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) 
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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): 
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‘‘(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 
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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-
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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— 
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‘‘(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— 
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‘‘(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-
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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. 
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‘‘(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-
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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 
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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 
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prompt access to electronic and other 
records pertaining to the administration of 
a copyright owner’s musical works upon 
reasonable written request of such owner 
or the owner’s authorized representative. 
‘‘(4) TERMS AND CONDITIONS OF BLANKET LI-
CENSE.—A blanket license is subject to, and condi-
tioned upon, the following requirements: 
‘‘(A) ROYALTY
REPORTING
AND
PAY-
MENTS.— 
‘‘(i) MONTHLY
REPORTS
AND
PAY-
MENT.—A digital music provider shall re-
port and pay royalties to the mechanical li-
censing collective under the blanket license 
on a monthly basis in accordance with 
clause (ii) and subsection (c)(2)(I), but the 
monthly reporting shall be due 45 calendar 
days, rather than 20 calendar days, after 
the end of the monthly reporting period. 
‘‘(ii) DATA TO BE REPORTED.—In re-
porting usage of musical works to the me-
chanical licensing collective, a digital music 
provider shall provide usage data for musi-
cal works used under the blanket license 
and usage data for musical works used in 
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covered activities under voluntary licenses 
and individual download licenses. In the re-
port of usage, the digital music provider 
shall— 
‘‘(I) with respect to each sound 
recording 
embodying 
a 
musical 
work— 
‘‘(aa) provide identifying in-
formation for the sound record-
ing, including sound recording 
name, featured artist, and, to the 
extent reasonably available to the 
digital music provider, 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 the 
sound recordings embody; 
‘‘(bb) to the extent reason-
ably available to the digital music 
provider, 
provide 
information 
concerning authorship and own-
ership of the applicable rights in 
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the musical work embodied in the 
sound recording (including each 
songwriter, publisher name, and 
respective ownership share) and 
the international standard musi-
cal work code; and 
‘‘(cc) provide the number of 
digital phonorecord deliveries of 
the sound recording, including 
limited downloads and interactive 
streams; 
‘‘(II) identify and provide contact 
information for all musical work copy-
right owners for works embodied in 
sound recordings as to which a vol-
untary license, rather than the blan-
ket license, is in effect with respect to 
the uses being reported; and 
‘‘(III) provide such other infor-
mation as the Register of Copyrights 
shall require by regulation. 
‘‘(iii) FORMAT AND MAINTENANCE OF 
REPORTS.—Reports of usage provided by 
digital music providers to the mechanical 
licensing collective shall be in a machine- 
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readable format that is compatible with the 
information technology systems of the me-
chanical licensing collective and meets the 
requirements of regulations adopted by the 
Register of Copyrights. The Register shall 
also adopt regulations setting forth re-
quirements under which records of use 
shall be maintained and made available to 
the mechanical licensing collective by dig-
ital music providers engaged in covered ac-
tivities under a blanket license. 
‘‘(iv) ADOPTION OF REGULATIONS.— 
The Register shall adopt regulations— 
‘‘(I) setting forth requirements 
under which records of use shall be 
maintained and made available to the 
mechanical licensing collective by dig-
ital music providers engaged in cov-
ered activities under a blanket license; 
and 
‘‘(II) regarding adjustments to 
reports of usage by digital music pro-
viders, including mechanisms to ac-
count for overpayment and under-
payment of royalties in prior periods. 
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‘‘(B) COLLECTION OF SOUND RECORDING 
INFORMATION.—A digital music provider shall 
engage in good-faith, commercially reasonable 
efforts to obtain from copyright owners of 
sound recordings made available through the 
service of such digital music provider— 
‘‘(i) sound recording copyright owners, 
international standard recording codes, 
and other information commonly used in 
the industry to identify sound recordings 
and match them to the musical works the 
sound recordings embody; and 
‘‘(ii) information concerning the au-
thorship and ownership of musical works, 
including songwriters, publisher names, 
ownership shares, and international stand-
ard musical work codes. 
‘‘(C) PAYMENT
OF
ADMINISTRATIVE
AS-
SESSMENT.—A digital music provider and any 
significant nonblanket licensee shall pay the ad-
ministrative assessment established under para-
graph (7)(D) in accordance with this subsection 
and applicable regulations. 
‘‘(D) VERIFICATION OF PAYMENTS BY DIG-
ITAL MUSIC PROVIDERS.— 
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‘‘(i) VERIFICATION
PROCESS.—The 
mechanical licensing collective may conduct 
an audit of a digital music provider oper-
ating under the blanket license to verify 
the accuracy of royalty payments by the 
digital music provider to the mechanical li-
censing collective as follows: 
‘‘(I) The mechanical licensing 
collective may commence an audit of a 
digital music provider no more than 
once in any 3-calendar-year period to 
cover a verification period of no more 
than the 3 full calendar years pre-
ceding the date of commencement of 
the audit, and such audit may not 
audit records for any such 3-year 
verification period more than once. 
‘‘(II) The audit shall be con-
ducted by a qualified auditor, who 
shall perform the audit during the or-
dinary course of business by exam-
ining the books, records, and data of 
the digital music provider, according 
to generally accepted auditing stand-
ards and subject to applicable con-
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fidentiality requirements prescribed by 
the Register of Copyrights under 
paragraph (12)(C). 
‘‘(III) The digital music provider 
shall make such books, records, and 
data available to the qualified auditor 
and respond to reasonable requests 
for relevant information, and shall use 
commercially reasonable efforts to 
provide access to relevant information 
maintained with respect to a digital 
music provider by third parties. 
‘‘(IV) To commence the audit, 
the mechanical licensing collective 
shall file with the Copyright Office a 
notice of intent to conduct an audit of 
the digital music provider, identifying 
the period of time to be audited, and 
shall simultaneously deliver a copy of 
such notice to the digital music pro-
vider. The Register of Copyrights 
shall cause the notice of audit to be 
published in the Federal Register 
within 45 calendar days after receipt. 
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‘‘(V) The qualified auditor shall 
determine the accuracy of royalty pay-
ments, including whether an under-
payment or overpayment of royalties 
was made by the digital music pro-
vider to the mechanical licensing col-
lective, but before providing a final 
audit report to the mechanical licens-
ing collective, the qualified auditor 
shall provide a tentative draft of the 
report to the digital music provider 
and allow the digital music provider a 
reasonable opportunity to respond to 
the findings, including by clarifying 
issues and correcting factual errors. 
‘‘(VI) The mechanical licensing 
collective shall pay the cost of the 
audit, unless the qualified auditor de-
termines that there was an under-
payment by the digital music provider 
of 10 percent or more, in which case 
the digital music provider shall bear 
the reasonable costs of the audit, in 
addition to paying the amount of any 
underpayment to the mechanical li-
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censing collective. In case of an over-
payment by the digital music provider, 
the mechanical licensing collective 
shall provide a credit to the account 
of the digital music provider. 
‘‘(VII) A digital music provider 
may not assert section 507 or any 
other Federal or State statute of limi-
tations, doctrine of laches or estoppel, 
or similar provision as a defense to a 
legal action arising from an audit 
under this subparagraph if such legal 
action is commenced no more than 6 
years after the commencement of the 
audit that is the basis for such action. 
‘‘(ii) 
ALTERNATIVE
VERIFICATION 
PROCEDURES.—Nothing in this subpara-
graph shall preclude the mechanical licens-
ing collective and a digital music provider 
from agreeing to audit procedures different 
from those described herein, but a notice 
of the audit shall be provided to and pub-
lished by the Copyright Office as described 
in clause (i)(IV). 
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‘‘(E) DEFAULT
UNDER
BLANKET
LI-
CENSE.— 
‘‘(i) CONDITIONS
OF
DEFAULT.—A 
digital music provider shall be in default 
under a blanket license if the digital music 
provider— 
‘‘(I) fails to provide one or more 
monthly reports of usage to the me-
chanical licensing collective when due; 
‘‘(II) fails to make a monthly 
royalty or late fee payment to the me-
chanical licensing collective when due, 
in all or material part; 
‘‘(III) provides one or more 
monthly reports of usage to the me-
chanical licensing collective that, on 
the whole, is or are materially defi-
cient as a result of inaccurate, miss-
ing, or unreadable data, where the 
correct data was available to the dig-
ital music provider and required to be 
reported under this section and appli-
cable regulations; 
‘‘(IV) fails to pay the administra-
tive assessment as required under this 
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subsection and applicable regulations; 
or 
‘‘(V) after being provided written 
notice by the mechanical licensing col-
lective, refuses to comply with any 
other material term or condition of 
the blanket license under this section 
for a period of 60 calendar days or 
longer. 
‘‘(ii) NOTICE OF DEFAULT AND TER-
MINATION.—In case of a default by a dig-
ital music provider, the mechanical licens-
ing collective may proceed to terminate the 
blanket license of the digital music pro-
vider as follows: 
‘‘(I) The mechanical licensing 
collective shall provide written notice 
to the digital music provider describ-
ing with reasonable particularity the 
default and advising that unless such 
default is cured within 60 calendar 
days after the date of the notice, the 
blanket license will automatically ter-
minate at the end of that period. 
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‘‘(II) If the digital music provider 
fails to remedy the default within the 
60-day period referenced in subclause 
(I), the license shall terminate without 
any further action on the part of the 
mechanical licensing collective. Such 
termination renders the making of all 
digital phonorecord deliveries of all 
musical works (and shares thereof) 
covered by the blanket license for 
which the royalty or administrative 
assessment has not been paid action-
able as acts of infringement under 
section 501 and subject to the rem-
edies 
provided 
by 
sections 
502 
through 506. 
‘‘(iii) NOTICE
TO
COPYRIGHT
OWN-
ERS.—The mechanical licensing collective 
shall provide written notice of any termi-
nation under this subparagraph to copy-
right owners of affected works. 
‘‘(iv) REVIEW BY FEDERAL DISTRICT 
COURT.—A digital music provider that be-
lieves a blanket license was improperly ter-
minated by the mechanical licensing collec-
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tive may seek review of such termination 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 sup-
porting evidence presented by the parties. 
‘‘(5) DIGITAL LICENSEE COORDINATOR.— 
‘‘(A) IN
GENERAL.—The digital licensee 
coordinator shall be a single entity that— 
‘‘(i) is a nonprofit, not owned by any 
other entity, that is created to carry out 
responsibilities under this subsection; 
‘‘(ii) is endorsed by and enjoys sub-
stantial support from digital music pro-
viders and significant nonblanket licensees 
that together represent the greatest per-
centage of the licensee market for uses of 
musical works in covered activities, as 
measured over the preceding 3 calendar 
years; 
‘‘(iii) is able to demonstrate that it 
has, or will have prior to the license avail-
ability date, the administrative capabilities 
to perform the required functions of the 
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digital licensee coordinator under this sub-
section; and 
‘‘(iv) has been designated by the Reg-
ister of Copyrights in accordance with sub-
paragraph (B). 
‘‘(B) DESIGNATION OF DIGITAL LICENSEE 
COORDINATOR.— 
‘‘(i) 
INITIAL
DESIGNATION.—The 
Register of Copyrights shall initially des-
ignate the digital licensee coordinator with-
in 9 months after the enactment date, in 
accordance with the same procedure de-
scribed for designation of the mechanical 
licensing collective in paragraph (3)(B)(i). 
‘‘(ii) PERIODIC REVIEW OF DESIGNA-
TION.—Following the initial designation of 
the digital licensee coordinator, the Reg-
ister shall, every 5 years, beginning with 
the fifth full calendar year to commence 
after the initial designation, determine 
whether the existing designation should be 
continued, or a different entity meeting the 
criteria described in clauses (i) through 
(iii) of subparagraph (A) should be des-
ignated, in accordance with the same pro-
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cedure described for the mechanical licens-
ing collective in paragraph (3)(B)(ii). 
‘‘(iii) INABILITY
TO
DESIGNATE.—If 
the Register is unable to identify an entity 
that fulfills each of the qualifications de-
scribed in clauses (i) through (iii) of sub-
paragraph (A) to serve as the digital li-
censee coordinator, the Register may de-
cline to designate a digital licensee coordi-
nator. The Register’s determination not to 
designate a digital licensee coordinator 
shall not negate or otherwise affect any 
provision of this subsection except to the 
limited extent that a provision references 
the digital licensee coordinator. In such 
case, the reference to the digital licensee 
coordinator shall be without effect unless 
and until a new digital licensee coordinator 
is designated. 
‘‘(C) AUTHORITIES AND FUNCTIONS.— 
‘‘(i) IN
GENERAL.—The digital li-
censee coordinator is authorized to perform 
the following functions, subject to more 
particular requirements as described in 
this subsection: 
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‘‘(I) 
Establish 
a 
governance 
structure, criteria for membership, 
and any dues to be paid by its mem-
bers. 
‘‘(II) Engage in efforts to enforce 
notice and payment obligations with 
respect to the administrative assess-
ment, including by receiving informa-
tion from and coordinating with the 
mechanical licensing collective. 
‘‘(III) Initiate and participate in 
proceedings before the Copyright Roy-
alty Judges to establish the adminis-
trative assessment under this sub-
section. 
‘‘(IV) Initiate and participate in 
proceedings before the Copyright Of-
fice with respect to activities under 
this subsection. 
‘‘(V) Gather and provide docu-
mentation for use in proceedings be-
fore the Copyright Royalty Judges to 
set rates and terms under this section. 
‘‘(VI) Maintain records of its ac-
tivities. 
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‘‘(VII) Engage in such other ac-
tivities as may be necessary or appro-
priate to fulfill its responsibilities 
under this subsection. 
‘‘(ii) RESTRICTION
ON
LOBBYING.— 
The digital licensee coordinator may not 
engage in government lobbying activities, 
but may engage in the activities described 
in subclauses (III), (IV), and (V) of clause 
(i). 
‘‘(6) REQUIREMENTS
FOR
SIGNIFICANT
NON-
BLANKET LICENSEES.— 
‘‘(A) IN GENERAL.— 
‘‘(i) NOTICE OF ACTIVITY.—Not later 
than 45 calendar days after the license 
availability date, or 45 calendar days after 
the end of the first full calendar month in 
which an entity initially qualifies as a sig-
nificant nonblanket licensee, whichever oc-
curs later, a significant nonblanket licensee 
shall submit a notice of nonblanket activity 
to the mechanical licensing collective. The 
notice of nonblanket activity shall comply 
in form and substance with requirements 
that the Register of Copyrights shall estab-
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lish by regulation, and a copy shall be 
made available to the digital licensee coor-
dinator. 
‘‘(ii) REPORTING AND PAYMENT OBLI-
GATIONS.—The notice of nonblanket activ-
ity submitted to the mechanical licensing 
collective shall be accompanied by a report 
of usage that contains the information de-
scribed in paragraph (4)(A)(ii), as well as 
any payment of the administrative assess-
ment required under this subsection and 
applicable regulations. Thereafter, subject 
to clause (iii), a significant nonblanket li-
censee shall continue to provide monthly 
reports of usage, accompanied by any re-
quired payment of the administrative as-
sessment, to the mechanical licensing col-
lective. Such reports and payments shall be 
submitted not later than 45 calendar days 
after the end of the calendar month being 
reported. 
‘‘(iii) DISCONTINUATION OF OBLIGA-
TIONS.—An entity that has submitted a 
notice of nonblanket activity to the me-
chanical licensing collective that has ceased 
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to qualify as a significant nonblanket li-
censee may so notify the collective in writ-
ing. In such case, as of the calendar month 
in which such notice is provided, such enti-
ty shall no longer be required to provide 
reports of usage or pay the administrative 
assessment, but if such entity later quali-
fies as a significant nonblanket licensee, 
such entity shall again be required to com-
ply with clauses (i) and (ii). 
‘‘(B) REPORTING BY MECHANICAL LICENS-
ING COLLECTIVE TO DIGITAL LICENSEE COOR-
DINATOR.— 
‘‘(i) MONTHLY
REPORTS
OF
NON-
COMPLIANT
LICENSEES.—The mechanical 
licensing collective shall provide monthly 
reports to the digital licensee coordinator 
setting forth any significant nonblanket li-
censees of which the collective is aware 
that have failed to comply with subpara-
graph (A). 
‘‘(ii) TREATMENT OF CONFIDENTIAL 
INFORMATION.—The mechanical licensing 
collective and digital licensee coordinator 
shall take appropriate steps to safeguard 
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the confidentiality and security of financial 
and other sensitive data shared under this 
subparagraph, in accordance with the con-
fidentiality requirements prescribed by the 
Register of Copyrights under paragraph 
(12)(C). 
‘‘(C) LEGAL ENFORCEMENT EFFORTS.— 
‘‘(i) 
FEDERAL
COURT
ACTION.— 
Should the mechanical licensing collective 
or digital licensee coordinator become 
aware that a significant nonblanket li-
censee has failed to comply with subpara-
graph (A), either may commence an action 
in Federal district court for damages and 
injunctive relief. If the significant non-
blanket licensee is found liable, the court 
shall, absent a finding of excusable neglect, 
award damages in an amount equal to 
three times the total amount of the unpaid 
administrative assessment and, notwith-
standing anything to the contrary in sec-
tion 505, reasonable attorney’s fees and 
costs, as well as such other relief as the 
court deems appropriate. In all other 
cases, the court shall award relief as ap-
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propriate. Any recovery of damages shall 
be payable to the mechanical licensing col-
lective as an offset to the collective total 
costs. 
‘‘(ii) STATUTE OF LIMITATIONS FOR 
ENFORCEMENT
ACTION.—Any action de-
scribed in this subparagraph shall be com-
menced within the time period described in 
section 507(b). 
‘‘(iii) OTHER RIGHTS AND REMEDIES 
PRESERVED.—The ability of the mechan-
ical licensing collective or digital licensee 
coordinator to bring an action under this 
subparagraph shall in no way alter, limit 
or negate any other right or remedy that 
may be available to any party at law or in 
equity. 
‘‘(7) FUNDING
OF
MECHANICAL
LICENSING 
COLLECTIVE.— 
‘‘(A) IN
GENERAL.—The collective total 
costs shall be funded by— 
‘‘(i) an administrative assessment, as 
such assessment is established by the 
Copyright Royalty Judges pursuant to sub-
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paragraph (D) from time to time, to be 
paid by— 
‘‘(I) digital music providers that 
are engaged, in all or in part, in cov-
ered activities pursuant to a blanket 
license; and 
‘‘(II) significant nonblanket li-
censees; and 
‘‘(ii) voluntary contributions from dig-
ital music providers and significant non-
blanket licensees as may be agreed with 
copyright owners. 
‘‘(B) VOLUNTARY CONTRIBUTIONS.— 
‘‘(i) AGREEMENTS CONCERNING CON-
TRIBUTIONS.—Except 
as 
provided 
in 
clause (ii), voluntary contributions by dig-
ital music providers and significant non-
blanket licensees shall be determined by 
private negotiation and agreement, and the 
following conditions apply: 
‘‘(I) The date and amount of 
each voluntary contribution to the me-
chanical licensing collective shall be 
documented in a writing signed by an 
authorized agent of the mechanical li-
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censing collective and the contributing 
party. 
‘‘(II) Such agreement shall be 
made available as required in pro-
ceedings before the Copyright Royalty 
Judges to establish or adjust the ad-
ministrative assessment in accordance 
with applicable statutory and regu-
latory provisions and rulings of the 
Copyright Royalty Judges. 
‘‘(ii) 
TREATMENT
OF
CONTRIBU-
TIONS.—Each such voluntary contribution 
shall be treated for purposes of an admin-
istrative assessment proceeding as an off-
set to the collective total costs that would 
otherwise be recovered through the admin-
istrative assessment. Any allocation or re-
allocation of voluntary contributions be-
tween or among individual digital music 
providers or significant nonblanket licens-
ees shall be a matter of private negotiation 
and agreement among such parties and 
outside the scope of the administrative as-
sessment proceeding. 
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‘‘(C) INTERIM APPLICATION OF ACCRUED 
ROYALTIES.—In the event that the administra-
tive assessment, together with any funding from 
voluntary contributions as provided in subpara-
graphs (A) and (B), is inadequate to cover cur-
rent collective total costs, the collective, with 
approval of its board of directors, may apply 
unclaimed accrued royalties on an interim basis 
to defray such costs, subject to future reim-
bursement of such royalties from future collec-
tions of the assessment. 
‘‘(D) DETERMINATION
OF
ADMINISTRA-
TIVE ASSESSMENT.— 
‘‘(i) ADMINISTRATIVE ASSESSMENT TO 
COVER
COLLECTIVE
TOTAL
COSTS.—The 
administrative assessment shall be used 
solely and exclusively to fund the collective 
total costs. 
‘‘(ii) SEPARATE PROCEEDING BEFORE 
COPYRIGHT
ROYALTY
JUDGES.—The 
amount and terms of the administrative 
assessment shall be determined and estab-
lished in a separate and independent pro-
ceeding before the Copyright Royalty 
Judges, according to the procedures de-
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lotter on DSKBCFDHB2PROD with BILLS
scribed in clauses (iii) and (iv). The admin-
istrative assessment determined in such 
proceeding shall— 
‘‘(I) be wholly independent of 
royalty rates and terms applicable to 
digital music providers, which shall 
not be taken into consideration in any 
manner in establishing the adminis-
trative assessment; 
‘‘(II) be established by the Copy-
right Royalty Judges in an amount 
that is calculated to defray the rea-
sonable collective total costs; 
‘‘(III) be assessed based on usage 
of musical works by digital music pro-
viders and significant nonblanket li-
censees in covered activities under 
both compulsory and nonblanket li-
censes; 
‘‘(IV) may be in the form of a 
percentage of royalties payable under 
this section for usage of musical 
works in covered activities (regardless 
of whether a different rate applies 
under a voluntary license), or any 
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other usage-based metric reasonably 
calculated to equitably allocate the 
collective total costs across digital 
music providers and significant non-
blanket licensees engaged in covered 
activities, but shall include as a com-
ponent a minimum fee for all digital 
music providers and significant non-
blanket licensees; and 
‘‘(V) take into consideration an-
ticipated future collective total costs 
and collections of the administrative 
assessment, but also, as applicable— 
‘‘(aa) any portion of past ac-
tual collective total costs of the 
mechanical 
licensing 
collective 
not funded by previous collections 
of the administrative assessment 
or voluntary contributions be-
cause such collections or con-
tributions together were insuffi-
cient to fund such costs; 
‘‘(bb) any past collections of 
the 
administrative 
assessment 
and voluntary contributions that 
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exceeded past actual collective 
total costs, resulting in a surplus; 
and 
‘‘(cc) the amount of any vol-
untary contributions by digital 
music providers or significant 
nonblanket licensees in relevant 
periods, described in subpara-
graphs (A) and (B) of paragraph 
(7). 
‘‘(iii) INITIAL
ADMINISTRATIVE
AS-
SESSMENT.—The 
procedure 
for 
estab-
lishing the initial administrative assess-
ment shall be as follows: 
‘‘(I) 
The 
Copyright 
Royalty 
Judges shall commence a proceeding 
to establish the initial administrative 
assessment within 9 months after the 
enactment date by publishing a notice 
in the Federal Register seeking peti-
tions to participate. 
‘‘(II) The mechanical licensing 
collective and digital licensee coordi-
nator shall participate in such pro-
ceeding, along with any interested 
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copyright owners, digital music pro-
viders or significant nonblanket licens-
ees that have notified the Copyright 
Royalty Judges of their desire to par-
ticipate. 
‘‘(III) The Copyright Royalty 
Judges shall establish a schedule for 
submission by the parties of informa-
tion that may be relevant to estab-
lishing the administrative assessment, 
including actual and anticipated col-
lective total costs of the mechanical li-
censing collective, actual and antici-
pated collections from digital music 
providers and significant nonblanket 
licensees, and documentation of vol-
untary contributions, as well as a 
schedule 
for 
further 
proceedings, 
which shall include a hearing, as they 
deem appropriate. 
‘‘(IV) The initial administrative 
assessment shall be determined, and 
such determination shall be published 
in the Federal Register by the Copy-
right Royalty Judges, within 1 year 
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after commencement of the proceeding 
described in this clause. The deter-
mination shall be supported by a writ-
ten record. The initial administrative 
assessment shall be effective as of the 
license availability date, and shall con-
tinue in effect unless and until an ad-
justed administrative assessment is 
established pursuant to an adjustment 
proceeding under clause (iii). 
‘‘(iv) ADJUSTMENT
OF
ADMINISTRA-
TIVE
ASSESSMENT.—The administrative 
assessment may be adjusted by the Copy-
right Royalty Judges periodically, in ac-
cordance with the following procedures: 
‘‘(I) No earlier than one year 
after the most recent publication of a 
determination of the administrative 
assessment by the Copyright Royalty 
Judges, the mechanical licensing col-
lective, the digital licensee coordi-
nator, or one or more interested copy-
right owners, digital music providers, 
or significant nonblanket licensees, 
may file a petition with the Copyright 
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Royalty Judges in the month of Octo-
ber to commence a proceeding to ad-
just the administrative assessment. 
‘‘(II) Notice of the commence-
ment of such proceeding shall be pub-
lished in the Federal Register in the 
month of November following the fil-
ing of any petition, with a schedule of 
requested information and additional 
proceedings, as described in clause 
(iii)(III). The mechanical licensing 
collective and digital licensee coordi-
nator shall participate in such pro-
ceeding, along with any interested 
copyright owners, digital music pro-
viders, or significant nonblanket li-
censees that have notified the Copy-
right Royalty Judges of their desire to 
participate. 
‘‘(III) The determination of the 
adjusted administrative assessment, 
which shall be supported by a written 
record, shall be published in the Fed-
eral Register during November of the 
calendar year following the commence-
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ment of the proceeding. The adjusted 
administrative assessment shall take 
effect January 1 of the year following 
such publication. 
‘‘(v) 
ADOPTION
OF
VOLUNTARY 
AGREEMENTS.—In lieu of reaching their 
own determination based on evaluation of 
relevant data, the Copyright Royalty 
Judges shall approve and adopt a nego-
tiated agreement to establish the amount 
and terms of the administrative assessment 
that has been agreed to by the mechanical 
licensing collective and the digital licensee 
coordinator (or if none has been des-
ignated, interested digital music providers 
and significant nonblanket licensees rep-
resenting more than half of the market for 
uses of musical works in covered activi-
ties), but the Copyright Royalty Judges 
shall have the discretion to reject any such 
agreement for good cause shown. An ad-
ministrative assessment adopted under this 
clause shall apply to all digital music pro-
viders and significant nonblanket licensees 
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engaged in covered activities during the pe-
riod it is in effect. 
‘‘(vi) CONTINUING
AUTHORITY
TO 
AMEND.—The Copyright Royalty Judges 
shall retain continuing authority to amend 
a determination of an administrative as-
sessment to correct technical or clerical er-
rors, or modify the terms of implementa-
tion, for good cause, with any such amend-
ment to be published in the Federal Reg-
ister. 
‘‘(vii) APPEAL
OF
ADMINISTRATIVE 
ASSESSMENT.—The determination of an 
administrative assessment by the Copy-
right Royalty Judges shall be appealable, 
within 30 calendar days after publication 
in the Federal Register, to the Court of 
Appeals for the District of Columbia Cir-
cuit by any party that fully participated in 
the proceeding. The administrative assess-
ment as established by the Copyright Roy-
alty Judges shall remain in effect pending 
the final outcome of any such appeal, and 
the mechanical licensing collective, digital 
licensee coordinator, digital music pro-
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viders, and significant nonblanket licensees 
shall implement appropriate financial or 
other measures within 3 months after any 
modification of the assessment to reflect 
and account for such outcome. 
‘‘(viii) REGULATIONS.—The Copyright 
Royalty Judges may adopt regulations to 
govern the conduct of proceedings under 
this paragraph. 
‘‘(8) ESTABLISHMENT OF RATES AND TERMS 
UNDER BLANKET LICENSE.— 
‘‘(A) 
RESTRICTIONS
ON
RATESETTING 
PARTICIPATION.—Neither the mechanical li-
censing collective nor the digital licensee coordi-
nator shall be a party to a proceeding described 
in subsection (c)(1)(E), but either may gather 
and provide financial and other information for 
the use of a party to such a proceeding and 
comply with requests for information as re-
quired under applicable statutory and regu-
latory provisions and rulings of the Copyright 
Royalty Judges. 
‘‘(B) APPLICATION
OF
LATE
FEES.—In 
any proceeding described in subparagraph (A) 
in which the Copyright Royalty Judges estab-
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lish a late fee for late payment of royalties for 
uses of musical works under this section, such 
fee shall apply to covered activities under blan-
ket licenses, as follows: 
‘‘(i) Late fees for past due royalty 
payments shall accrue from the due date 
for payment until payment is received by 
the mechanical licensing collective. 
‘‘(ii) The availability of late fees shall 
in no way prevent a copyright owner or the 
mechanical licensing collective from assert-
ing any other rights or remedies to which 
such copyright owner or the mechanical li-
censing collective may be entitled under 
this title. 
‘‘(C) INTERIM RATE AGREEMENTS IN GEN-
ERAL.—For any covered activity for which no 
rate or terms have been established by the 
Copyright Royalty Judges, the mechanical li-
censing collective and any digital music provider 
may agree to an interim rate and terms for 
such activity under the blanket license, and any 
such rate and terms— 
‘‘(i) shall be treated as nonpreceden-
tial and not cited or relied upon in any 
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ratesetting proceeding before the Copyright 
Royalty Judges or any other tribunal; and 
‘‘(ii) shall automatically expire upon 
the establishment of a rate and terms for 
such covered activity by the Copyright 
Royalty 
Judges, 
under 
subsection 
(c)(1)(E). 
‘‘(D) 
ADJUSTMENTS
FOR
INTERIM 
RATES.—The rate and terms established by the 
Copyright Royalty Judges for a covered activity 
to which an interim rate and terms have been 
agreed under subparagraph (C) shall supersede 
the interim rate and terms and apply retro-
actively to the inception of the activity under 
the blanket license. In such case, within 3 
months after the rate and terms established by 
the Copyright Royalty Judges become effec-
tive— 
‘‘(i) if the rate established by the 
Copyright Royalty Judges exceeds the in-
terim rate, the digital music provider shall 
pay to the mechanical licensing collective 
the amount of any underpayment of royal-
ties due; or 
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‘‘(ii) if the interim rate exceeds the 
rate established by the Copyright Royalty 
Judges, the mechanical licensing collective 
shall credit the account of the digital music 
provider for the amount of any overpay-
ment of royalties due. 
‘‘(9) TRANSITION TO BLANKET LICENSES.— 
‘‘(A) SUBSTITUTION
OF
BLANKET
LI-
CENSE.—On the license availability date, a 
blanket license shall, without any interruption 
in license authority enjoyed by such digital 
music provider, be automatically substituted for 
and supersede any existing compulsory license 
previously obtained under this section by the 
digital music provider from a copyright owner 
to engage in one or more covered activities with 
respect to a musical work, but the foregoing 
shall not apply to any authority obtained from 
a record company pursuant to a compulsory li-
cense to make and distribute permanent 
downloads unless and until such record com-
pany terminates such authority in writing to 
take effect at the end of a monthly reporting 
period, with a copy to the mechanical licensing 
collective. 
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‘‘(B) 
EXPIRATION
OF
EXISTING
LI-
CENSES.—Except to the extent provided in sub-
paragraph (A), on and after the license avail-
ability date, licenses other than individual 
download licenses obtained under this section 
for covered activities prior to the license avail-
ability date shall no longer continue in effect. 
‘‘(C) TREATMENT
OF
VOLUNTARY
LI-
CENSES.—A voluntary license for a covered ac-
tivity in effect on the license availability date 
will remain in effect unless and until the vol-
untary license expires according to the terms of 
the voluntary license, or the parties agree to 
amend or terminate the voluntary license. In a 
case where a voluntary license for a covered ac-
tivity entered into before the license availability 
date incorporates the terms of this section by 
reference, the terms so incorporated (but not 
the rates) shall be those in effect immediately 
prior to the license availability date, and those 
terms shall continue to apply unless and until 
such voluntary license is terminated or amend-
ed, or the parties enter into a new voluntary li-
cense. 
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‘‘(D) FURTHER ACCEPTANCE OF NOTICES 
FOR COVERED ACTIVITIES BY COPYRIGHT OF-
FICE.—On and after the enactment date— 
‘‘(i) the Copyright Office shall no 
longer accept notices of intention with re-
spect to covered activities; and 
‘‘(ii) previously filed notices of inten-
tion will no longer be effective or provide 
license authority with respect to covered 
activities, but before the license availability 
date there shall be no liability under sec-
tion 501 for the reproduction or distribu-
tion of a musical work (or share thereof) 
in covered activities if a valid notice of in-
tention was filed for such work (or share) 
before the enactment date. 
‘‘(10) PRIOR UNLICENSED USES.— 
‘‘(A) LIMITATION ON LIABILITY IN GEN-
ERAL.—A copyright owner that commences an 
action under section 501 on or after January 1, 
2018, against a digital music provider for the 
infringement of the exclusive rights provided by 
paragraph (1) or (3) of section 106 arising 
from the unauthorized reproduction or distribu-
tion of a musical work by such digital music 
VerDate Sep 11 2014 
01:21 Apr 11, 2018
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E:\BILLS\H5447.IH
H5447
lotter on DSKBCFDHB2PROD with BILLS