SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Music Modernization Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Rescission Of Unobligated Balances In The Department Of Justice As-
sets Forfeiture Fund. 
TITLE I—MUSIC LICENSING MODERNIZATION 
Sec. 101. Short title. 
Sec. 102. Blanket license for digital uses and mechanical licensing collective. 
Sec. 103. Amendments to section 114. 
Sec. 104. Random assignment of rate court proceedings. 
TITLE II—COMPENSATING LEGACY ARTISTS FOR THEIR SONGS, 
SERVICE, AND IMPORTANT CONTRIBUTIONS TO SOCIETY 
Sec. 201. Short title. 
Sec. 202. Unauthorized digital performance of pre-1972 sound recordings. 
Sec. 203. Effective date. 
TITLE III—ALLOCATION FOR MUSIC PRODUCERS 
Sec. 301. Short title. 
Sec. 302. Payment of statutory performance royalties. 
Sec. 303. Effective date. 
SEC. 2. RESCISSION OF UNOBLIGATED BALANCES IN THE 
DEPARTMENT 
OF 
JUSTICE 
ASSETS 
FOR-
FEITURE FUND. 
Of the unobligated balances available under the De-
partment of Justice Assets Forfeiture Fund, $47,000,000 
is hereby permanently rescinded.
TITLE I—MUSIC LICENSING 
MODERNIZATION 
SEC. 101. SHORT TITLE. 
This title may be cited as the ‘‘Musical Works Mod-
ernization Act’’. 
SEC. 102. BLANKET LICENSE FOR DIGITAL USES AND ME-
CHANICAL LICENSING COLLECTIVE. 
(a) AMENDMENT.—Section 115 of title 17, United 
States Code, is amended— 
(1) in subsection (a)— 
(A) by inserting ‘‘IN
GENERAL’’ after 
‘‘AVAILABILITY
AND SCOPE
OF COMPULSORY 
LICENSE’’; 
(B) by striking paragraph (1) and insert-
ing the following new paragraph: 
‘‘(1) 
ELIGIBILITY
FOR
COMPULSORY
LI-
CENSE.— 
‘‘(A) CONDITIONS
FOR
COMPULSORY
LI-
CENSE.—A person may by complying with the 
provisions of this section obtain a compulsory li-
cense to make and distribute phonorecords of a 
nondramatic musical work, including by means 
of digital phonorecord delivery. A person may 
obtain a compulsory license only if the primary 
purpose in making phonorecords of the musical
work is to distribute them to the public for pri-
vate use, including by means of digital phono-
record delivery, and— 
‘‘(i) phonorecords of such musical 
work have previously been distributed to 
the public in the United States under the 
authority of the copyright owner of the 
work, including by means of digital phono-
record delivery; or 
‘‘(ii) in the case of a digital music 
provider seeking to make and distribute 
digital phonorecord deliveries of a sound 
recording embodying a musical work under 
a compulsory license for which clause (i) 
does not apply— 
‘‘(I) the first fixation of such 
sound recording was made under the 
authority of the musical work copy-
right owner, and sound recording 
copyright owner has the authority of 
the musical work copyright owner to 
make and distribute digital phono-
record deliveries embodying such work 
to the public in the United States; 
and
‘‘(II) the sound recording copy-
right owner or its authorized dis-
tributor has authorized the digital 
music provider to make and distribute 
digital phonorecord deliveries of the 
sound recording to the public in the 
United States. 
‘‘(B) DUPLICATION
OF
SOUND
RECORD-
ING.—A person may not obtain a compulsory li-
cense for the use of the work in the making of 
phonorecords duplicating a sound recording 
fixed by another, including by means of digital 
phonorecord delivery, unless— 
‘‘(i) such sound recording was fixed 
lawfully; and 
‘‘(ii) the making of the phonorecords 
was authorized by the owner of the copy-
right in the sound recording or, if the 
sound recording was fixed before February 
15, 1972, by any person who fixed the 
sound recording pursuant to an express li-
cense from the owner of the copyright in 
the musical work or pursuant to a valid 
compulsory license for use of such work in 
a sound recording.’’; and
(C) in paragraph (2), by striking ‘‘A com-
pulsory license’’ and inserting ‘‘MUSICAL AR-
RANGEMENT.—A compulsory license’’; 
(2) by striking subsection (b) and inserting the 
following: 
‘‘(b) PROCEDURES TO OBTAIN A COMPULSORY LI-
CENSE.— 
‘‘(1) PHONORECORDS
OTHER
THAN
DIGITAL 
PHONORECORD DELIVERIES.—A person who seeks to 
obtain a compulsory license under subsection (a) to 
make and distribute phonorecords of a musical work 
other than by means of digital phonorecord delivery 
shall, before or within 30 calendar days after mak-
ing, and before distributing, any phonorecord of the 
work, serve notice of intention to do so on the copy-
right owner. If the registration or other public 
records of the Copyright Office do not identify the 
copyright owner and include an address at which no-
tice can be served, it shall be sufficient to file the 
notice of intention with the Copyright Office. The 
notice shall comply, in form, content, and manner of 
service, with requirements that the Register of Copy-
rights shall prescribe by regulation. 
‘‘(2) DIGITAL PHONORECORD DELIVERIES.—A 
person who seeks to obtain a compulsory license
under subsection (a) to make and distribute 
phonorecords of a musical work by means of digital 
phonorecord delivery— 
‘‘(A) prior to the license availability date, 
shall, before or within 30 calendar days after 
first making any such digital phonorecord deliv-
ery, serve a notice of intention to do so on the 
copyright owner (but may not file the notice 
with the Copyright Office, even if the public 
records of the Office do not identify the owner 
or the owner’s address), and such notice shall 
comply, in form, content, and manner of serv-
ice, with requirements that the Register of 
Copyrights shall prescribe by regulation; or 
‘‘(B) on or after the license availability 
date, shall, before making any such digital pho-
norecord delivery, follow the procedure de-
scribed in subsection (d)(2), except as provided 
in paragraph (3). 
‘‘(3) RECORD COMPANY INDIVIDUAL DOWNLOAD 
LICENSES.—Notwithstanding paragraph (2)(B), a 
record company may, on or after the license avail-
ability date, obtain an individual download license in 
accordance with the notice requirements described in 
paragraph (2)(A) (except for the requirement that
‘‘(c) GENERAL CONDITIONS APPLICABLE TO COM-
PULSORY LICENSE.— 
‘‘(1) ROYALTY PAYABLE UNDER COMPULSORY 
LICENSE.— 
‘‘(A) IDENTIFICATION REQUIREMENT.—To 
be entitled to receive royalties under a compul-
sory license obtained under subsection (b)(1) 
the copyright owner must be identified in the 
registration or other public records of the Copy-
right Office. The owner is entitled to royalties 
for phonorecords made and distributed after 
being so identified, but is not entitled to recover 
for any phonorecords previously made and dis-
tributed. 
‘‘(B) 
ROYALTY
FOR
PHONORECORDS 
OTHER
THAN
DIGITAL
PHONORECORD
DELIV-
ERIES.—Except as provided by subparagraph 
(A), for every phonorecord made and distrib-
uted under a compulsory license under sub-
section (a) other than by means of digital pho-
norecord delivery, with respect to each work 
embodied in the phonorecord, the royalty shall 
be the royalty prescribed under subparagraphs 
(D) through (F) and paragraph (2)(A) and 
chapter 8 of this title. For purposes of this sub-
paragraph, a phonorecord is considered ‘distrib-
uted’ if the person exercising the compulsory li-
cense has voluntarily and permanently parted 
with its possession. 
‘‘(C) ROYALTY
FOR
DIGITAL
PHONO-
RECORD DELIVERIES.—For every digital phono-
record delivery of a musical work made under 
a compulsory license under this section, the roy-
alty payable shall be the royalty prescribed 
under subparagraphs (D) through (F) and 
paragraph (2)(A) and chapter 8 of this title. 
‘‘(D) AUTHORITY
TO
NEGOTIATE.—Not-
withstanding any provision of the antitrust 
laws, any copyright owners of nondramatic mu-
sical works and any persons entitled to obtain 
a compulsory license under subsection (a) may 
negotiate and agree upon the terms and rates 
of royalty payments under this section and the 
proportionate division of fees paid among copy-
right owners, and may designate common 
agents on a nonexclusive basis to negotiate, 
agree to, pay or receive such royalty payments. 
Such authority to negotiate the terms and rates 
of royalty payments includes, but is not limited 
to, the authority to negotiate the year during
which the royalty rates prescribed under this 
subparagraph and subparagraphs (E) and (F) 
and paragraph (2)(A) and chapter 8 of this 
title shall next be determined. 
‘‘(E) DETERMINATION
OF
REASONABLE 
RATES AND TERMS.—Proceedings under chap-
ter 8 shall determine reasonable rates and 
terms of royalty payments for the activities 
specified by this section during the period be-
ginning with the effective date of such rates 
and terms, but not earlier than January 1 of 
the second year following the year in which the 
petition requesting the proceeding is filed, and 
ending on the effective date of successor rates 
and terms, or such other period as the parties 
may agree. Any copyright owners of nondra-
matic musical works and any persons entitled 
to obtain a compulsory license under subsection 
(a) may submit to the Copyright Royalty 
Judges licenses covering such activities. The 
parties to each proceeding shall bear their own 
costs. 
‘‘(F) 
SCHEDULE
OF
REASONABLE 
RATES.—The schedule of reasonable rates and 
terms determined by the Copyright Royalty
Judges shall, subject to paragraph (2)(A), be 
binding on all copyright owners of nondramatic 
musical works and persons entitled to obtain a 
compulsory license under subsection (a) during 
the period specified in subparagraph (E), such 
other period as may be determined pursuant to 
subparagraphs (D) and (E), or such other pe-
riod as the parties may agree. The Copyright 
Royalty Judges shall establish rates and terms 
that most clearly represent the rates and terms 
that would have been negotiated in the market-
place between a willing buyer and a willing sell-
er. In determining such rates and terms for dig-
ital phonorecord deliveries, the Copyright Roy-
alty Judges shall base their decision on eco-
nomic, competitive, and programming informa-
tion presented by the parties, including— 
‘‘(i) whether use of the compulsory li-
censee’s service may substitute for or may 
promote the sales of phonorecords or oth-
erwise may interfere with or may enhance 
the musical work copyright owner’s other 
streams of revenue from its musical works; 
and
‘‘(ii) the relative roles of the copyright 
owner and the compulsory licensee in the 
copyrighted work and the service made 
available to the public with respect to the 
relative creative contribution, technological 
contribution, capital investment, cost, and 
risk. 
‘‘(2) ADDITIONAL TERMS AND CONDITIONS.— 
‘‘(A) VOLUNTARY
LICENSES
AND
CON-
TRACTUAL ROYALTY RATES.— 
‘‘(i) License agreements voluntarily 
negotiated at any time between one or 
more copyright owners of nondramatic mu-
sical works and one or more persons enti-
tled to obtain a compulsory license under 
subsection (a) shall be given effect in lieu 
of any determination by the Copyright 
Royalty Judges. Subject to clause (ii), the 
royalty rates determined pursuant to sub-
paragraphs (E) and (F) of paragraph (1) 
shall be given effect as to digital phono-
record deliveries in lieu of any contrary 
royalty rates specified in a contract pursu-
ant to which a recording artist who is the 
author of a nondramatic musical work
grants a license under that person’s exclu-
sive rights in the musical work under para-
graphs (1) and (3) of section 106 or com-
mits another person to grant a license in 
that musical work under paragraphs (1) 
and (3) of section 106, to a person desir-
ing to fix in a tangible medium of expres-
sion a sound recording embodying the mu-
sical work. 
‘‘(ii) The second sentence of clause (i) 
shall not apply to— 
‘‘(I) a contract entered into on or 
before June 22, 1995, and not modi-
fied thereafter for the purpose of re-
ducing the royalty rates determined 
pursuant to subparagraphs (E) and 
(F) of paragraph (1) or of increasing 
the number of musical works within 
the scope of the contract covered by 
the reduced rates, except if a contract 
entered into on or before June 22, 
1995, is modified thereafter for the 
purpose of increasing the number of 
musical works within the scope of the 
contract, any contrary royalty rates
specified in the contract shall be given 
effect in lieu of royalty rates deter-
mined pursuant to subparagraphs (E) 
and (F) of paragraph (1) for the 
number of musical works within the 
scope of the contract as of June 22, 
1995; and 
‘‘(II) a contract entered into 
after the date that the sound record-
ing is fixed in a tangible medium of 
expression substantially in a form in-
tended for commercial release, if at 
the time the contract is entered into, 
the recording artist retains the right 
to grant licenses as to the musical 
work under paragraphs (1) and (3) of 
section 106. 
‘‘(B) SOUND RECORDING INFORMATION.— 
Except as provided in section 1002(e) of this 
title, a digital phonorecord delivery licensed 
under this paragraph shall be accompanied by 
the information encoded in the sound recording, 
if any, by or under the authority of the copy-
right owner of that sound recording, that iden-
tifies the title of the sound recording, the fea-
tured recording artist who performs on the 
sound recording, and related information, in-
cluding information concerning the underlying 
musical work and its writer. 
‘‘(C) INFRINGEMENT REMEDIES.— 
‘‘(i) A digital phonorecord delivery of 
a sound recording is actionable as an act 
of infringement under section 501, and is 
fully subject to the remedies provided by 
sections 502 through 506, unless— 
‘‘(I) the digital phonorecord de-
livery has been authorized by the 
sound recording copyright owner; and 
‘‘(II) the entity making the dig-
ital phonorecord delivery has obtained 
a compulsory license under subsection 
(a) or has otherwise been authorized 
by the musical work copyright owner, 
or by a record company pursuant to 
an individual download license, to 
make and distribute phonorecords of 
each musical work embodied in the 
sound recording by means of digital 
phonorecord delivery.
‘‘(ii) Any cause of action under this 
subparagraph shall be in addition to those 
available to the owner of the copyright in 
the nondramatic musical work under sub-
paragraph (J) and section 106(4) and the 
owner of the copyright in the sound record-
ing under section 106(6). 
‘‘(D) LIABILITY
OF
SOUND
RECORDING 
OWNERS.—The liability of the copyright owner 
of a sound recording for infringement of the 
copyright in a nondramatic musical work em-
bodied in the sound recording shall be deter-
mined in accordance with applicable law, except 
that the owner of a copyright in a sound re-
cording shall not be liable for a digital phono-
record delivery by a third party if the owner of 
the copyright in the sound recording does not 
license the distribution of a phonorecord of the 
nondramatic musical work. 
‘‘(E) RECORDING DEVICES AND MEDIA.— 
Nothing in section 1008 shall be construed to 
prevent the exercise of the rights and remedies 
allowed by this paragraph, subparagraph (J), 
and chapter 5 in the event of a digital phono-
record delivery, except that no action alleging
infringement of copyright may be brought 
under this title against a manufacturer, im-
porter or distributor of a digital audio recording 
device, a digital audio recording medium, an 
analog recording device, or an analog recording 
medium, or against a consumer, based on the 
actions described in such section. 
‘‘(F) PRESERVATION
OF
RIGHTS.—Noth-
ing in this section annuls or limits (i) the exclu-
sive right to publicly perform a sound recording 
or the musical work embodied therein, including 
by means of a digital transmission, under sec-
tions 106(4) and 106(6), (ii) except for compul-
sory licensing under the conditions specified by 
this section, the exclusive rights to reproduce 
and distribute the sound recording and the mu-
sical work embodied therein under sections 
106(1) and 106(3), including by means of a 
digital phonorecord delivery, or (iii) any other 
rights under any other provision of section 106, 
or remedies available under this title, as such 
rights or remedies exist either before or after 
the date of enactment of the Digital Perform-
ance Right in Sound Recordings Act of 1995.
‘‘(G) EXEMPT
TRANSMISSIONS
AND
RE-
TRANSMISSIONS.—The provisions of this section 
concerning digital phonorecord deliveries shall 
not apply to any exempt transmissions or re-
transmissions under section 114(d)(1). The ex-
emptions created in section 114(d)(1) do not 
expand or reduce the rights of copyright owners 
under section 106(1) through (5) with respect 
to such transmissions and retransmissions. 
‘‘(H) DISTRIBUTION BY RENTAL, LEASE, 
OR LENDING.—A compulsory license obtained 
under subsection (b)(1) to make and distribute 
phonorecords includes the right of the maker of 
such a phonorecord to distribute or authorize 
distribution of such phonorecord, other than by 
means of a digital phonorecord delivery, by 
rental, lease, or lending (or by acts or practices 
in the nature of rental, lease, or lending). With 
respect to each nondramatic musical work em-
bodied in the phonorecord, the royalty shall be 
a proportion of the revenue received by the 
compulsory licensee from every such act of dis-
tribution of the phonorecord under this clause 
equal to the proportion of the revenue received 
by the compulsory licensee from distribution of
the 
phonorecord 
under 
subsection 
(a)(1)(A)(ii)(II) that is payable by a compulsory 
licensee under that clause and under chapter 8. 
The Register of Copyrights shall issue regula-
tions to carry out the purpose of this clause. 
‘‘(I) PAYMENT OF ROYALTIES AND STATE-
MENTS OF ACCOUNT.—Except as provided in 
paragraphs (4)(A)(i) and (10)(B) of subsection 
(d), royalty payments shall be made on or be-
fore the twentieth day of each month and shall 
include all royalties for the month next pre-
ceding. Each monthly payment shall be made 
under oath and shall comply with requirements 
that the Register of Copyrights shall prescribe 
by regulation. The Register shall also prescribe 
regulations under which detailed cumulative an-
nual statements of account, certified by a cer-
tified public accountant, shall be filed for every 
compulsory license under subsection (a). The 
regulations covering both the monthly and the 
annual statements of account shall prescribe 
the form, content, and manner of certification 
with respect to the number of records made and 
the number of records distributed.
‘‘(J) NOTICE
OF
DEFAULT
AND
TERMI-
NATION
OF
COMPULSORY
LICENSE.—In the 
case of a license obtained under subsection 
(b)(1), (b)(2)(A), or (b)(3), if the copyright 
owner does not receive the monthly payment 
and the monthly and annual statements of ac-
count when due, the owner may give written no-
tice to the licensee that, unless the default is 
remedied within 30 days from the date of the 
notice, the compulsory license will be automati-
cally terminated. Such termination renders ei-
ther the making or the distribution, or both, of 
all phonorecords for which the royalty has not 
been paid, actionable as acts of infringement 
under section 501 and fully subject to the rem-
edies provided by sections 502 through 506. In 
the case of a license obtained under subsection 
(b)(2)(B), license authority under the compul-
sory license may be terminated as provided in 
subsection (d)(4)(E).’’; 
(4) by amending subsection (d) to read as fol-
lows: 
‘‘(d) BLANKET LICENSE FOR DIGITAL USES, ME-
CHANICAL LICENSING COLLECTIVE, AND DIGITAL LI-
CENSEE COORDINATOR.—
‘‘(1) BLANKET LICENSE FOR DIGITAL USES.— 
‘‘(A) IN GENERAL.—A digital music pro-
vider that qualifies for a compulsory license 
under subsection (a) may, by complying with 
the terms and conditions of this subsection, ob-
tain a blanket license from copyright owners 
through the mechanical licensing collective to 
make and distribute digital phonorecord deliv-
eries of musical works through one or more cov-
ered activities. 
‘‘(B) INCLUDED ACTIVITIES.—A blanket li-
cense— 
‘‘(i) covers all musical works (or 
shares of such works) available for compul-
sory licensing under this section for pur-
poses of engaging in covered activities, ex-
cept as provided in subparagraph (C); 
‘‘(ii) includes the making and dis-
tribution of server, intermediate, archival, 
and incidental reproductions of musical 
works that are reasonable and necessary 
for the digital music provider to engage in 
covered activities licensed under this sub-
section, solely for the purpose of engaging 
in such covered activities; and
‘‘(iii) does not cover or include any 
rights or uses other than those described 
in clauses (i) and (ii). 
‘‘(C) OTHER
LICENSES.—A voluntary li-
cense for covered activities entered into by or 
under the authority of one or more copyright 
owners and one or more digital music providers, 
or authority to make and distribute permanent 
downloads of a musical work obtained by a dig-
ital music provider from a sound recording 
copyright owner pursuant to an individual 
download license, shall be given effect in lieu of 
a blanket license under this subsection with re-
spect to the musical works (or shares thereof) 
covered by such voluntary license or individual 
download authority and the following conditions 
apply: 
‘‘(i) Where a voluntary license or indi-
vidual download license applies, the license 
authority provided under the blanket li-
cense shall exclude any musical works (or 
shares thereof) subject to the voluntary li-
cense or individual download license. 
‘‘(ii) An entity engaged in covered ac-
tivities under a voluntary license or author-
ity obtained pursuant to an individual 
download license that is a significant non-
blanket licensee shall comply with para-
graph (6)(A). 
‘‘(iii) The rates and terms of any vol-
untary license shall be subject to the sec-
ond sentence of clause (i) and clause (ii) of 
subsection (c)(2)(A) and paragraph (9)(C), 
as applicable. 
‘‘(D) PROTECTION
AGAINST
INFRINGE-
MENT ACTIONS.—A digital music provider that 
obtains and complies with the terms of a valid 
blanket license under this subsection shall not 
be subject to an action for infringement of the 
exclusive rights provided by paragraphs (1) and 
(3) of section 106 under this title arising from 
use of a musical work (or share thereof) to en-
gage in covered activities authorized by such li-
cense, subject to paragraph (4)(E). 
‘‘(E) OTHER REQUIREMENTS AND CONDI-
TIONS APPLY.—Except as expressly provided in 
this subsection, each requirement, limitation, 
condition, privilege, right, and remedy otherwise 
applicable to compulsory licenses under this sec-
tion shall apply to compulsory blanket licenses 
under this subsection. 
‘‘(2) AVAILABILITY OF BLANKET LICENSE.— 
‘‘(A) PROCEDURE
FOR
OBTAINING
LI-
CENSE.—A digital music provider may obtain a 
blanket license by submitting a notice of license 
to the mechanical licensing collective that speci-
fies the particular covered activities in which 
the digital music provider seeks to engage, as 
follows: 
‘‘(i) The notice of license shall comply 
in form and substance with requirements 
that the Register of Copyrights shall estab-
lish by regulation. 
‘‘(ii) Unless rejected in writing by the 
mechanical licensing collective within 30 
calendar days after receipt, the blanket li-
cense shall be effective as of the date the 
notice of license was sent by the digital 
music provider as shown by a physical or 
electronic record. 
‘‘(iii) A notice of license may only be 
rejected by the mechanical licensing collec-
tive if—
‘‘(I) the digital music provider or 
notice of license does not meet the re-
quirements of this section or applica-
ble regulations, in which case the re-
quirements at issue shall be specified 
with reasonable particularity in the 
notice of rejection; or 
‘‘(II) the digital music provider 
has had a blanket license terminated 
by the mechanical licensing collective 
within the past 3 years pursuant to 
paragraph (4)(E). 
‘‘(iv) If a notice of license is rejected 
under clause (iii)(I), the digital music pro-
vider shall have 30 calendar days after re-
ceipt of the notice of rejection to cure any 
deficiency and submit an amended notice 
of license to the mechanical licensing col-
lective. If the deficiency has been cured, 
the mechanical licensing collective shall so 
confirm in writing, and the license shall be 
effective as of the date that the original 
notice of license was provided by the dig-
ital music provider.
‘‘(v) A digital music provider that be-
lieves a notice of license was improperly re-
jected by the mechanical licensing collec-
tive may seek review of such rejection in 
Federal district court. The district court 
shall determine the matter de novo based 
on the record before the mechanical licens-
ing collective and any additional evidence 
presented by the parties. 
‘‘(B) 
BLANKET
LICENSE
EFFECTIVE 
DATE.—Blanket licenses shall be made available 
by the mechanical licensing collective on and 
after the license availability date. No such li-
cense shall be effective prior to the license avail-
ability date. 
‘‘(3) MECHANICAL LICENSING COLLECTIVE.— 
‘‘(A) IN
GENERAL.—The mechanical li-
censing collective shall be a single entity that— 
‘‘(i) is a nonprofit, not owned by any 
other entity, that is created by copyright 
owners to carry out responsibilities under 
this subsection; 
‘‘(ii) is endorsed by and enjoys sub-
stantial support from musical work copy-
right owners that together represent the
greatest percentage of the licensor market 
for uses of such works in covered activities, 
as measured over the preceding 3 full cal-
endar years; 
‘‘(iii) is able to demonstrate to the 
Register of Copyrights that it has, or will 
have prior to the license availability date, 
the administrative and technological capa-
bilities to perform the required functions of 
the mechanical licensing collective under 
this subsection; and 
‘‘(iv) has been designated by the Reg-
ister of Copyrights in accordance with sub-
paragraph (B). 
‘‘(B) DESIGNATION
OF
MECHANICAL
LI-
CENSING COLLECTIVE.— 
‘‘(i) 
INITIAL
DESIGNATION.—The 
Register of Copyrights shall initially des-
ignate the mechanical licensing collective 
within 9 months after the enactment date 
as follows: 
‘‘(I) Within 90 calendar days 
after the enactment date, the Register 
shall publish notice in the Federal 
Register soliciting information to as-
sist in identifying the appropriate en-
tity to serve as the mechanical licens-
ing collective, including the name and 
affiliation of each member of the 
board of directors described under 
subparagraph (D)(i) and each com-
mittee established pursuant to clauses 
(iii), (iv), and (v) of subparagraph 
(D). 
‘‘(II) After reviewing the infor-
mation requested under subclause (I) 
and making a designation, the Reg-
ister shall publish notice in the Fed-
eral Register setting forth the identity 
of and contact information for the me-
chanical licensing collective. 
‘‘(ii) PERIODIC REVIEW OF DESIGNA-
TION.—Following the initial designation of 
the mechanical licensing collective, the 
Register shall, every 5 years, beginning 
with the fifth full calendar year to com-
mence after the initial designation, publish 
notice in the Federal Register in the 
month of January soliciting information 
concerning whether the existing designa-
tion should be continued, or a different en-
tity meeting the criteria described in 
clauses (i) through (iii) of subparagraph 
(A) shall be designated. Following publica-
tion of such notice: 
‘‘(I) The Register shall, after re-
viewing the information submitted and 
conducting additional proceedings as 
appropriate, publish notice in the Fed-
eral Register of a continuing designa-
tion or new designation of the me-
chanical licensing collective, as the 
case may be, with any new designa-
tion to be effective as of the first day 
of a month that is no less than 6 
months and no longer than 9 months 
after the date of publication of such 
notice, as specified by the Register. 
‘‘(II) If a new entity is des-
ignated as a mechanical licensing col-
lective, the Register shall adopt regu-
lations to govern the transfer of li-
censes, funds, records, data, and ad-
ministrative responsibilities from the
existing mechanical licensing collective 
to the new entity. 
‘‘(iii) CLOSEST
ALTERNATIVE
DES-
IGNATION.—If the Register is unable to 
identify an entity that fulfills each of the 
qualifications set forth in clauses (i) 
through (iii) of subparagraph (A), the Reg-
ister shall designate the entity that most 
nearly fulfills such qualifications for pur-
poses of carrying out the responsibilities of 
the mechanical licensing collective. 
‘‘(C) AUTHORITIES AND FUNCTIONS.— 
‘‘(i) IN GENERAL.—The mechanical li-
censing collective is authorized to perform 
the following functions, subject to more 
particular requirements as described in 
this subsection: 
‘‘(I) Offer and administer blanket 
licenses, including receipt of notices of 
license and reports of usage from dig-
ital music providers. 
‘‘(II) Collect and distribute royal-
ties from digital music providers for 
covered activities.
‘‘(III) Engage in efforts to iden-
tify musical works (and shares of such 
works) embodied in particular sound 
recordings, and to identify and locate 
the copyright owners of such musical 
works (and shares of such works). 
‘‘(IV) 
Maintain 
the 
musical 
works database and other information 
relevant to the administration of li-
censing activities under this section. 
‘‘(V) Administer a process by 
which copyright owners can claim 
ownership of musical works (and 
shares of such works), and a process 
by which royalties for works for which 
the owner is not identified or located 
are equitably distributed to known 
copyright owners. 
‘‘(VI) Administer collections of 
the administrative assessment from 
digital music providers and significant 
nonblanket licensees, including receipt 
of notices of nonblanket activity. 
‘‘(VII) Invest in relevant re-
sources, and arrange for services of
outside vendors and others, to support 
its activities. 
‘‘(VIII) Engage in legal and 
other efforts to enforce rights and ob-
ligations under this subsection, includ-
ing by filing bankruptcy proofs of 
claims for amounts owed under li-
censes, and acting in coordination 
with the digital licensee coordinator. 
‘‘(IX) Initiate and participate in 
proceedings before the Copyright Roy-
alty Judges to establish the adminis-
trative assessment under this sub-
section. 
‘‘(X) Initiate and participate in 
proceedings before the Copyright Of-
fice with respect to activities under 
this subsection. 
‘‘(XI) Gather and provide docu-
mentation for use in proceedings be-
fore the Copyright Royalty Judges to 
set rates and terms under this section. 
‘‘(XII) Maintain records of its 
activities and engage in and respond
to audits described under this sub-
section. 
‘‘(XIII) Engage in such other ac-
tivities as may be necessary or appro-
priate to fulfill its responsibilities 
under this subsection. 
‘‘(ii) ADDITIONAL
ADMINISTRATIVE 
ACTIVITIES.—Subject 
to 
paragraph 
(11)(C) and clause (iii), the mechanical li-
censing collective may also administer, or 
assist in administering, voluntary licenses 
issued by or individual download licenses 
obtained from copyright owners for uses of 
musical works, for which the mechanical li-
censing collective shall charge reasonable 
fees for such services. 
‘‘(iii) RESTRICTION CONCERNING PUB-
LIC PERFORMANCE RIGHTS.—The mechan-
ical licensing collective may, pursuant to 
clause (ii), provide administration services 
with respect to voluntary licenses that in-
clude the right of public performance in 
musical works, but may not itself negotiate 
or grant licenses for the right of public 
performance in musical works, and may
not be the exclusive or nonexclusive as-
signee or grantee of the right of public per-
formance in musical works. 
‘‘(iv) RESTRICTION
ON
LOBBYING.— 
The mechanical licensing collective may 
not engage in government lobbying activi-
ties, but may engage in the activities de-
scribed in subclauses (IX), (X), and (XI) 
of clause (i). 
‘‘(D) GOVERNANCE.— 
‘‘(i) BOARD OF DIRECTORS.—The me-
chanical licensing collective shall have a 
board of directors consisting of 14 voting 
members and 3 nonvoting members, as fol-
lows: 
‘‘(I) Ten voting members shall be 
representatives of music publishers to 
which songwriters have assigned ex-
clusive rights of reproduction and dis-
tribution of musical works with re-
spect to covered activities and no such 
music publisher member may be 
owned by, or under common control 
with, any other board member.
‘‘(II) Four voting members shall 
be professional songwriters who have 
retained and exercise exclusive rights 
of reproduction and distribution with 
respect to covered activities with re-
spect to musical works they have au-
thored. 
‘‘(III) One nonvoting member 
shall be a representative of the non-
profit trade association of music pub-
lishers that represents the greatest 
percentage of the licensor market for 
uses of musical works in covered ac-
tivities, as measured over the pre-
ceding 3 full calendar years. 
‘‘(IV) One nonvoting member 
shall be a representative of the digital 
licensee coordinator, provided that a 
digital licensee coordinator has been 
designated pursuant to paragraph 
(5)(B). 
Otherwise, 
the 
nonvoting 
member shall be the nonprofit trade 
association of digital licensees that 
represents the greatest percentage of 
the licensee market for uses of musi-
cal works in covered activities, as 
measured over the preceding 3 full 
calendar years. 
‘‘(V) 
One 
nonvoting 
member 
shall be a representative of a nation-
ally recognized nonprofit trade asso-
ciation whose primary mission is advo-
cacy on behalf of songwriters in the 
United States. 
‘‘(ii) BOARD
MEETINGS.—The board 
of directors shall meet no less than two 
times per year and discuss matters perti-
nent to the operations, including the me-
chanical licensing collective budget. 
‘‘(iii) OPERATIONS
ADVISORY
COM-
MITTEE.—The board of directors of the 
mechanical licensing collective shall estab-
lish an operations advisory committee con-
sisting of no fewer than six members to 
make recommendations to the board of di-
rectors concerning the operations of the 
mechanical licensing collective, including 
the efficient investment in and deployment 
of information technology and data re-
sources. Such committee shall have an
equal number of members of the committee 
who are— 
‘‘(I) musical work copyright own-
ers who are appointed by the board of 
directors of the mechanical licensing 
collective; and 
‘‘(II) representatives of digital 
music providers who are appointed by 
the digital licensee coordinator. 
‘‘(iv) UNCLAIMED
ROYALTIES
OVER-
SIGHT COMMITTEE.—The board of direc-
tors of the mechanical licensing collective 
shall establish and appoint an unclaimed 
royalties oversight committee consisting of 
10 members, 5 of which shall be musical 
work copyright owners and 5 of which 
shall be professional songwriters whose 
works are used in covered activities. 
‘‘(v) 
DISPUTE
RESOLUTION
COM-
MITTEE.—The board of directors of the 
mechanical licensing collective shall estab-
lish and appoint a dispute resolution com-
mittee consisting of no fewer than six 
members, which committee shall include an 
equal number of representatives of musical
work copyright owners and professional 
songwriters. 
‘‘(vi) MECHANICAL
LICENSING
COL-
LECTIVE
ANNUAL
REPORT.—Not later 
than June 30 of each year commencing 
after the license availability date, the me-
chanical licensing collective shall post, and 
make available online for a period of at 
least 3 years, an annual report that sets 
forth how the collective operates, how roy-
alties are collected and distributed, and the 
collective total costs for the preceding cal-
endar year. At the time of posting, a copy 
of the report shall be provided to the Reg-
ister of Copyrights. 
‘‘(E) MUSICAL WORKS DATABASE.— 
‘‘(i) ESTABLISHMENT
AND
MAINTE-
NANCE OF DATABASE.—The mechanical li-
censing collective shall establish and main-
tain a database containing information re-
lating to musical works (and shares of 
such works) and, to the extent known, the 
identity and location of the copyright own-
ers of such works (and shares thereof) and 
the sound recordings in which the musical
works are embodied. In furtherance of 
maintaining such database, the mechanical 
licensing collective shall engage in efforts 
to identify the musical works embodied in 
particular sound recordings, as well as to 
identify and locate the copyright owners of 
such works (and shares thereof), and up-
date such data as appropriate. 
‘‘(ii) MATCHED WORKS.—With respect 
to musical works (and shares thereof) that 
have been matched to copyright owners, 
the musical works database shall include— 
‘‘(I) the title of the musical work; 
‘‘(II) the copyright owner of the 
work (or share thereof), and such 
owner’s ownership percentage; 
‘‘(III) contact information for 
such copyright owner; 
‘‘(IV) to the extent reasonably 
available to the mechanical licensing 
collective— 
‘‘(aa) 
the 
international 
standard musical work code for 
the work; and
‘‘(bb) identifying informa-
tion for sound recordings in 
which the musical work is em-
bodied, including the name of the 
sound recording, featured artist, 
sound recording copyright owner, 
producer, international standard 
recording code, and other infor-
mation commonly used to assist 
in associating sound recordings 
with musical works; and 
‘‘(V) such other information as 
the Register of Copyrights may pre-
scribe by regulation. 
‘‘(iii) UNMATCHED WORKS.—With re-
spect to unmatched musical works (and 
shares of works) in the database, the musi-
cal works database shall include— 
‘‘(I) to the extent reasonably 
available to the mechanical licensing 
collective— 
‘‘(aa) the title of the musical 
work;
‘‘(bb) the ownership percent-
age for which an owner has not 
been identified; 
‘‘(cc) if a copyright owner 
has been identified but not lo-
cated, the identity of such owner 
and such owner’s ownership per-
centage; 
‘‘(dd) identifying informa-
tion for sound recordings in 
which the work is embodied, in-
cluding sound recording name, 
featured artist, sound recording 
copyright owner, producer, inter-
national standard recording code, 
and other information commonly 
used to assist in associating 
sound recordings with musical 
works; and 
‘‘(ee) any additional infor-
mation reported to the mechan-
ical licensing collective that may 
assist in identifying the work; 
and
‘‘(II) such other information re-
lating to the identity and ownership of 
musical works (and shares of such 
works) as the Register of Copyrights 
may prescribe by regulation. 
‘‘(iv) SOUND
RECORDING
INFORMA-
TION.—Each 
musical 
work 
copyright 
owner with any musical work listed in the 
musical works database shall engage in 
commercially reasonable efforts to deliver 
to the mechanical licensing collective, in-
cluding for use in the musical works data-
base, to the extent such information is not 
then available in the database, information 
regarding the names of the sound record-
ings in which that copyright owner’s musi-
cal works (or shares thereof) are embodied, 
to the extent practicable. 
‘‘(v) ACCESSIBILITY OF DATABASE.— 
The musical works database shall be made 
available to members of the public in a 
searchable, online format, free of charge. 
The mechanical licensing collective shall 
make such database available in a bulk, 
machine-readable format, through a widely
available software application, to the fol-
lowing entities: 
‘‘(I) Digital music providers oper-
ating under the authority of valid no-
tices of license, free of charge. 
‘‘(II) Significant nonblanket li-
censees in compliance with their obli-
gations under paragraph (6), free of 
charge. 
‘‘(III) Authorized vendors of the 
entities described in subclauses (I) 
and (II), free of charge. 
‘‘(IV) The Register of Copy-
rights, free of charge (but the Reg-
ister shall not treat such database or 
any information therein as a Govern-
ment record). 
‘‘(V) Any member of the public, 
for a fee not to exceed the marginal 
cost to the mechanical licensing collec-
tive of providing the database to such 
person. 
‘‘(vi) ADDITIONAL REQUIREMENTS.— 
The Register of Copyrights shall establish 
requirements by regulations to ensure the
usability, interoperability, and usage re-
strictions of the musical works database. 
‘‘(F) NOTICES
OF
LICENSE
AND
NON-
BLANKET ACTIVITY.— 
‘‘(i) NOTICES OF LICENSES.—The me-
chanical licensing collective shall receive, 
review, and confirm or reject notices of li-
cense from digital music providers, as pro-
vided in paragraph (2)(A). The collective 
shall maintain a current, publicly acces-
sible list of blanket licenses that includes 
contact information for the licensees and 
the effective dates of such licenses. 
‘‘(ii) NOTICES OF NONBLANKET AC-
TIVITY.—The mechanical licensing collec-
tive shall receive notices of nonblanket ac-
tivity from significant nonblanket licensees, 
as provided in paragraph (6)(A). The col-
lective shall maintain a current, publicly 
accessible list of notices of nonblanket ac-
tivity that includes contact information for 
significant nonblanket licensees and the 
dates of receipt of such notices. 
‘‘(G) COLLECTION AND DISTRIBUTION OF 
ROYALTIES.—
‘‘(i) IN GENERAL.—Upon receiving re-
ports of usage and payments of royalties 
from digital music providers for covered 
activities, the mechanical licensing collec-
tive shall— 
‘‘(I) engage in efforts to— 
‘‘(aa) identify the musical 
works embodied in sound record-
ings reflected in such reports, 
and the copyright owners of such 
musical works (and shares there-
of); 
‘‘(bb) confirm uses of musi-
cal works subject to voluntary li-
censes and individual download 
licenses, and the corresponding 
pro rata amounts to be deducted 
from royalties that would other-
wise be due under the blanket li-
cense; and 
‘‘(cc) confirm proper pay-
ment of royalties due; 
‘‘(II) distribute royalties to copy-
right owners in accordance with the 
usage and other information contained
in such reports, as well as the owner-
ship and other information contained 
in the records of the collective; and 
‘‘(III) deposit into an interest- 
bearing account, as provided in sub-
paragraph (H)(ii), royalties that can-
not be distributed due to— 
‘‘(aa) an inability to identify 
or locate a copyright owner of a 
musical work (or share thereof); 
or 
‘‘(bb) a pending dispute be-
fore the dispute resolution com-
mittee of the mechanical licens-
ing collective. 
‘‘(ii) OTHER COLLECTION EFFORTS.— 
Any royalties recovered by the mechanical 
licensing collective as a result of efforts to 
enforce rights or obligations under a blan-
ket license, including through a bankruptcy 
proceeding or other legal action, shall be 
distributed to copyright owners based on 
available usage information and in accord-
ance with the procedures described in sub-
clauses (I) and (II) of clause (i), on a pro
rata basis in proportion to the overall per-
centage recovery of the total royalties 
owed, with any pro rata share of royalties 
that cannot be distributed deposited in an 
interest-bearing account as provided in 
subparagraph (H)(ii). 
‘‘(H) HOLDING
OF
ACCRUED
ROYAL-
TIES.— 
‘‘(i) HOLDING PERIOD.—The mechan-
ical licensing collective shall hold accrued 
royalties associated with particular musical 
works (and shares of works) that remain 
unmatched for a period of at least 3 years 
after the date on which the funds were re-
ceived by the mechanical licensing collec-
tive, or at least 3 years after the date on 
which they were accrued by a digital music 
provider that subsequently transferred 
such funds to the mechanical licensing col-
lective pursuant to paragraph (10)(B), 
whichever period expires sooner. 
‘‘(ii) INTEREST-BEARING ACCOUNT.— 
Accrued royalties for unmatched works 
(and shares thereof) shall be maintained 
by the mechanical licensing collective in an
interest-bearing account that earns month-
ly interest at the Federal, short-term rate, 
such interest to accrue for the benefit of 
copyright owners entitled to payment of 
such accrued royalties. 
‘‘(I) MUSICAL
WORKS
CLAIMING
PROC-
ESS.—The mechanical licensing collective shall 
publicize the existence of accrued royalties for 
unmatched musical works (and shares of such 
works) within 6 months of receiving a transfer 
of accrued royalties for such works by publicly 
listing the works and the procedures by which 
copyright owners may identify themselves and 
provide ownership, contact, and other relevant 
information to the mechanical licensing collec-
tive in order to receive payment of accrued roy-
alties. When a copyright owner of an un-
matched work (or share of a work) has been 
identified and located in accordance with the 
procedures of the mechanical licensing collec-
tive, the collective shall— 
‘‘(i) update the musical works data-
base and its other records accordingly; and 
‘‘(ii) provided that accrued royalties 
for the musical work (or share thereof)
have not yet been included in a distribution 
pursuant to subparagraph (J)(i), pay such 
accrued royalties and a proportionate 
amount of accrued interest associated with 
that work (or share thereof) to the copy-
right owner, accompanied by a cumulative 
statement of account reflecting usage of 
such work and accrued royalties based on 
information provided by digital music pro-
viders to the mechanical licensing collec-
tive. 
‘‘(J) DISTRIBUTION
OF
UNCLAIMED
AC-
CRUED ROYALTIES.— 
‘‘(i) DISTRIBUTION
PROCEDURES.— 
After the expiration of the prescribed hold-
ing period for accrued royalties provided in 
paragraph (H)(i), the mechanical licensing 
collective shall distribute such accrued roy-
alties, along with a proportionate share of 
accrued interest, to copyright owners iden-
tified in the records of the collective, sub-
ject to the following requirements, and in 
accordance with the policies and proce-
dures established under clause (ii):
‘‘(I) The first such distribution 
shall occur on or after July 1 of the 
first full calendar year to commence 
after the license availability date, with 
at least one such distribution to take 
place during each calendar year there-
after. 
‘‘(II) Copyright owners’ payment 
shares for unclaimed accrued royalties 
for particular reporting periods shall 
be determined in a transparent and 
equitable manner based on data indi-
cating the relative market shares of 
such copyright owners as reflected by 
royalty payments made by digital 
music providers for covered activities 
for the periods in question, including, 
in addition to royalty payments made 
to the mechanical licensing collective, 
royalty payments made to copyright 
owners under voluntary licenses and 
individual download licenses for cov-
ered activities, to the extent such in-
formation is available to the mechan-
ical licensing collective. In furtherance
of the determination of equitable mar-
ket shares under this subparagraph— 
‘‘(aa) the mechanical licens-
ing collective may require copy-
right owners seeking distribu-
tions of unclaimed accrued royal-
ties to provide, or direct the pro-
vision of, information concerning 
royalties received under voluntary 
licenses and individual download 
licenses for covered activities; and 
‘‘(bb) the mechanical licens-
ing collective shall take appro-
priate steps to safeguard the con-
fidentiality and security of finan-
cial and other sensitive data used 
to compute market shares in ac-
cordance with the confidentiality 
provisions prescribed by the Reg-
ister of Copyrights under para-
graph (12)(C). 
‘‘(ii) ESTABLISHMENT OF DISTRIBU-
TION POLICIES.—The unclaimed royalties 
oversight 
committee 
established 
under 
paragraph (3)(D)(iv) shall establish poli-
cies and procedures for the distribution of 
unclaimed accrued royalties and accrued 
interest in accordance with this subpara-
graph, including the provision of usage 
data to copyright owners to allocate pay-
ments and credits to songwriters pursuant 
to clause (iv), subject to the approval of 
the board of directors of the mechanical li-
censing collective. 
‘‘(iii) ADVANCE NOTICE OF DISTRIBU-
TIONS.—The mechanical licensing collec-
tive shall publicize a pending distribution 
of unclaimed accrued royalties and accrued 
interest at least 90 calendar days in ad-
vance of such distribution. 
‘‘(iv) 
SONGWRITER
PAYMENTS.— 
Copyright owners that receive a distribu-
tion of unclaimed accrued royalties and ac-
crued interest shall pay or credit a portion 
to songwriters (or the authorized agents of 
songwriters) on whose behalf the copyright 
owners license or administer musical works 
for covered activities, in accordance with 
applicable contractual terms, but notwith-
standing any agreement to the contrary—
‘‘(I) such payments and credits 
to songwriters shall be allocated in 
proportion to reported usage of indi-
vidual musical works by digital music 
providers during the reporting periods 
covered by the distribution from the 
mechanical licensing collective; and 
‘‘(II) in no case shall the pay-
ment or credit to an individual song-
writer be less than 50 percent of the 
payment received by the copyright 
owner attributable to usage of musical 
works (or shares of works) of that 
songwriter. 
‘‘(K) DISPUTE RESOLUTION.—The dispute 
resolution committee established under para-
graph (3)(D)(v) shall address and resolve in a 
timely and equitable manner disputes among 
copyright owners relating to ownership interests 
in musical works licensed under this section and 
allocation and distribution of royalties by the 
mechanical licensing collective, according to a 
process approved by the board of directors of 
the mechanical licensing collective. Such proc-
ess—
‘‘(i) shall include a mechanism to hold 
disputed funds in accordance with the re-
quirements 
described 
in 
subparagraph 
(H)(ii) pending resolution of the dispute; 
and 
‘‘(ii) except as provided in paragraph 
(11)(D), shall not affect any legal or equi-
table rights or remedies available to any 
copyright owner or songwriter concerning 
ownership of, and entitlement to royalties 
for, a musical work. 
‘‘(L) VERIFICATION OF PAYMENTS BY ME-
CHANICAL LICENSING COLLECTIVE.— 
‘‘(i) 
VERIFICATION
PROCESS.—A 
copyright owner entitled to receive pay-
ments of royalties for covered activities 
from the mechanical licensing collective 
may, individually or with other copyright 
owners, conduct an audit of the mechanical 
licensing collective to verify the accuracy of 
royalty payments by the mechanical licens-
ing collective to such copyright owner, as 
follows: 
‘‘(I) A copyright owner may 
audit the mechanical licensing collec-
tive only once in a year for any or all 
of the prior 3 calendar years, and may 
not audit records for any calendar 
year more than once. 
‘‘(II) The audit shall be con-
ducted by a qualified auditor, who 
shall perform the audit during the or-
dinary course of business by exam-
ining the books, records, and data of 
the mechanical licensing collective, ac-
cording to generally accepted auditing 
standards and subject to applicable 
confidentiality 
requirements 
pre-
scribed by the Register of Copyrights 
under paragraph (12)(C). 
‘‘(III) The mechanical licensing 
collective shall make such books, 
records, and data available to the 
qualified auditor and respond to rea-
sonable requests for relevant informa-
tion, and shall use commercially rea-
sonable efforts to facilitate access to 
relevant information maintained by 
third parties.
‘‘(IV) To commence the audit, 
any copyright owner shall file with the 
Copyright Office a notice of intent to 
conduct an audit of the mechanical li-
censing collective, identifying the pe-
riod of time to be audited, and shall 
simultaneously deliver a copy of such 
notice to the mechanical licensing col-
lective. The Register of Copyrights 
shall cause the notice of audit to be 
published in the Federal Register 
within 45 calendar days after receipt. 
‘‘(V) The qualified auditor shall 
determine the accuracy of royalty pay-
ments, including whether an under-
payment or overpayment of royalties 
was made by the mechanical licensing 
collective to each auditing copyright 
owner, but before providing a final 
audit report to any such copyright 
owner, the qualified auditor shall pro-
vide a tentative draft of the report to 
the mechanical licensing collective and 
allow the mechanical licensing collec-
tive a reasonable opportunity to re-
spond to the findings, including by 
clarifying issues and correcting factual 
errors. 
‘‘(VI) The auditing copyright 
owner or owners shall bear the cost of 
the audit. In case of an underpayment 
to any copyright owner, the mechan-
ical licensing collective shall pay the 
amounts of any such underpayment to 
such auditing copyright owner, as ap-
propriate. In case of an overpayment 
by the mechanical licensing collective, 
the mechanical licensing collective 
may debit the account of the auditing 
copyright owner or owners for such 
overpaid amounts, or such owner(s) 
shall refund overpaid amounts to the 
mechanical licensing collective, as ap-
propriate. 
‘‘(ii) 
ALTERNATIVE
VERIFICATION 
PROCEDURES.—Nothing in this subpara-
graph shall preclude a copyright owner and 
the mechanical licensing collective from 
agreeing to audit procedures different from 
those described herein, but a notice of the
audit shall be provided to and published by 
the Copyright Office as described in clause 
(i)(IV). 
‘‘(M) RECORDS OF MECHANICAL LICENS-
ING COLLECTIVE.— 
‘‘(i) RECORDS
MAINTENANCE.—The 
mechanical licensing collective shall ensure 
that all material records of its operations, 
including those relating to notices of li-
cense, the administration of its claims 
process, reports of usage, royalty pay-
ments, receipt and maintenance of accrued 
royalties, royalty distribution processes, 
and legal matters, are preserved and main-
tained in a secure and reliable manner, 
with appropriate commercially reasonable 
safeguards against unauthorized access, 
copying, and disclosure, and subject to the 
confidentiality requirements prescribed by 
the Register of Copyrights under para-
graph (12)(C) for a period of no less than 
7 years after the date of creation or re-
ceipt, whichever occurs later. 
‘‘(ii) RECORDS ACCESS.—The mechan-
ical 
licensing 
collective 
shall 
provide