tion within 30 days after the date 
of such notice, the free pro-
motional use shall be considered 
not to have been authorized 
under this subclause. 
‘‘(III) 30-SECOND PROMOTIONAL 
STREAMS.— 
‘‘(aa) IN
GENERAL.—Not-
withstanding subsection (a) or 
any other provision of this sec-
tion, but subject to subsection 
(f), a digital music provider li-
censed under this subsection to 
distribute a full download of a 
sound recording, or authorized to 
distribute a physical phonorecord 
of a sound recording, shall, if the 
digital music provider is author-
ized to do so by the owner or li-
censee of the sound recording, 
has the right to create, repro-
duce, and transmit, including the 
making of all server and inci-
dental reproductions that are 
necessary, an excerpt of the 
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sound recording of up to 30 sec-
onds in length to be made avail-
able directly to end users in the 
form of an interactive stream— 
‘‘(AA) solely for pur-
poses of promoting the law-
ful sale or paid use of the 
sound recording, or the paid 
use of a subscription service 
offering the sound recording; 
and 
‘‘(BB) 
only 
if 
such 
stream is a free promotional 
use. 
‘‘(bb) REPORTING NOT RE-
QUIRED.—A digital music pro-
vider is not required to report to 
the designated agent free pro-
motional uses of 30-second ex-
cerpts authorized under this sub-
clause. 
‘‘(cc) 
CONSTRUCTION.— 
(AA) 
The 
authority 
granted 
under this subclause does not in-
clude or extend to any other 
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right to create, reproduce, or dis-
tribute an excerpt of a musical 
work for any purpose other than 
that expressly authorized under 
this subclause, including for use 
as, or to promote, a ringtone or 
mastertone. 
‘‘(BB) Nothing in this sub-
clause shall be cited, relied upon, 
interpreted, or construed for pur-
poses of evaluating or deter-
mining whether the creation or 
use of an excerpt of a musical 
work other than as expressly au-
thorized under this subclause 
does or does not qualify for a 
compulsory license under this 
section. 
‘‘(IV) REGULATIONS.—The Reg-
ister of Copyrights shall promulgate 
regulations detailing reporting and 
recordkeeping requirements for free 
promotional uses. 
‘‘(B) ROYALTY
COMPLIANCE
EXAMINA-
TIONS.—A designated agent may, upon pro-
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viding written notice to its licensee under this 
subsection, conduct a royalty compliance exam-
ination of the licensee, subject to the following: 
‘‘(i) A designated agent may conduct 
only 1 examination of any licensee in a cal-
endar year, and may conduct an examina-
tion of a licensee with respect to a report-
ing period only once. A designated agent 
may conduct an examination jointly with 1 
or more other designated agents. 
‘‘(ii) The examination may begin only 
within 18 months after the end of the pe-
riod being examined and may only cover a 
period of not less than 2 and not more 
than 4 consecutive years, except that an 
examination may cover a period of— 
‘‘(I) more than 4 years if the ex-
amination includes activities subject 
to retroactive payments under para-
graph (6); 
‘‘(II) less than 2 years if— 
‘‘(aa) the licensee’s license 
has been terminated; 
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‘‘(bb) the licensee has de-
faulted in its reporting or pay-
ments under this paragraph; or 
‘‘(cc) the licensee has termi-
nated or is about to terminate 
operations, has filed or indicated 
an intent to file for bankruptcy, 
or has transferred or indicated 
an intent to transfer its assets to 
a third party; or 
‘‘(III) less than 2 years or more 
than 4 years if, for other good cause, 
the examination cannot reasonably 
cover a period of 2 to 4 years. 
‘‘(iii) At the conclusion of the exam-
ination, the designated agent shall, after 
considering any written rebuttal provided 
by the licensee during the examination, 
provide a written notice to the licensee set-
ting forth the designated agent’s final 
claim, if any, resulting from the examina-
tion. 
‘‘(iv) The designated agent shall bear 
the costs of the examination, except that, 
if the licensee underpaid royalty fees by 10 
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