HR 5447 RDS
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 
than the 3 full calendar years pre-
ceding the date of commencement of 
the audit, and such audit may not 
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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. 
‘‘(IV) To commence the audit, 
the mechanical licensing collective 
shall file with the Copyright Office a 
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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 
the findings, including by clarifying 
issues and correcting factual errors. 
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‘‘(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 
years after the commencement of the 
audit that is the basis for such action. 
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‘‘(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; 
‘‘(III) provides one or more 
monthly reports of usage to the me-
chanical licensing collective that, on 
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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 
blanket license of the digital music pro-
vider as follows: 
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