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 
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 
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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-
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-
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100 
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. 
‘‘(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 
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101 
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 
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— 
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102 
‘‘(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 
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 
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103 
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 
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 
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104 
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 
(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 
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105 
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 
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 
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106 
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 
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 
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107 
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 
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-
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108 
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-
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-
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109 
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. 
‘‘(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 
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110 
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. 
‘‘(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. 
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111 
‘‘(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-
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: 
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112 
‘‘(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). 
‘‘(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— 
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113 
‘‘(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 
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. 
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114 
‘‘(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 
‘‘(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 
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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-
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. 
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