Title: Music Modernization Act of 2018
Policy area: Commerce

Summary:
Music Modernization Act of 2018
This bill amends the copyright law to create a statutory blanket license for making and distributing nondramatic musical sound recordings, including through digital delivery. The blanket license allows digital music services to distribute sound recordings covered by the license without negotiating for the rights for each individual recording, as long as the music service complies with the license's requirements, such as paying the required royalties.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 2334 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  2d Session
                                S. 2334

To amend title 17, United States Code, to provide clarity with respect 
  to, and to modernize, the licensing system for musical works under 
 section 115 of that title, to ensure fairness in the establishment of 
 certain rates and fees under sections 114 and 115 of that title, and 
                          for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 24, 2018

Mr. Hatch (for himself, Mr. Whitehouse, Mr. Alexander, Ms. Harris, Mr. 
 Corker, Mr. Durbin, Mr. Isakson, Mr. Coons, and Mr. Jones) introduced 
the following bill; which was read twice and referred to the Committee 
                            on the Judiciary

_______________________________________________________________________

                                 A BILL


 
To amend title 17, United States Code, to provide clarity with respect 
  to, and to modernize, the licensing system for musical works under 
 section 115 of that title, to ensure fairness in the establishment of 
 certain rates and fees under sections 114 and 115 of that title, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Music Modernization Act of 2018''.

SEC. 2. BLANKET LICENSE FOR DIGITAL USES AND MECHANICAL 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''; and
                    (B) by striking paragraph (1) and inserting the 
                following:
            ``(1)(A) A person may by complying with the provisions of 
        this section obtain a compulsory license 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 private use, including by means of digital 
        phonorecord 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; 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--
                            ``(I) the copyright owner of the sound 
                        recording first fixed such sound recording 
                        under the authority of the copyright owner of 
                        the musical work and is further authorized by 
                        the copyright owner of the musical work to make 
                        and distribute phonorecords embodying such work 
                        to the public in the United States; and
                            ``(II) the copyright owner of the sound 
                        recording or its authorized distributor 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) A person may not obtain a compulsory license 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 copyright 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 license 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.'';
            (2) by striking subsection (b) and inserting the following:
    ``(b) Procedures To Obtain a Compulsory License.--
            ``(1) Phonorecords other than digital phonorecord 
        deliveries.--A person who seeks to obtain a compulsory license 
        under this section to make and distribute phonorecords of a 
        musical work other than by means of digital phonorecord 
        delivery shall, before or within 30 days after making, and 
        before distributing, any phonorecord of the work, serve notice 
        of intention to do so on the copyright owner. If the 
        registration or other public records of the Copyright Office do 
        not identify the copyright owner and include an address at 
        which notice can be served, it shall be sufficient to file the 
        notice of intention in the Copyright Office. The notice shall 
        comply, in form, content, and manner of service, with 
        requirements that the Register of Copyrights shall prescribe by 
        regulation.
            ``(2) Digital phonorecord deliveries.--A person who seeks 
        to obtain a compulsory license under this section to make and 
        distribute phonorecords of a musical work by means of digital 
        phonorecord delivery--
                    ``(A) prior to the license availability date set 
                forth in subsection (e), shall, before or within 30 
                days after first making any such digital phonorecord 
                delivery, serve a notice of intention to do so on the 
                copyright owner. The notice, which may not be filed 
                with the Copyright Office, shall comply, in form, 
                content, and manner of service, with requirements that 
                the Register of Copyrights shall prescribe by 
                regulation; and
                    ``(B) on or after the license availability date, 
                shall, before making any such digital phonorecord 
                delivery, follow the procedure set forth in subsection 
                (d)(2), except as provided in paragraph (3).
            ``(3) Record company download licenses.--Notwithstanding 
        anything to the contrary in this section, a record company may, 
        on or after the license availability date, obtain a license to 
        make and distribute, or authorize the making and distribution 
        of, digital phonorecord deliveries of musical works in the form 
        of permanent downloads in the manner described in paragraph 
        (2)(A). A record company that obtains a compulsory license for 
        permanent downloads as permitted under this paragraph shall 
        provide statements of account and pay royalties as provided in 
        subsection (c)(5).
            ``(4) Failure to obtain license.--
                    ``(A) Phonorecords other than digital phonorecord 
                deliveries.--In the case of phonorecords made and 
                distributed other than by means of digital phonorecord 
                delivery, the failure to serve or file the notice of 
                intention required by paragraph (1) forecloses the 
                possibility of a compulsory license under paragraph 
                (1). In the case of phonorecords made and distributed 
                by means of digital phonorecord delivery prior to the 
                license availability date, the failure to serve the 
                notice of intention required by paragraph (2)(A) 
                forecloses the possibility of a compulsory license 
                under paragraph (2)(A). In either case, in the absence 
                of a voluntary license, the failure to obtain a 
                compulsory license renders the making and distribution 
                of phonorecords, including by means of digital 
                phonorecord delivery, actionable as acts of 
                infringement under section 501 and subject to the 
                remedies provided by sections 502 through 506.
                    ``(B) Digital phonorecord deliveries.--In the case 
                of phonorecords made and distributed by means of 
                digital phonorecord delivery on or after the license 
                availability date, the failure to comply with paragraph 
                (2)(B), or, if applicable, paragraph (3), forecloses 
                the possibility of a compulsory license under this 
                section. In the absence of a voluntary license, the 
                failure to obtain a compulsory license renders the 
                making and distribution of phonorecords by means of 
                digital phonorecord delivery actionable as acts of 
                infringement under section 501 and subject to the 
                remedies provided by sections 502 through 506.'';
            (3) in subsection (c)--
                    (A) by striking paragraphs (1) and (2) and 
                inserting the following:
            ``(1) To be entitled to receive royalties under a 
        compulsory license obtained under subsection (b)(1) the 
        copyright owner must be identified in the registration or other 
        public records of the Copyright 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 distributed.
            ``(2) Except as provided by paragraph (1), for every 
        phonorecord made and distributed under a compulsory license 
        under this section other than by means of digital phonorecord 
        delivery, with respect to each work embodied in the 
        phonorecord, the royalty shall be the royalty prescribed under 
        subparagraphs (B) through (E) of paragraph (3) and chapter 8 of 
        this title. For purposes of this paragraph, a phonorecord is 
        considered `distributed' if the person exercising the 
        compulsory license has voluntarily and permanently parted with 
        its possession.'';
                    (B) by striking paragraph (3)(A) and inserting the 
                following:
            ``(3)(A) For every digital phonorecord delivery of a 
        musical work made under a compulsory license under this 
        section, the royalty payable shall be the royalty prescribed 
        under subparagraphs (B) through (E) and chapter 8 of this 
        title.'';
                    (C) in paragraph (3)(C)--
                            (i) by striking the second sentence; and
                            (ii) by adding at the end the following new 
                        sentence: ``The administrative assessment to be 
                        paid by digital music providers and significant 
                        nonblanket licensees under subsection (d) shall 
                        be established in separate proceedings before 
                        the Copyright Royalty Judges as provided in 
                        subsection (d)(7).'';
                    (D) by striking paragraph (3)(D) and inserting the 
                following:
            ``(D) The schedule of reasonable rates and terms determined 
        by the Copyright Royalty Judges shall, subject to subparagraph 
        (E), be binding on all copyright owners of nondramatic musical 
        works and persons entitled to obtain a compulsory license under 
        subsection (a)(1) during the period specified in subparagraph 
        (C), such other period as may be determined pursuant to 
        subparagraphs (B) and (C), or such other period 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 marketplace between a willing 
        buyer and a willing seller. In determining such rates and terms 
        for digital phonorecord deliveries, the Copyright Royalty 
        Judges shall base their decision on economic, competitive, and 
        programming information presented by the parties, including--
                    ``(i) whether use of the compulsory licensee's 
                service may substitute for or may promote the sales of 
                phonorecords or otherwise 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.'';
                    (E) in paragraph (3)(E)(i), by striking ``Librarian 
                of Congress and'';
                    (F) in paragraph (3)(G)(i)(II)--
                            (i) by striking ``owner of the copyright in 
                        the sound recording or the''; and
                            (ii) by striking ``to distribute or 
                        authorize the distribution, by means of a 
                        digital phonorecord delivery'' and inserting 
                        ``, or by a record company pursuant to an 
                        individual download license, to make and 
                        distribute phonorecords by means of digital 
                        phonorecord delivery'';
                    (G) in paragraph (4), by striking the first 
                sentence and inserting ``A compulsory license obtained 
                in accordance with 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).'';
                    (H) in paragraph (5), by striking ``Royalty 
                payments shall'' and inserting ``Except as provided in 
                paragraphs (4)(A)(i) and (10)(B) of subsection (d), 
                royalty payments shall''; and
                    (I) in paragraph (6)--
                            (i) by striking ``If the copyright owner'' 
                        and inserting ``In the case of a license 
                        obtained under subsection (b)(1), (b)(2)(A), or 
                        (b)(3), if the copyright owner''; and
                            (ii) by adding at the end the following 
                        sentence: ``In the case of a license obtained 
                        under subsection (b)(2)(B), license authority 
                        under the compulsory license may be terminated 
                        as provided in subsection (d)(4)(E).'';
            (4) by amending subsection (d) to read as follows:
    ``(d) Blanket License for Digital Uses, Mechanical Licensing 
Collective, and Digital Licensee Coordinator.--
            ``(1) Blanket license for digital uses.--A digital music 
        provider that qualifies for a compulsory license under 
        subsection (a) may, by complying with the terms and conditions 
        of this subsection, obtain a blanket license from copyright 
        owners through the mechanical licensing collective designated 
        under paragraph (3)(B) to make and distribute digital 
        phonorecord deliveries of musical works through one or more 
        covered activities.
                    ``(A) Included activities.--A blanket license 
                obtained under this subsection--
                            ``(i) covers all musical works (or shares 
                        of such works) available for compulsory 
                        licensing under this section for purposes of 
                        engaging in covered activities, except as 
                        provided in subparagraph (B);
                            ``(ii) includes the making and distribution 
                        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 subsection, solely for the 
                        purpose of engaging in such covered activities; 
                        and
                            ``(iii) does not cover or include any 
                        rights or uses other than those set forth in 
                        subsections (d)(1)(A)(i) and (ii).
                    ``(B) Other licenses.--A voluntary license for 
                covered activities entered into between 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 
                digital music provider from the copyright owner of a 
                sound recording pursuant to an individual download 
                license, shall be given effect in lieu of a blanket 
                license under this subsection with respect to the 
                musical works (or shares thereof) covered by such 
                voluntary license or individual download authority; 
                provided, however, that--
                            ``(i) where a voluntary or individual 
                        download license applies, the license authority 
                        provided under the blanket license shall 
                        exclude any musical works (or shares thereof) 
                        subject to the voluntary or individual download 
                        license;
                            ``(ii) an entity engaged in covered 
                        activities under a voluntary license or 
                        authority obtained pursuant to an individual 
                        download license that is a significant 
                        nonblanket licensee shall comply with paragraph 
                        (6)(A); and
                            ``(iii) the rates and terms of any 
                        voluntary license shall be subject to the 
                        second sentence of clause (i) and clause (ii) 
                        of subsection (c)(3)(E) and paragraph (9)(C) as 
                        applicable.
                    ``(C) Protection against infringement 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 engage in covered activities authorized by such 
                license, subject to paragraph (4)(E).
                    ``(D) Other requirements and conditions apply.--
                Except as expressly provided in this subsection, each 
                requirement, limitation, condition, privilege, right, 
                and remedy otherwise applicable to compulsory licenses 
                under this section shall apply to compulsory blanket 
                licenses under this subsection.
            ``(2) Availability of blanket license.--
                    ``(A) Procedure for obtaining license.--A digital 
                music provider may obtain a blanket license under this 
                subsection to engage in one or more covered activities 
                by submitting a notice of license to the mechanical 
                licensing collective described in paragraph (3) that 
                specifies 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 establish by 
                        regulation.
                            ``(ii) Unless rejected in writing by the 
                        mechanical licensing collective within 30 days 
                        after receipt, the blanket license shall be 
                        effective as of the date the notice of license 
                        was provided by the digital music provider.
                            ``(iii) A notice of license shall not be 
                        rejected by the mechanical licensing collective 
                        unless--
                                    ``(I) the digital music provider or 
                                notice of license does not meet all 
                                requirements of this section or 
                                applicable regulations, in which case 
                                the requirements at issue shall be 
                                specified with reasonable particularity 
                                in the notice of rejection, or
                                    ``(II) the digital music provider 
                                has had a license under this subsection 
                                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), the digital music provider 
                        shall have 30 days after receipt of the notice 
                        of rejection to cure any deficiency and submit 
                        an amended notice of license to the mechanical 
                        licensing collective. 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 
                        digital music provider.
                    ``(B) Blanket license effective date.--Blanket 
                licenses under this subsection shall be made available 
                by the mechanical licensing collective as of the 
                license availability date specified in subsection 
                (e)(15). No such license shall be effective prior to 
                the license availability date.
            ``(3) Mechanical licensing collective.--
                    ``(A) In general.--The mechanical licensing 
                collective shall be a single entity that--
                            ``(i) is a not-for-profit entity, 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 
                        substantial support from copyright owners of 
                        musical works that together represent the 
                        greatest share of the licensor market for uses 
                        of such works in covered activities, as 
                        measured over the preceding 3 full calendar 
                        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 
                        capabilities to perform the required functions 
                        of the mechanical licensing collective under 
                        this subsection; and
                            ``(iv) has been designated by the Register 
                        of Copyrights in accordance with subparagraph 
                        (B).
                    ``(B) Designation of mechanical licensing 
                collective.--
                            ``(i) Initial designation.--The Register of 
                        Copyrights shall initially designate the 
                        mechanical licensing collective within 9 months 
                        of the enactment date as follows:
                                    ``(I) Within 90 days of the 
                                enactment date, the Register shall 
                                publish notice in the Federal Register 
                                soliciting information to assist in 
                                identifying the appropriate entity to 
                                serve as the mechanical licensing 
                                collective.
                                    ``(II) After reviewing the 
                                information requested under subclause 
                                (I) and making a designation, the 
                                Register shall publish notice in the 
                                Federal Register setting forth the 
                                identity of and contact information for 
                                the mechanical licensing collective.
                            ``(ii) Periodic review of designation.--
                        Following the initial designation of the 
                        mechanical licensing collective, the Register 
                        shall, every 5 years, beginning with the fifth 
                        full calendar year to commence after the 
                        initial designation, publish notice in the 
                        Federal Register in the month of January 
                        soliciting information concerning whether the 
                        existing designation should be continued, or a 
                        different entity meeting the criteria set forth 
                        in subparagraph (A) should be designated. 
                        Following publication of such notice:
                                    ``(I) The Register shall, after 
                                reviewing the information submitted and 
                                conducting additional proceedings as 
                                appropriate, publish notice in the 
                                Federal Register of a continuing 
                                designation or new designation of the 
                                mechanical licensing collective, as the 
                                case may be, with any new designation 
                                to be effective as of the first day of 
                                a month that is no less than 6 months 
                                from the date of publication of such 
                                notice, as specified by the Register.
                                    ``(II) If a new entity is 
                                designated as a mechanical licensing 
                                collective, the Register shall adopt 
                                regulations to govern the transfer of 
                                licenses, funds, records, and 
                                administrative responsibilities from 
                                the existing mechanical licensing 
                                collective to the new entity.
                    ``(C) Authorities and functions.--
                            ``(i) In general.--The mechanical licensing 
                        collective is authorized to perform the 
                        following functions, subject to more particular 
                        requirements as set forth in this subsection:
                                    ``(I) Offer and administer blanket 
                                licenses for covered activities, 
                                including receipt of notices of license 
                                and reports of usage from digital music 
                                providers.
                                    ``(II) Collect and distribute 
                                royalties from digital music providers 
                                for covered activities.
                                    ``(III) Engage in efforts to 
                                identify 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 a publicly 
                                accessible database of musical works 
                                (and shares of such works) and 
                                copyright owners, and other information 
                                relevant to the administration of 
                                licensing 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 
                                resources, and arrange for services of 
                                outside vendors and others, to support 
                                its activities.
                                    ``(VIII) Engage in efforts to 
                                enforce rights and obligations under 
                                this subsection, including in 
                                coordination with the digital licensee 
                                coordinator.
                                    ``(IX) Initiate and participate in 
                                proceedings before the Copyright 
                                Royalty Judges to establish the 
                                administrative assessment under this 
                                subsection.
                                    ``(X) Initiate and participate in 
                                proceedings before the Copyright Office 
                                with respect to activities under this 
                                subsection.
                                    ``(XI) Gather and provide 
                                documentation for use in proceedings 
                                before 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 as contemplated under this 
                                subsection.
                                    ``(XIII) Engage in such other 
                                activities as may be necessary or 
                                appropriate to fulfill its 
                                responsibilities under this subsection.
                            ``(ii) Additional administrative 
                        activities.--Subject to paragraph (11)(C) and 
                        subsection (e)(31), the mechanical licensing 
                        collective may also administer, or assist in 
                        administering, voluntary or individual download 
                        licenses issued by copyright owners for uses of 
                        musical works, for which the mechanical 
                        licensing collective shall charge reasonable 
                        fees for such services.
                            ``(iii) Restriction on lobbying.--The 
                        mechanical licensing collective shall not 
                        engage in government lobbying activities; 
                        provided, however, that it may engage in the 
                        activities set forth in subclauses (IX), (X), 
                        and (XI) of clause (i).
                    ``(D) Governance.--
                            ``(i) Board of directors.--The mechanical 
                        licensing collective shall have a board of 
                        directors consisting of 10 voting members and 3 
                        nonvoting members, as follows:
                                    ``(I) Eight voting members shall be 
                                music publishers to which songwriters 
                                have assigned exclusive rights of 
                                reproduction and distribution of 
                                musical works with respect to covered 
                                activities; provided, however, that no 
                                such music publisher member may be 
                                owned by, or under common control with, 
                                any other board member.
                                    ``(II) Two voting members shall be 
                                professional songwriters who have 
                                retained and exercise exclusive rights 
                                of reproduction and distribution with 
                                respect to covered activities with 
                                respect to musical works they have 
                                authored.
                                    ``(III) One nonvoting member shall 
                                be a representative of the nonprofit 
                                trade association of music publishers 
                                that represents the greatest share of 
                                the licensor market for uses of musical 
                                works in covered activities, as 
                                measured over the preceding 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 subsection 
                                (d)(5)(B). Otherwise, the nonvoting 
                                member shall be the nonprofit trade 
                                association of digital licensees that 
                                represents the greatest share of the 
                                licensee market for uses of musical 
                                works in covered activities, as 
                                measured over the preceding 3 full 
                                calendar years.
                                    ``(V) One nonvoting member shall be 
                                a representative of a nationally 
                                recognized nonprofit trade association 
                                whose primary mission is advocacy on 
                                behalf of American songwriters.
                            ``(ii) Board meetings.--The board of 
                        directors shall meet no less than 2 times per 
                        year and discuss matters pertinent to the 
                        operations, including the budget, of the board 
                        of directors.
                            ``(iii) Operations advisory committee.--The 
                        board of directors of the mechanical licensing 
                        collective shall establish an operations 
                        advisory committee consisting of no fewer than 
                        6 members to make recommendations to the board 
                        of directors concerning the operations of the 
                        mechanical licensing collective, including the 
                        efficient investment in and deployment of 
                        information technology and data resources. Such 
                        committee shall have an equal number of--
                                    ``(I) copyright owners of musical 
                                works 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 oversight 
                        committee.--The board of directors of the 
                        mechanical licensing collective shall establish 
                        and appoint an unclaimed royalties oversight 
                        committee consisting of 10 members, 6 of which 
                        shall be copyright owners of musical works and 
                        4 of which shall be professional songwriters 
                        whose works are used in covered activities.
                            ``(v) Dispute resolution committee.--The 
                        board of directors of the mechanical licensing 
                        collective shall establish and appoint a 
                        dispute resolution committee consisting of no 
                        fewer than 6 members, which committee shall 
                        include an equal number of representatives of 
                        copyright owners of musical works and 
                        professional songwriters.
                    ``(E) Musical works database.--
                            ``(i) Establishment and maintenance of 
                        database.--The mechanical licensing collective 
                        shall establish and maintain a database of 
                        musical works (and shares of such works) and, 
                        to the extent known, the identity and location 
                        of the copyright owners of such works (and 
                        shares thereof) and the sound recordings in 
                        which they 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 update 
                        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 available--
                                            ``(aa) the international 
                                        standard musical work code for 
                                        the work; and
                                            ``(bb) identifying 
                                        information for sound 
                                        recordings in which the musical 
                                        work is embodied, including the 
                                        name of the sound recording, 
                                        featured artist, producer, 
                                        international standard 
                                        recording code, and other 
                                        information commonly used to 
                                        assist in associating sound 
                                        recordings with musical works; 
                                        and
                                    ``(V) such other information as the 
                                Register of Copyrights may prescribe by 
                                regulation.
                            ``(iii) Unmatched works.--With respect to 
                        unmatched works (and shares of works) in the 
                        database, the musical works database shall 
                        include--
                                    ``(I) to the extent available--
                                            ``(aa) the title of the 
                                        musical work;
                                            ``(bb) the ownership 
                                        percentage for which an owner 
                                        has not been identified;
                                            ``(cc) if a copyright owner 
                                        has been identified but not 
                                        located, the identity of such 
                                        owner and such owner's 
                                        ownership percentage;
                                            ``(dd) identifying 
                                        information for sound 
                                        recordings in which the work is 
                                        embodied, including sound 
                                        recording name, featured 
                                        artist, producer, international 
                                        standard recording code, and 
                                        other information commonly used 
                                        to assist in associating sound 
                                        recordings with musical works; 
                                        and
                                            ``(ee) any additional 
                                        information reported to the 
                                        mechanical licensing collective 
                                        that may assist in identifying 
                                        the work; and
                                    ``(II) such other information 
                                relating 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 information.--Each 
                        copyright owner of musical works shall engage 
                        in commercially reasonable efforts to deliver 
                        to the mechanical licensing collective for use 
                        in the musical works database, to the extent 
                        such information is not then available in the 
                        database, information regarding the names of 
                        the sound recordings in which that copyright 
                        owner's musical works (or shares thereof) are 
                        embodied, to the extent practicable.
                            ``(v) Accessibility of database.--The 
                        musical work database shall be accessible to 
                        the public in a searchable, online format free 
                        of charge. The mechanical licensing collective 
                        shall also make such database available free of 
                        charge in a bulk, machine-readable format, via 
                        a widely available software application, to--
                                    ``(I) digital music providers 
                                operating under valid notices of 
                                license;
                                    ``(II) significant nonblanket 
                                licensees; and
                                    ``(III) authorized vendors of the 
                                entities described in subclauses (I) 
                                and (II).
                            ``(vi) Additional requirements.--The 
                        Register of Copyrights shall establish 
                        requirements by regulations to ensure the 
                        usability, interoperability, and usage 
                        restrictions of the musical works database.
                    ``(F) Notices of license and nonblanket activity.--
                            ``(i) In general.--The mechanical licensing 
                        collective shall receive, review, and confirm 
                        or reject notices of license from digital music 
                        providers, as provided in subsection (d)(2)(A). 
                        The collective shall maintain a current, 
                        publicly accessible list of blanket licenses 
                        obtained by digital music providers under this 
                        subsection that includes contact information 
                        for the licensees and the effective dates of 
                        such licenses.
                            ``(ii) Public list of notices.--The 
                        mechanical licensing collective shall receive 
                        notices of nonblanket activity from significant 
                        nonblanket licensees, as provided in subsection 
                        (d)(6)(A). The collective shall maintain a 
                        current, publicly accessible list of notices of 
                        nonblanket activity submitted by significant 
                        nonblanket licensees that includes contact 
                        information for such licensees and the dates of 
                        receipt of such notices.
                    ``(G) Collection and distribution of royalties.--
                            ``(i) In general.--Upon receiving reports 
                        of usage and payments of royalties from digital 
                        music providers for covered activities, the 
                        mechanical licensing collective shall--
                                    ``(I) engage in efforts to--
                                            ``(aa) identify the musical 
                                        works embodied in sound 
                                        recordings reflected in such 
                                        reports, and the copyright 
                                        owners of such musical works 
                                        (and shares thereof);
                                            ``(bb) confirm uses of 
                                        musical works subject to 
                                        voluntary and individual 
                                        download licenses, and the 
                                        corresponding pro rata amounts 
                                        to be deducted from royalties 
                                        that would otherwise be due 
                                        under the blanket license; and
                                            ``(cc) confirm proper 
                                        payment of royalties due;
                                    ``(II) distribute royalties to 
                                copyright owners in accordance with the 
                                usage and other information contained 
                                in such reports, as well as the 
                                ownership and other information 
                                contained in its records; and
                                    ``(III) deposit royalties that 
                                cannot be distributed due to an 
                                inability to identify or locate a 
                                copyright owner of a musical work (or 
                                share thereof), or due to a pending 
                                dispute before the dispute resolution 
                                committee of the mechanical licensing 
                                collective, in an interest-bearing 
                                account as provided in subparagraph 
                                (H)(ii).
                            ``(ii) Regulations required.--The Register 
                        of Copyrights shall adopt regulations regarding 
                        adjustments to reports of usage by digital 
                        music providers, including establishing 
                        mechanisms to account for overpayments and 
                        underpayments made in prior periods.
                    ``(H) Holding of accrued royalties.--
                            ``(i) Holding period.--The mechanical 
                        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 from 
                        the date on which the funds were received by 
                        the mechanical licensing collective, or at 
                        least 3 years from the date on which they were 
                        accrued by a digital music provider that 
                        subsequently transferred such funds to the 
                        mechanical licensing collective 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 monthly 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 process.--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 collective in 
                order to receive payment of accrued royalties. When a 
                copyright owner of an unmatched work (or share of a 
                work) has been identified and located in accordance 
                with the procedures of the mechanical licensing 
                collective, the collective shall--
                            ``(i) update the musical works database 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 share of accrued interest 
                        associated with that work (or share thereof) to 
                        the copyright owner, accompanied by a 
                        cumulative statement of account reflecting 
                        usage of such work and accrued royalties based 
                        on information provided by digital music 
                        providers to the mechanical licensing 
                        collective.
                    ``(J) Distribution of unclaimed accrued 
                royalties.--
                            ``(i) Distribution procedures.--After the 
                        expiration of the prescribed holding period for 
                        accrued royalties provided in subparagraph 
                        (H)(i), the mechanical licensing collective 
                        shall distribute such accrued royalties, along 
                        with a proportionate share of accrued interest, 
                        to copyright owners identified in its records, 
                        subject to the following requirements, and in 
                        accordance with the policies and procedures 
                        established under clause (ii):
                                    ``(I) The first such distribution 
                                shall occur in the first full calendar 
                                year to commence after the license 
                                availability date, with at least one 
                                such distribution to take place in each 
                                calendar year thereafter.
                                    ``(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 
                                indicating 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 and individual 
                                download licenses for covered 
                                activities, to the extent such 
                                information is available to the 
                                mechanical licensing collective. In 
                                furtherance of the determination of 
                                equitable market shares under this 
                                paragraph--
                                            ``(aa) the mechanical 
                                        licensing collective may 
                                        require copyright owners 
                                        seeking distributions of 
                                        unclaimed accrued royalties to 
                                        provide, or direct the 
                                        provision of, information 
                                        concerning royalties received 
                                        under voluntary and individual 
                                        download licenses for covered 
                                        activities, and
                                            ``(bb) the mechanical 
                                        licensing collective shall take 
                                        appropriate steps to safeguard 
                                        the confidentiality and 
                                        security of financial and other 
                                        sensitive data used to compute 
                                        market shares in accordance 
                                        with the confidentiality 
                                        provisions prescribed by the 
                                        Register of Copyrights under 
                                        subsection (d)(12)(C).
                            ``(ii) Establishment of distribution 
                        policies.--The unclaimed royalties oversight 
                        committee established under paragraph 
                        (3)(D)(iv) shall establish policies and 
                        procedures for the distribution of unclaimed 
                        accrued royalties in accordance with this 
                        subparagraph, subject to the approval of the 
                        board of directors of the mechanical licensing 
                        collective.
                            ``(iii) Advance notice of distributions.--
                        The mechanical licensing collective shall 
                        publicize a pending distribution of unclaimed 
                        accrued royalties at least 90 days in advance 
                        of such distribution.
                            ``(iv) Songwriter payments.--Copyright 
                        owners that receive a distribution of unclaimed 
                        accrued royalties and accrued interest shall 
                        pay or credit a portion to songwriters (or the 
                        authorized agents of songwriters) on whose 
                        behalf they license or administer musical works 
                        for covered activities, in accordance with 
                        applicable contractual terms; provided, 
                        however, that notwithstanding any agreement to 
                        the contrary--
                                    ``(I) such payments and credits to 
                                songwriters shall be allocated in 
                                proportion to reported usage of 
                                individual 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 payment 
                                or credit to an individual songwriter 
                                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 paragraph (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 process--
                            ``(i) shall include a mechanism to hold 
                        disputed funds in accordance with the 
                        requirements set forth in subparagraph (H)(ii) 
                        pending resolution of the dispute by the 
                        committee, written agreement of the affected 
                        parties, or pursuant to a binding judicial 
                        determination or arbitration; and
                            ``(ii) except as provided in paragraph 
                        (11)(D), shall not affect any legal or 
                        equitable 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 mechanical 
                licensing collective.--
                            ``(i) Verification process.--A copyright 
                        owner entitled to receive payments 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 and distributions 
                        by the mechanical licensing collective to such 
                        copyright owner, as follows:
                                    ``(I) A copyright owner may audit 
                                the mechanical licensing collective 
                                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 conducted 
                                by a qualified auditor, who shall 
                                perform the audit during the ordinary 
                                course of business by examining the 
                                books, records and systems of the 
                                mechanical licensing collective, as 
                                well as underlying data, according to 
                                generally accepted auditing standards 
                                and subject to applicable 
                                confidentiality requirements prescribed 
                                by the Register of Copyrights under 
                                subsection (d)(12)(C).
                                    ``(III) The mechanical licensing 
                                collective 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 facilitate access 
                                to relevant information maintained by 
                                third parties.
                                    ``(IV) To commence the audit, the 
                                copyright owner(s) shall file with the 
                                Copyright Office a notice of intent to 
                                conduct an audit of the mechanical 
                                licensing collective, and shall 
                                simultaneously deliver a copy of such 
                                notice to the mechanical licensing 
                                collective. The Register of Copyrights 
                                shall cause the notice of audit to be 
                                published in the Federal Register 
                                within 30 days of receipt.
                                    ``(V) The qualified auditor shall 
                                determine the accuracy of royalty 
                                payments, including whether an 
                                underpayment or overpayment of 
                                royalties was made by the mechanical 
                                licensing collective to the auditing 
                                copyright owner(s); provided, however, 
                                that before providing a final audit 
                                report to such copyright owner(s), the 
                                qualified auditor shall provide a 
                                tentative draft of the report to the 
                                mechanical licensing collective and 
                                allow the mechanical licensing 
                                collective a reasonable opportunity to 
                                respond to the findings, including by 
                                clarifying issues and correcting 
                                factual errors.
                                    ``(VI) The auditing copyright 
                                owner(s) shall bear the cost of the 
                                audit. In case of an underpayment to 
                                the copyright owner(s), the mechanical 
                                licensing collective shall pay the 
                                amounts of any such underpayment to the 
                                auditing copyright owner(s), as 
                                appropriate. In case of an overpayment 
                                by the mechanical licensing collective, 
                                the mechanical licensing collective may 
                                debit the accounts of the auditing 
                                copyright owner(s) for such overpaid 
                                amounts, or such owner(s) shall refund 
                                overpaid amounts to the mechanical 
                                licensing collective, as appropriate.
                            ``(ii) Alternative verification 
                        procedures.--Nothing in this subparagraph shall 
                        preclude a copyright owner and the mechanical 
                        licensing collective from agreeing to audit 
                        procedures different from those set forth 
                        herein; provided, however, that notice of the 
                        audit shall still be provided to and published 
                        by the Copyright Office as set forth in clause 
                        (i)(IV).
                    ``(M) Records of mechanical licensing collective.--
                            ``(i) Records maintenance.--The mechanical 
                        licensing collective shall ensure that all 
                        material records of its operations, including 
                        those relating to notices of license, the 
                        administration of its claims process, reports 
                        of usage, royalty payments, receipt and 
                        maintenance of accrued royalties, royalty 
                        distribution processes, and legal matters, are 
                        preserved and maintained 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 subsection 
                        (d)(12)(C) for a period of no less than 7 years 
                        from date of creation or receipt, whichever 
                        occurs later.
                            ``(ii) Records access.--The mechanical 
                        licensing collective shall provide 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 license.--A blanket 
        license obtained under this subsection is subject to, and 
        conditioned upon, the following requirements:
                    ``(A) Royalty reporting and payments.--
                            ``(i) Monthly reports and payment.--A 
                        digital music provider shall report and pay 
                        royalties to the mechanical licensing 
                        collective under the blanket license on a 
                        monthly basis in accordance with clause (ii) 
                        and subsection (c)(5); provided, however, that 
                        monthly reporting shall be due 45 days, rather 
                        than 20 days, after the end of the monthly 
                        reporting period.
                            ``(ii) Data to be reported.--In reporting 
                        usage of musical works to the mechanical 
                        licensing collective, a digital music provider 
                        shall provide usage data for musical works used 
                        under the blanket license under this subsection 
                        as well as usage data for musical works used in 
                        covered activities under voluntary and 
                        individual download licenses. In its report of 
                        usage, the digital music provider shall--
                                    ``(I) with respect to each musical 
                                work--
                                            ``(aa) provide identifying 
                                        information for the sound 
                                        recording embodying such work, 
                                        including sound recording name, 
                                        featured artist, producer and, 
                                        to the extent available, 
                                        producer, international 
                                        standard recording code, and 
                                        other information commonly used 
                                        in the industry to identify 
                                        sound recordings and match them 
                                        to the musical works they 
                                        embody;
                                            ``(bb) to the extent 
                                        available, provide information 
                                        concerning authorship and 
                                        ownership of the applicable 
                                        rights in the musical work, 
                                        including songwriter(s), 
                                        publisher name(s) and 
                                        respective ownership share(s), 
                                        and the international standard 
                                        musical work code; and
                                            ``(cc) provide the number 
                                        of digital phonorecord 
                                        deliveries of such work, 
                                        including limited downloads and 
                                        interactive streams;
                                    ``(II) identify and provide contact 
                                information for all copyright owners of 
                                musical works as to which a voluntary 
                                license, rather than the blanket 
                                license, is in effect with respect to 
                                the uses being reported; and
                                    ``(III) provide such other 
                                information 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-readable 
                        format that is compatible with the information 
                        technology systems of the mechanical licensing 
                        collective and meets the requirements of 
                        regulations adopted by the Register of 
                        Copyrights. The Register shall also adopt 
                        regulations setting forth requirements under 
                        which records of use shall be maintained and 
                        made available to the mechanical licensing 
                        collective by digital music providers engaged 
                        in covered activities under a blanket license.
                    ``(B) Procurement of sound recording information.--
                In addition to obtaining sound recording names and 
                featured artists, 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) producers, international standard 
                        recording codes, and other information commonly 
                        used in the industry to identify sound 
                        recordings and match them to the musical works 
                        they embody; and
                            ``(ii) information concerning the 
                        authorship and ownership of musical works, 
                        including songwriters, publisher names, 
                        ownership shares, and international standard 
                        musical work codes.
                    ``(C) Payment of administrative assessment.--A 
                digital music provider and any significant nonblanket 
                licensee shall pay the administrative assessment 
                established under paragraph (7)(D) in accordance with 
                this subsection and applicable regulations.
                    ``(D) Verification of payments by digital music 
                providers.--
                            ``(i) Verification process.--The mechanical 
                        licensing collective may conduct an audit of a 
                        digital music provider operating under the 
                        blanket license to verify the accuracy of 
                        royalty payments by the digital music provider 
                        to the mechanical licensing collective as 
                        follows:
                                    ``(I) The mechanical licensing 
                                collective may commence an audit of a 
                                digital music provider no more than 
                                once in any 3-year period to cover a 
                                verification period of no more than the 
                                3 preceding full calendar years, and 
                                such audit may not audit records for 
                                any such 3-year verification period 
                                more than once.
                                    ``(II) The audit shall be conducted 
                                by a qualified auditor, who shall 
                                perform the audit during the ordinary 
                                course of business by examining the 
                                books, records, and systems of the 
                                digital music provider, as well as 
                                underlying data, according to generally 
                                accepted auditing standards and subject 
                                to applicable confidentiality 
                                requirements prescribed by the Register 
                                of Copyrights under subsection 
                                (d)(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, and shall 
                                simultaneously deliver a copy of such 
                                notice to the digital music provider. 
                                The Register of Copyrights shall cause 
                                the notice of audit to be published in 
                                the Federal Register within 30 days of 
                                receipt.
                                    ``(V) The qualified auditor shall 
                                determine the accuracy of royalty 
                                payments, including whether an 
                                underpayment or overpayment of 
                                royalties was made by the digital music 
                                provider to the mechanical licensing 
                                collective; provided, however, that 
                                before providing a final audit report 
                                to the copyright owner(s), 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 
                                determines that there was an 
                                underpayment 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 
                                licensing collective. In case of an 
                                overpayment by the digital music 
                                provider, the mechanical licensing 
                                collective shall provide a credit to 
                                the digital music provider.
                                    ``(VII) A digital music provider 
                                may not assert section 507 or any other 
                                Federal or State statute of 
                                limitations, doctrine of laches or 
                                estoppel, or similar provision as a 
                                defense to a legal action arising from 
                                an audit under this subparagraph 
                                provided that 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 subparagraph shall 
                        preclude the mechanical licensing collective 
                        and a digital music provider from agreeing to 
                        audit procedures different from those set forth 
                        herein; provided, however, that notice of the 
                        audit shall still be provided to and published 
                        by the Copyright Office as set forth in clause 
                        (i)(IV).
                    ``(E) Default under blanket license.--
                            ``(i) Condition of default.--A digital 
                        music provider shall be considered generally in 
                        default under a blanket license obtained under 
                        this subsection if the digital music provider--
                                    ``(I) fails to provide one or more 
                                monthly reports of usage to the 
                                mechanical licensing collective when 
                                due;
                                    ``(II) fails to make a monthly 
                                royalty or late fee payment to the 
                                mechanical licensing collective when 
                                due, in all or material part;
                                    ``(III) provides one or more 
                                monthly reports of usage to the 
                                mechanical licensing collective that, 
                                on the whole, is or are materially 
                                deficient as a result of inaccurate, 
                                missing, or unreadable data, where the 
                                correct data was available to the 
                                digital music provider and required to 
                                be reported under this section and 
                                applicable regulations;
                                    ``(IV) fails to pay the 
                                administrative assessment as required 
                                under this subsection and applicable 
                                regulations; or
                                    ``(V) after being provided written 
                                notice by the mechanical licensing 
                                collective, refuses to comply with any 
                                other material term or condition of the 
                                blanket license under this section for 
                                a period of 60 days or longer.
                            ``(ii) Notice of default and termination.--
                        In case of a general default by a digital music 
                        provider, the mechanical licensing collective 
                        may proceed to terminate the blanket license of 
                        the digital music provider as follows:
                                    ``(I) The mechanical licensing 
                                collective shall provide written notice 
                                to the digital music provider 
                                describing with reasonable 
                                particularity the default and advising 
                                that unless such default is cured 
                                within 60 days from the date of the 
                                notice, the blanket license will 
                                automatically terminate at the end of 
                                that period.
                                    ``(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 actionable as acts of infringement 
                                under section 501 and subject to the 
                                remedies provided by sections 502 
                                through 506.
                            ``(iii) Notice to copyright owners.--The 
                        mechanical licensing collective shall provide 
                        written notice of any termination under this 
                        subparagraph to copyright owners of affected 
                        works.
            ``(5) Digital licensee coordinator.--
                    ``(A) In general.--The digital licensee coordinator 
                shall be a single entity that--
                            ``(i) is a not-for-profit entity, not owned 
                        by any other entity, that is designated by the 
                        Register of Copyrights to carry out 
                        responsibilities under this subsection;
                            ``(ii) is endorsed by and enjoys 
                        substantial support from digital music 
                        providers and significant nonblanket licensees 
                        that together represent the greatest share of 
                        the licensee market for uses of musical works 
                        in covered activities, as measured over the 
                        preceding 3 full calendar years;
                            ``(iii) is able to demonstrate that it has, 
                        or will have prior to the license availability 
                        date, the administrative capabilities to 
                        perform the required functions of the digital 
                        licensee coordinator under this subsection; and
                            ``(iv) has been designated by the Register 
                        of Copyrights in accordance with subparagraph 
                        (B).
                    ``(B) Designation of digital licensee 
                coordinator.--
                            ``(i) Initial designation.--The Register of 
                        Copyrights shall initially designate the 
                        digital licensee coordinator within 9 months of 
                        the enactment date, in accordance with the same 
                        procedure as set forth for designation of the 
                        mechanical licensing collective in paragraph 
                        (3)(B)(i).
                            ``(ii) Periodic review of designation.--
                        Following the initial designation of the 
                        digital licensee coordinator, the Register 
                        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 set forth 
                        in subparagraph (A) should be designated, in 
                        accordance with the same procedure as set forth 
                        for the mechanical licensing collective in 
                        paragraph (3)(B)(ii).
                            ``(iii) Inability to designate.--If the 
                        Register is unable to identify an entity that 
                        fulfills the qualifications set forth in 
                        subparagraph (A) that is willing to serve as 
                        digital licensee coordinator, the Register 
                        shall decline to designate a digital licensee 
                        coordinator. The Register's inability 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 licensee 
                        coordinator is authorized to perform the 
                        following functions, subject to more particular 
                        requirements as set forth in this subsection:
                                    ``(I) Establish a governance 
                                structure, criteria for membership, and 
                                any dues to be paid by its members.
                                    ``(II) Engage in efforts to enforce 
                                notice and payment obligations with 
                                respect to the administrative 
                                assessment, including by receiving 
                                information from and coordinating with 
                                the mechanical licensing collective.
                                    ``(III) Initiate and participate in 
                                proceedings before the Copyright 
                                Royalty Judges to establish the 
                                administrative assessment under this 
                                subsection.
                                    ``(IV) Initiate and participate in 
                                proceedings before the Copyright Office 
                                with respect to activities under this 
                                subsection.
                                    ``(V) Gather and provide 
                                documentation for use in proceedings 
                                before the Copyright Royalty Judges to 
                                set rates and terms under this section.
                                    ``(VI) Maintain records of its 
                                activities.
                                    ``(VII) Engage in such other 
                                activities as may be necessary or 
                                appropriate to fulfill its 
                                responsibilities under this subsection.
                            ``(ii) Restriction on lobbying.--The 
                        digital licensee coordinator shall not engage 
                        in government lobbying activities; provided, 
                        however, that it may engage in the activities 
                        set forth in clause (i)(III), (IV), and (V).
            ``(6) Requirements for significant nonblanket licensees.--
                    ``(A) In general.--
                            ``(i) Notice of activity.--Not later than 
                        45 days after the license availability date, or 
                        45 days after the end of the first full 
                        calendar month in which an entity initially 
                        qualifies as a significant nonblanket licensee 
                        as defined in subsection (e)(29), whichever 
                        occurs 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 establish by regulation, 
                        and a copy shall be made available to the 
                        digital licensee coordinator.
                            ``(ii) Reporting and payment obligations.--
                        The notice of nonblanket activity submitted to 
                        the mechanical licensing collective shall be 
                        accompanied by a report of usage that contains 
                        the information described in paragraph 
                        (4)(A)(ii), as well as payment of the 
                        administrative assessment as required under 
                        this subsection and applicable regulations. 
                        Thereafter, subject to clause (iii), a 
                        significant nonblanket licensee shall continue 
                        to provide monthly reports of usage, 
                        accompanied by payment of the administrative 
                        assessment, to the mechanical licensing 
                        collective, such reports and payments to be 
                        submitted not later than 45 days after the end 
                        of the calendar month being reported.
                            ``(iii) Discontinuation of obligations.--An 
                        entity that has submitted a notice of 
                        nonblanket activity to the mechanical licensing 
                        collective that has ceased to qualify as a 
                        significant nonblanket licensee may so notify 
                        the collective in writing. In such case, as of 
                        the calendar month in which such notice is 
                        provided, such entity shall no longer be 
                        required to provide reports of usage or pay the 
                        administrative assessment; provided, however, 
                        that should such entity once again qualify as a 
                        significant nonblanket licensee, it shall again 
                        be required to comply with clauses (i) and 
                        (ii).
                    ``(B) Reporting by mechanical licensing collective 
                to digital licensee coordinator.--
                            ``(i) Monthly reports of noncompliant 
                        licensees.--The mechanical licensing collective 
                        shall provide monthly reports to the digital 
                        licensee coordinator setting forth any 
                        significant nonblanket licensees of which the 
                        collective is aware that have failed to comply 
                        with subparagraph (A).
                            ``(ii) Treatment of confidential 
                        information.--The mechanical licensing 
                        collective and digital licensee coordinator 
                        shall take appropriate steps to safeguard the 
                        confidentiality and security of financial and 
                        other sensitive data shared under this 
                        subparagraph, in accordance with the 
                        confidentiality requirements prescribed by the 
                        Register of Copyrights under subsection 
                        (d)(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 licensee has failed to 
                        comply with subparagraph (A), either may 
                        commence an action in Federal district court 
                        for damages and injunctive relief. If the 
                        significant nonblanket 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, 
                        notwithstanding anything to the contrary in 
                        section 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 appropriate. 
                        Any recovery of damages shall be payable to the 
                        mechanical licensing collective as an offset to 
                        total costs.
                            ``(ii) Statute of limitations for 
                        enforcement action.--Any action described in 
                        this subparagraph shall be commenced within the 
                        time period set forth in section 507(b).
                            ``(iii) Other rights and remedies 
                        preserved.--The ability of the mechanical 
                        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 total costs of the 
                mechanical licensing collective shall be funded by--
                            ``(i) an administrative assessment, as such 
                        assessment is established by the Copyright 
                        Royalty Judges pursuant to subparagraph (D) 
                        from time to time, to be paid by--
                                    ``(I) digital music providers that 
                                are engaged, in all or in part, in 
                                covered activities pursuant to a 
                                blanket license under this subsection; 
                                and
                                    ``(II) significant nonblanket 
                                licensees; and
                            ``(ii) voluntary contributions from digital 
                        music providers and significant nonblanket 
                        licensees as may be agreed with copyright 
                        owners.
                    ``(B) Voluntary contributions.--
                            ``(i) Agreements concerning 
                        contributions.--Except as provided in clause 
                        (ii), any voluntary contributions by digital 
                        music providers and significant nonblanket 
                        licensees shall be determined by private 
                        negotiation and agreement; provided, however, 
                        that--
                                    ``(I) the date and amount of any 
                                voluntary contribution to the 
                                mechanical licensing collective shall 
                                be documented in a writing signed by an 
                                authorized agent of the mechanical 
                                licensing collective and the 
                                contributing party, and
                                    ``(II) such agreement shall be made 
                                available as required in proceedings 
                                before the Copyright Royalty Judges to 
                                establish or adjust the administrative 
                                assessment in accordance with 
                                applicable statutory and regulatory 
                                provisions and rulings of the Copyright 
                                Royalty Judges.
                            ``(ii) Treatment of contributions.--Any 
                        such voluntary contribution shall be treated 
                        for purposes of an administrative assessment 
                        proceeding as a general offset to total costs 
                        of the mechanical licensing collective that 
                        would otherwise be recovered through the 
                        administrative assessment. Any allocation or 
                        reallocation of voluntary contributions between 
                        or among individual digital music providers or 
                        significant nonblanket licensees shall be a 
                        matter of private negotiation and agreement 
                        among such parties and outside the scope of the 
                        administrative assessment proceeding.
                    ``(C) Interim application of accrued royalties.--In 
                the event that the administrative assessment, together 
                with any funding from voluntary contributions as 
                provided in subparagraphs (A) and (B), is inadequate to 
                cover current total costs of the mechanical licensing 
                collective, 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 reimbursement of such royalties from future 
                collections of the assessment.
                    ``(D) Determination of administrative assessment.--
                            ``(i) Administrative assessment to cover 
                        total costs.--The administrative assessment 
                        shall be used solely and exclusively to fund 
                        the total costs of the mechanical licensing 
                        collective.
                            ``(ii) Separate proceeding before copyright 
                        royalty judges.--The amount and terms of the 
                        administrative assessment shall be determined 
                        and established in a separate and independent 
                        proceeding before the Copyright Royalty Judges, 
                        according to the procedures described in 
                        clauses (iii) and (iv). The administrative 
                        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 
                                administrative assessment;
                                    ``(II) be established by the 
                                Copyright Royalty Judges in an amount 
                                that is calculated to defray the 
                                reasonable total costs of the 
                                mechanical licensing collective, as 
                                such total costs are defined in 
                                subsection (e)(31);
                                    ``(III) be assessed based on usage 
                                of musical works by digital music 
                                providers and significant nonblanket 
                                licensees in covered activities under 
                                both compulsory and nonblanket 
                                licenses;
                                    ``(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 other 
                                usage-based metric reasonably 
                                calculated to equitably allocate the 
                                costs of the mechanical licensing 
                                collective across digital music 
                                providers and significant nonblanket 
                                licensees engaged in covered 
                                activities, but shall include as a 
                                component a minimum fee for all digital 
                                music providers and significant 
                                nonblanket licensees; and
                                    ``(V) take into consideration not 
                                only anticipated future total costs and 
                                collections of the administrative 
                                assessment, but also, as applicable--
                                            ``(aa) any portion of past 
                                        actual total costs of the 
                                        mechanical licensing collective 
                                        not funded by previous 
                                        collections of the 
                                        administrative assessment or 
                                        voluntary contributions because 
                                        such collections or 
                                        contributions together were 
                                        insufficient to fund such 
                                        costs;
                                            ``(bb) any past collections 
                                        of the administrative 
                                        assessment and voluntary 
                                        contributions that exceeded 
                                        past actual total costs of the 
                                        mechanical licensing 
                                        collective, resulting in a 
                                        surplus; and
                                            ``(cc) the amount of any 
                                        voluntary contributions by 
                                        digital music providers or 
                                        significant nonblanket 
                                        licensees in relevant periods, 
                                        as described in subparagraphs 
                                        (A) and (B) of paragraph (7).
                            ``(iii) Initial administrative 
                        assessment.--The procedure for establishing the 
                        initial administrative assessment shall be as 
                        follows:
                                    ``(I) The Copyright Royalty Judges 
                                shall commence a proceeding to 
                                establish the initial administrative 
                                assessment within one year of the 
                                enactment date by publishing a notice 
                                in the Federal Register seeking 
                                petitions to participate.
                                    ``(II) The mechanical licensing 
                                collective and digital licensee 
                                coordinator shall participate in such 
                                proceeding, along with any interested 
                                copyright owners, digital music 
                                providers or significant nonblanket 
                                licensees that have notified the 
                                Copyright Royalty Judges of their 
                                desire to participate.
                                    ``(III) The Copyright Royalty 
                                Judges shall establish a schedule for 
                                submission by the parties of 
                                information that may be relevant to 
                                establishing the administrative 
                                assessment, including actual and 
                                anticipated total costs of the 
                                mechanical licensing collective, actual 
                                and anticipated collections from 
                                digital music providers and significant 
                                nonblanket licensees, and documentation 
                                of voluntary 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 
                                Copyright Royalty Judges, within 9 
                                months of commencement of the 
                                proceeding contemplated by this clause. 
                                The determination shall be supported by 
                                a written record. The initial 
                                administrative assessment shall be 
                                effective as of the license 
                                availability date, and shall continue 
                                in effect unless and until an adjusted 
                                administrative assessment is 
                                established pursuant to an adjustment 
                                proceeding under clause (iii).
                            ``(iv) Adjustment of administrative 
                        assessment.--The administrative assessment may 
                        be adjusted by the Copyright Royalty Judges in 
                        a proceeding to occur no more than once every 2 
                        years, in accordance with the following 
                        procedure:
                                    ``(I) The mechanical licensing 
                                collective, digital licensee 
                                coordinator, or one or more interested 
                                copyright owners, digital music 
                                providers or significant nonblanket 
                                licensees may file a petition with the 
                                Copyright Royalty Judges in the month 
                                of January to commence a proceeding to 
                                adjust the administrative assessment, 
                                if at least 2 years have expired since 
                                the date of the most recent 
                                determination of the administrative 
                                assessment by the Copyright Royalty 
                                Judges.
                                    ``(II) Notice of the commencement 
                                of such proceeding shall be published 
                                in the Federal Register in the month of 
                                February, along with a schedule of 
                                requested information and additional 
                                proceedings, as described in clause 
                                (iii)(III). The mechanical licensing 
                                collective and digital licensee 
                                coordinator shall participate in such 
                                proceeding, along with any interested 
                                copyright owners, digital music 
                                providers or significant nonblanket 
                                licensees that have notified the 
                                Copyright Royalty Judges of their 
                                desire to participate.
                                    ``(III) The adjusted administrative 
                                assessment, which shall be supported by 
                                a written record, shall be published in 
                                the Federal Register no later than 9 
                                months after the publication of the 
                                notice of commencement of the 
                                adjustment proceeding. The adjusted 
                                administrative assessment shall take 
                                effect as of January 1 of the following 
                                year.
                            ``(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 
                        negotiated agreement to establish the amount 
                        and terms of the administrative assessment that 
                        has been agreed to by the mechanical licensing 
                        collective, on the one hand, and the digital 
                        licensee coordinator (or if none has been 
                        designated, interested digital music providers 
                        and significant nonblanket licensees 
                        representing more than half of the market for 
                        uses of musical works in covered activities), 
                        on the other; provided, however, that the 
                        Copyright Royalty Judges shall have the 
                        discretion to reject any such agreement for 
                        good cause shown. An administrative assessment 
                        adopted under this clause shall apply to all 
                        digital music providers and significant 
                        nonblanket licensees engaged in covered 
                        activities during the period it is in effect.
                            ``(vi) Continuing authority to amend.--The 
                        Copyright Royalty Judges shall retain 
                        continuing authority to amend a determination 
                        of an administrative assessment to correct 
                        technical or clerical errors, or modify the 
                        terms of implementation, for good cause, with 
                        any such amendment to be published in the 
                        Federal Register.
                            ``(vii) Appeal of administrative 
                        assessment.--The determination of an 
                        administrative assessment by the Copyright 
                        Royalty Judges shall be appealable, within 30 
                        days after publication in the Federal Register, 
                        to the Court of Appeals for the District of 
                        Columbia Circuit by any party that fully 
                        participated in the proceeding. The 
                        administrative assessment as established by the 
                        Copyright Royalty Judges shall remain in effect 
                        pending the final outcome of any such appeal; 
                        provided, however, that the mechanical 
                        licensing collective, digital licensee 
                        coordinator, digital music providers, and 
                        significant nonblanket licensees shall 
                        implement appropriate financial or other 
                        measures within 3 months of 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 licensing collective nor the 
                digital licensee coordinator shall be a party to a 
                proceeding to determine rates and terms for activities 
                under this section as described in subsection 
                (c)(3)(C); provided, however, that 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 required under applicable 
                statutory and regulatory 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 establish a late fee for late payment of 
                royalties for uses of musical works under this section, 
                such fee shall apply to covered activities under 
                blanket licenses under this subsection, 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 asserting 
                        any other rights or remedies to which it may be 
                        entitled under this title.
                    ``(C) Interim rate agreements.--For any covered 
                activity for which no rate or terms have been 
                established by the Copyright Royalty Judges, the 
                mechanical licensing collective and a digital music 
                provider may agree to an interim rate and terms for 
                such activity; provided, however, that any such interim 
                rate and terms--
                            ``(i) shall be treated as nonprecedential 
                        and not cited or relied upon in any 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, except as may otherwise be agreed by 
                        the parties.
            ``(9) Transition to blanket licenses.--
                    ``(A) Substitution of blanket license.--As of the 
                license availability date, a blanket license obtained 
                by a digital music provider under this subsection 
                shall, without any interruption in license authority 
                enjoyed by such digital music provider, be 
                automatically substituted for and supersede any 
                existing license previously obtained by the digital 
                music provider from a copyright owner under this 
                section to engage in one or more covered activities 
                with respect to a musical work; provided, however, that 
                the foregoing shall not apply to authority obtained 
                from a record company to make and distribute permanent 
                downloads unless and until such record company 
                terminates such authority in writing as of the end of a 
                monthly reporting period, with a copy to the mechanical 
                licensing collective.
                    ``(B) Expiration of existing licenses.--Except to 
                the extent provided in subparagraph (A), as of the 
                license availability date, licenses obtained under this 
                section for covered activities prior to the license 
                availability date shall no longer continue in effect.
                    ``(C) Treatment of voluntary licenses.--A voluntary 
                license for a covered activity in effect as of the 
                license availability date will remain in effect unless 
                and until it expires according to its terms, or the 
                parties agree to amend or terminate the license. In a 
                case where a voluntary license for a covered activity 
                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 license is terminated or 
                amended, or the parties enter into a new voluntary 
                license.
                    ``(D) Further acceptance of notices for covered 
                activities by copyright office.--As of the enactment 
                date--
                            ``(i) the Copyright Office shall no longer 
                        accept notices of intention with respect to 
                        covered activities; and
                            ``(ii) previously filed notices of 
                        intention will no longer be effective or 
                        provide license authority with respect to 
                        covered activities; provided, however, that 
                        there shall be no liability pursuant to section 
                        501 for the reproduction or distribution of a 
                        musical work (or share thereof) under a validly 
                        filed notice of intention through the license 
                        availability date.
            ``(10) Prior unlicensed uses.--
                    ``(A) Limitation on liability in general.--A 
                copyright owner that commences an action pursuant to 
                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 distribution of a musical work by such digital music 
                provider in the course of engaging in covered 
                activities prior to the license availability date, 
                shall, as the copyright owner's sole and exclusive 
                remedy against the digital music provider, be eligible 
                to recover the royalty prescribed under subsection 
                (c)(3)(A) and chapter 8 of this title, from the digital 
                music provider, provided that such digital music 
                provider can demonstrate compliance with the 
                requirements of subparagraph (B), as applicable. In all 
                other cases the limitation on liability under this 
                subparagraph shall not apply.
                    ``(B) Requirements for limitation on liability.--
                The following requirements shall apply as of the 
                enactment date through the license availability date to 
                digital music providers seeking to avail themselves of 
                the limitation on liability described in subparagraph 
                (A):
                            ``(i) No later than 30 days after first 
                        making a particular sound recording of a 
                        musical work available through its service via 
                        one or more covered activities, or 30 days 
                        after the enactment date, whichever occurs 
                        later, a digital music provider shall engage in 
                        good-faith, commercially reasonable efforts to 
                        identify and locate each copyright owner of 
                        such musical work (or share thereof). Such 
                        required matching efforts shall include:
                                    ``(I) Good-faith, commercially 
                                reasonable efforts to obtain from the 
                                owner of the corresponding sound 
                                recording made available through the 
                                digital music provider's service the 
                                following information:
                                            ``(aa) Sound recording 
                                        name, featured artist, 
                                        producer, international 
                                        standard recording code, and 
                                        other information commonly used 
                                        in the industry to identify 
                                        sound recordings and match them 
                                        to the musical works they 
                                        embody.
                                            ``(bb) Any available 
                                        musical work ownership 
                                        information, including 
                                        songwriter and publisher 
                                        name(s), percentage ownership 
                                        share(s), and international 
                                        standard musical work code.
                                    ``(II) Employment of one or more 
                                bulk electronic matching processes that 
                                are available to the digital music 
                                provider through third-party vendors on 
                                commercially reasonable terms; 
                                provided, however, that a digital music 
                                provider may rely on its own bulk 
                                electronic matching process if it has 
                                capabilities comparable to or better 
                                than such third-party offerings.
                            ``(ii) The required matching efforts shall 
                        be repeated by the digital music provider no 
                        less than once per month for so long as the 
                        copyright owner remains unidentified or has not 
                        been located.
                            ``(iii) If the required matching efforts 
                        are successful in identifying and locating a 
                        copyright owner of a musical work (or share 
                        thereof) by the end of the calendar month in 
                        which the digital music provider first makes 
                        use of the work, the digital music provider 
                        shall provide statements of account and pay 
                        royalties to such copyright owner in accordance 
                        with this section and applicable regulations.
                            ``(iv) If the copyright owner is not 
                        identified or located by the end of the 
                        calendar month in which the digital music 
                        provider first makes use of the work, the 
                        digital music provider shall accrue and hold 
                        royalties calculated under the applicable 
                        statutory rate in accordance with usage of the 
                        work, from initial use of the work until the 
                        accrued royalties can be paid to the copyright 
                        owner or are required to be transferred to the 
                        mechanical licensing collective, as follows:
                                    ``(I) Accrued royalties shall be 
                                maintained by the digital music 
                                provider in accordance with generally 
                                accepted accounting principles.
                                    ``(II) If a copyright owner of an 
                                unmatched work (or share thereof) is 
                                identified and located by or to the 
                                digital music provider before the 
                                license availability date, the digital 
                                music provider shall--
                                            ``(aa) within 45 days after 
                                        the end of the calendar month 
                                        during which the copyright 
                                        owner was identified and 
                                        located, pay the copyright 
                                        owner all accrued royalties, 
                                        such payment to be accompanied 
                                        by a cumulative statement of 
                                        account that includes all of 
                                        the information that would have 
                                        been provided to the copyright 
                                        owner had the digital music 
                                        provider been providing monthly 
                                        statements of account to the 
                                        copyright owner from initial 
                                        use of the work in accordance 
                                        with this section and 
                                        applicable regulations, 
                                        including the requisite 
                                        certification under subsection 
                                        (c)(5);
                                            ``(bb) beginning with the 
                                        accounting period following the 
                                        calendar month in which the 
                                        copyright owner was identified 
                                        and located, and for all other 
                                        accounting periods prior to the 
                                        license availability date, 
                                        provide monthly statements of 
                                        account and pay royalties to 
                                        the copyright owner as required 
                                        under this section and 
                                        applicable regulations; and
                                            ``(cc) as of the monthly 
                                        royalty reporting period 
                                        commencing on the license 
                                        availability date, begin 
                                        reporting usage and paying 
                                        royalties for such musical work 
                                        (or share thereof) for such 
                                        reporting period and reporting 
                                        periods thereafter to the 
                                        mechanical licensing 
                                        collective, as required under 
                                        this subsection and applicable 
                                        regulations.
                                    ``(III) If a copyright owner of an 
                                unmatched work (or share thereof) is 
                                not identified and located by the 
                                license availability date, the digital 
                                music provider shall--
                                            ``(aa) within 45 days after 
                                        the license availability date, 
                                        transfer all accrued royalties 
                                        to the mechanical licensing 
                                        collective, such payment to be 
                                        accompanied by a cumulative 
                                        statement of account that 
                                        includes all of the information 
                                        that would have been provided 
                                        to the copyright owner had the 
                                        digital music provider been 
                                        serving monthly statements of 
                                        account on the copyright owner 
                                        from initial use of the work in 
                                        accordance with this section 
                                        and applicable regulations, 
                                        including the requisite 
                                        certification under subsection 
                                        (c)(5), and accompanied by an 
                                        additional certification by a 
                                        duly authorized officer of the 
                                        digital music provider that the 
                                        digital music provider has 
                                        fulfilled the requirements of 
                                        clauses (i) and (ii) of 
                                        subparagraph (B) but has not 
                                        been successful in locating or 
                                        identifying the copyright 
                                        owner; and
                                            ``(bb) as of the monthly 
                                        royalty reporting period 
                                        commencing on the license 
                                        availability date, begin 
                                        reporting usage and paying 
                                        royalties for such musical work 
                                        (or share thereof) for such 
                                        period and reporting periods 
                                        thereafter to the mechanical 
                                        licensing collective, as 
                                        required under this subsection 
                                        and applicable regulations.
                            ``(v) Suspension of late fees.--A digital 
                        music provider that complies with the 
                        requirements of this paragraph with respect to 
                        unmatched musical works (or shares of works) 
                        shall not be liable for or accrue late fees for 
                        late payments of royalties for such works until 
                        such time as the digital music provider is 
                        required to begin paying monthly royalties to 
                        the copyright owner or the mechanical licensing 
                        collective, as applicable.
                    ``(C) Adjusted statute of limitations.--
                Notwithstanding anything to the contrary in section 
                507(b), with respect to any claim of infringement of 
                the exclusive rights provided by paragraphs (1) and (3) 
                of section 106 against a digital music provider arising 
                from the unauthorized reproduction or distribution of a 
                musical work by such digital music provider to engage 
                in covered activities that accrued no more than 3 years 
                prior to the license availability date, such action may 
                be commenced within 3 years of the date the claim 
                accrued, or up to 2 years after the license 
                availability date, whichever is later.
                    ``(D) Other rights and remedies preserved.--Except 
                as expressly provided in this paragraph, nothing in 
                this paragraph shall be construed to alter, limit, or 
                negate any right or remedy of a copyright owner with 
                respect to unauthorized use of a musical work.
            ``(11) Legal protections for licensing activities.--
                    ``(A) Exemption for compulsory license 
                activities.--The antitrust exemption set forth in 
                subsection (c)(3)(B) shall apply to negotiations and 
                agreements between and among copyright owners and 
                persons entitled to obtain a compulsory license for 
                covered activities under this subsection, and common 
                agents acting on their behalf, including with respect 
                to the administrative assessment established under this 
                subsection.
                    ``(B) Limitation on common agent exemption.--
                Notwithstanding the antitrust exemption provided in 
                subsection (c)(3)(B) and subparagraph (A), except for 
                the administrative assessment, neither the mechanical 
                licensing collective nor the digital licensee 
                coordinator shall serve as a common agent with respect 
                to the establishment of royalty rates or terms under 
                this section.
                    ``(C) Antitrust exemption for administrative 
                activities.--Notwithstanding any provision of the 
                antitrust laws, copyright owners and persons entitled 
                to obtain a compulsory license under this section may 
                designate the mechanical licensing collective to 
                administer voluntary licenses for the reproduction or 
                distribution of musical works in covered activities on 
                their behalf; provided, however, that--
                            ``(i) each copyright owner shall establish 
                        the royalty rates and material license terms of 
                        any such voluntary license individually and not 
                        in agreement, combination, or concert with any 
                        other copyright owner;
                            ``(ii) each person entitled to obtain a 
                        compulsory license under this section shall 
                        establish the royalty rates and material 
                        license terms of any such voluntary license 
                        individually and not in agreement, combination, 
                        or concert with any other digital music 
                        provider; and
                            ``(iii) the mechanical licensing collective 
                        shall maintain the confidentiality of the 
                        voluntary licenses in accordance with the 
                        confidentiality provisions prescribed by the 
                        Register of Copyrights under subsection 
                        (d)(12)(C).
                    ``(D) Liability for good-faith activities.--The 
                mechanical licensing collective shall not be liable to 
                any person or entity based on a claim arising from its 
                good-faith administration of policies and procedures 
                adopted and implemented to carry out the 
                responsibilities set forth in subparagraphs (J) and (K) 
                of paragraph (3), except to the extent of correcting an 
                underpayment or overpayment of royalties as provided in 
                paragraph (3)(L)(i)(VI); provided, however, that it may 
                be named as a stakeholder in an action between 
                copyright owners if it is holding disputed funds that 
                are the subject of such action. For purposes of this 
                subparagraph, `good-faith administration' means 
                administration in a manner that is not grossly 
                negligent.
                    ``(E) Preemption of state property laws.--The 
                holding and distribution of funds by the mechanical 
                licensing collective in accordance with this subsection 
                shall supersede and preempt any State law (including 
                common law) concerning escheatment or abandoned 
                property, or any analogous provision, that might 
                otherwise apply.
            ``(12) Regulations.--
                    ``(A) Adoption by register of copyrights and 
                copyright royalty judges.--The Register of Copyrights 
                may conduct such proceedings and adopt such regulations 
                as may be necessary or appropriate to effectuate the 
                provisions of this subsection, except for regulations 
                concerning proceedings before the Copyright Royalty 
                Judges to establish the administrative assessment, 
                which shall be adopted by the Copyright Royalty Judges.
                    ``(B) Judicial review of regulations.--Except as 
                provided in paragraph (7)(D)(vii), regulations adopted 
                under this subsection shall be subject to judicial 
                review pursuant to chapter 7 of title 5.
                    ``(C) Protection of confidential information.--The 
                Register of Copyrights shall adopt regulations to 
                provide for the appropriate procedures to ensure that 
                confidential, private, proprietary, or privileged 
                information contained in the records of the mechanical 
                licensing collective and digital license coordinator is 
                not improperly disclosed or used, including through any 
                disclosure or use by the board of directors or 
                personnel of either entity, and specifically including 
                the unclaimed royalties oversight committee and the 
                dispute resolution committee of the mechanical 
                licensing collective.
            ``(13) Savings clauses.--
                    ``(A) Limitation on activities and rights 
                covered.--This subsection applies solely to uses of 
                musical works subject to licensing under this section. 
                The blanket compulsory license established hereunder 
                shall not be construed to extend or apply to activities 
                other than covered activities or to rights other than 
                the exclusive rights of reproduction and distribution 
                licensed under this section, or serve or act as the 
                basis to extend or expand the compulsory license under 
                this section to activities and rights not covered by 
                this section as of the enactment date.
                    ``(B) Rights of public performance not affected.--
                The rights, protections, and immunities granted under 
                this subsection, the data concerning musical works 
                collected and made available under this subsection, and 
                the definitions set forth in subsection (e) shall not 
                extend to, limit, or otherwise affect any right of 
                public performance in a musical work.''; and
            (5) by adding at the end the following new subsection:
    ``(e) Definitions.--As used in this section:
            ``(1) Accrued interest.--The term `accrued interest' means 
        interest accrued on accrued royalties, as described in 
        subsection (d)(3)(I)(ii).
            ``(2) Accrued royalties.--The term `accrued royalties' 
        means royalties accrued for the reproduction or distribution of 
        a musical work (or share thereof) in a covered activity, 
        calculated in accordance with the applicable rate under this 
        section.
            ``(3) Administrative assessment.--The term `administrative 
        assessment' means the fee to be paid by digital music providers 
        and significant nonblanket licensees that is established 
        pursuant to subsection (d)(7)(D).
            ``(4) Blanket license.--The term `blanket license' means a 
        compulsory license to engage in covered activities as described 
        in subsection (d)(1).
            ``(5) Budget.--The term `budget' means a statement of the 
        financial position of the mechanical licensing collective for a 
        fiscal year or quarter thereof based on estimates of 
        expenditures during the period and proposals for financing 
        them, including a calculation of total costs.
            ``(6) Copyright owner.--The term `copyright owner'--
                    ``(A) means the owner of the exclusive right of 
                reproduction or distribution in a musical work, in all 
                or in part, as provided in section 201 of this title; 
                and
                    ``(B) does not refer to ownership of any other 
                right.
            ``(7) Covered activity.--The term `covered activity' means 
        the activity of making a digital phonorecord delivery of a 
        musical work, including in the form of a permanent download, 
        limited download, or interactive stream, where such activity is 
        subject to compulsory licensing under this section.
            ``(8) Digital music provider.--The term `digital music 
        provider' means a person (or persons operating under the 
        authority of that person) that, with respect to a service 
        engaged in covered activities licensed under this subsection--
                    ``(A) has a direct contractual, subscription, or 
                other economic relationship with end users of the 
                service, or, if no such relationship with end users 
                exists, exercises direct control over the provision of 
                the service to end users;
                    ``(B) is able to fully report on any revenues and 
                consideration generated by the service; and
                    ``(C) is able to fully report on usage of sound 
                recordings of musical works by the service (or procure 
                such reporting).
            ``(9) Digital licensee coordinator.--The term `digital 
        licensee coordinator' means the entity described in subsection 
        (d)(5).
            ``(10) Digital phonorecord delivery.--The term `digital 
        phonorecord delivery' means each individual delivery of a 
        phonorecord by digital transmission of a sound recording that 
        results in a specifically identifiable reproduction by or for 
        any transmission recipient of a phonorecord of that sound 
        recording, regardless of whether the digital transmission is 
        also a public performance of the sound recording or any musical 
        work embodied therein, and includes a permanent download, a 
        limited download, or an interactive stream. A digital 
        phonorecord delivery does not result from a real-time, 
        noninteractive subscription transmission of a sound recording 
        where no reproduction of the sound recording or the musical 
        work embodied therein is made from the inception of the 
        transmission through to its receipt by the transmission 
        recipient in order to make the sound recording audible. A 
        digital phonorecord delivery does not include the digital 
        transmission of sounds accompanying a motion picture or other 
        audiovisual work as defined in section 101 of this title.
            ``(11) Enactment date.--The term `enactment date' means the 
        date of enactment of the Music Modernization Act of 2018.
            ``(12) Individual download license.--The term `individual 
        download license' means a license obtained by a record company 
        under subsection (b)(3) to make and distribute, or authorize 
        the making and distribution of, permanent downloads embodying a 
        specific musical work (or share of a work).
            ``(13) Interactive stream.--The term `interactive stream' 
        means a digital transmission of a sound recording of a musical 
        work in the form of a stream, where the performance of the 
        sound recording by means of such transmission is not exempt 
        under section 114(d)(1) and does not in itself, or as a result 
        of a program in which it is included, qualify for statutory 
        licensing under section 114(d)(2). An interactive stream is a 
        digital phonorecord delivery.
            ``(14) Interested.--The term `interested', as applied to a 
        party seeking to participate in a proceeding under subsection 
        (d)(7)(D), is a party as to which the Copyright Royalty Judges 
        have not determined that the party lacks a significant interest 
        in such proceeding.
            ``(15) License availability date.--The term `license 
        availability date' means January 1 following the second 
        anniversary of the enactment of Music Modernization Act of 
        2018.
            ``(16) Limited download.--The term `limited download' means 
        a digital transmission of a sound recording of a musical work 
        in the form of a download, where such sound recording is 
        accessible for listening only for a limited amount of time or 
        specified number of times.
            ``(17) Matched.--The term `matched', as applied to a 
        musical work (or share thereof), means that the copyright owner 
        of such work (or share thereof) has been identified and 
        located.
            ``(18) Mechanical licensing collective.--The term 
        `mechanical licensing collective' means the entity described in 
        subsection (d)(3)(A).
            ``(19) Musical works database.--The term `musical works 
        database' means the database described in subsection (d)(3)(E).
            ``(20) Notice of license.--The term `notice of license' 
        means a notice from a digital music provider provided under 
        subsection (d)(2)(A) for purposes of obtaining a blanket 
        license to engage in covered activities under subsection (d).
            ``(21) Notice of nonblanket activity.--The term `notice of 
        nonblanket activity' means a notice from a significant 
        nonblanket licensee provided under subsection (d)(6)(A) for 
        purposes of notifying the mechanical licensing collective that 
        it has been engaging in covered activities.
            ``(22) Permanent download.--The term `permanent download' 
        means a digital transmission of a sound recording of a musical 
        work in the form of a download, where such sound recording is 
        accessible for listening without restriction as to the amount 
        of time or number of times it may be accessed.
            ``(23) Qualified auditor.--The term `qualified auditor' 
        means an independent, certified public accountant with 
        experience performing music royalty audits.
            ``(24) Record company.--The term `record company' means an 
        entity that invests in, produces, and markets sound recordings 
        of musical works, and distributes such sound recordings for 
        remuneration through multiple sales channels.
            ``(25) Report of usage.--The term `report of usage' means a 
        report reflecting an entity's usage of musical works in covered 
        activities as described in subsection (d)(4)(A).
            ``(26) Required matching efforts.--The term `required 
        matching efforts' means efforts to identify and locate 
        copyright owners of musical works as described in subsection 
        (d)(10)(B)(i).
            ``(27) Service.--The term `service', as used in relation to 
        covered activities, means any site or other facility through 
        which sound recordings of musical works are made available by 
        digital transmission to members of the public.
            ``(28) Share.--The term `share', as applied to a musical 
        work, means a fractional ownership interest in such work.
            ``(29) Significant nonblanket licensee.--The term 
        `significant nonblanket licensee' means an entity, including a 
        group of entities under common ownership or control that, 
        acting under the authority of one or more voluntary or 
        individual download licenses, offers a service engaged in 
        covered activities, where such entity or group of entities--
                    ``(A) is not currently operating under a blanket 
                license obtained under this subsection and therefore is 
                not obligated to provide reports of usage reflecting 
                covered activities under subsection (d)(4)(A);
                    ``(B) has a direct contractual, subscription, or 
                other economic relationship with end users of the 
                service or, if no such relationship with end users 
                exists, exercises direct control over the provision of 
                the service to end users; and
                    ``(C) either--
                            ``(i) at any time in a calendar month, 
                        makes more than 5,000 different sound 
                        recordings of musical works available through 
                        its service; or
                            ``(ii) derives revenue or other 
                        consideration in connection with such covered 
                        activities greater than 50,000 dollars in a 
                        calendar month, or total revenue or other 
                        consideration greater than 500,000 dollars 
                        during the preceding 12 calendar months.
            ``(30) Songwriter.--The term `songwriter' means the author 
        of all or part of a musical work, including a composer or 
        lyricist.
            ``(31) Total costs.--The term `total costs' means the total 
        costs of establishing, maintaining, and operating the 
        mechanical licensing collective to fulfill its statutory 
        functions, including startup costs; financing, legal, and 
        insurance costs; investments in information technology, 
        infrastructure, and other long-term resources; outside vendor 
        costs; costs of licensing, royalty administration, and 
        enforcement of rights; costs of bad debt; and costs of 
        automated and manual efforts to identify and locate copyright 
        owners of musical works (and shares thereof) and match sound 
        recordings to the musical works they embody; provided, however, 
        that total costs shall not include any added costs incurred by 
        the mechanical licensing collective to provide services under 
        voluntary licenses.
            ``(32) Unclaimed accrued royalties.--The term `unclaimed 
        accrued royalties' means accrued royalties eligible for 
        distribution under subsection (d)(3)(J).
            ``(33) Unmatched.--The term `unmatched', as applied to a 
        musical work (or share thereof), means that the copyright owner 
        of such work (or share thereof) has not been identified or 
        located.
            ``(34) Voluntary license.--The term `voluntary license' 
        means a license for use of a musical work (or share thereof) 
        other than a compulsory license obtained under this section.''.
    (b) Technical and Conforming Amendments to Section 801.--Section 
801(b) of title 17, United States Code, is amended--
            (1) in paragraph (1), by striking ``The rates applicable 
        under sections 114(f)(1)(B), 115, and 116 shall be calculated 
        to achieve the following objectives'' and inserting ``The rates 
        applicable under sections 114(f)(1)(B) and 116 shall be 
        calculated to achieve the following objectives'';
            (2) by redesignating paragraph (8) as paragraph (9); and
            (3) by inserting after paragraph (7) the following new 
        paragraph:
            ``(8) To determine the administrative assessment to be paid 
        by digital music providers under section 115(d). The provisions 
        of section 115(d) shall apply to the conduct of proceedings by 
        the Copyright Royalty Judges under section 115(d) and not the 
        procedures set forth in this section, or section 803, 804, or 
        805.''.
    (c) Effective Date of Amended Rate Setting Standard.--The 
amendments made by subsections (a)(3)(D) and (b)(1) shall apply to any 
proceeding before the Copyright Royalty Judges that is pending on, or 
commenced on or after, the date of the enactment of this Act.
    (d) Technical and Conforming Amendments to Title 37, Part 385 of 
the Code of Federal Regulations.--Within 9 months after the date of the 
enactment of this Act, the Copyright Royalty Judges shall amend the 
existing regulations for section 115 in part 385 of title 17, Code of 
Federal Regulations, to conform definitions used in such part to the 
definitions of the same terms set forth in section 115(e) of title 17, 
United States Code, as amended by subsection (a). In so doing, the 
Copyright Royalty Judges shall make adjustments to the language of the 
regulations as necessary to achieve the same purpose and effect as the 
original regulations with respect to the rates and terms previously 
adopted by the Copyright Royalty Judges.
    (e) Best Practices Working Group.--Not later than 1 year after the 
date of the enactment of this Act, the Register of Copyrights shall 
establish a working group consisting of representatives of the 
mechanical licensing collective, the digital licensee coordinator, 
copyright owners, digital music providers, sound recording owners, and 
performing rights societies to consider and advise on best practices to 
minimize the incidence of unidentified and unmatched musical works and 
facilitate and encourage the exchange of ownership information and 
prompt access to such information by and among such parties.

SEC. 3. AMENDMENT TO SECTION 114.

    (a) Repeal.--Subsection (i) of section 114 of title 17, United 
States Code, is repealed.
    (b) Proceedings Not Affected.--The repeal of section 114(i) of 
title 17, United States Code, by subsection (a) shall not be taken into 
account in any proceeding to set or adjust the rates and fees payable 
for the use of sound recordings under section 112(e) or section 114(f) 
of such title that is pending on, or commenced on or after, the date of 
the enactment of this Act.
    (c) Decisions and Precedents Not Affected.--The repeal of section 
114(i) of title 17, United States Code, by subsection (a) shall not 
have any effect upon the decisions, or the precedents established or 
relied upon, in any proceeding to set or adjust the rates and fees 
payable for the use of sound recordings under section 112(e) or section 
114(f) of such title before the date of the enactment of this Act.

SEC. 4. RANDOM ASSIGNMENT OF RATE COURT PROCEEDINGS.

    Section 137 of title 28, United States Code, is amended--
            (1) by striking ``The business'' and inserting ``(a) The 
        business''; and
            (2) by adding at the end the following new subsection:
    ``(b)(1) In the case of any performing rights society subject to a 
consent decree, any application for the determination of a license fee 
for the public performance of music in accordance with the applicable 
consent decree shall be made in the district court with jurisdiction 
over that consent decree and assigned by lot to a judge of that 
district court according to that court's rules for the division of 
business among district judges currently in effect or as may be amended 
from time to time, provided that any such application shall not be 
assigned to (A) a judge to whom continuing jurisdiction over any 
performing rights society for any performing rights society consent 
decree is assigned or has previously been assigned, or (B) a judge to 
whom another proceeding concerning an application for the determination 
of a reasonable license fee is assigned at the time of the filing of 
the application. This provision does not apply to applications to 
determine reasonable license fees made by individual proprietors under 
section 513 of title 17.
    ``(2) Nothing in paragraph (1) shall abrogate the right of any 
party to the applicable consent decree to make an application for a 
construction of any provision of the applicable consent decree to the 
judge to whom continuing jurisdiction over the applicable consent 
decree is currently assigned. If a party to a consent decree makes such 
an application in connection with any rate proceeding, such proceeding 
shall be stayed until the final determination of the construction 
application.''.
                                 <all>