) BOARD OF DIRECTORS.—The me-
chanical licensing collective shall have a 
board of directors consisting of 14 voting 
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members and 3 nonvoting members, as fol-
lows: 
‘‘(I) Ten voting members shall be 
representatives of music publishers to 
which songwriters have assigned ex-
clusive rights of reproduction and dis-
tribution of musical works with re-
spect to covered activities and no such 
music publisher member may be 
owned by, or under common control 
with, any other board member. 
‘‘(II) Four voting members shall 
be professional songwriters who have 
retained and exercise exclusive rights 
of reproduction and distribution with 
respect to covered activities with re-
spect to musical works they have au-
thored. 
‘‘(III) One nonvoting member 
shall be a representative of the non-
profit trade association of music pub-
lishers that represents the greatest 
percentage of the licensor market for 
uses of musical works in covered ac-
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tivities, as measured over the pre-
ceding 3 full calendar years. 
‘‘(IV) One nonvoting member 
shall be a representative of the digital 
licensee coordinator, provided that a 
digital licensee coordinator has been 
designated pursuant to paragraph 
(5)(B). 
Otherwise, 
the 
nonvoting 
member shall be the nonprofit trade 
association of digital licensees that 
represents the greatest percentage of 
the licensee market for uses of musi-
cal works in covered activities, as 
measured over the preceding 3 full 
calendar years. 
‘‘(V) 
One 
nonvoting 
member 
shall be a representative of a nation-
ally recognized nonprofit trade asso-
ciation whose primary mission is advo-
cacy on behalf of songwriters in the 
United States. 
‘‘(ii) BOARD
MEETINGS.—The board 
of directors shall meet no less than 2 times 
per year and discuss matters pertinent to 
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the operations, including the mechanical li-
censing collective budget. 
‘‘(iii) OPERATIONS
ADVISORY
COM-
MITTEE.—The board of directors of the 
mechanical licensing collective shall estab-
lish an operations advisory committee con-
sisting of no fewer than 6 members to 
make recommendations to the board of di-
rectors concerning the operations of the 
mechanical licensing collective, including 
the efficient investment in and deployment 
of information technology and data re-
sources. Such committee shall have an 
equal number of members of the committee 
who are— 
‘‘(I) musical work copyright own-
ers who are appointed by the board of 
directors of the mechanical licensing 
collective; and 
‘‘(II) representatives of digital 
music providers who are appointed by 
the digital licensee coordinator. 
‘‘(iv) UNCLAIMED
ROYALTIES
OVER-
SIGHT COMMITTEE.—The board of direc-
tors of the mechanical licensing collective 
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shall establish and appoint an unclaimed 
royalties oversight committee consisting of 
10 members, 5 of which shall be musical 
work copyright owners and 5 of which 
shall be professional songwriters whose 
works are used in covered activities. 
‘‘(v) 
DISPUTE
RESOLUTION
COM-
MITTEE.—The board of directors of the 
mechanical licensing collective shall estab-
lish and appoint a dispute resolution com-
mittee consisting of no fewer than 6 mem-
bers, which committee shall include an 
equal number of representatives of musical 
work copyright owners and professional 
songwriters. 
‘‘(vi) MECHANICAL
LICENSING
COL-
LECTIVE
ANNUAL
REPORT.—Not later 
than June 30 of each year commencing 
after the license availability date, the me-
chanical licensing collective shall post, and 
make available online for a period of at 
least 3 years, an annual report that sets 
forth how the collective operates, how roy-
alties are collected and distributed, and the 
collective total costs for the preceding cal-
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endar year. At the time of posting, a copy 
of the report shall be provided to the Reg-
ister of Copyrights. 
‘‘(E) MUSICAL WORKS DATABASE.— 
‘‘(i) ESTABLISHMENT
AND
MAINTE-
NANCE OF DATABASE.—The mechanical li-
censing collective shall establish and main-
tain a database containing information re-
lating to musical works (and shares of 
such works) and, to the extent known, the 
identity and location of the copyright own-
ers 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 up-
date 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— 
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‘‘(I) the title of the musical work; 
‘‘(II) the copyright owner of the 
work (or share thereof), and such 
owner’s ownership percentage; 
‘‘(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 informa-
tion for sound recordings in 
which the musical work is em-
bodied, including the name of the 
sound recording, featured artist, 
sound recording copyright owner, 
international standard recording 
code, and other information com-
monly used to assist in associ-
ating sound recordings with mu-
sical works; and 
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‘‘(V) such other information as 
the Register of Copyrights may pre-
scribe by regulation. 
‘‘(iii) UNMATCHED WORKS.—With re-
spect to unmatched musical works (and 
shares of works) in the database, the musi-
cal works database shall include— 
‘‘(I) to the extent reasonably 
available to the mechanical licensing 
collective— 
‘‘(aa) the title of the musical 
work; 
‘‘(bb) the ownership percent-
age for which an owner has not 
been identified; 
‘‘(cc) if a copyright owner 
has been identified but not lo-
cated, the identity of such owner 
and such owner’s ownership per-
centage; 
‘‘(dd) identifying informa-
tion for sound recordings in 
which the work is embodied, in-
cluding sound recording name, 
featured artist, sound recording 
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copyright 
owner, 
international 
standard recording code, and 
other information commonly used 
to assist in associating sound re-
cordings with musical works; and 
‘‘(ee) any additional infor-
mation reported to the mechan-
ical licensing collective that may 
assist in identifying the work; 
and 
‘‘(II) such other information re-
lating 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
INFORMA-
TION.—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, in-
cluding for use in the musical works data-
base, to the extent such information is not 
then available in the database, information 
regarding the names of the sound record-
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ings in which that copyright owner’s musi-
cal works (or shares thereof) are embodied, 
to the extent practicable. 
‘‘(v) ACCESSIBILITY OF DATABASE.— 
The musical works database shall be made 
available to members of the public in a 
searchable, online format, free of charge. 
The mechanical licensing collective shall 
make such database available in a bulk, 
machine-readable format, through a widely 
available software application, to the fol-
lowing entities: 
‘‘(I) Digital music providers oper-
ating under the authority of valid no-
tices of license, free of charge. 
‘‘(II) Significant nonblanket li-
censees in compliance with their obli-
gations 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 Copy-
rights, free of charge (but the Reg-
ister shall not treat such database or 
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any information therein as a Govern-
ment record). 
‘‘(V) Any member of the public, 
for a fee not to exceed the marginal 
cost to the mechanical licensing collec-
tive of providing the database to such 
person. 
‘‘(vi) ADDITIONAL REQUIREMENTS.— 
The Register of Copyrights shall establish 
requirements by regulations to ensure the 
usability, interoperability, and usage re-
strictions of the musical works database. 
‘‘(F) NOTICES
OF
LICENSE
AND
NON-
BLANKET ACTIVITY.— 
‘‘(i) NOTICES OF LICENSES.—The me-
chanical licensing collective shall receive, 
review, and confirm or reject notices of li-
cense from digital music providers, as pro-
vided in paragraph (2)(A). The collective 
shall maintain a current, publicly acces-
sible list of blanket licenses that includes 
contact information for the licensees and 
the effective dates of such licenses. 
‘‘(ii) NOTICES OF NONBLANKET AC-
TIVITY.—The mechanical licensing collec-
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tive shall receive notices of nonblanket ac-
tivity from significant nonblanket licensees, 
as provided in paragraph (6)(A). The col-
lective shall maintain a current, publicly 
accessible list of notices of nonblanket ac-
tivity 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 re-
ports 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 record-
ings reflected in such reports, 
and the copyright owners of such 
musical works (and shares there-
of); 
‘‘(bb) confirm uses of musi-
cal works subject to voluntary li-
censes and individual download 
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licenses, and the corresponding 
pro rata amounts to be deducted 
from royalties that would other-
wise be due under the blanket li-
cense; and 
‘‘(cc) confirm proper pay-
ment of royalties due; 
‘‘(II) distribute royalties to copy-
right owners in accordance with the 
usage and other information contained 
in such reports, as well as the owner-
ship and other information contained 
in the records of the collective; and 
‘‘(III) deposit into an interest- 
bearing account, as provided in sub-
paragraph (H)(ii), royalties that can-
not 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 be-
fore the dispute resolution com-
mittee of the mechanical licens-
ing collective. 
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‘‘(ii) OTHER COLLECTION EFFORTS.— 
Any royalties recovered by the mechanical 
licensing collective as a result of efforts to 
enforce rights or obligations under a blan-
ket license, including through a bankruptcy 
proceeding or other legal action, shall be 
distributed to copyright owners based on 
available usage information and in accord-
ance with the procedures described in sub-
clauses (I) and (II) of clause (i), on a pro 
rata basis in proportion to the overall per-
centage 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 
subparagraph (H)(ii). 
‘‘(H) HOLDING
OF
ACCRUED
ROYAL-
TIES.— 
‘‘(i) HOLDING PERIOD.—The mechan-
ical licensing collective shall hold accrued 
royalties associated with particular musical 
works (and shares of works) that remain 
unmatched for a period of at least 3 years 
after the date on which the funds were re-
ceived by the mechanical licensing collec-
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tive, or at least 3 years after the date on 
which they were accrued by a digital music 
provider that subsequently transferred 
such funds to the mechanical licensing col-
lective pursuant to paragraph (10)(B), 
whichever period expires sooner. 
‘‘(ii) INTEREST-BEARING ACCOUNT.— 
Accrued royalties for unmatched works 
(and shares thereof) shall be maintained 
by the mechanical licensing collective in an 
interest-bearing account that earns month-
ly interest at the Federal, short-term rate, 
such interest to accrue for the benefit of 
copyright owners entitled to payment of 
such accrued royalties. 
‘‘(I) MUSICAL
WORKS
CLAIMING
PROC-
ESS.—The mechanical licensing collective shall 
publicize the existence of accrued royalties for 
unmatched musical works (and shares of such 
works) within 6 months of receiving a transfer 
of accrued royalties for such works by publicly 
listing the works and the procedures by which 
copyright owners may identify themselves and 
provide ownership, contact, and other relevant 
information to the mechanical licensing collec-
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tive in order to receive payment of accrued roy-
alties. When a copyright owner of an un-
matched work (or share of a work) has been 
identified and located in accordance with the 
procedures of the mechanical licensing collec-
tive, the collective shall— 
‘‘(i) update the musical works data-
base and its other records 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 copy-
right owner, accompanied by a cumulative 
statement of account reflecting usage of 
such work and accrued royalties based on 
information provided by digital music pro-
viders to the mechanical licensing collec-
tive. 
‘‘(J) DISTRIBUTION
OF
UNCLAIMED
AC-
CRUED ROYALTIES.— 
‘‘(i) DISTRIBUTION
PROCEDURES.— 
After the expiration of the prescribed hold-
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ing period for accrued royalties provided in 
paragraph (H)(i), the mechanical licensing 
collective shall distribute such accrued roy-
alties, along with a proportionate share of 
accrued interest, to copyright owners iden-
tified in the records of the collective, sub-
ject to the following requirements, and in 
accordance with the policies and proce-
dures established under clause (ii): 
‘‘(I) The first such distribution 
shall occur on or after July 1 of the 
first full calendar year to commence 
after the license availability date, with 
at least one such distribution to take 
place during each calendar year there-
after. 
‘‘(II) Copyright owners’ payment 
shares for unclaimed accrued royalties 
for particular reporting periods shall 
be determined in a transparent and 
equitable manner based on data indi-
cating the relative market shares of 
such copyright owners as reflected by 
royalty payments made by digital 
music providers for covered activities 
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for the periods in question, including, 
in addition to royalty payments made 
to the mechanical licensing collective, 
royalty payments made to copyright 
owners under voluntary licenses and 
individual download licenses for cov-
ered activities, to the extent such in-
formation is available to the mechan-
ical licensing collective. In furtherance 
of the determination of equitable mar-
ket shares under this subparagraph— 
‘‘(aa) the mechanical licens-
ing collective may require copy-
right owners seeking distribu-
tions of unclaimed accrued royal-
ties to provide, or direct the pro-
vision of, information concerning 
royalties received under voluntary 
licenses and individual download 
licenses for covered activities, and 
‘‘(bb) the mechanical licens-
ing collective shall take appro-
priate steps to safeguard the con-
fidentiality and security of finan-
cial and other sensitive data used 
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to compute market shares in ac-
cordance with the confidentiality 
provisions prescribed by the Reg-
ister of Copyrights under para-
graph (12)(C). 
‘‘(ii) ESTABLISHMENT OF DISTRIBU-
TION POLICIES.—The unclaimed royalties 
oversight 
committee 
established 
under 
paragraph (3)(D)(iv) shall establish poli-
cies and procedures for the distribution of 
unclaimed accrued royalties and accrued 
interest in accordance with this subpara-
graph, including the provision of usage 
data to copyright owners to allocate pay-
ments and credits to songwriters pursuant 
to clause (iv), subject to the approval of 
the board of directors of the mechanical li-
censing collective. 
‘‘(iii) ADVANCE NOTICE OF DISTRIBU-
TIONS.—The mechanical licensing collec-
tive shall publicize a pending distribution 
of unclaimed accrued royalties and accrued 
interest at least 90 calendar days in ad-
vance of such distribution. 
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‘‘(iv) 
SONGWRITER
PAYMENTS.— 
Copyright owners that receive a distribu-
tion of unclaimed accrued royalties and ac-
crued interest shall pay or credit a portion 
to songwriters (or the authorized agents of 
songwriters) on whose behalf the copyright 
owners license or administer musical works 
for covered activities, in accordance with 
applicable contractual terms, but notwith-
standing any agreement to the contrary— 
‘‘(I) such payments and credits 
to songwriters shall be allocated in 
proportion to reported usage of indi-
vidual musical works by digital music 
providers during the reporting periods 
covered by the distribution from the 
mechanical licensing collective; and 
‘‘(II) in no case shall the pay-
ment or credit to an individual song-
writer 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. 
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‘‘(K) DISPUTE RESOLUTION.—The dispute 
resolution committee established under para-
graph (3)(D)(v) shall address and resolve in a 
timely and equitable manner disputes among 
copyright owners relating to ownership interests 
in musical works licensed under this section and 
allocation and distribution of royalties by the 
mechanical licensing collective, according to a 
process approved by the board of directors of 
the mechanical licensing collective. Such proc-
ess— 
‘‘(i) shall include a mechanism to hold 
disputed funds in accordance with the re-
quirements 
described 
in 
subparagraph 
(H)(ii) pending resolution of the dispute; 
and 
‘‘(ii) except as provided in paragraph 
(11)(D), shall not affect any legal or equi-
table rights or remedies available to any 
copyright owner or songwriter concerning 
ownership of, and entitlement to royalties 
for, a musical work. 
‘‘(L) VERIFICATION OF PAYMENTS BY ME-
CHANICAL LICENSING COLLECTIVE.— 
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‘‘(i) 
VERIFICATION
PROCESS.—A 
copyright owner entitled to receive pay-
ments 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 licens-
ing collective to such copyright owner, as 
follows: 
‘‘(I) A copyright owner may 
audit the mechanical licensing collec-
tive only once in a year for any or all 
of the prior 3 calendar years, and may 
not audit records for any calendar 
year more than once. 
‘‘(II) The audit shall be con-
ducted by a qualified auditor, who 
shall perform the audit during the or-
dinary course of business by exam-
ining the books, records, and data of 
the mechanical licensing collective, ac-
cording to generally accepted auditing 
standards and subject to applicable 
confidentiality 
requirements 
pre-
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scribed by the Register of Copyrights 
under paragraph (12)(C). 
‘‘(III) The mechanical licensing 
collective shall make such books, 
records, and data available to the 
qualified auditor and respond to rea-
sonable requests for relevant informa-
tion, and shall use commercially rea-
sonable efforts to facilitate access to 
relevant information maintained by 
third parties. 
‘‘(IV) To commence the audit, 
any copyright owner shall file with the 
Copyright Office a notice of intent to 
conduct an audit of the mechanical li-
censing collective, identifying the pe-
riod of time to be audited, and shall 
simultaneously deliver a copy of such 
notice to the mechanical licensing col-
lective. The Register of Copyrights 
shall cause the notice of audit to be 
published in the Federal Register 
within 45 calendar days after receipt. 
‘‘(V) The qualified auditor shall 
determine the accuracy of royalty pay-
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ments, including whether an under-
payment or overpayment of royalties 
was made by the mechanical licensing 
collective to each auditing copyright 
owner, but before providing a final 
audit report to any such copyright 
owner, the qualified auditor shall pro-
vide a tentative draft of the report to 
the mechanical licensing collective and 
allow the mechanical licensing collec-
tive a reasonable opportunity to re-
spond 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 mechan-
ical licensing collective shall pay the 
amounts of any such underpayment to 
such auditing copyright owner, as ap-
propriate. In case of an overpayment 
by the mechanical licensing collective, 
the mechanical licensing collective 
may debit the account of the auditing 
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copyright owner or owners for such 
overpaid amounts, or such owner(s) 
shall refund overpaid amounts to the 
mechanical licensing collective, as ap-
propriate. 
‘‘(ii) 
ALTERNATIVE
VERIFICATION 
PROCEDURES.—Nothing in this subpara-
graph shall preclude a copyright owner and 
the mechanical licensing collective from 
agreeing to audit procedures different from 
those described herein, but 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 LICENS-
ING COLLECTIVE.— 
‘‘(i) RECORDS
MAINTENANCE.—The 
mechanical licensing collective shall ensure 
that all material records of its operations, 
including those relating to notices of li-
cense, the administration of its claims 
process, reports of usage, royalty pay-
ments, receipt and maintenance of accrued 
royalties, royalty distribution processes, 
and legal matters, are preserved and main-
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tained in a secure and reliable manner, 
with appropriate commercially reasonable 
safeguards against unauthorized access, 
copying, and disclosure, and subject to the 
confidentiality requirements prescribed by 
the Register of Copyrights under para-
graph (12)(C) for a period of no less than 
7 years after the date of creation or re-
ceipt, whichever occurs later. 
‘‘(ii) RECORDS ACCESS.—The mechan-
ical 
licensing 
collective 
shall 
provide 
prompt access to electronic and other 
records pertaining to the administration of 
a copyright owner’s musical works upon 
reasonable written request of such owner 
or the owner’s authorized representative. 
‘‘(4) TERMS AND CONDITIONS OF BLANKET LI-
CENSE.—A blanket license is subject to, and condi-
tioned upon, the following requirements: 
‘‘(A) ROYALTY
REPORTING
AND
PAY-
MENTS.— 
‘‘(i) MONTHLY
REPORTS
AND
PAY-
MENT.—A digital music provider shall re-
port and pay royalties to the mechanical li-
censing collective under the blanket license 
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on a monthly basis in accordance with 
clause (ii) and subsection (c)(2)(I), but the 
monthly reporting shall be due 45 calendar 
days, rather than 20 calendar days, after 
the end of the monthly reporting period. 
‘‘(ii) DATA TO BE REPORTED.—In re-
porting usage of musical works to the me-
chanical licensing collective, a digital music 
provider shall provide usage data for musi-
cal works used under the blanket license 
and usage data for musical works used in 
covered activities under voluntary licenses 
and individual download licenses. In the re-
port of usage, the digital music provider 
shall— 
‘‘(I) with respect to each sound 
recording 
embodying 
a 
musical 
work— 
‘‘(aa) provide identifying in-
formation for the sound record-
ing, including sound recording 
name, featured artist, and, to the 
extent reasonably available to the 
digital music provider, sound re-
cording copyright owner, inter-
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national 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 reason-
ably available to the digital music 
provider, 
provide 
information 
concerning authorship and own-
ership of the applicable rights in 
the musical work embodied in the 
sound recording (including each 
songwriter, publisher name, and 
respective ownership share) and 
the international standard musi-
cal work code; and 
‘‘(cc) provide the number of 
digital phonorecord deliveries of 
the sound recording, including 
limited downloads and interactive 
streams; 
‘‘(II) identify and provide contact 
information for all musical work copy-
right owners for works embodied in 
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sound recordings as to which a vol-
untary license, rather than the blan-
ket license, is in effect with respect to 
the uses being reported; and 
‘‘(III) provide such other infor-
mation 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 me-
chanical licensing collective and meets the 
requirements of regulations adopted by the 
Register of Copyrights. The Register shall 
also adopt regulations setting forth re-
quirements under which records of use 
shall be maintained and made available to 
the mechanical licensing collective by dig-
ital music providers engaged in covered ac-
tivities under a blanket license. 
‘‘(iv) ADOPTION OF REGULATIONS.— 
The Register shall adopt regulations— 
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‘‘(I) setting forth requirements 
under which records of use shall be 
maintained and made available to the 
mechanical licensing collective by dig-
ital music providers engaged in cov-
ered activities under a blanket license; 
and 
‘‘(II) regarding adjustments to 
reports of usage by digital music pro-
viders, including mechanisms to ac-
count for overpayment and under-
payment 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 copyright owners of 
sound recordings made available through the 
service of such digital music provider— 
‘‘(i) sound recording copyright owners, 
international standard recording codes, 
and other information commonly used in 
the industry to identify sound recordings 
and match them to the musical works the 
sound recordings embody; and 
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‘‘(ii) information concerning the au-
thorship and ownership of musical works, 
including songwriters, publisher names, 
ownership shares, and international stand-
ard musical work codes. 
‘‘(C) PAYMENT
OF
ADMINISTRATIVE
AS-
SESSMENT.—A digital music provider and any 
significant nonblanket licensee shall pay the ad-
ministrative assessment established under para-
graph (7)(D) in accordance with this subsection 
and applicable regulations. 
‘‘(D) VERIFICATION OF PAYMENTS BY DIG-
ITAL MUSIC PROVIDERS.— 
‘‘(i) VERIFICATION
PROCESS.—The 
mechanical licensing collective may conduct 
an audit of a digital music provider oper-
ating under the blanket license to verify 
the accuracy of royalty payments by the 
digital music provider to the mechanical li-
censing collective as follows: 
‘‘(I) The mechanical licensing 
collective may commence an audit of a 
digital music provider no more than 
once in any 3-calendar-year period to 
cover a verification period of no more 
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than the 3 full calendar years pre-
ceding 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 con-
ducted by a qualified auditor, who 
shall perform the audit during the or-
dinary course of business by exam-
ining the books, records, and data of 
the digital music provider, according 
to generally accepted auditing stand-
ards and subject to applicable con-
fidentiality requirements prescribed by 
the Register of Copyrights under 
paragraph (12)(C). 
‘‘(III) The digital music provider 
shall make such books, records, and 
data available to the qualified auditor 
and respond to reasonable requests 
for relevant information, and shall use 
commercially reasonable efforts to 
provide access to relevant information 
maintained with respect to a digital 
music provider by third parties. 
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‘‘(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 pro-
vider. The Register of Copyrights 
shall cause the notice of audit to be 
published in the Federal Register 
within 45 calendar days after receipt. 
‘‘(V) The qualified auditor shall 
determine the accuracy of royalty pay-
ments, including whether an under-
payment or overpayment of royalties 
was made by the digital music pro-
vider to the mechanical licensing col-
lective, but before providing a final 
audit report to the mechanical licens-
ing collective, the qualified auditor 
shall provide a tentative draft of the 
report to the digital music provider 
and allow the digital music provider a 
reasonable opportunity to respond to 
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the findings, including by clarifying 
issues and correcting factual errors. 
‘‘(VI) The mechanical licensing 
collective shall pay the cost of the 
audit, unless the qualified auditor de-
termines that there was an under-
payment by the digital music provider 
of 10 percent or more, 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 li-
censing collective. In case of an over-
payment 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 limi-
tations, 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 no more than 6 
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years after the commencement of the 
audit that is the basis for such action. 
‘‘(ii) 
ALTERNATIVE
VERIFICATION 
PROCEDURES.—Nothing in this subpara-
graph shall preclude the mechanical licens-
ing collective and a digital music provider 
from agreeing to audit procedures different 
from those described herein, but a notice 
of the audit shall be provided to and pub-
lished by the Copyright Office as described 
in clause (i)(IV). 
‘‘(E) DEFAULT
UNDER
BLANKET
LI-
CENSE.— 
‘‘(i) CONDITIONS
OF
DEFAULT.—A 
digital music provider shall be in default 
under a blanket license if the digital music 
provider— 
‘‘(I) fails to provide one or more 
monthly reports of usage to the me-
chanical licensing collective when due; 
‘‘(II) fails to make a monthly 
royalty or late fee payment to the me-
chanical licensing collective when due, 
in all or material part; 
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‘‘(III) provides one or more 
monthly reports of usage to the me-
chanical licensing collective that, on 
the whole, is or are materially defi-
cient as a result of inaccurate, miss-
ing, or unreadable data, where the 
correct data was available to the dig-
ital music provider and required to be 
reported under this section and appli-
cable regulations; 
‘‘(IV) fails to pay the administra-
tive assessment as required under this 
subsection and applicable regulations; 
or 
‘‘(V) after being provided written 
notice by the mechanical licensing col-
lective, refuses to comply with any 
other material term or condition of 
the blanket license under this section 
for a period of 60 calendar days or 
longer. 
‘‘(ii) NOTICE OF DEFAULT AND TER-
MINATION.—In case of a default by a dig-
ital music provider, the mechanical licens-
ing collective may proceed to terminate the 
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blanket license of the digital music pro-
vider as follows: 
‘‘(I) The mechanical licensing 
collective shall provide written notice 
to the digital music provider describ-
ing with reasonable particularity the 
default and advising that unless such 
default is cured within 60 calendar 
days after the date of the notice, the 
blanket license will automatically ter-
minate at the end of that period. 
‘‘(II) If the digital music provider 
fails to remedy the default within the 
60-day period referenced in subclause 
(I), the license shall terminate without 
any further action on the part of the 
mechanical licensing collective. Such 
termination renders the making of all 
digital phonorecord deliveries of all 
musical works (and shares thereof) 
covered by the blanket license for 
which the royalty or administrative 
assessment has not been paid action-
able as acts of infringement under 
section 501 and subject to the rem-
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edies 
provided 
by 
sections 
502 
through 506. 
‘‘(iii) NOTICE
TO
COPYRIGHT
OWN-
ERS.—The mechanical licensing collective 
shall provide written notice of any termi-
nation under this subparagraph to copy-
right owners of affected works. 
‘‘(iv) REVIEW BY FEDERAL DISTRICT 
COURT.—A digital music provider that be-
lieves a blanket license was improperly ter-
minated by the mechanical licensing collec-
tive may seek review of such termination in 
Federal district court. The district court 
shall determine the matter de novo based 
on the record before the mechanical licens-
ing collective and any additional sup-
porting 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 sub-
stantial support from digital music pro-
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viders and significant nonblanket licensees 
that together represent the greatest per-
centage 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 avail-
ability date, the administrative capabilities 
to perform the required functions of the 
digital licensee coordinator under this sub-
section; and 
‘‘(iv) has been designated by the Reg-
ister of Copyrights in accordance with sub-
paragraph (B). 
‘‘(B) DESIGNATION OF DIGITAL LICENSEE 
COORDINATOR.— 
‘‘(i) 
INITIAL
DESIGNATION.—The 
Register of Copyrights shall initially des-
ignate the digital licensee coordinator with-
in 9 months after the enactment date, in 
accordance with the same procedure de-
scribed for designation of the mechanical 
licensing collective in paragraph (3)(B)(i). 
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‘‘(ii) PERIODIC REVIEW OF DESIGNA-
TION.—Following the initial designation of 
the digital licensee coordinator, the Reg-
ister 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 des-
ignated, in accordance with the same pro-
cedure described for the mechanical licens-
ing collective in paragraph (3)(B)(ii). 
‘‘(iii) INABILITY
TO
DESIGNATE.—If 
the Register is unable to identify an entity 
that fulfills each of the qualifications de-
scribed in clauses (i) through (iii) of sub-
paragraph (A) to serve as the digital li-
censee coordinator, the Register may de-
cline to designate a digital licensee coordi-
nator. The Register’s determination 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 
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the digital licensee coordinator. In such 
case, the reference to the digital licensee 
coordinator shall be without effect unless 
and until a new digital licensee coordinator 
is designated. 
‘‘(C) AUTHORITIES AND FUNCTIONS.— 
‘‘(i) IN
GENERAL.—The digital li-
censee 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 mem-
bers. 
‘‘(II) Engage in efforts to enforce 
notice and payment obligations with 
respect to the administrative assess-
ment, including by receiving informa-
tion from and coordinating with the 
mechanical licensing collective. 
‘‘(III) Initiate and participate in 
proceedings before the Copyright Roy-
alty Judges to establish the adminis-
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trative assessment under this sub-
section. 
‘‘(IV) Initiate and participate in 
proceedings before the Copyright Of-
fice with respect to activities under 
this subsection. 
‘‘(V) Gather and provide docu-
mentation for use in proceedings be-
fore the Copyright Royalty Judges to 
set rates and terms under this section. 
‘‘(VI) Maintain records of its ac-
tivities. 
‘‘(VII) Engage in such other ac-
tivities as may be necessary or appro-
priate to fulfill its responsibilities 
under this subsection. 
‘‘(ii) RESTRICTION
ON
LOBBYING.— 
The digital licensee coordinator may not 
engage in government lobbying activities, 
but may engage in the activities described 
in subclauses (III), (IV), and (V) of clause 
(i). 
‘‘(6) REQUIREMENTS
FOR
SIGNIFICANT
NON-
BLANKET LICENSEES.— 
‘‘(A) IN GENERAL.— 
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‘‘(i) NOTICE OF ACTIVITY.—Not later 
than 45 calendar days after the license 
availability date, or 45 calendar days after 
the end of the first full calendar month in 
which an entity initially qualifies as a sig-
nificant nonblanket licensee, whichever oc-
curs 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 estab-
lish by regulation, and a copy shall be 
made available to the digital licensee coor-
dinator. 
‘‘(ii) REPORTING AND PAYMENT OBLI-
GATIONS.—The notice of nonblanket activ-
ity submitted to the mechanical licensing 
collective shall be accompanied by a report 
of usage that contains the information de-
scribed in paragraph (4)(A)(ii), as well as 
any payment of the administrative assess-
ment required under this subsection and 
applicable regulations. Thereafter, subject 
to clause (iii), a significant nonblanket li-
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censee shall continue to provide monthly 
reports of usage, accompanied by any re-
quired payment of the administrative as-
sessment, to the mechanical licensing col-
lective. 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 OBLIGA-
TIONS.—An entity that has submitted a 
notice of nonblanket activity to the me-
chanical licensing collective that has ceased 
to qualify as a significant nonblanket li-
censee may so notify the collective in writ-
ing. In such case, as of the calendar month 
in which such notice is provided, such enti-
ty shall no longer be required to provide 
reports of usage or pay the administrative 
assessment, but if such entity later quali-
fies as a significant nonblanket licensee, 
such entity shall again be required to com-
ply with clauses (i) and (ii). 
‘‘(B) REPORTING BY MECHANICAL LICENS-
ING COLLECTIVE TO DIGITAL LICENSEE COOR-
DINATOR.— 
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‘‘(i) MONTHLY
REPORTS
OF
NON-
COMPLIANT
LICENSEES.—The mechanical 
licensing collective shall provide monthly 
reports to the digital licensee coordinator 
setting forth any significant nonblanket li-
censees of which the collective is aware 
that have failed to comply with subpara-
graph (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 con-
fidentiality requirements prescribed by the 
Register of Copyrights under paragraph 
(12)(C). 
‘‘(C) LEGAL ENFORCEMENT EFFORTS.— 
‘‘(i) 
FEDERAL
COURT
ACTION.— 
Should the mechanical licensing collective 
or digital licensee coordinator become 
aware that a significant nonblanket li-
censee has failed to comply with subpara-
graph (A), either may commence an action 
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in Federal district court for damages and 
injunctive relief. If the significant non-
blanket 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, notwith-
standing anything to the contrary in sec-
tion 505, reasonable attorney’s fees and 
costs, as well as such other relief as the 
court deems appropriate. In all other 
cases, the court shall award relief as ap-
propriate. Any recovery of damages shall 
be payable to the mechanical licensing col-
lective as an offset to the collective total 
costs. 
‘‘(ii) STATUTE OF LIMITATIONS FOR 
ENFORCEMENT
ACTION.—Any action de-
scribed in this subparagraph shall be com-
menced within the time period described in 
section 507(b). 
‘‘(iii) OTHER RIGHTS AND REMEDIES 
PRESERVED.—The ability of the mechan-
ical licensing collective or digital licensee 
coordinator to bring an action under this 
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subparagraph shall in no way alter, limit 
or negate any other right or remedy that 
may be available to any party at law or in 
equity. 
‘‘(7) FUNDING
OF
MECHANICAL
LICENSING 
COLLECTIVE.— 
‘‘(A) IN
GENERAL.—The collective total 
costs shall be funded by— 
‘‘(i) an administrative assessment, as 
such assessment is established by the 
Copyright Royalty Judges pursuant to sub-
paragraph (D) from time to time, to be 
paid by— 
‘‘(I) digital music providers that 
are engaged, in all or in part, in cov-
ered activities pursuant to a blanket 
license; and 
‘‘(II) significant nonblanket li-
censees; and 
‘‘(ii) voluntary contributions from dig-
ital music providers and significant non-
blanket licensees as may be agreed with 
copyright owners. 
‘‘(B) VOLUNTARY CONTRIBUTIONS.— 
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‘‘(i) AGREEMENTS CONCERNING CON-
TRIBUTIONS.—Except 
as 
provided 
in 
clause (ii), voluntary contributions by dig-
ital music providers and significant non-
blanket licensees shall be determined by 
private negotiation and agreement, and the 
following conditions apply: 
‘‘(I) The date and amount of 
each voluntary contribution to the me-
chanical licensing collective shall be 
documented in a writing signed by an 
authorized agent of the mechanical li-
censing collective and the contributing 
party. 
‘‘(II) Such agreement shall be 
made available as required in pro-
ceedings before the Copyright Royalty 
Judges to establish or adjust the ad-
ministrative assessment in accordance 
with applicable statutory and regu-
latory provisions and rulings of the 
Copyright Royalty Judges. 
‘‘(ii) 
TREATMENT
OF
CONTRIBU-
TIONS.—Each such voluntary contribution 
shall be treated for purposes of an admin-
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istrative assessment proceeding as an off-
set to the collective total costs that would 
otherwise be recovered through the admin-
istrative assessment. Any allocation or re-
allocation of voluntary contributions be-
tween or among individual digital music 
providers or significant nonblanket licens-
ees shall be a matter of private negotiation 
and agreement among such parties and 
outside the scope of the administrative as-
sessment proceeding. 
‘‘(C) INTERIM APPLICATION OF ACCRUED 
ROYALTIES.—In the event that the administra-
tive assessment, together with any funding from 
voluntary contributions as provided in subpara-
graphs (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 royalties on an interim basis 
to defray such costs, subject to future reim-
bursement of such royalties from future collec-
tions of the assessment. 
‘‘(D) DETERMINATION
OF
ADMINISTRA-
TIVE ASSESSMENT.— 
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‘‘(i) ADMINISTRATIVE ASSESSMENT TO 
COVER
COLLECTIVE
TOTAL
COSTS.—The 
administrative assessment shall be used 
solely and exclusively to fund the collective 
total costs. 
‘‘(ii) SEPARATE PROCEEDING BEFORE 
COPYRIGHT
ROYALTY
JUDGES.—The 
amount and terms of the administrative 
assessment shall be determined and estab-
lished in a separate and independent pro-
ceeding before the Copyright Royalty 
Judges, according to the procedures de-
scribed in clauses (iii) and (iv). The admin-
istrative assessment determined in such 
proceeding shall— 
‘‘(I) be wholly independent of 
royalty rates and terms applicable to 
digital music providers, which shall 
not be taken into consideration in any 
manner in establishing the adminis-
trative assessment; 
‘‘(II) be established by the Copy-
right Royalty Judges in an amount 
that is calculated to defray the rea-
sonable collective total costs; 
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‘‘(III) be assessed based on usage 
of musical works by digital music pro-
viders and significant nonblanket li-
censees in covered activities under 
both compulsory and nonblanket li-
censes; 
‘‘(IV) may be in the form of a 
percentage of royalties payable under 
this section for usage of musical 
works in covered activities (regardless 
of whether a different rate applies 
under a voluntary license), or any 
other usage-based metric reasonably 
calculated to equitably allocate the 
collective total costs across digital 
music providers and significant non-
blanket licensees engaged in covered 
activities, but shall include as a com-
ponent a minimum fee for all digital 
music providers and significant non-
blanket licensees; and 
‘‘(V) take into consideration an-
ticipated future collective total costs 
and collections of the administrative 
assessment, but also, as applicable— 
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‘‘(aa) any portion of past ac-
tual collective total costs of the 
mechanical 
licensing 
collective 
not funded by previous collections 
of the administrative assessment 
or voluntary contributions be-
cause such collections or con-
tributions together were insuffi-
cient to fund such costs; 
‘‘(bb) any past collections of 
the 
administrative 
assessment 
and voluntary contributions that 
exceeded past actual collective 
total costs, resulting in a surplus; 
and 
‘‘(cc) the amount of any vol-
untary contributions by digital 
music providers or significant 
nonblanket licensees in relevant 
periods, described in subpara-
graphs (A) and (B) of paragraph 
(7). 
‘‘(iii) INITIAL
ADMINISTRATIVE
AS-
SESSMENT.—The 
procedure 
for 
estab-
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lishing the initial administrative assess-
ment shall be as follows: 
‘‘(I) 
The 
Copyright 
Royalty 
Judges shall commence a proceeding 
to establish the initial administrative 
assessment within 9 months after the 
enactment date by publishing a notice 
in the Federal Register seeking peti-
tions to participate. 
‘‘(II) The mechanical licensing 
collective and digital licensee coordi-
nator shall participate in such pro-
ceeding, along with any interested 
copyright owners, digital music pro-
viders or significant nonblanket licens-
ees that have notified the Copyright 
Royalty Judges of their desire to par-
ticipate. 
‘‘(III) The Copyright Royalty 
Judges shall establish a schedule for 
submission by the parties of informa-
tion that may be relevant to estab-
lishing the administrative assessment, 
including actual and anticipated col-
lective total costs of the mechanical li-
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censing collective, actual and antici-
pated collections from digital music 
providers and significant nonblanket 
licensees, and documentation of vol-
untary contributions, as well as a 
schedule 
for 
further 
proceedings, 
which shall include a hearing, as they 
deem 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, within 1 year 
after commencement of the proceeding 
described in this clause. The deter-
mination shall be supported by a writ-
ten record. The initial administrative 
assessment shall be effective as of the 
license availability date, and shall con-
tinue in effect unless and until an ad-
justed administrative assessment is 
established pursuant to an adjustment 
proceeding under clause (iii). 
‘‘(iv) ADJUSTMENT
OF
ADMINISTRA-
TIVE
ASSESSMENT.—The administrative 
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assessment may be adjusted by the Copy-
right Royalty Judges periodically, in ac-
cordance with the following procedures: 
‘‘(I) No earlier than one year 
after the most recent publication of a 
determination of the administrative 
assessment by the Copyright Royalty 
Judges, the mechanical licensing col-
lective, the digital licensee coordi-
nator, or one or more interested copy-
right owners, digital music providers, 
or significant nonblanket licensees, 
may file a petition with the Copyright 
Royalty Judges in the month of Octo-
ber to commence a proceeding to ad-
just the administrative assessment. 
‘‘(II) Notice of the commence-
ment of such proceeding shall be pub-
lished in the Federal Register in the 
month of November following the fil-
ing 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 coordi-
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nator shall participate in such pro-
ceeding, along with any interested 
copyright owners, digital music pro-
viders, or significant nonblanket li-
censees that have notified the Copy-
right Royalty Judges of their desire to 
participate. 
‘‘(III) The determination of the 
adjusted administrative assessment, 
which shall be supported by a written 
record, shall be published in the Fed-
eral Register during November of the 
calendar year following the commence-
ment of the proceeding. The adjusted 
administrative assessment shall take 
effect January 1 of the year following 
such publication. 
‘‘(v) 
ADOPTION
OF
VOLUNTARY 
AGREEMENTS.—In lieu of reaching their 
own determination based on evaluation of 
relevant data, the Copyright Royalty 
Judges shall approve and adopt a nego-
tiated agreement to establish the amount 
and terms of the administrative assessment 
that has been agreed to by the mechanical 
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licensing collective and the digital licensee 
coordinator (or if none has been des-
ignated, interested digital music providers 
and significant nonblanket licensees rep-
resenting more than half of the market for 
uses of musical works in covered activi-
ties), but the Copyright Royalty Judges 
shall have the discretion to reject any such 
agreement for good cause shown. An ad-
ministrative assessment adopted under this 
clause shall apply to all digital music pro-
viders and significant nonblanket licensees 
engaged in covered activities during the pe-
riod it is in effect. 
‘‘(vi) CONTINUING
AUTHORITY
TO 
AMEND.—The Copyright Royalty Judges 
shall retain continuing authority to amend 
a determination of an administrative as-
sessment to correct technical or clerical er-
rors, or modify the terms of implementa-
tion, for good cause, with any such amend-
ment to be published in the Federal Reg-
ister. 
‘‘(vii) APPEAL
OF
ADMINISTRATIVE 
ASSESSMENT.—The determination of an 
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administrative assessment by the Copy-
right Royalty Judges shall be appealable, 
within 30 calendar days after publication 
in the Federal Register, to the Court of 
Appeals for the District of Columbia Cir-
cuit by any party that fully participated in 
the proceeding. The administrative assess-
ment as established by the Copyright Roy-
alty Judges shall remain in effect pending 
the final outcome of any such appeal, and 
the mechanical licensing collective, digital 
licensee coordinator, digital music pro-
viders, and significant nonblanket licensees 
shall implement appropriate financial or 
other measures within 3 months after any 
modification of the assessment to reflect 
and account for such outcome. 
‘‘(viii) REGULATIONS.—The Copyright 
Royalty Judges may adopt regulations to 
govern the conduct of proceedings under 
this paragraph. 
‘‘(8) ESTABLISHMENT OF RATES AND TERMS 
UNDER BLANKET LICENSE.— 
‘‘(A) 
RESTRICTIONS
ON
RATESETTING 
PARTICIPATION.—Neither the mechanical li-
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censing collective nor the digital licensee coordi-
nator shall be a party to a proceeding described 
in subsection (c)(1)(E), but either 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 re-
quired under applicable statutory and regu-
latory provisions and rulings of the Copyright 
Royalty Judges. 
‘‘(B) APPLICATION
OF
LATE
FEES.—In 
any proceeding described in subparagraph (A) 
in which the Copyright Royalty Judges estab-
lish a late fee for late payment of royalties for 
uses of musical works under this section, such 
fee shall apply to covered activities under blan-
ket 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 assert-
ing any other rights or remedies to which 
such copyright owner or the mechanical li-
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censing collective may be entitled under 
this title. 
‘‘(C) INTERIM RATE AGREEMENTS IN GEN-
ERAL.—For any covered activity for which no 
rate or terms have been established by the 
Copyright Royalty Judges, the mechanical li-
censing 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 nonpreceden-
tial and not cited or relied upon in any 
ratesetting proceeding before the Copyright 
Royalty Judges or any other tribunal; and 
‘‘(ii) shall automatically expire upon 
the establishment of a rate and terms for 
such covered activity by the Copyright 
Royalty 
Judges, 
under 
subsection 
(c)(1)(E). 
‘‘(D) 
ADJUSTMENTS
FOR
INTERIM 
RATES.—The rate and terms established by the 
Copyright Royalty Judges for a covered activity 
to which an interim rate and terms have been 
agreed under subparagraph (C) shall supersede 
the interim rate and terms and apply retro-
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digital music provider from a copyright owner 
to engage in one or more covered activities with 
respect to a musical work, but the foregoing 
shall not apply to any authority obtained from 
a record company pursuant to a compulsory li-
cense to make and distribute permanent 
downloads unless and until such record com-
pany 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
LI-
CENSES.—Except to the extent provided in sub-
paragraph (A), on and after the license avail-
ability date, licenses other than individual 
download licenses obtained under this section 
for covered activities prior to the license avail-
ability date shall no longer continue in effect. 
‘‘(C) TREATMENT
OF
VOLUNTARY
LI-
CENSES.—A voluntary license for a covered ac-
tivity in effect on the license availability date 
will remain in effect unless and until the vol-
untary license expires according to the terms of 
the voluntary license, or the parties agree to 
amend or terminate the voluntary license. In a 
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case where a voluntary license for a covered ac-
tivity entered into before the license availability 
date incorporates the terms of this section by 
reference, the terms so incorporated (but not 
the rates) shall be those in effect immediately 
prior to the license availability date, and those 
terms shall continue to apply unless and until 
such voluntary license is terminated or amend-
ed, or the parties enter into a new voluntary li-
cense. 
‘‘(D) FURTHER ACCEPTANCE OF NOTICES 
FOR COVERED ACTIVITIES BY COPYRIGHT OF-
FICE.—On and after the enactment date— 
‘‘(i) the Copyright Office shall no 
longer accept notices of intention with re-
spect to covered activities; and 
‘‘(ii) previously filed notices of inten-
tion will no longer be effective or provide 
license authority with respect to covered 
activities, but before the license availability 
date there shall be no liability under sec-
tion 501 for the reproduction or distribu-
tion of a musical work (or share thereof) 
in covered activities if a valid notice of in-
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tention was filed for such work (or share) 
before the enactment date. 
‘‘(10) PRIOR UNLICENSED USES.— 
‘‘(A) LIMITATION ON LIABILITY IN GEN-
ERAL.—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 distribu-
tion 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 exclu-
sive remedy against the digital music provider, 
be eligible to recover the royalty prescribed 
under subsection (c)(1)(C) and chapter 8 of 
this title, from the digital music provider, pro-
vided that such digital music provider can dem-
onstrate compliance with the requirements of 
subparagraph (B), as applicable. In all other 
cases the limitation on liability under this sub-
paragraph shall not apply. 
‘‘(B) REQUIREMENTS FOR LIMITATION ON 
LIABILITY.—The following requirements shall 
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apply on the enactment date and through the 
end of the period that expires 90 days after the 
license availability date to digital music pro-
viders seeking to avail themselves of the limita-
tion on liability described in subparagraph (A): 
‘‘(i) No later than 30 calendar days 
after first making a particular sound re-
cording of a musical work available 
through its service via one or more covered 
activities, or 30 calendar days after the en-
actment 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 in-
clude the following: 
‘‘(I) 
Good-faith, 
commercially 
reasonable efforts to obtain from the 
owner of the corresponding sound re-
cording made available through the 
digital music provider’s service the fol-
lowing information: 
‘‘(aa) 
Sound 
recording 
name, featured artist, sound re-
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101 
cording copyright owner, inter-
national standard recording code, 
and other information commonly 
used in the industry to identify 
sound 
recordings 
and 
match 
them to the musical works they 
embody. 
‘‘(bb) Any available musical 
work ownership information, in-
cluding each songwriter and pub-
lisher name, percentage owner-
ship share, and international 
standard musical work code. 
‘‘(II) Employment of one or more 
bulk electronic matching processes 
that are available to the digital music 
provider through a third-party vendor 
on commercially reasonable terms, but 
a digital music provider may rely on 
its own bulk electronic matching proc-
ess if it has capabilities comparable to 
or better than those available from a 
third-party vendor on commercially 
reasonable terms. 
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‘‘(ii) The required matching efforts 
shall be repeated by the digital music pro-
vider no less than once per month for so 
long as the copyright owner remains un-
identified 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 copy-
right owner in accordance with this section 
and applicable regulations. 
‘‘(iv) If the copyright owner is not 
identified or located by the end of the cal-
endar month in which the digital music 
provider first makes use of the work, the 
digital music provider shall accrue and 
hold royalties calculated under the applica-
ble 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 
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transferred to the mechanical licensing col-
lective, as follows: 
‘‘(I) Accrued royalties shall be 
maintained by the digital music pro-
vider in accordance with generally ac-
cepted accounting principles. 
‘‘(II) If a copyright owner of an 
unmatched musical work (or share 
thereof) is identified and located by or 
to the digital music provider before 
the license availability date, the digital 
music provider shall— 
‘‘(aa) within 45 calendar 
days after the end of the cal-
endar 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 informa-
tion that would have been pro-
vided to the copyright owner had 
the digital music provider been 
providing monthly statements of 
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104 
account to the copyright owner 
from initial use of the work in 
accordance with this section and 
applicable regulations, including 
the requisite certification under 
subsection (c)(2)(I); 
‘‘(bb) beginning with the ac-
counting period following the cal-
endar month in which the copy-
right owner was identified and lo-
cated, and for all other account-
ing 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 avail-
ability date, report usage and pay 
royalties for such musical work 
(or share thereof) for such re-
porting period and reporting pe-
riods thereafter to the mechanical 
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licensing collective, as required 
under this subsection and appli-
cable 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) within 45 calendar 
days after the license availability 
date, transfer all accrued royal-
ties to the mechanical licensing 
collective, such payment to be ac-
companied by a cumulative state-
ment of account that includes all 
of the information that would 
have been provided to the copy-
right 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 regu-
lations, including the requisite 
certification 
under 
subsection 
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(c)(2)(I), and accompanied by an 
additional certification by a duly 
authorized officer of the digital 
music provider that the digital 
music provider has fulfilled the 
requirements of clauses (i) and 
(ii) of subparagraph (B) but has 
not been successful in locating or 
identifying the copyright owner; 
and 
‘‘(bb) beginning with the 
monthly royalty reporting period 
commencing on the license avail-
ability date, report usage and pay 
royalties for such musical work 
(or share thereof) for such period 
and reporting periods thereafter 
to the mechanical licensing collec-
tive, as required under this sub-
section and applicable regula-
tions. 
‘‘(v) SUSPENSION OF LATE FEES.—A 
digital music provider that complies with 
the requirements of this paragraph with 
respect to unmatched musical works (or 
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107 
shares of works) shall not be liable for or 
accrue late fees for late payments of royal-
ties for such works until such time as the 
digital music provider is required to begin 
paying monthly royalties to the copyright 
owner or the mechanical licensing collec-
tive, as applicable. 
‘‘(C) ADJUSTED
STATUTE
OF
LIMITA-
TIONS.—Notwithstanding anything to the con-
trary 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 distribu-
tion of a musical work by such digital music 
provider to engage in covered activities that ac-
crued no more than 3 years prior to the license 
availability date, such action may be com-
menced within 3 years of the date the claim ac-
crued, or up to 2 years after the license avail-
ability date, whichever is later. 
‘‘(D) OTHER RIGHTS AND REMEDIES PRE-
SERVED.—Except as expressly provided in this 
paragraph, nothing in this paragraph shall be 
construed to alter, limit, or negate any right or 
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remedy of a copyright owner with respect to un-
authorized use of a musical work. 
‘‘(E) REMEDY
IN
FEDERAL
DISTRICT 
COURT.—A person may bring a claim in a Fed-
eral district court of competent jurisdiction for 
an issue that is not adequately resolved by the 
board of directors or a committee of the me-
chanical licensing collective, as applicable. 
‘‘(11) LEGAL PROTECTIONS FOR LICENSING AC-
TIVITIES.— 
‘‘(A) EXEMPTION
FOR
COMPULSORY
LI-
CENSE
ACTIVITIES.—The antitrust exemption 
described in subsection (c)(1)(D) shall apply to 
negotiations and agreements between and 
among copyright owners and persons entitled to 
obtain a compulsory license for covered activi-
ties, 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 EX-
EMPTION.—Notwithstanding the antitrust ex-
emption provided in subsection (c)(1)(D) and 
subparagraph (A) (except for the administrative 
assessment referenced therein and except as 
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109 
provided in paragraph (8)(C)), neither the me-
chanical licensing collective nor the digital li-
censee coordinator shall serve as a common 
agent with respect to the establishment of roy-
alty rates or terms under this section. 
‘‘(C) ANTITRUST EXEMPTION FOR ADMIN-
ISTRATIVE
ACTIVITIES.—Notwithstanding any 
provision of the antitrust laws, copyright own-
ers and persons entitled to obtain a compulsory 
license under this section may designate the 
mechanical licensing collective to administer vol-
untary licenses for the reproduction or distribu-
tion of musical works in covered activities on 
behalf of such copyright owners and persons, 
but the following conditions apply: 
‘‘(i) Each copyright owner shall estab-
lish the royalty rates and material terms of 
any such voluntary license individually and 
not in agreement, combination, or concert 
with any other copyright owner. 
‘‘(ii) Each person entitled to obtain a 
compulsory license under this section shall 
establish the royalty rates and material 
terms of any such voluntary license indi-
vidually and not in agreement, combina-
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110 
tion, or concert with any other digital 
music provider. 
‘‘(iii) The mechanical licensing collec-
tive shall maintain the confidentiality of 
the voluntary licenses in accordance with 
the confidentiality provisions prescribed by 
the Register of Copyrights under para-
graph (12)(C). 
‘‘(D) LIABILITY FOR GOOD-FAITH ACTIVI-
TIES.—The mechanical licensing collective shall 
not be liable to any person or entity based on 
a claim arising from its good-faith administra-
tion of policies and procedures adopted and im-
plemented to carry out the responsibilities de-
scribed in subparagraphs (J) and (K) of para-
graph (3), except to the extent of correcting an 
underpayment or overpayment of royalties as 
provided in paragraph (3)(L)(i)(VI), but the 
collective may participate in a legal proceeding 
as a stakeholder party if the collective is hold-
ing funds that are the subject of a dispute be-
tween copyright owners. For purposes of this 
subparagraph, 
‘good-faith 
administration’ 
means administration in a manner that is not 
grossly negligent. 
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111 
‘‘(E) PREEMPTION
OF
STATE
PROPERTY 
LAWS.—The holding and distribution of funds 
by the mechanical licensing collective in accord-
ance with this subsection shall supersede and 
preempt any State law (including common law) 
concerning escheatment or abandoned property, 
or any analogous provision, that might other-
wise apply. 
‘‘(12) REGULATIONS.— 
‘‘(A) ADOPTION
BY
REGISTER
OF
COPY-
RIGHTS AND COPYRIGHT 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 regula-
tions concerning proceedings before the Copy-
right Royalty Judges to establish the adminis-
trative assessment, which shall be adopted by 
the Copyright Royalty Judges. 
‘‘(B) JUDICIAL
REVIEW
OF
REGULA-
TIONS.—Except as provided in paragraph 
(7)(D)(vii), regulations adopted under this sub-
section shall be subject to judicial review pursu-
ant to chapter 7 of title 5. 
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‘‘(C) PROTECTION OF CONFIDENTIAL IN-
FORMATION.—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 collec-
tive and digital licensee coordinator is not im-
properly disclosed or used, including through 
any disclosure or use by the board of directors 
or personnel of either entity, and specifically in-
cluding the unclaimed royalties oversight com-
mittee 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 licens-
ing under this section. The blanket license shall 
not be construed to extend or apply to activities 
other than covered activities or to rights other 
than the exclusive rights of reproduction and 
distribution licensed under this section, or serve 
or act as the basis to extend or expand the 
compulsory license under this section to activi-
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113 
ties and rights not covered by this section on 
the enactment date. 
‘‘(B) RIGHTS
OF
PUBLIC
PERFORMANCE 
NOT AFFECTED.—The rights, protections, and 
immunities granted under this subsection, the 
data concerning musical works collected and 
made available under this subsection, and the 
definitions described in 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 new sub-
section: 
‘‘(e) DEFINITIONS.—As used in this section: 
‘‘(1) ACCRUED INTEREST.—The term ‘accrued 
interest’ means interest accrued on accrued royal-
ties, as described in subsection (d)(3)(H)(ii). 
‘‘(2) ACCRUED ROYALTIES.—The term ‘accrued 
royalties’ means royalties accrued for the reproduc-
tion or distribution of a musical work (or share 
thereof) in a covered activity, calculated in accord-
ance with the applicable royalty rate under this sec-
tion. 
‘‘(3) ADMINISTRATIVE ASSESSMENT.—The term 
‘administrative assessment’ means the fee estab-
lished pursuant to subsection (d)(7)(D). 
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‘‘(4) AUDIT.—The term ‘audit’ means a royalty 
compliance examination to verify the accuracy of 
royalty payments, or the conduct of such an exam-
ination, as applicable. 
‘‘(5) BLANKET LICENSE.—The term ‘blanket li-
cense’ means a compulsory license described in sub-
section (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 li-
censing collective to fulfill its statutory func-
tions, including— 
‘‘(i) startup costs; 
‘‘(ii) financing, legal, and insurance 
costs; 
‘‘(iii) investments in information tech-
nology, infrastructure, and other long-term 
resources; 
‘‘(iv) outside vendor costs; 
‘‘(v) costs of licensing, royalty admin-
istration, and enforcement of rights; 
‘‘(vi) costs of bad debt; and 
‘‘(vii) costs of automated and manual 
efforts to identify and locate copyright 
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owners of musical works (and shares of 
such musical works) and match sound re-
cordings to the musical works the sound 
recordings embody; and 
‘‘(B) does not include any added costs in-
curred 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 pho-
norecord delivery of a musical work, including in the 
form of a permanent download, limited download, or 
interactive stream, where such activity qualified for 
a compulsory license under this section. 
‘‘(8) DIGITAL
MUSIC
PROVIDER.—The term 
‘digital music provider’ means a person (or persons 
operating under the authority of that person) that, 
with respect to a service engaged in covered activi-
ties— 
‘‘(A) has a direct contractual, subscription, 
or other economic relationship with end users of 
the service, or, if no such relationship with end 
users exists, exercises direct control over the 
provision of the service to end users; 
‘‘(B) is able to fully report on any revenues 
and consideration generated by the service; and 
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116 
‘‘(C) is able to fully report on usage of 
sound recordings of musical works by the serv-
ice (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 indi-
vidual delivery of a phonorecord by digital trans-
mission of a sound recording that results in a spe-
cifically 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 reproduction of the sound 
recording or the musical work embodied therein is 
made from the inception of the transmission through 
to its receipt by the transmission recipient in order 
to make the sound recording audible. A digital pho-
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117 
norecord delivery does not include the digital trans-
mission of sounds accompanying a motion picture or 
other audiovisual work as defined in section 101 of 
this title. 
‘‘(11) ENACTMENT
DATE.—The term ‘enact-
ment date’ means the date of the enactment of the 
Musical Works Modernization Act. 
‘‘(12) INDIVIDUAL DOWNLOAD LICENSE.—The 
term ‘individual download license’ means a compul-
sory license obtained by a record company to make 
and distribute, or authorize the making and distribu-
tion of, permanent downloads embodying a specific 
individual musical work. 
‘‘(13) INTERACTIVE STREAM.—The term ‘inter-
active 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 record-
ing 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 pro-
ceeding under subsection (d)(7)(D), is a party as to 
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which the Copyright Royalty Judges have not deter-
mined that the party lacks a significant interest in 
such proceeding. 
‘‘(15) LICENSE AVAILABILITY DATE.—The term 
‘license availability date’ means the next January 1 
following the expiration of the two-year period begin-
ning 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 ap-
plied 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 Reg-
ister of Copyrights under subsection (d)(3). 
‘‘(19) MECHANICAL
LICENSING
COLLECTIVE 
BUDGET.—The term ‘mechanical licensing collective 
budget’ means a statement of the financial position 
of the mechanical licensing collective for a fiscal year 
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or quarter thereof based on estimates of expendi-
tures during the period and proposals for financing 
them, including a calculation of the collective total 
costs. 
‘‘(20) MUSICAL WORKS DATABASE.—The term 
‘musical works database’ means the database de-
scribed 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 pro-
vider provided under subsection (d)(2)(A) for pur-
poses of obtaining a blanket license. 
‘‘(23) NOTICE
OF
NONBLANKET
ACTIVITY.— 
The term ‘notice of nonblanket activity’ means a no-
tice from a significant nonblanket licensee provided 
under subsection (d)(6)(A) for purposes of notifying 
the mechanical licensing collective that the licensee 
has been engaging in covered activities. 
‘‘(24) PERMANENT
DOWNLOAD.—The term 
‘permanent download’ means a digital transmission 
of a sound recording of a musical work in the form 
of a download, where such sound recording is acces-
sible for listening without restriction as to the 
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