(3)(A) for the activity reported under subpara-
graph (A), retroactive to January 1, 2001. 
‘‘(7) LICENSE NOT TRANSFERABLE.—A license 
granted to a digital music provider under this sub-
section may not be transferred to any other person 
or entity. 
‘‘(8) ROYALTY RATES AND TERMS.— 
‘‘(A) IN GENERAL.—Except as provided in 
this paragraph, the Copyright Royalty Judges 
shall determine reasonable rates and terms for 
digital phonorecord deliveries and hybrid offer-
ings as provided under subsection (c) and chap-
ter 8, except for server and incidental reproduc-
tions for noninteractive streaming that are eligi-
ble for royalty-free licenses under this sub-
section. 
‘‘(B) RATES
AND
TERMS
IN
EFFECT.— 
Rates and terms in effect under subsection (c) 
on the effective date of the Section 115 Reform 
Act of 2006 for any activity for which a license 
is available under this section shall continue to 
apply to that activity on and after that date 
until a new rate is determined under subsection 
(c) and chapter 8. 
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‘‘(C) PAYMENT.—Licensees under this 
subsection shall make payments of royalty rates 
and terms to the designated agents as directed 
by the Copyright Royalty Judges. 
‘‘(D) RATES
AND
TERMS
FOR
NEW
LI-
CENSE ACTIVITIES.— 
‘‘(i) IN
GENERAL.—Not later than 
December 1, 2007, the Copyright Royalty 
Judges shall initiate a ratemaking pro-
ceeding, pursuant to the procedures set 
forth in chapter 8, to determine a final 
rate and terms for any activity for which 
a license is available under this subsection 
if— 
‘‘(I) a final rate and terms have 
not been established for the activity as 
of that date; or 
‘‘(II) the activity is not the sub-
ject of a proceeding to set a final rate 
and terms under subsection (c) that is 
pending before the Copyright Royalty 
Judges on that date. 
‘‘(ii) 
PENDING
PROCEEDINGS.—In 
any case in which a proceeding is pending 
before the Copyright Royalty Judges, on 
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December 1, 2007, to determine final rates 
and terms under subsection (c) for any ac-
tivity for which a license is available under 
this subsection, the Copyright Royalty 
Judges may expand and adjust the sched-
ule of the proceeding to cover rates and 
terms for any activity described in clause 
(i), in lieu of initiating a proceeding under 
clause (i) with respect to that activity, if so 
expanding and adjusting the schedule of 
the proceeding will not unduly prejudice 
any party to the proceeding and will not 
delay the final determination of rates and 
terms by the Copyright Royalty Judges by 
more than 90 days. 
‘‘(iii) PARTICIPATION OF DESIGNATED 
AGENTS.—All designated agents, and any 
other parties who have a significant inter-
est, within the meaning of section 804(a), 
in the applicable royalty rate, are entitled 
to participate in a proceeding under this 
subparagraph relating to activities licensed 
under this subsection. 
‘‘(E) INTERIM RATES.— 
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‘‘(i) IN GENERAL.—For any activity 
for which a license is available under this 
subsection and for which a rate and terms 
have not been determined under subsection 
(c), a digital music provider shall, upon fil-
ing a valid application with the relevant 
designated agent, have a license under this 
subsection to engage in the activity, sub-
ject to clause (ii). 
‘‘(ii) INTERIM RATES AND TERMS.— 
Upon the filing of an application under 
clause (i)— 
‘‘(I) the digital music provider 
and the designated agent may nego-
tiate an interim rate and terms that 
will apply to the activity under the li-
cense; or 
‘‘(II) the digital music provider 
or the designated agent, or both, may 
apply 
to 
the 
Copyright 
Royalty 
Judges for an interim rate and terms, 
in which case— 
‘‘(aa) the Copyright Royalty 
Judges shall, not later than 15 
days after the application is 
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made, publish notice of an expe-
dited proceeding to determine the 
interim rate and terms; and 
‘‘(bb) the Judges shall de-
termine the interim rate and 
terms not less than 30 days and 
not more than 60 days after pub-
lishing the notice, through the 
expedited proceeding. 
‘‘(iii) APPLICABILITY
OF
INTERIM 
RATES AND TERMS.—(I) An interim rate 
and terms negotiated under clause (ii)(I) 
or established under clause (ii)(II) shall 
apply to the activity under the license con-
cerned until a final rate and terms for the 
activity are determined under subpara-
graph (D), or as otherwise agreed by the 
parties. 
‘‘(II) An interim rate and terms de-
scribed in clause (i) with respect to an ac-
tivity by a digital music provider shall not 
be treated as precedent in a final rate-
making proceeding. If the Copyright Roy-
alty Judges have established an interim 
rate and terms under clause (ii)(II), sub-
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ject to clause (iv), that rate and those 
terms shall apply to the same activity en-
gaged in by any digital music provider, ex-
cept as otherwise agreed to by the parties. 
‘‘(iv) SINGLE PROCEEDING FOR EACH 
ACTIVITY.—Unless the Copyright Royalty 
Judges determine that there is good cause 
to review an interim rate established under 
clause (ii)(II), the Judges may conduct 
only 1 proceeding to determine an interim 
rate and terms for an activity for which a 
license is available under this subsection. 
‘‘(v) 
ADJUSTMENT
OF
INTERIM 
RATES.—After a determination of a final 
rate and terms that will apply to an activ-
ity for which a license is available under 
this subsection has been made under sub-
paragraph (D), the final rate and terms 
shall be retroactive to the inception of the 
activity under all licenses to which such 
rate and terms apply, unless an agreement 
between the parties to a license provides 
otherwise. Not later than 60 days after the 
determination of the final rate becomes ef-
fective— 
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‘‘(I) the digital music provider 
shall pay to the designated agent any 
amounts due from underpayment of 
fees by the digital music provider be-
cause the final rate exceeds the in-
terim rate; or 
‘‘(II) the designated agent shall 
refund to the digital music provider 
the amounts of any overpayment of 
fees by the digital music provider be-
cause the interim rate exceed the final 
rate, or, at the election of the digital 
music provider, the designated agent 
shall credit such overpayment against 
future payments by the digital music 
provider to the designated agent 
under this subsection. 
‘‘(9) DESIGNATED AGENTS.— 
‘‘(A) IN
GENERAL.—Designated agents 
under this subsection are the General Des-
ignated Agent and additional designated agents. 
‘‘(B) GENERAL DESIGNATED AGENT.— 
‘‘(i) DESIGNATION
AND
PURPOSE.— 
(I) Not later than August 1, 2007, the 
Register of Copyrights shall designate a 
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mechanical licensing and collection agency 
representing music publishing entities that 
represent the greatest share of the music 
publishing market, as measured by the 
amount of royalties collected during the 
preceding 3 full calendar years with re-
spect to the use of copyrighted musical 
works pursuant to this section, to establish 
and operate the General Designated Agent. 
‘‘(II) The General Designated Agent 
shall grant and administer licenses and col-
lect and distribute royalties payable for the 
use of musical works licensed under this 
subsection. 
‘‘(III) The General Designated Agent 
shall be governed by a board of directors 
consisting of representatives of at least 5 
music publishing entities. 
‘‘(ii) DECERTIFICATION.—The Reg-
ister of Copyrights may disqualify the Gen-
eral Designated Agent upon a showing 
that it fails to meet the qualifications 
under this subparagraph or otherwise fails 
to meet the requirements under this para-
graph. In such a case, the Register of 
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Copyrights shall designate another General 
Designated Agent that most closely meets 
the requirements of clause (i)(I). 
‘‘(C) ADDITIONAL DESIGNATED AGENTS.— 
‘‘(i) CERTIFICATION.—The Register of 
Copyrights shall certify as an additional 
designated agent to represent copyright 
owners for purposes of licenses under this 
subsection any entity that demonstrates 
that— 
‘‘(I) upon certification, it will 
represent music publishing entities 
that represent at least a 15 percent 
share of the music publishing market, 
as measured by the amount of royal-
ties collected during the preceding 3 
full calendar years with respect to the 
use of copyrighted musical works pur-
suant to this section; and 
‘‘(II) it has the capability to per-
form the required functions of a des-
ignated agent under this subsection. 
‘‘(ii) DUTIES.—(I) Upon certification 
under clause (i), an additional designated 
agent shall represent any copyright owners 
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of musical works who elect to have the ad-
ditional designated agent represent them 
and the musical works (or shares of musi-
cal works) owned or controlled by such 
copyright owners for purposes of the li-
censes under this subsection. 
‘‘(II) 
Each 
additional 
designated 
agent shall notify the General Designated 
Agent and any other additional designated 
agent of each copyright owner, and the 
musical works (or shares of musical works) 
owned or controlled by the copyright 
owner, that the additional designated agent 
represents pursuant to subclause (I). 
‘‘(III) Any election under subclause 
(I) is effective only if it is made in writing, 
a copy of which shall be made available to 
any other designated agent upon a reason-
able request therefor. 
‘‘(iii) DECERTIFICATION.—The Reg-
ister of Copyrights may remove the certifi-
cation of any additional designated agent 
upon a showing that it fails to meet the 
qualifications under this subparagraph or 
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otherwise fails to meet the requirements 
under this paragraph. 
‘‘(D) 
AUTHORITIES
OF
DESIGNATED 
AGENTS.—A designated agent may— 
‘‘(i) engage in activities pursuant to 
this subsection; 
‘‘(ii) engage in such additional activi-
ties in the interest of music publishers and 
songwriters as the designated agent con-
siders appropriate, including industry ne-
gotiations, ratesetting proceedings, litiga-
tion, and legislative efforts; and 
‘‘(iii) apply any administrative fees or 
other funds it collects to support the activi-
ties described in clauses (i) and (ii). 
‘‘(E) ELECTIONS
BY
COPYRIGHT
OWN-
ERS.— 
‘‘(i) REPRESENTATION
BY
SINGLE 
DESIGNATED
AGENT.—Each 
copyright 
owner, and the musical works (or shares of 
musical works) that the copyright owner 
owns or controls, may be represented by 
only one designated agent during any cal-
endar year. 
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‘‘(ii) 
ANNUAL
ENROLLMENT
PE-
RIOD.— 
‘‘(I) IN
GENERAL.—Each copy-
right owner may, during the month of 
September of each year, elect to 
change the designated agent to rep-
resent the owner and the musical 
works (or shares of musical works) re-
ferred to in clause (i), beginning on 
January 1 of the succeeding calendar 
year. 
‘‘(II) SELECTION.—A copyright 
owner may choose only one designated 
agent during the month of September 
of each year. If the designated agent 
chosen is not certified pursuant to 
subparagraph (C)(i) or is decertified 
pursuant to subparagraph (C)(iii), the 
copyright owner and the musical 
works (or shares) referred to in clause 
(i) shall be represented by the General 
Designated Agent for the succeeding 
calendar year. 
‘‘(iii) EFFECT ON LICENSES.—A des-
ignated agent’s representation of the musi-
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cal works (and shares of musical works) of 
any copyright owner who elects to change 
designated agents under clause (ii) shall 
terminate on December 31 of the year in 
which the election is made, after which the 
musical works (and shares of musical 
works) of the copyright owner will become 
subject to the licenses in effect with the 
designated agent selected under clause (ii). 
‘‘(iv) DEFAULT REPRESENTATION BY 
GENERAL DESIGNATED AGENT.—If a copy-
right owner does not choose to be rep-
resented by an additional designated agent, 
the General Designated Agent shall rep-
resent the copyright owner and musical 
works (or shares of musical works) owned 
or controlled by the copyright owner. 
‘‘(v) VOLUNTARY
AGREEMENTS.—A 
copyright owner and a digital music pro-
vider may enter into a voluntary license 
agreement 
pursuant 
to 
subsection 
(c)(3)(E)(i) to cover activities licensed 
under this subsection. Any such agreement 
shall apply in lieu of a blanket license 
under this subsection with respect to those 
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musical works (or shares of musical works) 
and activities covered by the agreement 
during the period that the agreement is in 
effect. The royalty fees due for usage of 
musical works (or shares of musical works) 
under a blanket license under this sub-
section shall be reduced in proportion to 
the usage covered under such a voluntary 
license agreement. Each designated agent 
shall establish procedures by which copy-
right owners and licensees shall be re-
quired to notify the designated agent of 
the existence of voluntary license agree-
ments upon which they are relying in lieu 
of the blanket license. Such procedures 
shall include appropriate measures to pro-
tect confidential information of licensees. 
‘‘(F) NOTICE OF DESIGNATED AGENTS.— 
At least 90 days before beginning operations, 
the General Designated Agent and any inter-
ested party wishing to serve as a designated 
agent shall file with the Copyright Office a no-
tice of intent to operate as a designated agent 
under this subsection. The notice shall contain 
such contact information, and such information 
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concerning applications for licenses under this 
subsection and access to the electronic database 
of the designated agent (described in subpara-
graph (H)(i)) identifying musical works (or 
shares of musical works) represented by the 
designated agent, as required in regulations 
issued to carry out this subsection. The Copy-
right Office shall make each notice filed under 
this subparagraph available to the public on the 
Internet. 
‘‘(G) 
TERMINATION
OF
DESIGNATED 
AGENT.— 
‘‘(i) NOTICE
AND
TRANSFER
OF 
RECORDS.—At least 180 days before termi-
nating operations, a designated agent 
shall— 
‘‘(I) notify the Copyright Office, 
all of its licensees under this sub-
section, all of the copyright owners 
represented by the designated agent 
for the purposes of this subsection, 
and all other designated agents of its 
intent to terminate operations; and 
‘‘(II) 
transfer 
electronic 
and 
other copies of all relevant records to 
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the existing General Designated Agent 
or, in the case of the termination of 
the General Designated Agent, to the 
successor General Designated Agent. 
‘‘(ii) ASSUMPTION
OF
DUTIES
BY 
GDA.—Upon the termination of operations 
of a designated agent, the General Des-
ignated Agent or successor General Des-
ignated Agent, as the case may be, shall 
assume the administration of the musical 
works and rights previously administered 
by the terminated designated agent, re-
gardless of whether the terminated agent 
has complied with clause (i). 
‘‘(H) MUSICAL WORKS DATA.— 
‘‘(i) 
AVAILABILITY.—The 
General 
Designated Agent and each additional des-
ignated agent shall maintain and make 
available to licensees, free of charge, a 
searchable electronic database of informa-
tion from which licensees can determine 
which musical works (or shares of musical 
works) are available for licensing under 
this subsection through that designated 
agent. Any musical work (or shares of a 
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musical work) not identified as being rep-
resented by the General Designated Agent 
or any additional designated agent in any 
such database may be presumed by licens-
ees to be represented by the General Des-
ignated Agent. 
‘‘(ii) USE
OF
DATABASE
BY
DES-
IGNATED AGENTS AND LICENSEES.—Sub-
ject to the public access described under 
clause (iii), the database required by clause 
(i) may be used by designated agents and 
licensees only for purposes of determining 
the identity and availability of musical 
works for licenses under this subsection, 
obtaining such licenses, reporting of use of 
musical works, payment of royalties, and 
otherwise to comply with licenses under 
this subsection, except that a designated 
agent may use or make the database it 
maintains available for other purposes re-
lating to musical works or music pub-
lishers. The Copyright Royalty Judges 
shall, in establishing cost-sharing amounts 
pursuant to paragraph (12), consider the 
value and benefit of any such other pur-
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poses to the designated agent and the 
copyright owners it represents. The use of 
any such database shall be subject to rea-
sonable confidentiality and security stand-
ards prescribed in regulations to carry out 
this subsection. 
‘‘(iii) PUBLIC
ACCESS
TO
DATA-
BASE.—The General Designated Agent 
and each designated agent shall make rel-
evant portions of the database required by 
clause (i) available free of charge to the 
general public to access information con-
cerning specific musical works that are 
represented by the designated agent, sub-
ject to reasonable terms and conditions of 
use as may be prescribed by the Register 
of Copyrights. 
‘‘(I) LETTERS OF DIRECTION.— 
‘‘(i) 
IN
GENERAL.—A 
designated 
agent shall comply with a letter of direc-
tion submitted under clause (ii) or (iii) 
which instructs the designated agent to 
pay all or part of the royalties otherwise 
payable to the copyright owner to another 
person. 
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‘‘(ii) RECOUPMENT OF ADVANCE.—A 
copyright owner that receives an advance 
payment from a sound recording company 
under a contract entered into before June 
1, 2006, that has not been recouped by the 
sound recording company shall, at the re-
quest of the sound recording company, 
submit a letter of direction to a designated 
agent instructing the designated agent to 
pay royalties otherwise payable to the 
copyright owner to the sound recording 
company until such time as the advance 
payment made by the sound recording 
company to the copyright owner is re-
couped by the sound recording company. 
‘‘(iii) MISSING COPYRIGHT OWNER.— 
In any case in which a sound recording 
company is, after reasonable efforts, un-
able to locate a copyright owner that re-
ceived an advance payment from the sound 
recording company that has not fully been 
recouped by the sound recording company, 
the sound recording company may submit 
a letter of direction to a designated agent 
directing the designated agent to pay roy-
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alties that would be due the copyright 
owner to the sound recording company. 
‘‘(10) ROYALTY
REPORTING
AND
COMPLI-
ANCE.— 
‘‘(A) REQUIREMENTS.— 
‘‘(i) 
IN
GENERAL.—Each 
licensee 
under this subsection shall, on a quarterly 
basis and in electronic format, report its 
usage of musical works under the license, 
and make royalty payments by reason of 
such usage, to the applicable designated 
agent. 
‘‘(ii) LIMITATION ON DISCLOSURE.— 
‘‘(I) IN GENERAL.—A designated 
agent may disclose information re-
ceived under clause (i) to a recipient 
of royalty payments made by a li-
censee only with respect to musical 
works owned or controlled by the re-
cipient. The designated agent may not 
disclose such information to any other 
person in a form that can be readily 
associated with a licensee except to 
the extent permitted by written agree-
ment of the licensee. 
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‘‘(II) EXCEPTION.—Subclause (I) 
does not prevent a designated agent 
from providing information with re-
spect to a licensee— 
‘‘(aa) to the legal and finan-
cial advisors of the designated 
agent or to an accountant or 
auditor rendering services relat-
ing to this subsection; or 
‘‘(bb) to the extent nec-
essary in connection with a bona 
fide dispute or legal claim or pro-
ceeding. 
‘‘(iii) INTEREST.— 
‘‘(I) IN
GENERAL.—A licensee 
who has failed to make a payment re-
quired under this subsection by the 
due date to a designated agent (in-
cluding as specified in a notice of pay-
ment deficiency or default, as deter-
mined in a royalty compliance exam-
ination under subparagraph (B), or as 
required by a determination of the 
Copyright Royalty Judges), shall pay 
to the designated agent interest on 
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the overdue amount, at the Federal 
funds rate plus 5 percent, such inter-
est to accrue monthly from the date 
payment was due until the date pay-
ment is received by the designated 
agent. 
‘‘(II) 
DEFINITION.—In 
this 
clause, the term ‘Federal funds rate’ 
means the interest rate established by 
the Federal Reserve at which deposi-
tory institutions lend balances at the 
Federal Reserve to other depository 
institutions overnight. The Federal 
funds rate for any 1-month period 
during which interest accrues under 
clause (i) is the Federal funds rate in 
effect on the first day of that 1-month 
period. 
‘‘(iv) PROMOTIONAL USE.—A licensee 
under this subsection shall not be required 
to report or pay under this subsection for 
a free promotional use of a musical work 
that is authorized by the copyright owner 
of the musical work. 
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‘‘(B) ROYALTY
COMPLIANCE
EXAMINA-
TIONS.—A designated agent may, upon pro-
viding written notice to its licensee under this 
subsection, conduct a royalty compliance exam-
ination of the licensee, subject to the following: 
‘‘(i) A designated agent may conduct 
only 1 examination of any licensee in a cal-
endar year, and may conduct an examina-
tion of a licensee with respect to a report-
ing period only once. A designated agent 
may conduct an examination jointly with 
one or more other designated agents. 
‘‘(ii) The examination may begin only 
within 18 months after the end of the pe-
riod being examined and may only cover a 
period of not less than 2 and not more 
than 4 consecutive years, except that an 
examination may cover a period of— 
‘‘(I) more than 4 years if the ex-
amination includes activities subject 
to retroactive payments under para-
graph (6); 
‘‘(II) a period of less than 2 
years if— 
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‘‘(aa) the licensee’s license 
has been terminated; 
‘‘(bb) the licensee has de-
faulted in its reporting or pay-
ments under this paragraph; or 
‘‘(cc) the licensee has termi-
nated or is about to terminate 
operations, has filed or indicated 
an intent to file for bankruptcy, 
or has transferred or indicated 
an intent to transfer its assets to 
a third party; or 
‘‘(III) a period of less than 2 
years or more than 4 years, if for 
other good cause the examination can-
not reasonably cover a period of 2 to 
4 years. 
‘‘(iii) At the conclusion of the exam-
ination, the designated agent shall, after 
considering any written rebuttal provided 
by the licensee during the examination, 
provide a written notice to the licensee set-
ting forth the designated agent’s final de-
termination of the claim, if any, resulting 
from the examination. 
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E:\BILLS\H5553.IH
H5553
jcorcoran on PROD1PC62 with BILLS