[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5447 Engrossed in House (EH)]

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115th CONGRESS
  2d Session
                                H. R. 5447

_______________________________________________________________________

                                 AN ACT


 
          To modernize copyright law, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Music 
Modernization Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Rescission Of Unobligated Balances In The Department Of Justice 
                            Assets Forfeiture Fund.
                 TITLE I--MUSIC LICENSING MODERNIZATION

Sec. 101. Short title.
Sec. 102. Blanket license for digital uses and mechanical licensing 
                            collective.
Sec. 103. Amendments to section 114.
Sec. 104. Random assignment of rate court proceedings.
  TITLE II--COMPENSATING LEGACY ARTISTS FOR THEIR SONGS, SERVICE, AND 
                   IMPORTANT CONTRIBUTIONS TO SOCIETY

Sec. 201. Short title.
Sec. 202. Unauthorized digital performance of pre-1972 sound 
                            recordings.
Sec. 203. Effective date.
               TITLE III--ALLOCATION FOR MUSIC PRODUCERS

Sec. 301. Short title.
Sec. 302. Payment of statutory performance royalties.
Sec. 303. Effective date.

SEC. 2. RESCISSION OF UNOBLIGATED BALANCES IN THE DEPARTMENT OF JUSTICE 
              ASSETS FORFEITURE FUND.

    Of the unobligated balances available under the Department of 
Justice Assets Forfeiture Fund, $47,000,000 is hereby permanently 
rescinded.

                 TITLE I--MUSIC LICENSING MODERNIZATION

SEC. 101. SHORT TITLE.

    This title may be cited as the ``Musical Works Modernization Act''.

SEC. 102. 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'';
                    (B) by striking paragraph (1) and inserting the 
                following new paragraph:
            ``(1) Eligibility for compulsory license.--
                    ``(A) Conditions for compulsory license.--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, including by means 
                        of digital phonorecord delivery; or
                            ``(ii) in the case of a digital music 
                        provider seeking to make and distribute digital 
                        phonorecord deliveries of a sound recording 
                        embodying a musical work under a compulsory 
                        license for which clause (i) does not apply--
                                    ``(I) the first fixation of such 
                                sound recording was made under the 
                                authority of the musical work copyright 
                                owner, and sound recording copyright 
                                owner has the authority of the musical 
                                work copyright owner to make and 
                                distribute digital phonorecord 
                                deliveries embodying such work to the 
                                public in the United States; and
                                    ``(II) the sound recording 
                                copyright owner 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) Duplication of sound recording.--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.''; and
                    (C) in paragraph (2), by striking ``A compulsory 
                license'' and inserting ``Musical arrangement.--A 
                compulsory license'';
            (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 subsection (a) to make and distribute phonorecords of a 
        musical work other than by means of digital phonorecord 
        delivery shall, before or within 30 calendar days after 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 with 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 subsection (a) to make and 
        distribute phonorecords of a musical work by means of digital 
        phonorecord delivery--
                    ``(A) prior to the license availability date, 
                shall, before or within 30 calendar days after first 
                making any such digital phonorecord delivery, serve a 
                notice of intention to do so on the copyright owner 
                (but may not file the notice with the Copyright Office, 
                even if the public records of the Office do not 
                identify the owner or the owner's address), and such 
                notice shall comply, in form, content, and manner of 
                service, with requirements that the Register of 
                Copyrights shall prescribe by regulation; or
                    ``(B) on or after the license availability date, 
                shall, before making any such digital phonorecord 
                delivery, follow the procedure described in subsection 
                (d)(2), except as provided in paragraph (3).
            ``(3) Record company individual download licenses.--
        Notwithstanding paragraph (2)(B), a record company may, on or 
        after the license availability date, obtain an individual 
        download license in accordance with the notice requirements 
        described in paragraph (2)(A) (except for the requirement that 
        notice occur prior to the license availability date). A record 
        company that obtains an individual download license as 
        permitted under this paragraph shall provide statements of 
        account and pay royalties as provided in subsection (c)(2)(I).
            ``(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 absence of a voluntary license, the failure 
                to obtain a compulsory license renders the making and 
                distribution of phonorecords actionable as acts of 
                infringement under section 501 and subject to the 
                remedies provided by sections 502 through 506.
                    ``(B) Digital phonorecord deliveries.--
                            ``(i) In the case of phonorecords made and 
                        distributed by means of digital phonorecord 
                        delivery:
                                    ``(I) The failure to serve the 
                                notice of intention required by 
                                paragraph (2)(A) or paragraph (3), as 
                                applicable, forecloses the possibility 
                                of a compulsory license under such 
                                paragraph.
                                    ``(II) The failure to comply with 
                                paragraph (2)(B) forecloses the 
                                possibility of a blanket license for a 
                                period of 3 years after the last 
                                calendar day on which the notice of 
                                license was required to be submitted to 
                                the mechanical licensing collective 
                                under such paragraph.
                            ``(ii) In either case described in clause 
                        (i), 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) by amending subsection (c) to read as follows:
    ``(c) General Conditions Applicable to Compulsory License.--
            ``(1) Royalty payable under compulsory license.--
                    ``(A) Identification requirement.--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.
                    ``(B) Royalty for phonorecords other than digital 
                phonorecord deliveries.--Except as provided by 
                subparagraph (A), for every phonorecord made and 
                distributed under a compulsory license under subsection 
                (a) 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 (D) through (F) and 
                paragraph (2)(A) and chapter 8 of this title. For 
                purposes of this subparagraph, a phonorecord is 
                considered `distributed' if the person exercising the 
                compulsory license has voluntarily and permanently 
                parted with its possession.
                    ``(C) Royalty for digital phonorecord deliveries.--
                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 (D) through (F) and 
                paragraph (2)(A) and chapter 8 of this title.
                    ``(D) Authority to negotiate.--Notwithstanding any 
                provision of the antitrust laws, any copyright owners 
                of nondramatic musical works and any persons entitled 
                to obtain a compulsory license under subsection (a) may 
                negotiate and agree upon the terms and rates of royalty 
                payments under this section and the proportionate 
                division of fees paid among copyright owners, and may 
                designate common agents on a nonexclusive basis to 
                negotiate, agree to, pay or receive such royalty 
                payments. Such authority to negotiate the terms and 
                rates of royalty payments includes, but is not limited 
                to, the authority to negotiate the year during which 
                the royalty rates prescribed under this subparagraph 
                and subparagraphs (E) and (F) and paragraph (2)(A) and 
                chapter 8 of this title shall next be determined.
                    ``(E) Determination of reasonable rates and 
                terms.--Proceedings under chapter 8 shall determine 
                reasonable rates and terms of royalty payments for the 
                activities specified by this section during the period 
                beginning with the effective date of such rates and 
                terms, but not earlier than January 1 of the second 
                year following the year in which the petition 
                requesting the proceeding is filed, and ending on the 
                effective date of successor rates and terms, or such 
                other period as the parties may agree. Any copyright 
                owners of nondramatic musical works and any persons 
                entitled to obtain a compulsory license under 
                subsection (a) may submit to the Copyright Royalty 
                Judges licenses covering such activities. The parties 
                to each proceeding shall bear their own costs.
                    ``(F) Schedule of reasonable rates.--The schedule 
                of reasonable rates and terms determined by the 
                Copyright Royalty Judges shall, subject to paragraph 
                (2)(A), be binding on all copyright owners of 
                nondramatic musical works and persons entitled to 
                obtain a compulsory license under subsection (a) during 
                the period specified in subparagraph (E), such other 
                period as may be determined pursuant to subparagraphs 
                (D) and (E), or such other 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.
            ``(2) Additional terms and conditions.--
                    ``(A) Voluntary licenses and contractual royalty 
                rates.--
                            ``(i) License agreements voluntarily 
                        negotiated at any time between one or more 
                        copyright owners of nondramatic musical works 
                        and one or more persons entitled to obtain a 
                        compulsory license under subsection (a) shall 
                        be given effect in lieu of any determination by 
                        the Copyright Royalty Judges. Subject to clause 
                        (ii), the royalty rates determined pursuant to 
                        subparagraphs (E) and (F) of paragraph (1) 
                        shall be given effect as to digital phonorecord 
                        deliveries in lieu of any contrary royalty 
                        rates specified in a contract pursuant to which 
                        a recording artist who is the author of a 
                        nondramatic musical work grants a license under 
                        that person's exclusive rights in the musical 
                        work under paragraphs (1) and (3) of section 
                        106 or commits another person to grant a 
                        license in that musical work under paragraphs 
                        (1) and (3) of section 106, to a person 
                        desiring to fix in a tangible medium of 
                        expression a sound recording embodying the 
                        musical work.
                            ``(ii) The second sentence of clause (i) 
                        shall not apply to--
                                    ``(I) a contract entered into on or 
                                before June 22, 1995, and not modified 
                                thereafter for the purpose of reducing 
                                the royalty rates determined pursuant 
                                to subparagraphs (E) and (F) of 
                                paragraph (1) or of increasing the 
                                number of musical works within the 
                                scope of the contract covered by the 
                                reduced rates, except if a contract 
                                entered into on or before June 22, 
                                1995, is modified thereafter for the 
                                purpose of increasing the number of 
                                musical works within the scope of the 
                                contract, any contrary royalty rates 
                                specified in the contract shall be 
                                given effect in lieu of royalty rates 
                                determined pursuant to subparagraphs 
                                (E) and (F) of paragraph (1) for the 
                                number of musical works within the 
                                scope of the contract as of June 22, 
                                1995; and
                                    ``(II) a contract entered into 
                                after the date that the sound recording 
                                is fixed in a tangible medium of 
                                expression substantially in a form 
                                intended for commercial release, if at 
                                the time the contract is entered into, 
                                the recording artist retains the right 
                                to grant licenses as to the musical 
                                work under paragraphs (1) and (3) of 
                                section 106.
                    ``(B) Sound recording information.--Except as 
                provided in section 1002(e) of this title, a digital 
                phonorecord delivery licensed under this paragraph 
                shall be accompanied by the information encoded in the 
                sound recording, if any, by or under the authority of 
                the copyright owner of that sound recording, that 
                identifies the title of the sound recording, the 
                featured recording artist who performs on the sound 
                recording, and related information, including 
                information concerning the underlying musical work and 
                its writer.
                    ``(C) Infringement remedies.--
                            ``(i) A digital phonorecord delivery of a 
                        sound recording is actionable as an act of 
                        infringement under section 501, and is fully 
                        subject to the remedies provided by sections 
                        502 through 506, unless--
                                    ``(I) the digital phonorecord 
                                delivery has been authorized by the 
                                sound recording copyright owner; and
                                    ``(II) the entity making the 
                                digital phonorecord delivery has 
                                obtained a compulsory license under 
                                subsection (a) or has otherwise been 
                                authorized by the musical work 
                                copyright owner, or by a record company 
                                pursuant to an individual download 
                                license, to make and distribute 
                                phonorecords of each musical work 
                                embodied in the sound recording by 
                                means of digital phonorecord delivery.
                            ``(ii) Any cause of action under this 
                        subparagraph shall be in addition to those 
                        available to the owner of the copyright in the 
                        nondramatic musical work under subparagraph (J) 
                        and section 106(4) and the owner of the 
                        copyright in the sound recording under section 
                        106(6).
                    ``(D) Liability of sound recording owners.--The 
                liability of the copyright owner of a sound recording 
                for infringement of the copyright in a nondramatic 
                musical work embodied in the sound recording shall be 
                determined in accordance with applicable law, except 
                that the owner of a copyright in a sound recording 
                shall not be liable for a digital phonorecord delivery 
                by a third party if the owner of the copyright in the 
                sound recording does not license the distribution of a 
                phonorecord of the nondramatic musical work.
                    ``(E) Recording devices and media.--Nothing in 
                section 1008 shall be construed to prevent the exercise 
                of the rights and remedies allowed by this paragraph, 
                subparagraph (J), and chapter 5 in the event of a 
                digital phonorecord delivery, except that no action 
                alleging infringement of copyright may be brought under 
                this title against a manufacturer, importer or 
                distributor of a digital audio recording device, a 
                digital audio recording medium, an analog recording 
                device, or an analog recording medium, or against a 
                consumer, based on the actions described in such 
                section.
                    ``(F) Preservation of rights.--Nothing in this 
                section annuls or limits (i) the exclusive right to 
                publicly perform a sound recording or the musical work 
                embodied therein, including by means of a digital 
                transmission, under sections 106(4) and 106(6), (ii) 
                except for compulsory licensing under the conditions 
                specified by this section, the exclusive rights to 
                reproduce and distribute the sound recording and the 
                musical work embodied therein under sections 106(1) and 
                106(3), including by means of a digital phonorecord 
                delivery, or (iii) any other rights under any other 
                provision of section 106, or remedies available under 
                this title, as such rights or remedies exist either 
                before or after the date of enactment of the Digital 
                Performance Right in Sound Recordings Act of 1995.
                    ``(G) Exempt transmissions and retransmissions.--
                The provisions of this section concerning digital 
                phonorecord deliveries shall not apply to any exempt 
                transmissions or retransmissions under section 
                114(d)(1). The exemptions created in section 114(d)(1) 
                do not expand or reduce the rights of copyright owners 
                under section 106(1) through (5) with respect to such 
                transmissions and retransmissions.
                    ``(H) Distribution by rental, lease, or lending.--A 
                compulsory license obtained under subsection (b)(1) to 
                make and distribute phonorecords includes the right of 
                the maker of such a phonorecord to distribute or 
                authorize distribution of such phonorecord, other than 
                by means of a digital phonorecord delivery, by rental, 
                lease, or lending (or by acts or practices in the 
                nature of rental, lease, or lending). With respect to 
                each nondramatic musical work embodied in the 
                phonorecord, the royalty shall be a proportion of the 
                revenue received by the compulsory licensee from every 
                such act of distribution of the phonorecord under this 
                clause equal to the proportion of the revenue received 
                by the compulsory licensee from distribution of the 
                phonorecord under subsection (a)(1)(A)(ii)(II) that is 
                payable by a compulsory licensee under that clause and 
                under chapter 8. The Register of Copyrights shall issue 
                regulations to carry out the purpose of this clause.
                    ``(I) Payment of royalties and statements of 
                account.--Except as provided in paragraphs (4)(A)(i) 
                and (10)(B) of subsection (d), royalty payments shall 
                be made on or before the twentieth day of each month 
                and shall include all royalties for the month next 
                preceding. Each monthly payment shall be made under 
                oath and shall comply with requirements that the 
                Register of Copyrights shall prescribe by regulation. 
                The Register shall also prescribe regulations under 
                which detailed cumulative annual statements of account, 
                certified by a certified public accountant, shall be 
                filed for every compulsory license under subsection 
                (a). The regulations covering both the monthly and the 
                annual statements of account shall prescribe the form, 
                content, and manner of certification with respect to 
                the number of records made and the number of records 
                distributed.
                    ``(J) Notice of default and termination of 
                compulsory license.--In the case of a license obtained 
                under subsection (b)(1), (b)(2)(A), or (b)(3), if the 
                copyright owner does not receive the monthly payment 
                and the monthly and annual statements of account when 
                due, the owner may give written notice to the licensee 
                that, unless the default is remedied within 30 days 
                from the date of the notice, the compulsory license 
                will be automatically terminated. Such termination 
                renders either the making or the distribution, or both, 
                of all phonorecords for which the royalty has not been 
                paid, actionable as acts of infringement under section 
                501 and fully subject to the remedies provided by 
                sections 502 through 506. 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) In general.--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 to 
                make and distribute digital phonorecord deliveries of 
                musical works through one or more covered activities.
                    ``(B) Included activities.--A blanket license--
                            ``(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 (C);
                            ``(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 described in 
                        clauses (i) and (ii).
                    ``(C) Other licenses.--A voluntary license for 
                covered activities entered into by or under the 
                authority of one or more copyright owners and one or 
                more digital music providers, or authority to make and 
                distribute permanent downloads of a musical work 
                obtained by a digital music provider from a sound 
                recording copyright owner pursuant to an individual 
                download license, shall be given effect in lieu of a 
                blanket license under this subsection with respect to 
                the musical works (or shares thereof) covered by such 
                voluntary license or individual download authority and 
                the following conditions apply:
                            ``(i) Where a voluntary license or 
                        individual download license applies, the 
                        license authority provided under the blanket 
                        license shall exclude any musical works (or 
                        shares thereof) subject to the voluntary 
                        license 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).
                            ``(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)(2)(A) and paragraph (9)(C), 
                        as applicable.
                    ``(D) 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).
                    ``(E) 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 by 
                submitting a notice of license to the mechanical 
                licensing collective 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 
                        calendar days after receipt, the blanket 
                        license shall be effective as of the date the 
                        notice of license was sent by the digital music 
                        provider as shown by a physical or electronic 
                        record.
                            ``(iii) A notice of license may only be 
                        rejected by the mechanical licensing collective 
                        if--
                                    ``(I) the digital music provider or 
                                notice of license does not meet the 
                                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 blanket license terminated by 
                                the mechanical licensing collective 
                                within the past 3 years pursuant to 
                                paragraph (4)(E).
                            ``(iv) If a notice of license is rejected 
                        under clause (iii)(I), the digital music 
                        provider shall have 30 calendar 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.
                            ``(v) A digital music provider that 
                        believes a notice of license was improperly 
                        rejected by the mechanical licensing collective 
                        may seek review of such rejection in Federal 
                        district court. The district court shall 
                        determine the matter de novo based on the 
                        record before the mechanical licensing 
                        collective and any additional evidence 
                        presented by the parties.
                    ``(B) Blanket license effective date.--Blanket 
                licenses shall be made available by the mechanical 
                licensing collective on and after the license 
                availability date. No such 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 nonprofit, not owned by any 
                        other entity, that is created by copyright 
                        owners to carry out responsibilities under this 
                        subsection;
                            ``(ii) is endorsed by and enjoys 
                        substantial support from musical work copyright 
                        owners that together represent the greatest 
                        percentage of the licensor market for uses of 
                        such works in covered activities, as measured 
                        over the preceding 3 full 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 
                        after the enactment date as follows:
                                    ``(I) Within 90 calendar days after 
                                the enactment date, the Register shall 
                                publish notice in the Federal Register 
                                soliciting information to assist in 
                                identifying the appropriate entity to 
                                serve as the mechanical licensing 
                                collective, including the name and 
                                affiliation of each member of the board 
                                of directors described under 
                                subparagraph (D)(i) and each committee 
                                established pursuant to clauses (iii), 
                                (iv), and (v) of subparagraph (D).
                                    ``(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 described 
                        in clauses (i) through (iii) of subparagraph 
                        (A) shall 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 
                                and no longer than 9 months after the 
                                date of publication of such notice, as 
                                specified by the Register.
                                    ``(II) If a new entity is 
                                designated as a mechanical licensing 
                                collective, the Register shall adopt 
                                regulations to govern the transfer of 
                                licenses, funds, records, data, and 
                                administrative responsibilities from 
                                the existing mechanical licensing 
                                collective to the new entity.
                            ``(iii) Closest alternative designation.--
                        If the Register is unable to identify an entity 
                        that fulfills each of the qualifications set 
                        forth in clauses (i) through (iii) of 
                        subparagraph (A), the Register shall designate 
                        the entity that most nearly fulfills such 
                        qualifications for purposes of carrying out the 
                        responsibilities of the mechanical licensing 
                        collective.
                    ``(C) Authorities and functions.--
                            ``(i) In general.--The mechanical licensing 
                        collective is authorized to perform the 
                        following functions, subject to more particular 
                        requirements as described in this subsection:
                                    ``(I) Offer and administer blanket 
                                licenses, including receipt of notices 
                                of license and reports of usage from 
                                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 the musical works 
                                database 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 legal and other 
                                efforts to enforce rights and 
                                obligations under this subsection, 
                                including by filing bankruptcy proofs 
                                of claims for amounts owed under 
                                licenses, and acting 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 described 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 
                        clause (iii), the mechanical licensing 
                        collective may also administer, or assist in 
                        administering, voluntary licenses issued by or 
                        individual download licenses obtained from 
                        copyright owners for uses of musical works, for 
                        which the mechanical licensing collective shall 
                        charge reasonable fees for such services.
                            ``(iii) Restriction concerning public 
                        performance rights.--The mechanical licensing 
                        collective may, pursuant to clause (ii), 
                        provide administration services with respect to 
                        voluntary licenses that include the right of 
                        public performance in musical works, but may 
                        not itself negotiate or grant licenses for the 
                        right of public performance in musical works, 
                        and may not be the exclusive or nonexclusive 
                        assignee or grantee of the right of public 
                        performance in musical works.
                            ``(iv) Restriction on lobbying.--The 
                        mechanical licensing collective may not engage 
                        in government lobbying activities, but may 
                        engage in the activities described 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 14 voting members and 3 
                        nonvoting members, as follows:
                                    ``(I) Ten voting members shall be 
                                representatives of music publishers to 
                                which songwriters have assigned 
                                exclusive rights of reproduction and 
                                distribution of musical works with 
                                respect to covered activities and no 
                                such music publisher member may be 
                                owned by, or under common control with, 
                                any other board member.
                                    ``(II) Four voting members shall be 
                                professional songwriters who have 
                                retained and exercise exclusive rights 
                                of reproduction and distribution with 
                                respect to covered activities with 
                                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 percentage 
                                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 paragraph 
                                (5)(B). Otherwise, the nonvoting member 
                                shall be the nonprofit trade 
                                association of digital licensees that 
                                represents the greatest percentage of 
                                the licensee market for uses of 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 songwriters in the United 
                                States.
                            ``(ii) Board meetings.--The board of 
                        directors shall meet no less than two times per 
                        year and discuss matters pertinent to the 
                        operations, including the mechanical licensing 
                        collective budget.
                            ``(iii) Operations advisory committee.--The 
                        board of directors of the mechanical licensing 
                        collective shall establish an operations 
                        advisory committee consisting of no fewer than 
                        six 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 members 
                        of the committee who are--
                                    ``(I) musical work copyright owners 
                                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, 5 of which 
                        shall be musical work copyright owners and 5 of 
                        which shall be professional songwriters whose 
                        works are used in covered activities.
                            ``(v) Dispute resolution committee.--The 
                        board of directors of the mechanical licensing 
                        collective shall establish and appoint a 
                        dispute resolution committee consisting of no 
                        fewer than six members, which committee shall 
                        include an equal number of representatives of 
                        musical work copyright owners and professional 
                        songwriters.
                            ``(vi) Mechanical licensing collective 
                        annual report.--Not later than June 30 of each 
                        year commencing after the license availability 
                        date, the mechanical licensing collective shall 
                        post, and make available online for a period of 
                        at least 3 years, an annual report that sets 
                        forth how the collective operates, how 
                        royalties are collected and distributed, and 
                        the collective total costs for the preceding 
                        calendar year. At the time of posting, a copy 
                        of the report shall be provided to the Register 
                        of Copyrights.
                    ``(E) Musical works database.--
                            ``(i) Establishment and maintenance of 
                        database.--The mechanical licensing collective 
                        shall establish and maintain a database 
                        containing information relating to 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 the 
                        musical works are embodied. In furtherance of 
                        maintaining such database, the mechanical 
                        licensing collective shall engage in efforts to 
                        identify the musical works embodied in 
                        particular sound recordings, as well as to 
                        identify and locate the copyright owners of 
                        such works (and shares thereof), and 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 reasonably 
                                available to the mechanical licensing 
                                collective--
                                            ``(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, sound 
                                        recording copyright owner, 
                                        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 musical works (and shares of works) 
                        in the database, the musical works database 
                        shall include--
                                    ``(I) to the extent reasonably 
                                available to the mechanical licensing 
                                collective--
                                            ``(aa) the title of the 
                                        musical work;
                                            ``(bb) the ownership 
                                        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, sound recording 
                                        copyright owner, 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 
                        musical work copyright owner with any musical 
                        work listed in the musical works database shall 
                        engage in commercially reasonable efforts to 
                        deliver to the mechanical licensing collective, 
                        including 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 works database shall be made available 
                        to members of the public in a searchable, 
                        online format, free of charge. The mechanical 
                        licensing collective shall make such database 
                        available in a bulk, machine-readable format, 
                        through a widely available software 
                        application, to the following entities:
                                    ``(I) Digital music providers 
                                operating under the authority of valid 
                                notices of license, free of charge.
                                    ``(II) Significant nonblanket 
                                licensees in compliance with their 
                                obligations under paragraph (6), free 
                                of charge.
                                    ``(III) Authorized vendors of the 
                                entities described in subclauses (I) 
                                and (II), free of charge.
                                    ``(IV) The Register of Copyrights, 
                                free of charge (but the Register shall 
                                not treat such database or any 
                                information therein as a Government 
                                record).
                                    ``(V) Any member of the public, for 
                                a fee not to exceed the marginal cost 
                                to the mechanical licensing collective 
                                of providing the database to such 
                                person.
                            ``(vi) Additional requirements.--The 
                        Register of Copyrights shall establish 
                        requirements by regulations to ensure the 
                        usability, interoperability, and usage 
                        restrictions of the musical works database.
                    ``(F) Notices of license and nonblanket activity.--
                            ``(i) Notices of licenses.--The mechanical 
                        licensing collective shall receive, review, and 
                        confirm or reject notices of license from 
                        digital music providers, as provided in 
                        paragraph (2)(A). The collective shall maintain 
                        a current, publicly accessible list of blanket 
                        licenses that includes contact information for 
                        the licensees and the effective dates of such 
                        licenses.
                            ``(ii) Notices of nonblanket activity.--The 
                        mechanical licensing collective shall receive 
                        notices of nonblanket activity from significant 
                        nonblanket licensees, as provided in paragraph 
                        (6)(A). The collective shall maintain a 
                        current, publicly accessible list of notices of 
                        nonblanket activity that includes contact 
                        information for significant nonblanket 
                        licensees and the dates of receipt of such 
                        notices.
                    ``(G) Collection and distribution of royalties.--
                            ``(i) In general.--Upon receiving 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 licenses 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 the records of the 
                                collective; and
                                    ``(III) deposit into an interest-
                                bearing account, as provided in 
                                subparagraph (H)(ii), royalties that 
                                cannot be distributed due to--
                                            ``(aa) an inability to 
                                        identify or locate a copyright 
                                        owner of a musical work (or 
                                        share thereof); or
                                            ``(bb) a pending dispute 
                                        before the dispute resolution 
                                        committee of the mechanical 
                                        licensing collective.
                            ``(ii) Other collection efforts.--Any 
                        royalties recovered by the mechanical licensing 
                        collective as a result of efforts to enforce 
                        rights or obligations under a blanket license, 
                        including through a bankruptcy proceeding or 
                        other legal action, shall be distributed to 
                        copyright owners based on available usage 
                        information and in accordance with the 
                        procedures described in subclauses (I) and (II) 
                        of clause (i), on a pro rata basis in 
                        proportion to the overall percentage recovery 
                        of the total royalties owed, with any pro rata 
                        share of royalties that cannot be distributed 
                        deposited in an interest-bearing account as 
                        provided in subparagraph (H)(ii).
                    ``(H) Holding of accrued 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 
                        after the date on which the funds were received 
                        by the mechanical licensing collective, or at 
                        least 3 years after the date on which they were 
                        accrued by a digital music provider that 
                        subsequently transferred such funds to the 
                        mechanical licensing 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 amount 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 paragraph (H)(i), 
                        the mechanical licensing collective shall 
                        distribute such accrued royalties, along with a 
                        proportionate share of accrued interest, to 
                        copyright owners identified in the records of 
                        the collective, subject to the following 
                        requirements, and in accordance with the 
                        policies and procedures established under 
                        clause (ii):
                                    ``(I) The first such distribution 
                                shall occur on or after July 1 of the 
                                first full calendar year to commence 
                                after the license availability date, 
                                with at least one such distribution to 
                                take place during each calendar year 
                                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 licenses 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 
                                subparagraph--
                                            ``(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 licenses 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 
                                        paragraph (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 and accrued interest in 
                        accordance with this subparagraph, including 
                        the provision of usage data to copyright owners 
                        to allocate payments and credits to songwriters 
                        pursuant to clause (iv), 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 and accrued interest at least 
                        90 calendar 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 the copyright owners license or 
                        administer musical works for covered 
                        activities, in accordance with applicable 
                        contractual terms, but 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 described in subparagraph (H)(ii) 
                        pending resolution of the dispute; and
                            ``(ii) except as provided in paragraph 
                        (11)(D), shall not affect any legal or 
                        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 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 data of the 
                                mechanical licensing collective, 
                                according to generally accepted 
                                auditing standards and subject to 
                                applicable confidentiality requirements 
                                prescribed by the Register of 
                                Copyrights under paragraph (12)(C).
                                    ``(III) The mechanical licensing 
                                collective shall make such books, 
                                records, and data available to the 
                                qualified auditor and respond to 
                                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, any 
                                copyright owner shall file with the 
                                Copyright Office a notice of intent to 
                                conduct an audit of the mechanical 
                                licensing collective, identifying the 
                                period of time to be audited, 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 45 calendar days after 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 each auditing 
                                copyright owner, but before providing a 
                                final audit report to any such 
                                copyright owner, 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 
                                or owners shall bear the cost of the 
                                audit. In case of an underpayment to 
                                any copyright owner, the mechanical 
                                licensing collective shall pay the 
                                amounts of any such underpayment to 
                                such auditing copyright owner, as 
                                appropriate. In case of an overpayment 
                                by the mechanical licensing collective, 
                                the mechanical licensing collective may 
                                debit the account of the auditing 
                                copyright owner or owners for such 
                                overpaid amounts, or such owner(s) 
                                shall refund overpaid amounts to the 
                                mechanical licensing collective, as 
                                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 described 
                        herein, but a notice of the audit shall be 
                        provided to and published by the Copyright 
                        Office as described in clause (i)(IV).
                    ``(M) Records of mechanical 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 paragraph 
                        (12)(C) for a period of no less than 7 years 
                        after the 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 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)(2)(I), but the monthly 
                        reporting shall be due 45 calendar days, rather 
                        than 20 calendar days, after the end of the 
                        monthly reporting period.
                            ``(ii) Data to be reported.--In 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 and usage data for 
                        musical works used in covered activities under 
                        voluntary licenses and individual download 
                        licenses. In the report of usage, the digital 
                        music provider shall--
                                    ``(I) with respect to each sound 
                                recording embodying a musical work--
                                            ``(aa) provide identifying 
                                        information for the sound 
                                        recording, including sound 
                                        recording name, featured artist 
                                        and, to the extent acquired by 
                                        the digital music provider in 
                                        connection with its use of 
                                        sound recordings of musical 
                                        works to engage in covered 
                                        activities, including pursuant 
                                        to subparagraph (B), producer, 
                                        international standard 
                                        recording code, and other 
                                        information commonly used in 
                                        the industry to identify sound 
                                        recordings and match them to 
                                        the musical works the sound 
                                        recordings embody;
                                            ``(bb) to the extent 
                                        acquired by the digital music 
                                        provider in the metadata in 
                                        connection with its use of 
                                        sound recordings of musical 
                                        works to engage in covered 
                                        activities, including pursuant 
                                        to subparagraph (B), provide 
                                        information concerning 
                                        authorship and ownership of the 
                                        applicable rights in the 
                                        musical work embodied in the 
                                        sound recording (including each 
                                        songwriter, publisher name, and 
                                        respective ownership share) and 
                                        the international standard 
                                        musical work code; and
                                            ``(cc) provide the number 
                                        of digital phonorecord 
                                        deliveries of the sound 
                                        recording, including limited 
                                        downloads and interactive 
                                        streams;
                                    ``(II) identify and provide contact 
                                information for all musical work 
                                copyright owners for works embodied in 
                                sound recordings 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.
                            ``(iv) Adoption of regulations.--The 
                        Register shall adopt regulations--
                                    ``(I) setting forth requirements 
                                under which records of use shall be 
                                maintained and made available to the 
                                mechanical licensing collective by 
                                digital music providers engaged in 
                                covered activities under a blanket 
                                license; and
                                    ``(II) regarding adjustments to 
                                reports of usage by digital music 
                                providers, including mechanisms to 
                                account for overpayment and 
                                underpayment of royalties in prior 
                                periods.
                    ``(B) Collection of sound recording information.--A 
                digital music provider shall engage in good-faith, 
                commercially reasonable efforts to obtain from 
                copyright owners of sound recordings made available 
                through the service of such digital music provider--
                            ``(i) sound recording copyright owners, 
                        producers, international standard recording 
                        codes, and other information commonly used in 
                        the industry to identify sound recordings and 
                        match them to the musical works the sound 
                        recordings embody; and
                            ``(ii) information concerning the 
                        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-calendar-year period to 
                                cover a verification period of no more 
                                than the 3 full calendar years 
                                preceding the date of commencement of 
                                the audit, and such audit may not audit 
                                records for any such 3-year 
                                verification period more than once.
                                    ``(II) The audit shall be conducted 
                                by a qualified auditor, who shall 
                                perform the audit during the ordinary 
                                course of business by examining the 
                                books, records, and data of the digital 
                                music provider, according to generally 
                                accepted auditing standards and subject 
                                to applicable confidentiality 
                                requirements prescribed by the Register 
                                of Copyrights under paragraph (12)(C).
                                    ``(III) The digital music provider 
                                shall make such books, records, and 
                                data available to the qualified auditor 
                                and respond to reasonable requests for 
                                relevant information, and shall use 
                                commercially reasonable efforts to 
                                provide access to relevant information 
                                maintained with respect to a digital 
                                music provider by third parties.
                                    ``(IV) To commence the audit, the 
                                mechanical licensing collective shall 
                                file with the Copyright Office a notice 
                                of intent to conduct an audit of the 
                                digital music provider, identifying the 
                                period of time to be audited, and shall 
                                simultaneously deliver a copy of such 
                                notice to the digital music provider. 
                                The Register of Copyrights shall cause 
                                the notice of audit to be published in 
                                the Federal Register within 45 calendar 
                                days after receipt.
                                    ``(V) The qualified auditor shall 
                                determine the accuracy of royalty 
                                payments, including whether an 
                                underpayment or overpayment of 
                                royalties was made by the digital music 
                                provider to the mechanical licensing 
                                collective, but before providing a 
                                final audit report to the mechanical 
                                licensing collective, the qualified 
                                auditor shall provide a tentative draft 
                                of the report to the digital music 
                                provider and allow the digital music 
                                provider a reasonable opportunity to 
                                respond to the findings, including by 
                                clarifying issues and correcting 
                                factual errors.
                                    ``(VI) The mechanical licensing 
                                collective shall pay the cost of the 
                                audit, unless the qualified auditor 
                                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 account of 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 if 
                                such legal action is commenced no more 
                                than 6 years after the commencement of 
                                the audit that is the basis for such 
                                action.
                            ``(ii) Alternative verification 
                        procedures.--Nothing in this subparagraph shall 
                        preclude the mechanical licensing collective 
                        and a digital music provider from agreeing to 
                        audit procedures different from those described 
                        herein, but a notice of the audit shall be 
                        provided to and published by the Copyright 
                        Office as described in clause (i)(IV).
                    ``(E) Default under blanket license.--
                            ``(i) Conditions of default.--A digital 
                        music provider shall be in default under a 
                        blanket license if the digital music provider--
                                    ``(I) fails to provide one or more 
                                monthly reports of usage to the 
                                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 calendar days or longer.
                            ``(ii) Notice of default and termination.--
                        In case of a 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 calendar days after 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.
                            ``(iv) Review by federal district court.--A 
                        digital music provider that believes a blanket 
                        license was improperly terminated by the 
                        mechanical licensing collective may seek review 
                        of such termination in Federal district court. 
                        The district court shall determine the matter 
                        de novo based on the record before the 
                        mechanical licensing collective and any 
                        additional supporting evidence presented by the 
                        parties.
            ``(5) Digital licensee coordinator.--
                    ``(A) In general.--The digital licensee coordinator 
                shall be a single entity that--
                            ``(i) is a nonprofit, not owned by any 
                        other entity, that is created to carry out 
                        responsibilities under this subsection;
                            ``(ii) is endorsed by and enjoys 
                        substantial support from digital music 
                        providers and significant nonblanket licensees 
                        that together represent the greatest percentage 
                        of the licensee market for uses of musical 
                        works in covered activities, as measured over 
                        the preceding 3 calendar years;
                            ``(iii) is able to demonstrate that it has, 
                        or will have prior to the license 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 
                        after the enactment date, in accordance with 
                        the same procedure described 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 described 
                        in clauses (i) through (iii) of subparagraph 
                        (A) should be designated, in accordance with 
                        the same procedure described 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 each of the qualifications described 
                        in clauses (i) through (iii) of subparagraph 
                        (A) to serve as the digital licensee 
                        coordinator, the Register may decline to 
                        designate a digital licensee coordinator. The 
                        Register's determination not to designate a 
                        digital licensee coordinator shall not negate 
                        or otherwise affect any provision of this 
                        subsection except to the limited extent that a 
                        provision references the digital licensee 
                        coordinator. In such case, the reference to the 
                        digital licensee coordinator shall be without 
                        effect unless and until a new digital licensee 
                        coordinator is designated.
                    ``(C) Authorities and functions.--
                            ``(i) In general.--The digital licensee 
                        coordinator is authorized to perform the 
                        following functions, subject to more particular 
                        requirements as described 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 may not engage in 
                        government lobbying activities, but may engage 
                        in the activities described in subclauses 
                        (III), (IV), and (V) of clause (i).
            ``(6) Requirements for significant nonblanket licensees.--
                    ``(A) In general.--
                            ``(i) Notice of activity.--Not later than 
                        45 calendar days after the license availability 
                        date, or 45 calendar days after the end of the 
                        first full calendar month in which an entity 
                        initially qualifies as a significant nonblanket 
                        licensee, 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 any payment of the 
                        administrative assessment 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 any required payment of the 
                        administrative assessment, to the mechanical 
                        licensing collective. Such reports and payments 
                        shall be submitted not later than 45 calendar 
                        days after the end of the calendar month being 
                        reported.
                            ``(iii) Discontinuation of 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, but if such entity 
                        later qualifies as a significant nonblanket 
                        licensee, such entity 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 paragraph (12)(C).
                    ``(C) Legal enforcement efforts.--
                            ``(i) Federal court action.--Should the 
                        mechanical licensing collective or digital 
                        licensee coordinator become aware that a 
                        significant nonblanket 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 
                        the collective total costs.
                            ``(ii) Statute of limitations for 
                        enforcement action.--Any action described in 
                        this subparagraph shall be commenced within the 
                        time period described 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 collective total costs 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; 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), voluntary contributions by digital music 
                        providers and significant nonblanket licensees 
                        shall be determined by private negotiation and 
                        agreement, and the following conditions apply:
                                    ``(I) The date and amount of each 
                                voluntary contribution to the 
                                mechanical licensing collective shall 
                                be documented in a writing signed by an 
                                authorized agent of the mechanical 
                                licensing collective and the 
                                contributing party.
                                    ``(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.--Each 
                        such voluntary contribution shall be treated 
                        for purposes of an administrative assessment 
                        proceeding as an offset to the collective total 
                        costs 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 collective total costs, the collective, 
                with approval of its board of directors, may apply 
                unclaimed accrued royalties on an interim basis to 
                defray such costs, subject to future reimbursement of 
                such royalties from future collections of the 
                assessment.
                    ``(D) Determination of administrative assessment.--
                            ``(i) Administrative assessment to cover 
                        collective total costs.--The administrative 
                        assessment shall be used solely and exclusively 
                        to fund the collective total costs.
                            ``(ii) Separate proceeding before copyright 
                        royalty judges.--The amount and terms of the 
                        administrative assessment shall be determined 
                        and 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 collective total costs;
                                    ``(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 
                                collective total costs 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 
                                anticipated future collective total 
                                costs and collections of the 
                                administrative assessment, but also, as 
                                applicable--
                                            ``(aa) any portion of past 
                                        actual collective 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 collective total 
                                        costs, resulting in a surplus; 
                                        and
                                            ``(cc) the amount of any 
                                        voluntary contributions by 
                                        digital music providers or 
                                        significant nonblanket 
                                        licensees in relevant periods, 
                                        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 9 months after 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 collective 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 1 year 
                                after commencement of the proceeding 
                                described in 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 
                        periodically, in accordance with the following 
                        procedures:
                                    ``(I) No earlier than 1 year after 
                                the most recent publication of a 
                                determination of the administrative 
                                assessment by the Copyright Royalty 
                                Judges, the mechanical licensing 
                                collective, the 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 October to commence a proceeding to 
                                adjust the administrative assessment.
                                    ``(II) Notice of the commencement 
                                of such proceeding shall be published 
                                in the Federal Register in the month of 
                                November following the filing of any 
                                petition, with a schedule of requested 
                                information and additional proceedings, 
                                as described in clause (iii)(III). The 
                                mechanical licensing collective and 
                                digital licensee 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 determination of the 
                                adjusted administrative assessment, 
                                which shall be supported by a written 
                                record, shall be published in the 
                                Federal Register during November of the 
                                calendar year following the 
                                commencement of the proceeding. The 
                                adjusted administrative assessment 
                                shall take effect January 1 of the year 
                                following such publication.
                            ``(v) Adoption of voluntary agreements.--In 
                        lieu of reaching their own determination based 
                        on evaluation of relevant data, the Copyright 
                        Royalty Judges shall approve and adopt a 
                        negotiated agreement to establish the amount 
                        and terms of the administrative assessment that 
                        has been agreed to by the mechanical licensing 
                        collective and the digital licensee coordinator 
                        (or if none has been designated, interested 
                        digital music providers and significant 
                        nonblanket licensees representing more than 
                        half of the market for uses of musical works in 
                        covered activities), but 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 
                        calendar 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, 
                        and the mechanical licensing collective, 
                        digital licensee coordinator, digital music 
                        providers, and significant nonblanket licensees 
                        shall implement appropriate financial or other 
                        measures within 3 months after any modification 
                        of the assessment to reflect and account for 
                        such outcome.
                            ``(viii) Regulations.--The Copyright 
                        Royalty Judges may adopt regulations to govern 
                        the conduct of proceedings under this 
                        paragraph.
            ``(8) Establishment of rates and terms under blanket 
        license.--
                    ``(A) Restrictions on ratesetting participation.--
                Neither the mechanical licensing collective nor the 
                digital licensee coordinator shall be a party to a 
                proceeding described in subsection (c)(1)(E), but 
                either may gather and provide financial and other 
                information for the use of a party to such a proceeding 
                and comply with requests for information as 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, 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 such 
                        copyright owner or the mechanical licensing 
                        collective may be entitled under this title.
                    ``(C) Interim rate agreements in general.--For any 
                covered activity for which no rate or terms have been 
                established by the Copyright Royalty Judges, the 
                mechanical licensing collective and any digital music 
                provider may agree to an interim rate and terms for 
                such activity under the blanket license, and any such 
                rate and terms--
                            ``(i) shall be treated as 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, under subsection (c)(1)(E).
                    ``(D) Adjustments for interim rates.--The rate and 
                terms established by the Copyright Royalty Judges for a 
                covered activity to which an interim rate and terms 
                have been agreed under subparagraph (C) shall supersede 
                the interim rate and terms and apply retroactively to 
                the inception of the activity under the blanket 
                license. In such case, within 3 months after the rate 
                and terms established by the Copyright Royalty Judges 
                become effective--
                            ``(i) if the rate established by the 
                        Copyright Royalty Judges exceeds the interim 
                        rate, the digital music provider shall pay to 
                        the mechanical licensing collective the amount 
                        of any underpayment of royalties due; or
                            ``(ii) if the interim rate exceeds the rate 
                        established by the Copyright Royalty Judges, 
                        the mechanical licensing collective shall 
                        credit the account of the digital music 
                        provider for the amount of any overpayment of 
                        royalties due.
            ``(9) Transition to blanket licenses.--
                    ``(A) Substitution of blanket license.--On the 
                license availability date, a blanket license shall, 
                without any interruption in license authority enjoyed 
                by such digital music provider, be automatically 
                substituted for and supersede any existing compulsory 
                license previously obtained under this section by the 
                digital music provider from a copyright owner to engage 
                in one or more covered activities with respect to a 
                musical work, but the foregoing shall not apply to any 
                authority obtained from a record company pursuant to a 
                compulsory license to make and distribute permanent 
                downloads unless and until such record company 
                terminates such authority in writing to take effect at 
                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), on and after 
                the license availability date, licenses other than 
                individual download 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 on the license 
                availability date will remain in effect unless and 
                until the voluntary license expires according to the 
                terms of the voluntary license, or the parties agree to 
                amend or terminate the voluntary license. In a case 
                where a voluntary license for a covered 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 voluntary 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.--On and after 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, but before the license 
                        availability date there shall be no liability 
                        under section 501 for the reproduction or 
                        distribution of a musical work (or share 
                        thereof) in covered activities if a valid 
                        notice of intention was filed for such work (or 
                        share) before the enactment date.
            ``(10) Prior unlicensed uses.--
                    ``(A) Limitation on liability in general.--A 
                copyright owner that commences an action under section 
                501 on or after January 1, 2018, against a digital 
                music provider for the infringement of the exclusive 
                rights provided by paragraph (1) or (3) of section 106 
                arising from the unauthorized reproduction or 
                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)(1)(C) 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 on the enactment 
                date and through the end of the period that expires 90 
                days after 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 calendar days after 
                        first making a particular sound recording of a 
                        musical work available through its service via 
                        one or more covered activities, or 30 calendar 
                        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 the 
                        following:
                                    ``(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, sound 
                                        recording copyright owner, 
                                        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 each 
                                        songwriter and publisher name, 
                                        percentage ownership share, and 
                                        international standard musical 
                                        work code.
                                    ``(II) Employment of one or more 
                                bulk electronic matching processes that 
                                are available to the digital music 
                                provider through a third-party vendor 
                                on commercially reasonable terms, but a 
                                digital music provider may rely on its 
                                own bulk electronic matching process if 
                                it has capabilities comparable to or 
                                better than those available from a 
                                third-party vendor on commercially 
                                reasonable terms.
                            ``(ii) The required matching efforts shall 
                        be repeated by the digital music 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 musical work (or share 
                                thereof) is identified and located by 
                                or to the digital music provider before 
                                the license availability date, the 
                                digital music provider shall--
                                            ``(aa) within 45 calendar 
                                        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)(2)(I);
                                            ``(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) beginning with the 
                                        monthly royalty reporting 
                                        period commencing on the 
                                        license availability date, 
                                        report usage and pay 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 musical work (or share 
                                thereof) is not identified and located 
                                by the license availability date, the 
                                digital music provider shall--
                                            ``(aa) within 45 calendar 
                                        days after the license 
                                        availability date, transfer all 
                                        accrued 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)(2)(I), and accompanied by 
                                        an additional certification by 
                                        a duly authorized officer of 
                                        the digital music provider that 
                                        the digital music provider has 
                                        fulfilled the requirements of 
                                        clauses (i) and (ii) of 
                                        subparagraph (B) but has not 
                                        been successful in locating or 
                                        identifying the copyright 
                                        owner; and
                                            ``(bb) beginning with the 
                                        monthly royalty reporting 
                                        period commencing on the 
                                        license availability date, 
                                        report usage and pay 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 described in 
                subsection (c)(1)(D) shall apply to negotiations and 
                agreements between and among copyright owners and 
                persons entitled to obtain a compulsory license for 
                covered activities, and common agents acting on behalf 
                of such copyright owners or persons, including with 
                respect to the administrative assessment established 
                under this subsection.
                    ``(B) Limitation on common agent exemption.--
                Notwithstanding the antitrust exemption provided in 
                subsection (c)(1)(D) and subparagraph (A) (except for 
                the administrative assessment referenced therein and 
                except as provided in paragraph (8)(C)), neither the 
                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 
                behalf of such copyright owners and persons, but the 
                following conditions apply:
                            ``(i) Each copyright owner shall establish 
                        the royalty rates and material terms of any 
                        such voluntary license individually and not in 
                        agreement, combination, or concert with any 
                        other copyright owner.
                            ``(ii) Each person entitled to obtain a 
                        compulsory license under this section shall 
                        establish the royalty rates and material terms 
                        of any such voluntary license individually and 
                        not in agreement, combination, or concert with 
                        any other digital music provider.
                            ``(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 paragraph (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 described 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), but the collective may 
                participate in a legal proceeding as a stakeholder 
                party if the collective is holding funds that are the 
                subject of a dispute between copyright owners. For 
                purposes of this subparagraph, `good-faith 
                administration' means administration in a manner that 
                is not grossly negligent.
                    ``(E) Preemption of state property laws.--The 
                holding and distribution of funds by the mechanical 
                licensing collective in 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.
                    ``(F) Rule of construction.--Except as expressly 
                provided in this subsection, nothing in this subsection 
                shall negate or limit the ability of any person to 
                pursue an action in Federal court against the 
                mechanical licensing collective or any other person 
                based upon a claim arising under this title or other 
                applicable law.
            ``(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 licensee 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 license shall not be construed to extend or 
                apply to activities other than covered activities or to 
                rights other than the exclusive rights of reproduction 
                and distribution licensed under this section, or serve 
                or act as the basis to extend or expand the compulsory 
                license under this section to activities and rights not 
                covered by this section on the enactment date.
                    ``(B) Rights of public performance not affected.--
                The rights, protections, and immunities granted under 
                this subsection, the data concerning musical works 
                collected and made available under this subsection, and 
                the definitions described in subsection (e) shall not 
                extend to, limit, or otherwise affect any right of 
                public performance in a musical work.''; and
            (5) by adding at the end the following new 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)(H)(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 royalty rate under 
        this section.
            ``(3) Administrative assessment.--The term `administrative 
        assessment' means the fee established pursuant to subsection 
        (d)(7)(D).
            ``(4) Audit.--The term `audit' means a royalty compliance 
        examination to verify the accuracy of royalty payments, or the 
        conduct of such an examination, as applicable.
            ``(5) Blanket license.--The term `blanket license' means a 
        compulsory license described in subsection (d)(1)(A) to engage 
        in covered activities.
            ``(6) Collective total costs.--The term `collective total 
        costs'--
                    ``(A) means the total costs of establishing, 
                maintaining, and operating the mechanical licensing 
                collective to fulfill its statutory functions, 
                including--
                            ``(i) startup costs;
                            ``(ii) financing, legal, and insurance 
                        costs;
                            ``(iii) investments in information 
                        technology, infrastructure, and other long-term 
                        resources;
                            ``(iv) outside vendor costs;
                            ``(v) costs of licensing, royalty 
                        administration, and enforcement of rights;
                            ``(vi) costs of bad debt; and
                            ``(vii) costs of automated and manual 
                        efforts to identify and locate copyright owners 
                        of musical works (and shares of such musical 
                        works) and match sound recordings to the 
                        musical works the sound recordings embody; and
                    ``(B) does not include any added costs incurred by 
                the mechanical licensing collective to provide services 
                under voluntary licenses.
            ``(7) Covered activity.--The term `covered activity' means 
        the activity of making a digital phonorecord delivery of a 
        musical work, including in the form of a permanent download, 
        limited download, or interactive stream, where such activity 
        qualified for a compulsory license under this section.
            ``(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--
                    ``(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 most recently designated 
        pursuant to 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 the enactment of the Musical Works Modernization Act.
            ``(12) Individual download license.--The term `individual 
        download license' means a compulsory license obtained by a 
        record company to make and distribute, or authorize the making 
        and distribution of, permanent downloads embodying a specific 
        individual musical 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 the next January 1 following the 
        expiration of the 2-year period beginning on the enactment 
        date.
            ``(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 most 
        recently designated as such by the Register of Copyrights under 
        subsection (d)(3).
            ``(19) Mechanical licensing collective budget.--The term 
        `mechanical licensing collective 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 the collective total costs.
            ``(20) Musical works database.--The term `musical works 
        database' means the database described in subsection (d)(3)(E).
            ``(21) Nonprofit.--The term `nonprofit' means a nonprofit 
        created or organized in a State.
            ``(22) 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.
            ``(23) 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 
        the licensee has been engaging in covered activities.
            ``(24) 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.
            ``(25) Qualified auditor.--The term `qualified auditor' 
        means an independent, certified public accountant with 
        experience performing music royalty audits.
            ``(26) 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, including a 
        corporate affiliate of such an entity engaged in distribution 
        of sound recordings.
            ``(27) Report of usage.--The term `report of usage' means a 
        report reflecting an entity's usage of musical works in covered 
        activities described in subsection (d)(4)(A).
            ``(28) 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).
            ``(29) Service.--The term `service', as used in relation to 
        covered activities, means any site, facility, or offering by or 
        through which sound recordings of musical works are digitally 
        transmitted to members of the public.
            ``(30) Share.--The term `share', as applied to a musical 
        work, means a fractional ownership interest in such work.
            ``(31) Significant nonblanket licensee.--The term 
        `significant nonblanket licensee'--
                    ``(A) means an entity, including a group of 
                entities under common ownership or control that, acting 
                under the authority of one or more voluntary licenses 
                or individual download licenses, offers a service 
                engaged in covered activities, and such entity or group 
                of entities--
                            ``(i) is not currently operating under a 
                        blanket license and is not obligated to provide 
                        reports of usage reflecting covered activities 
                        under subsection (d)(4)(A);
                            ``(ii) 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
                            ``(iii) either--
                                    ``(I) on any day in a calendar 
                                month, makes more than 5,000 different 
                                sound recordings of musical works 
                                available through such service; or
                                    ``(II) derives revenue or other 
                                consideration in connection with such 
                                covered activities greater than $50,000 
                                in a calendar month, or total revenue 
                                or other consideration greater than 
                                $500,000 during the preceding 12 
                                calendar months; and
                    ``(B) does not include--
                            ``(i) an entity whose covered activity 
                        consists solely of free-to-the-user streams of 
                        segments of sound recordings of musical works 
                        that do not exceed 90 seconds in length, are 
                        offered only to facilitate a licensed use of 
                        musical works that is not a covered activity, 
                        and have no revenue directly attributable to 
                        such streams constituting the covered activity; 
                        or
                            ``(ii) a `public broadcasting entity' as 
                        defined in section 118(f).
            ``(32) Songwriter.--The term `songwriter' means the author 
        of all or part of a musical work, including a composer or 
        lyricist.
            ``(33) State.--The term `State' means each State of the 
        United States, the District of Columbia, and each territory or 
        possession of the United States.
            ``(34) Unclaimed accrued royalties.--The term `unclaimed 
        accrued royalties' means accrued royalties eligible for 
        distribution under subsection (d)(3)(J).
            ``(35) 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.
            ``(36) 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) by redesignating paragraph (8) as paragraph (9); and
            (2) 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 described 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 
regulations for section 115 in part 385 of title 37, Code of Federal 
Regulations to conform the definitions used in such part to the 
definitions of the same terms described 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.

SEC. 103. AMENDMENTS TO SECTION 114.

    (a) Uniform Rate Standard.--Section 114(f) of title 17, United 
States Code, is amended--
            (1) by striking paragraphs (1) and (2) and inserting the 
        following:
            ``(1)(A) Proceedings under chapter 8 shall determine 
        reasonable rates and terms of royalty payments for 
        transmissions subject to statutory licensing under subsection 
        (d)(2) during the 5-year period beginning on January 1 of the 
        second year following the year in which the proceedings are to 
        be commenced pursuant to subparagraph (A) or (B) of section 
        804(b)(3), as the case may be, or such other period as the 
        parties may agree. The parties to each proceeding shall bear 
        their own costs.
            ``(B) The schedule of reasonable rates and terms determined 
        by the Copyright Royalty Judges shall, subject to paragraph 
        (2), be binding on all copyright owners of sound recordings and 
        entities performing sound recordings affected by this paragraph 
        during the 5-year period specified in subparagraph (A), or such 
        other period as the parties may agree. Such rates and terms 
        shall distinguish among the different types of services then in 
        operation and shall include a minimum fee for each such type of 
        service, such differences to be based on criteria including the 
        quantity and nature of the use of sound recordings and the 
        degree to which use of the service may substitute for or may 
        promote the purchase of phonorecords by consumers. 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, the 
        Copyright Royalty Judges--
                    ``(i) shall base their decision on economic, 
                competitive, and programming information presented by 
                the parties, including--
                            ``(I) whether use of the service may 
                        substitute for or may promote the sales of 
                        phonorecords or otherwise may interfere with or 
                        may enhance the sound recording copyright 
                        owner's other streams of revenue from the 
                        copyright owner's sound recordings; and
                            ``(II) the relative roles of the copyright 
                        owner and the transmitting entity in the 
                        copyrighted work and the service made available 
                        to the public with respect to relative creative 
                        contribution, technological contribution, 
                        capital investment, cost, and risk; and
                    ``(ii) may consider the rates and terms for 
                comparable types of audio transmission services and 
                comparable circumstances under voluntary license 
                agreements.
            ``(C) The procedures under subparagraphs (A) and (B) shall 
        also be initiated pursuant to a petition filed by any sound 
        recording copyright owner or any transmitting entity indicating 
        that a new type of service on which sound recordings are 
        performed is or is about to become operational, for the purpose 
        of determining reasonable terms and rates of royalty payments 
        with respect to such new type of service for the period 
        beginning with the inception of such new type of service and 
        ending on the date on which the royalty rates and terms for 
        eligible nonsubscription services and new subscription 
        services, or preexisting services, as the case may be, most 
        recently determined under subparagraph (A) or (B) and chapter 8 
        expire, or such other period as the parties may agree.''; and
            (2) by redesignating paragraphs (3), (4), and (5) as 
        paragraphs (2), (3), and (4), respectively.
    (b) Repeal.--Subsection (i) of section 114 of title 17, United 
States Code, is repealed.
    (c) Use in Musical Work Proceedings.--
            (1) In general.--License fees payable for the public 
        performance of sound recordings under section 106(6) of title 
        17, United States Code, shall not be taken into account in any 
        administrative, judicial, or other governmental proceeding to 
        set or adjust the royalties payable to musical work copyright 
        owners for the public performance of their works except in such 
        a proceeding to set or adjust royalties for the public 
        performance of musical works by means of a digital audio 
        transmission other than a transmission by a broadcaster, and 
        may be taken into account only with respect to such digital 
        audio transmission.
            (2) Definitions.--In this subsection:
                    (A) Transmission by a broadcaster.--A 
                ``transmission by a broadcaster'' means a 
                nonsubscription digital transmission made by a 
                terrestrial broadcast station on its own behalf, or on 
                the behalf of a terrestrial broadcast station under 
                common ownership or control, that is not part of an 
                interactive service or a music-intensive service 
                comprising the transmission of sound recordings 
                customized for or customizable by recipients or service 
                users.
                    (B) Terrestrial broadcast station.--A ``terrestrial 
                broadcast station'' means a terrestrial, over-the-air 
                radio or television broadcast station, licensed as such 
                by the Federal Communications Commission, including an 
                FM Translator as defined in section 74.1231 of title 
                47, Code of Federal Regulations, and whose primary 
                business activities are comprised of, and revenues are 
                generated through, terrestrial, over-the-air broadcast 
                transmissions, or the simultaneous or substantially-
                simultaneous digital retransmission by the terrestrial, 
                over-the-air broadcast station of its over-the-air 
                broadcast transmissions.
    (d) Rule of Construction.--Subsection (c)(2) shall not be given 
effect in interpreting provisions of title 17, United States Code.
    (e) Use in Sound Recording Proceedings.--The repeal of section 
114(i) of title 17, United States Code, by subsection (b) 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.
    (f) Decisions and Precedents Not Affected.--The repeal of section 
114(i) of title 17, United States Code, by subsection (b) 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.
    (g) Technical and Conforming Amendments.--
            (1) Section 114.--Section 114(f) of title 17, United States 
        Code, as amended by subsection (a), is further amended in 
        paragraph (4)(C), as so redesignated, by striking ``under 
        paragraph (4)'' and inserting ``under paragraph (3)''.
            (2) Section 801.--Section 801(b)(1) of title 17, United 
        States Code, is amended by striking ``The rates applicable'' 
        and all that follows though ``prevailing industry practices.''.
            (3) Section 804.--Section 804(b)(3)(C) of title 17, United 
        States Code, is amended--
                    (A) in clause (i), by striking ``and 
                114(f)(2)(C)'';
                    (B) in clause (iii)(II), by striking 
                ``114(f)(4)(B)(ii)'' and inserting 
                ``114(f)(3)(B)(ii)''; and
                    (C) in clause (iv), by striking ``or 114(f)(2)(C), 
                as the case may be''.

SEC. 104. RANDOM ASSIGNMENT OF RATE COURT PROCEEDINGS.

    Section 137 of title 28, United States Code, is amended--
            (1) by striking ``The business'' and inserting ``(a) In 
        General.--The business''; and
            (2) by adding at the end the following new subsection:
    ``(b) Random Assignment of Rate Court Proceedings.--
            ``(1) In general.--
                    ``(A) Determination of license fee.--Except as 
                provided in subparagraph (B), 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 randomly assigned 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--
                            ``(i) 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
                            ``(ii) 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.
                    ``(B) Exception.--Subparagraph (A) does not apply 
                to an application to determine reasonable license fees 
                made by individual proprietors under section 513 of 
                title 17.
            ``(2) Rule of construction.--Nothing in paragraph (1) shall 
        modify the rights of any party to a consent decree or to a 
        proceeding to determine reasonable license fees, to make an 
        application for the construction of any provision of the 
        applicable consent decree. Such application shall be referred 
        to the judge to whom continuing jurisdiction over the 
        applicable consent decree is currently assigned. If any such 
        application is made in connection with a rate proceeding, such 
        rate proceeding shall be stayed until the final determination 
        of the construction application. Disputes in connection with a 
        rate proceeding about whether a licensee is similarly situated 
        to another licensee shall not be subject to referral to the 
        judge with continuing jurisdiction over the applicable consent 
        decree.''.

  TITLE II--COMPENSATING LEGACY ARTISTS FOR THEIR SONGS, SERVICE, AND 
                   IMPORTANT CONTRIBUTIONS TO SOCIETY

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Compensating Legacy Artists for 
their Songs, Service, and Important Contributions to Society Act'' or 
the ``CLASSICS Act''.

SEC. 202. UNAUTHORIZED DIGITAL PERFORMANCE OF PRE-1972 SOUND 
              RECORDINGS.

    (a) Protection for Unauthorized Digital Performances.--Title 17, 
United States Code, is amended by adding at the end the following new 
chapter:

   ``CHAPTER 14--UNAUTHORIZED DIGITAL PERFORMANCE OF PRE-1972 SOUND 
                               RECORDINGS

``Sec.
``1401. Unauthorized digital performance of pre-1972 sound recordings.
``Sec. 1401. Unauthorized digital performance of pre-1972 sound 
              recordings
    ``(a) Unauthorized Acts.--Anyone who, before February 15, 2067, and 
without the consent of the rights owner, performs publicly, by means of 
a digital audio transmission, a sound recording fixed on or after 
January 1, 1923, and before February 15, 1972, shall be subject to the 
remedies provided in sections 502 through 505 to the same extent as an 
infringer of copyright.
    ``(b) Certain Authorized Transmissions.--A digital audio 
transmission of a sound recording fixed on or after January 1, 1923, 
and before February 15, 1972, shall, for purposes of subsection (a), be 
considered to be authorized and made with the consent of the rights 
owner if--
            ``(1) the transmission is made by a transmitting entity 
        that is publicly performing sound recordings fixed on or after 
        February 15, 1972, by means of digital audio transmissions 
        subject to section 114;
            ``(2) the transmission would satisfy the requirements for 
        statutory licensing under section 114(d)(2), or would be exempt 
        under section 114(d)(1), if the sound recording were fixed on 
        or after February 15, 1972;
            ``(3) in the case of a transmission that would not be 
        exempt under section 114(d)(1) as described in paragraph (2), 
        the transmitting entity pays statutory royalties and provides 
        notice of its use of the relevant sound recordings in the same 
        manner as is required by regulations adopted by the Copyright 
        Royalty Judges for sound recordings fixed on or after February 
        15, 1972; and
            ``(4) in the case of a transmission that would not be 
        exempt under section 114(d)(1) as described in paragraph (2), 
        the transmitting entity otherwise satisfies the requirements 
        for statutory licensing under section 114(f)(4)(B).
    ``(c) Transmissions by Direct Licensing of Statutory Services.--
            ``(1) In general.--A transmission of a sound recording 
        fixed on or after January 1, 1923, and before February 15, 
        1972, shall, for purposes of subsection (a), be considered to 
        be authorized and made with the consent of the rights owner if 
        such transmission is included in a license agreement 
        voluntarily negotiated at any time between the rights owner and 
        the entity performing the sound recording.
            ``(2) Payment of royalties to nonprofit collective.--To the 
        extent that such a license agreement entered into on or after 
        the date of the enactment of this section extends to digital 
        audio transmissions of a sound recording fixed on or after 
        January 1, 1923, and before February 15, 1972, that meet the 
        conditions of subsection (b), the licensee shall pay, to the 
        collective designated to distribute receipts from the licensing 
        of transmissions in accordance with section 114(f), 50 percent 
        of the performance royalties for the transmissions due under 
        the license, with such royalties fully credited as payments due 
        under the license.
            ``(3) Distribution of royalties by collective.--The 
        collective described in paragraph (2) shall, in accordance with 
        subparagraphs (B) through (D) of section 114(g)(2), and 
        paragraphs (5) and (6) of section 114(g)), distribute the 
        royalties received under paragraph (2) under the license 
        described in paragraph (2). Such payments shall be the only 
        payments to which featured and nonfeatured artists are entitled 
        by virtue of the transmissions described in paragraph (2) under 
        the license.
            ``(4) Rule of construction.--This section does not prohibit 
        any other license from directing the licensee to pay other 
        royalties due to featured and nonfeatured artists for such 
        transmissions to the collective designated to distribute 
        receipts from the licensing of transmissions in accordance with 
        section 114(f).
    ``(d) Relationship to State Law.--
            ``(1) In general.--Nothing in this section shall be 
        construed to annul or limit any rights or remedies under the 
        common law or statutes of any State for sound recordings fixed 
        before February 15, 1972, except, notwithstanding section 
        301(c), for the following:
                    ``(A) This section preempts any claim of common law 
                copyright or equivalent right under the laws of any 
                State arising from any digital audio transmission that 
                is made, on and after the date of the enactment of this 
                section, of a sound recording fixed on or after January 
                1, 1923, and before February 15, 1972.
                    ``(B) This section preempts any claim of common law 
                copyright or equivalent right under the laws of any 
                State arising from any reproduction that is made, on 
                and after the date of the enactment of this section, of 
                a sound recording fixed on or after January 1, 1923, 
                and before February 15, 1972, and that would satisfy 
                the requirements for statutory licensing under 
                paragraphs (1) and (6) of section 112(e), if the sound 
                recording were fixed on or after February 15, 1972.
                    ``(C) This section preempts any claim of common law 
                copyright or equivalent right under the laws of any 
                State arising from any digital audio transmission or 
                reproduction that is made, before the date of the 
                enactment of this section, of a sound recording fixed 
                on or after January 1, 1923, and before February 15, 
                1972, if--
                            ``(i) the digital audio transmission would 
                        have satisfied the requirements for statutory 
                        licensing under section 114(d)(2) or been 
                        exempt under section 114(d)(1), or the 
                        reproduction would have satisfied the 
                        requirements of section 112(e)(1), as the case 
                        may be, if the sound recording were fixed on or 
                        after February 15, 1972; and
                            ``(ii) except in the case of transmissions 
                        that would have been exempt under section 
                        114(d)(1), the transmitting entity, before the 
                        end of the 270-day period beginning on the date 
                        of the enactment of this section, pays 
                        statutory royalties and provides notice of the 
                        use of the relevant sound recordings in the 
                        same manner as is required by regulations 
                        adopted by the Copyright Royalty Judges for 
                        sound recordings that are protected under this 
                        title for all the digital audio transmissions 
                        and reproductions satisfying the requirements 
                        for statutory licensing under section 114(d)(2) 
                        and section 112(e)(1) during the 3 years prior 
                        to the date of the enactment of this section.
            ``(2) Rule of construction for common law copyright.--For 
        purposes of subparagraphs (A) through (C) of paragraph (1), a 
        claim of common law copyright or equivalent right under the 
        laws of any State includes a claim that characterizes conduct 
        subject to such subparagraphs as an unlawful distribution, act 
        of record piracy, or similar violation.
            ``(3) Rule of construction for public performance rights.--
        Nothing in this section shall be construed to recognize or 
        negate the existence of public performance rights in sound 
        recordings under the laws of any State.
    ``(e) Limitations on Remedies.--
            ``(1) Fair use; uses by libraries, archives, and 
        educational institutions.--The limitations on the exclusive 
        rights of a copyright owner described in sections 107, 108, and 
        110(1) and (2) shall apply to a claim under subsection (a) for 
        the unauthorized performance of a sound recording fixed on or 
        after January 1, 1923, and before February 15, 1972.
            ``(2) Actions.--The limitations on actions described in 
        section 507 shall apply to a claim under subsection (a) for the 
        unauthorized performance of a sound recording fixed on or after 
        January 1, 1923, and before February 15, 1972.
            ``(3) Material online.--Section 512 shall apply to a claim 
        under subsection (a) for the unauthorized performance of a 
        sound recording fixed on or after January 1, 1923, and before 
        February 15, 1972.
            ``(4) Principles of equity.--Principles of equity apply to 
        remedies for a violation of this section to the same extent as 
        such principles apply to remedies for infringement of 
        copyright.
            ``(5) Filing requirement for statutory damages and 
        attorneys' fees.--
                    ``(A) Filing of information on sound recordings.--
                            ``(i) Filing requirement.--Except in the 
                        case of a transmitting entity that has filed 
                        contact information for that transmitting 
                        entity under subparagraph (B), in any action 
                        under this section, an award of statutory 
                        damages or of attorneys' fees under section 504 
                        or 505 may be made with respect to an 
                        unauthorized transmission of a sound recording 
                        under subsection (a) only if--
                                    ``(I) the rights owner has filed 
                                with the Copyright Office a schedule 
                                that specifies the title, artist, and 
                                rights owner of the sound recording and 
                                contains such other information, as 
                                practicable, as the Register of 
                                Copyrights prescribes by regulation; 
                                and
                                    ``(II) the transmission is made 
                                after the end of the 90-day period 
                                beginning on the date on which the 
                                information filed under subclause (I) 
                                is indexed into the public records of 
                                the Copyright Office.
                            ``(ii) Regulations.--The Register of 
                        Copyrights shall, before the end of the 180-day 
                        period beginning on the date of the enactment 
                        of this section, issue regulations establishing 
                        the form, content, and procedures for the 
                        filing of schedules under clause (i). Such 
                        regulations shall provide that persons may 
                        request that they receive timely notification 
                        of such filings, and shall set forth the manner 
                        in which such requests may be made.
                    ``(B) Filing of contact information for 
                transmitting entities.--
                            ``(i) Filing requirement.--The Register of 
                        Copyrights shall, before the end of the 30-day 
                        period beginning on the date of the enactment 
                        of this section, issue regulations establishing 
                        the form, content, and procedures for the 
                        filing, by any entity that, as of the date of 
                        the enactment of this section, performs sound 
                        recordings fixed before February 15, 1972, by 
                        means of digital audio transmissions, of 
                        contact information for such entity.
                            ``(ii) Time limit on filings.--The Register 
                        of Copyrights may accept filings under clause 
                        (i) only until the 180th day after the date of 
                        the enactment of this section.
                            ``(iii) Limitation on statutory damages and 
                        attorneys' fees.--
                                    ``(I) Limitation.--An award of 
                                statutory damages or of attorneys' fees 
                                under section 504 or 505 may not be 
                                made, against an entity that has filed 
                                contact information for that entity 
                                under clause (i), with respect to an 
                                unauthorized transmission by that 
                                entity of a sound recording under 
                                subsection (a) if the transmission is 
                                made before the end of the 90-day 
                                period beginning on the date on which 
                                the entity receives a notice that--
                                            ``(aa) is sent by or on 
                                        behalf of the rights owner of 
                                        the sound recording;
                                            ``(bb) states that the 
                                        entity is not legally 
                                        authorized to transmit that 
                                        sound recording under 
                                        subsection (a); and
                                            ``(cc) identifies the sound 
                                        recording in a schedule 
                                        conforming to the requirements 
                                        prescribed by the regulations 
                                        issued under subparagraph 
                                        (A)(ii).
                                    ``(II) Undeliverable notices.--In 
                                any case in which a notice under 
                                subclause (I) is sent to an entity by 
                                mail or courier service and the notice 
                                is returned to the sender because the 
                                entity either is no longer located at 
                                the address provided in the contact 
                                information filed under clause (i) or 
                                has refused to accept delivery, or the 
                                notice is sent by electronic mail and 
                                is undeliverable, the 90-day period 
                                under subclause (I) shall begin on the 
                                date of the attempted delivery.
                    ``(C) Section 412.--Section 412 shall not limit an 
                award of statutory damages under section 504(c) or 
                attorneys' fees under section 505 with respect to an 
                unauthorized transmission of a sound recording under 
                subsection (a).
            ``(6) Applicability of other provisions.--
                    ``(A) In general.--Subject to subparagraph (B), no 
                provision of this title shall apply to or limit the 
                remedies available under this section except as 
                otherwise provided in this section.
                    ``(B) Applicability of definitions.--Any term used 
                in this section that is defined in section 101 shall 
                have the meaning given that term in section 101.
    ``(f) Application of Section 230 Safe Harbor.--For purposes of 
section 230 of the Communications Act of 1934 (47 U.S.C. 230), 
subsection (a) shall be considered to be a `law pertaining to 
intellectual property' under subsection (e)(2) of such section.
    ``(g) Rights Owner Defined.--In this section, the term `rights 
owner' means the person who has the exclusive right to reproduce a 
sound recording under the laws of any State.''.
    (b) Conforming Amendment.--The table of chapters for title 17, 
United States Code, is amended by adding at the end the following new 
chapter:

``14. Unauthorized digital performance of pre-1972 sound        1401''.
                            recordings.

SEC. 203. EFFECTIVE DATE.

    This title and the amendments made by this title shall take effect 
on the date of the enactment of this Act.

               TITLE III--ALLOCATION FOR MUSIC PRODUCERS

SEC. 301. SHORT TITLE.

    This title may be cited as the ``Allocation for Music Producers 
Act'' or the ``AMP Act''.

SEC. 302. PAYMENT OF STATUTORY PERFORMANCE ROYALTIES.

    (a) Letter of Direction.--Section 114(g) of title 17, United States 
Code, is amended by adding at the end the following new paragraph:
            ``(5) Letter of direction.--
                    ``(A) In general.--A nonprofit collective 
                designated by the Copyright Royalty Judges to 
                distribute receipts from the licensing of transmissions 
                in accordance with subsection (f) shall adopt and 
                reasonably implement a policy that provides, in 
                circumstances determined by the collective to be 
                appropriate, for acceptance of instructions from an 
                artist payee identified under subparagraph (A) or (D) 
                of paragraph (2) to distribute, to a producer, mixer, 
                or sound engineer who was part of the creative process 
                that created a sound recording, a portion of the 
                payments to which the artist payee would otherwise be 
                entitled from the licensing of transmissions of the 
                sound recording. In this section, such instructions 
                shall be referred to as a `letter of direction'.
                    ``(B) Acceptance of letter.--To the extent that the 
                collective accepts a letter of direction under 
                subparagraph (A), the person entitled to payment 
                pursuant to the letter of direction shall, during the 
                period in which the letter of direction is in effect 
                and carried out by the collective, be treated for all 
                purposes as the owner of the right to receive such 
                payment, and the artist payee providing the letter of 
                direction to the collective shall be treated as having 
                no interest in such payment.
                    ``(C) Authority of collective.--This paragraph 
                shall not be construed in such a manner so that the 
                collective is not authorized to accept or act upon 
                payment instructions in circumstances other than those 
                to which this paragraph applies.''.
    (b) Additional Provisions for Recordings Fixed Before November 1, 
1995.--Section 114(g) of title 17, United States Code, as amended by 
subsection (a), is further amended by adding at the end the following 
new paragraph:
            ``(6) Sound recordings fixed before november 1, 1995.--
                    ``(A) Payment absent letter of direction.--A 
                nonprofit collective designated by the Copyright 
                Royalty Judges to distribute receipts from the 
                licensing of transmissions in accordance with 
                subsection (f) (in this paragraph referred to as the 
                `collective') shall adopt and reasonably implement a 
                policy that provides, in circumstances determined by 
                the collective to be appropriate, for the deduction of 
                2 percent of all the receipts that are collected from 
                the licensing of transmissions of a sound recording 
                fixed before November 1, 1995, but which is withdrawn 
                from the amount otherwise payable under paragraph 
                (2)(D) to the recording artist or artists featured on 
                the sound recording (or the persons conveying rights in 
                the artists' performance in the sound recording), and 
                the distribution of such amount to one or more persons 
                described in subparagraph (B), after deduction of costs 
                described in paragraph (3) or (4), as applicable, if 
                each of the following requirements is met:
                            ``(i) Certification of attempt to obtain a 
                        letter of direction.--The person described in 
                        subparagraph (B) who is to receive the 
                        distribution has certified to the collective, 
                        under penalty of perjury, that--
                                    ``(I) for a period of at least 4 
                                months, that person made reasonable 
                                efforts to contact the artist payee for 
                                such sound recording to request and 
                                obtain a letter of direction 
                                instructing the collective to pay to 
                                that person a portion of the royalties 
                                payable to the featured recording 
                                artist or artists; and
                                    ``(II) during the period beginning 
                                on the date that person began the 
                                reasonable efforts described in 
                                subclause (I) and ending on the date of 
                                that person's certification to the 
                                collective, the artist payee did not 
                                affirm or deny in writing the request 
                                for a letter of direction.
                            ``(ii) Collective attempt to contact 
                        artist.--After receipt of the certification 
                        described in clause (i) and for a period of at 
                        least 4 months before the collective's first 
                        distribution to the person described in 
                        subparagraph (B), the collective attempted, in 
                        a reasonable manner as determined by the 
                        collective, to notify the artist payee of the 
                        certification made by the person described in 
                        subparagraph (B).
                            ``(iii) No objection received.--The artist 
                        payee did not, as of the date that is 10 
                        business days before the date on which the 
                        first distribution is made, submit to the 
                        collective in writing an objection to the 
                        distribution.
                    ``(B) Eligibility for payment.--A person shall be 
                eligible for payment under subparagraph (A) if the 
                person--
                            ``(i) is a producer, mixer, or sound 
                        engineer of the sound recording;
                            ``(ii) has entered into a written contract 
                        with a record company involved in the creation 
                        or lawful exploitation of the sound recording, 
                        or with the recording artist or artists 
                        featured on the sound recording (or the persons 
                        conveying rights in the artists' performance in 
                        the sound recording), under which the person 
                        seeking payment is entitled to participate in 
                        royalty payments that are based on the 
                        exploitation of the sound recording and are 
                        payable from royalties otherwise payable to the 
                        recording artist or artists featured on the 
                        sound recording (or the persons conveying 
                        rights in the artists' performance in the sound 
                        recording);
                            ``(iii) made a creative contribution to the 
                        creation of the sound recording; and
                            ``(iv) submits a written certification to 
                        the collective stating, under penalty of 
                        perjury, that the person meets the requirements 
                        in clauses (i) through (iii) and includes a 
                        true copy of the contract described in clause 
                        (ii).
                    ``(C) Multiple certifications.--Subject to 
                subparagraph (D), in a case in which more than one 
                person described in subparagraph (B) has met the 
                requirements for a distribution under subparagraph (A) 
                with respect to a sound recording as of the date that 
                is 10 business days before the date on which a 
                distribution is made, the collective shall divide the 2 
                percent distribution equally among all such persons.
                    ``(D) Objection to payment.--Not later than 10 
                business days after the date on which the collective 
                receives from the artist payee a written objection to a 
                distribution made pursuant to subparagraph (A), the 
                collective shall cease making any further payment 
                relating to such distribution. In any case in which the 
                collective has made one or more distributions pursuant 
                to subparagraph (A) to a person described in 
                subparagraph (B) before the date that is 10 business 
                days after the date on which the collective receives 
                from the artist payee an objection to such 
                distribution, the objection shall not affect that 
                person's entitlement to any distribution made before 
                the collective ceases such distribution under this 
                subparagraph.
                    ``(E) Ownership of the right to receive payments.--
                To the extent that the collective determines that a 
                distribution will be made under subparagraph (A) to a 
                person described in subparagraph (B), such person 
                shall, during the period covered by such distribution, 
                be treated for all purposes as the owner of the right 
                to receive such payments, and the artist payee to whom 
                such payments would otherwise be payable shall be 
                treated as having no interest in such payments.
                    ``(F) Artist payee defined.--In this paragraph, the 
                term `artist payee' means a person, other than a person 
                described in subparagraph (B), who owns the right to 
                receive all or part of the receipts payable under 
                paragraph (2)(D) with respect to a sound recording. In 
                a case in which there are multiple artist payees with 
                respect to a sound recording, an objection by one such 
                payee shall apply only to that payee's share of the 
                receipts payable under paragraph (2)(D), and does not 
                preclude payment under subparagraph (A) from the share 
                of an artist payee that does not so object.''.
    (c) Technical and Conforming Amendments.--Section 114(g) of title 
17, United States Code, as amended by subsections (a) and (b), is 
further amended--
            (1) in paragraph (2), by striking ``An agent designated'' 
        and inserting ``Except as provided for in paragraph (6), a 
        nonprofit collective designated by the Copyright Royalty 
        Judges'';
            (2) in paragraph (3)--
                    (A) by striking ``nonprofit agent designated'' and 
                inserting ``nonprofit collective designated by the 
                Copyright Royalty Judges'';
                    (B) by striking ``another designated agent'' and 
                inserting ``another designated nonprofit collective''; 
                and
                    (C) by striking ``agent'' and inserting 
                ``collective'' each subsequent place it appears;
            (3) in paragraph (4)--
                    (A) by striking ``designated agent'' and inserting 
                ``nonprofit collective''; and
                    (B) by striking ``agent'' and inserting 
                ``collective'' each subsequent place it appears; and
            (4) by adding at the end the following new paragraph:
            ``(7) Preemption of state property laws.--The holding and 
        distribution of receipts under section 112 and this section by 
        a nonprofit collective designated by the Copyright Royalty 
        Judges in accordance with this subsection and regulations 
        adopted by the Copyright Royalty Judges shall supersede and 
        preempt any State law (including common law) concerning 
        escheatment or abandoned property, or any analogous provision, 
        that might otherwise apply.''.

SEC. 303. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), this title 
and the amendments made by this title shall take effect on the date of 
the enactment of this Act.
    (b) Delayed Effective Date.--The effective date for paragraphs 
(5)(B) and (6)(E) of section 114(g) of title 17, United States Code, as 
added by section 302, shall be January 1, 2020.

            Passed the House of Representatives April 25, 2018.

            Attest:

                                                                 Clerk.
115th CONGRESS

  2d Session

                               H. R. 5447

_______________________________________________________________________

                                 AN ACT

          To modernize copyright law, and for other purposes.