tions of unclaimed accrued royal-
ties to provide, or direct the pro-
vision of, information concerning 
royalties received under voluntary 
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 
to compute market shares in ac-
cordance with the confidentiality 
provisions prescribed by the Reg-
ister of Copyrights under sub-
section (d)(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 in accordance 
with this subparagraph, subject to the ap-
proval of the board of directors of the me-
chanical licensing collective. 
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‘‘(iii) ADVANCE NOTICE OF DISTRIBU-
TIONS.—The mechanical licensing collec-
tive shall publicize a pending distribution 
of unclaimed accrued royalties at least 90 
days in advance of such distribution. 
‘‘(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 they license 
or administer musical works for covered 
activities, in accordance with applicable 
contractual terms; provided, however, that 
notwithstanding any agreement to the con-
trary— 
‘‘(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-
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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. 
‘‘(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 set forth in subparagraph 
(H)(ii) pending resolution of the dispute by 
the committee, written agreement of the 
affected parties, or pursuant to a binding 
judicial determination or arbitration; and 
‘‘(ii) except as provided in paragraph 
(11)(D), shall not affect any legal or equi-
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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.— 
‘‘(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 and distributions by the 
mechanical licensing 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-
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dinary course of business by exam-
ining the books, records and systems 
of the mechanical licensing collective, 
as well as underlying data, according 
to generally accepted auditing stand-
ards and subject to applicable con-
fidentiality requirements prescribed by 
the Register of Copyrights under sub-
section (d)(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, 
the copyright owner(s) shall file with 
the Copyright Office a notice of intent 
to conduct an audit of the mechanical 
licensing collective, and shall simulta-
neously deliver a copy of such notice 
to the mechanical licensing collective. 
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The Register of Copyrights shall 
cause the notice of audit to be pub-
lished in the Federal Register within 
30 days of 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 mechanical licensing 
collective to the auditing copyright 
owner(s); provided, however, that be-
fore providing a final audit report to 
such copyright owner(s), the qualified 
auditor shall provide a tentative draft 
of the report to the mechanical licens-
ing collective and allow the mechanical 
licensing collective a reasonable oppor-
tunity to respond to the findings, in-
cluding by clarifying issues and cor-
recting factual errors. 
‘‘(VI) The auditing copyright 
owner(s) shall bear the cost of the 
audit. In case of an underpayment to 
the copyright owner(s), the mechan-
ical licensing collective shall pay the 
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amounts of any such underpayment to 
the auditing copyright owner(s), as 
appropriate. In case of an overpay-
ment by the mechanical licensing col-
lective, the mechanical licensing collec-
tive may debit the accounts of the au-
diting copyright owner(s) 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 set forth herein; provided, however, 
that notice of the audit shall still be pro-
vided to and published by the Copyright 
Office as set forth 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, 
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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-
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 sub-
section (d)(12)(C) for a period of no less 
than 7 years from 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 obtained under this sub-
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section is subject to, and conditioned upon, the fol-
lowing 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 
on a monthly basis in accordance with 
clause (ii) and subsection (c)(5); provided, 
however, that monthly reporting shall be 
due 45 days, rather than 20 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 
under this subsection as well as usage data 
for musical works used in covered activities 
under voluntary and individual download 
licenses. In its report of usage, the digital 
music provider shall— 
‘‘(I) with respect to each musical 
work— 
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‘‘(aa) provide identifying in-
formation for the sound record-
ing embodying such work, includ-
ing sound recording name, fea-
tured artist, producer and, to the 
extent available, producer, 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) to the extent available, 
provide information concerning 
authorship and ownership of the 
applicable rights in the musical 
work, 
including 
songwriter(s), 
publisher name(s) and respective 
ownership 
share(s), 
and 
the 
international standard musical 
work code; and 
‘‘(cc) provide the number of 
digital phonorecord deliveries of 
such 
work, 
including 
limited 
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downloads 
and 
interactive 
streams; 
‘‘(II) identify and provide contact 
information for all copyright owners 
of musical works 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-
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ital music providers engaged in covered ac-
tivities under a blanket license. 
‘‘(B) PROCUREMENT OF SOUND RECORD-
ING
INFORMATION.—In addition to obtaining 
sound recording names and featured artists, 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 dig-
ital music provider— 
‘‘(i) producers, international standard 
recording codes, and other information 
commonly used in the industry to identify 
sound recordings and match them to the 
musical works they embody; and 
‘‘(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-
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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-year period to cover a 
verification period of no more than 
the 3 preceding full calendar years, 
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 systems 
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of the digital music provider, as well 
as underlying data, according to gen-
erally accepted auditing standards and 
subject to applicable confidentiality 
requirements prescribed by the Reg-
ister of Copyrights under subsection 
(d)(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 
notice of intent to conduct an audit of 
the digital music provider, and shall 
simultaneously deliver a copy of such 
notice to the digital music provider. 
The Register of Copyrights shall 
cause the notice of audit to be pub-
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lished in the Federal Register within 
30 days of 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; provided, however, that before 
providing a final audit report to the 
copyright owner(s), the qualified audi-
tor shall provide a tentative draft of 
the report to the digital music pro-
vider and allow the digital music pro-
vider a reasonable opportunity to re-
spond to 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 
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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 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 provided 
that such legal action is commenced 
no more than 6 years after the com-
mencement 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 set forth herein; provided, how-
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ever, that notice of the audit shall still be 
provided to and published by the Copyright 
Office as set forth in clause (i)(IV). 
‘‘(E) DEFAULT
UNDER
BLANKET
LI-
CENSE.— 
‘‘(i) CONDITION OF DEFAULT.—A dig-
ital music provider shall be considered gen-
erally in default under a blanket license 
obtained under this subsection if the dig-
ital 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 
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 
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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 days or longer. 
‘‘(ii) NOTICE OF DEFAULT AND TER-
MINATION.—In case of a general default by 
a digital music provider, the mechanical li-
censing collective may proceed to terminate 
the 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 days from 
the date of the notice, the blanket li-
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cense will automatically terminate 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-
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. 
‘‘(5) DIGITAL LICENSEE COORDINATOR.— 
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‘‘(A) IN
GENERAL.—The digital licensee 
coordinator shall be a single entity that— 
‘‘(i) is a not-for-profit entity, not 
owned by any other entity, that is des-
ignated by the Register of Copyrights to 
carry out responsibilities under this sub-
section; 
‘‘(ii) is endorsed by and enjoys sub-
stantial support from digital music pro-
viders and significant nonblanket licensees 
that together represent the greatest share 
of the licensee market for uses of musical 
works in covered activities, as measured 
over the preceding 3 full 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.— 
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‘‘(i) 
INITIAL
DESIGNATION.—The 
Register of Copyrights shall initially des-
ignate the digital licensee coordinator with-
in 9 months of the enactment date, in ac-
cordance with the same procedure as set 
forth for designation of the mechanical li-
censing collective in paragraph (3)(B)(i). 
‘‘(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 set forth in subparagraph (A) 
should be designated, in accordance with 
the same procedure as set forth for the 
mechanical licensing collective in para-
graph (3)(B)(ii). 
‘‘(iii) INABILITY
TO
DESIGNATE.—If 
the Register is unable to identify an entity 
that fulfills the qualifications set forth in 
paragraph (A) that is willing to serve as 
digital licensee coordinator, the Register 
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shall decline to designate a digital licensee 
coordinator. The Register’s inability to 
designate a digital licensee coordinator 
shall not negate or otherwise affect any 
provision of this subsection except to the 
limited extent that a provision references 
the digital licensee 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 set forth 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-
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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-
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 shall not 
engage in government lobbying activities; 
provided, however, that it may engage in 
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the activities set forth in clause (i)(III), 
(IV), and (V). 
‘‘(6) REQUIREMENTS
FOR
SIGNIFICANT
NON-
BLANKET LICENSEES.— 
‘‘(A) IN GENERAL.— 
‘‘(i) NOTICE OF ACTIVITY.—Not later 
than 45 days after the license availability 
date, or 45 days after the end of the first 
full calendar month in which an entity ini-
tially qualifies as a significant nonblanket 
licensee as defined in subsection (e)(29), 
whichever occurs later, a significant non-
blanket licensee shall submit a notice of 
nonblanket activity to the mechanical li-
censing collective. The notice of nonblanket 
activity shall comply in form and substance 
with requirements that the Register of 
Copyrights shall establish by regulation, 
and a copy shall be made available to the 
digital licensee coordinator. 
‘‘(ii) REPORTING AND PAYMENT 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-
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lotter on DSKBCFDHB2PROD with BILLS
scribed in paragraph (4)(A)(ii), as well as 
payment of the administrative assessment 
as required under this subsection and ap-
plicable regulations. Thereafter, subject to 
clause (iii), a significant nonblanket li-
censee shall continue to provide monthly 
reports of usage, accompanied by payment 
of the administrative assessment, to the 
mechanical licensing collective, such re-
ports and payments to be submitted not 
later than 45 days after the end of the cal-
endar 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; provided, however, that should 
such entity once again qualify as a signifi-
cant nonblanket licensee, it shall again be 
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required to comply with clauses (i) and 
(ii). 
‘‘(B) REPORTING BY MECHANICAL LICENS-
ING COLLECTIVE TO DIGITAL LICENSEE COOR-
DINATOR.— 
‘‘(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 subsection 
(d)(12)(C). 
‘‘(C) LEGAL ENFORCEMENT EFFORTS.— 
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‘‘(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 
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 total costs. 
‘‘(ii) STATUTE OF LIMITATIONS FOR 
ENFORCEMENT
ACTION.—Any action de-
scribed in this subparagraph shall be com-
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menced within the time period set forth 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 
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 total costs of the 
mechanical licensing collective 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 under this subsection; and 
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‘‘(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.— 
‘‘(i) AGREEMENTS CONCERNING CON-
TRIBUTIONS.—Except 
as 
provided 
in 
clause (ii), any voluntary contributions by 
digital music providers and significant non-
blanket licensees shall be determined by 
private negotiation and agreement; pro-
vided, however, that— 
‘‘(I) the date and amount of any 
voluntary contribution to the mechan-
ical licensing collective shall be docu-
mented in a writing signed by an au-
thorized agent of the mechanical li-
censing collective and the contributing 
party; and 
‘‘(II) such agreement shall be 
made available as required in pro-
ceedings before the Copyright Royalty 
Judges to establish or adjust the ad-
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ministrative assessment in accordance 
with applicable statutory and regu-
latory provisions and rulings of the 
Copyright Royalty Judges. 
‘‘(ii) 
TREATMENT
OF
CONTRIBU-
TIONS.—Any such voluntary contribution 
shall be treated for purposes of an admin-
istrative assessment proceeding as a gen-
eral offset to total costs of the mechanical 
licensing collective that would otherwise be 
recovered through the administrative as-
sessment. Any allocation or reallocation of 
voluntary contributions between or among 
individual digital music providers or sig-
nificant nonblanket licensees shall be a 
matter of private negotiation and agree-
ment among such parties and outside the 
scope of the administrative assessment pro-
ceeding. 
‘‘(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 total costs of the mechanical licensing col-
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lective, the collective, with approval of its board 
of directors, may apply unclaimed accrued roy-
alties on an interim basis to defray such costs, 
subject to future reimbursement of such royal-
ties from future collections of the assessment. 
‘‘(D) DETERMINATION
OF
ADMINISTRA-
TIVE ASSESSMENT.— 
‘‘(i) ADMINISTRATIVE ASSESSMENT TO 
COVER TOTAL COSTS.—The administrative 
assessment shall be used solely and exclu-
sively to fund the total costs of the me-
chanical licensing collective. 
‘‘(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 
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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 total costs of the mechanical 
licensing collective, as such total costs 
are defined in subsection (e)(31); 
‘‘(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 
costs of the mechanical licensing col-
lective across digital music providers 
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and significant nonblanket licensees 
engaged in covered activities, but shall 
include as a component a minimum 
fee for all digital music providers and 
significant nonblanket licensees; and 
‘‘(V) take into consideration not 
only anticipated future total costs and 
collections of the administrative as-
sessment, but also, as applicable— 
‘‘(aa) any portion of past ac-
tual total costs of the mechanical 
licensing collective not funded by 
previous collections of the admin-
istrative assessment or voluntary 
contributions because such collec-
tions or contributions together 
were insufficient to fund such 
costs; 
‘‘(bb) any past collections of 
the 
administrative 
assessment 
and voluntary contributions that 
exceeded past actual total costs 
of the mechanical licensing collec-
tive, resulting in a surplus; and 
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‘‘(cc) the amount of any vol-
untary contributions by digital 
music providers or significant 
nonblanket licensees in relevant 
periods, as described in subpara-
graphs (A) and (B) of paragraph 
(7). 
‘‘(iii) INITIAL
ADMINISTRATIVE
AS-
SESSMENT.—The 
procedure 
for 
estab-
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 one year of the en-
actment date by publishing a notice in 
the Federal Register seeking petitions 
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 
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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 total 
costs of the mechanical licensing col-
lective, actual and anticipated collec-
tions from digital music providers and 
significant nonblanket licensees, and 
documentation of voluntary contribu-
tions, 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 
months of commencement of the pro-
ceeding contemplated by this clause. 
The determination shall be supported 
by a written record. The initial ad-
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ministrative assessment shall be effec-
tive as of the license availability date, 
and shall continue in effect unless and 
until an adjusted administrative as-
sessment is established pursuant to an 
adjustment proceeding under clause 
(iii). 
‘‘(iv) ADJUSTMENT
OF
ADMINISTRA-
TIVE
ASSESSMENT.—The administrative 
assessment may be adjusted by the Copy-
right Royalty Judges in a proceeding to 
occur no more than once every 2 years, in 
accordance with the following procedure: 
‘‘(I) The mechanical licensing 
collective, digital licensee coordinator, 
or one or more interested copyright 
owners, digital music providers or sig-
nificant nonblanket licensees may file 
a petition with the Copyright Royalty 
Judges in the month of January to 
commence a proceeding to adjust the 
administrative assessment, if at least 
2 years have expired since the date of 
the most recent determination of the 
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administrative 
assessment 
by 
the 
Copyright Royalty Judges. 
‘‘(II) Notice of the commence-
ment of such proceeding shall be pub-
lished in the Federal Register in the 
month of February, along with a 
schedule of requested information and 
additional proceedings, as described in 
clause (iii)(III). The mechanical li-
censing collective and digital licensee 
coordinator shall participate in such 
proceeding, 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 adjusted administra-
tive assessment, which shall be sup-
ported by a written record, shall be 
published in the Federal Register no 
later than 9 months after the publica-
tion of the notice of commencement of 
the adjustment proceeding. The ad-
justed administrative assessment shall 
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take effect as of January 1 of the fol-
lowing year. 
‘‘(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 
licensing collective, on the one hand, and 
the digital licensee coordinator (or if none 
has been designated, interested digital 
music providers and significant nonblanket 
licensees representing more than half of 
the market for uses of musical works in 
covered activities), on the other; provided, 
however, 
that 
the 
Copyright 
Royalty 
Judges shall have the discretion to reject 
any such agreement for good cause shown. 
An administrative assessment adopted 
under this clause shall apply to all digital 
music providers and significant nonblanket 
licensees engaged in covered activities dur-
ing the period it is in effect. 
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‘‘(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 
administrative assessment by the Copy-
right Royalty Judges shall be appealable, 
within 30 days after publication in the 
Federal Register, to the Court of Appeals 
for the District of Columbia Circuit by any 
party that fully participated in the pro-
ceeding. The administrative assessment as 
established by the Copyright Royalty 
Judges shall remain in effect pending the 
final outcome of any such appeal; provided, 
however, that the mechanical licensing col-
lective, digital licensee coordinator, digital 
music providers, and significant non-
blanket licensees shall implement appro-
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priate financial or other measures within 3 
months of any modification of the assess-
ment to reflect and account for such out-
come. 
‘‘(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-
censing collective nor the digital licensee coordi-
nator shall be a party to a proceeding to deter-
mine rates and terms for activities under this 
section as described in subsection (c)(3)(C); 
provided, however, that 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 required under 
applicable statutory and regulatory provisions 
and rulings of the Copyright Royalty Judges. 
‘‘(B) APPLICATION
OF
LATE
FEES.—In 
any proceeding described in subparagraph (A) 
in which the Copyright Royalty Judges estab-
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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 under this subsection, 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 
it may be entitled under this title. 
‘‘(C) INTERIM
RATE
AGREEMENTS.—For 
any covered activity for which no rate or terms 
have been established by the Copyright Royalty 
Judges, the mechanical licensing collective and 
a digital music provider may agree to an in-
terim rate and terms for such activity; provided, 
however, that any such interim 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 
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‘‘(ii) shall automatically expire upon 
the establishment of a rate and terms for 
such covered activity by the Copyright 
Royalty Judges, except as may otherwise 
be agreed by the parties. 
‘‘(9) TRANSITION TO BLANKET LICENSES.— 
‘‘(A) SUBSTITUTION
OF
BLANKET
LI-
CENSE.—As of the license availability date, a 
blanket license obtained by a digital music pro-
vider under this subsection shall, without any 
interruption in license authority enjoyed by 
such digital music provider, be automatically 
substituted for and supersede any existing li-
cense previously obtained by the digital music 
provider from a copyright owner under this sec-
tion to engage in one or more covered activities 
with respect to a musical work; provided, how-
ever, that the foregoing shall not apply to au-
thority obtained from a record company to 
make and distribute permanent downloads un-
less and until such record company terminates 
such authority in writing as of the end of a 
monthly reporting period, with a copy to the 
mechanical licensing collective. 
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‘‘(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; provided, however, that there 
shall be no liability pursuant to section 
501 for the reproduction or distribution of 
a musical work (or share thereof) under a 
validly filed notice of intention through the 
license availability date. 
‘‘(10) PRIOR UNLICENSED USES.— 
‘‘(A) LIMITATION ON LIABILITY IN GEN-
ERAL.—A copyright owner that commences an 
action pursuant to section 501 on or after Jan-
uary 1, 2018, against a digital music provider 
for the infringement of the exclusive rights pro-
vided by paragraph (1) or (3) of section 106 
arising from the unauthorized reproduction or 
distribution of a musical work by such digital 
music provider in the course of engaging in cov-
ered activities prior to the license availability 
date, shall, as the copyright owner’s sole and 
exclusive remedy against the digital music pro-
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vider, be eligible to recover the royalty pre-
scribed under subsection (c)(3)(A) and chapter 
8 of this title, from the digital music provider, 
provided that such digital music provider can 
demonstrate compliance with the requirements 
of subparagraph (B), as applicable. In all other 
cases the limitation on liability under this sub-
paragraph shall not apply. 
‘‘(B) REQUIREMENTS FOR LIMITATION ON 
LIABILITY.—The following requirements shall 
apply as of the enactment date through the li-
cense availability date to digital music providers 
seeking to avail themselves of the limitation on 
liability described in subparagraph (A): 
‘‘(i) No later than 30 days after first 
making a particular sound recording of a 
musical work available through its service 
via one or more covered activities, or 30 
days after the enactment date, whichever 
occurs later, a digital music provider shall 
engage in good-faith, commercially reason-
able efforts to identify and locate each 
copyright owner of such musical work (or 
share thereof). Such required matching ef-
forts shall include: 
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‘‘(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, producer, 
international standard recording 
code, and other information com-
monly 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 songwriter and publisher 
name(s), percentage ownership 
share(s), and international stand-
ard musical work code. 
‘‘(II) Employment of one or more 
bulk electronic matching processes 
that are available to the digital music 
provider through third-party vendors 
on commercially reasonable terms; 
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provided, however, that a digital 
music provider may rely on its own 
bulk electronic matching process if it 
has capabilities comparable to or bet-
ter than such third-party offerings. 
‘‘(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 
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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 
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 work (or share thereof) is 
identified and located by or to the dig-
ital music provider before the license 
availability date, the digital music 
provider shall— 
‘‘(aa) within 45 days after 
the end of the calendar month 
during which the copyright owner 
was identified and located, pay 
the copyright owner all accrued 
royalties, such payment to be ac-
companied by a cumulative state-
ment of account that includes all 
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of the information that would 
have been provided to the copy-
right owner had the digital music 
provider been providing monthly 
statements of account to the 
copyright owner from initial use 
of the work in accordance with 
this section and applicable regu-
lations, including the requisite 
certification 
under 
subsection 
(c)(5); 
‘‘(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) as of the monthly roy-
alty reporting period commencing 
on the license availability date, 
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