[Congressional Record Volume 164, Number 155 (Tuesday, September 18, 2018)]
[Senate]
[Pages S6237-S6254]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA 4021. Mr. HATCH (for Mr. Alexander) proposed an amendment to 
amendment SA 4022 proposed by Mr. Hatch (for himself, Mr. Grassley, 
Mrs. Feinstein, Mr. Alexander, Mr. Whitehouse, Mr. Coons, and Mr. 
Wyden) to the bill H.R. 1551, to amend the Internal Revenue Code of 
1986 to modify the credit for production from advanced nuclear power 
facilities; as follows:

       On page 1, line 5, strike ``Music Modernization Act'' and 
     insert ``Orrin G. Hatch Music Modernization Act''.
                                 ______
                                 
  SA 4022. Mr. HATCH (for himself, Mr. Grassley, Mrs. Feinstein, Mr. 
Alexander, Mr. Whitehouse, Mr. Coons, and Mr. Wyden) proposed an 
amendment to the bill H.R. 1551, to amend the Internal Revenue Code of 
1986 to modify the credit for production from advanced nuclear power 
facilities; as follows:

       Strike all after the enacting clause and insert the 
     following:

     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. Customs user fees.

                 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.
Sec. 105. Performing rights society consent decrees.
Sec. 106. Effective date.

                TITLE II--CLASSICS PROTECTION AND ACCESS

Sec. 201. Short title.
Sec. 202. Unauthorized use of pre-1972 sound recordings.

               TITLE III--ALLOCATION FOR MUSIC PRODUCERS

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

                         TITLE IV--SEVERABILITY

Sec. 401. Severability.

     SEC. 2. CUSTOMS USER FEES.

       Section 13031(j)(3)(A) of the Consolidated Omnibus Budget 
     Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)(A)) is 
     amended by striking ``October 13, 2027'' and inserting 
     ``October 20, 2027''.

                 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) in the subsection heading, by inserting ``in General'' 
     after ``Availability and Scope of Compulsory License'';
       (B) by striking paragraph (1) and inserting the following:
       ``(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 
     the 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 the 
     authorized distributor of the sound recording copyright 
     owner, 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 not later than 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 not later than 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 general.--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) Effect of failure.--In either case described in 
     subclause (I) or (II) of 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

[[Page S6238]]

     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), paragraph 
     (2)(A), and chapter 8. 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), paragraph (2)(A), and chapter 8.
       ``(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, 
     subparagraphs (E) and (F), paragraph (2)(A), and chapter 8 
     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) In general.--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) Applicability.--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), 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) In general.--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) Other remedies.--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 paragraphs (4) and (6) 
     of section 106;
       ``(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 paragraphs (1) and (3) of section 106, 
     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 before, on, 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 paragraphs (1) through (5) 
     of section 106 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

[[Page S6239]]

     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 subparagraph.
       ``(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 paragraph 
     (1), (2)(A), or (3) of subsection (b), 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 not later than 30 days after the date on which the 
     notice is sent, 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 1 or 
     more copyright owners and 1 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 not later than 30 calendar days after 
     the date on which the mechanical licensing collective 
     receives the notice, the blanket license shall be effective 
     as of the date on which 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 during the 
     3-year period preceding the date on which the mechanical 
     licensing collective receives the notice 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 an 
     appropriate district court of the United States. 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 entity, not owned by any other entity, 
     that is created by copyright owners to carry out 
     responsibilities under this subsection;
       ``(ii) is endorsed by, and enjoys substantial support from, 
     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 the entity 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 that is governed by a board of directors in accordance 
     with subparagraph (D)(i); and
       ``(iv) has been designated by the Register of Copyrights, 
     with the approval of the Librarian of Congress pursuant to 
     section 702, in accordance with subparagraph (B).
       ``(B) Designation of mechanical licensing collective.--
       ``(i) Initial designation.--Not later than 270 days after 
     the enactment date, the Register of Copyrights shall 
     initially designate the mechanical licensing collective as 
     follows:

       ``(I) Not later than 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--

       ``(aa) the identity of and contact information for the 
     mechanical licensing collective; and
       ``(bb) the reasons for the designation.
       ``(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, the Register shall--

       ``(I) 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, and the reasons for such a designation, with 
     any new designation to be effective as of the first day of a 
     month that is not less than 6 months and not longer than 9 
     months after the date

[[Page S6240]]

     on which the Register publishes the notice, as specified by 
     the Register; and
       ``(II) if a new entity is designated as the mechanical 
     licensing collective, 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 the 
     activities of the mechanical licensing collective.
       ``(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 the activities of the 
     mechanical licensing collective and engage in and respond to 
     audits described in this subsection.
       ``(XIII) Engage in such other activities as may be 
     necessary or appropriate to fulfill the responsibilities of 
     the mechanical licensing collective under this subsection.

       ``(ii) Restrictions concerning licensing and administrative 
     activities.--With respect to the administration of licenses, 
     except as provided in clauses (i) and (iii) and subparagraph 
     (E)(v), the mechanical licensing collective may only--

       ``(I) issue blanket licenses pursuant to subsection (d)(1); 
     and
       ``(II) administer blanket licenses for reproduction or 
     distribution rights in musical works for covered activities, 
     including collecting and distributing royalties, pursuant to 
     blanket licenses.

       ``(iii) Additional administrative activities.--Subject to 
     paragraph (11)(C), the mechanical licensing collective may 
     also administer, including by collecting and distributing 
     royalties, voluntary licenses issued by, or individual 
     download licenses obtained from, copyright owners only for 
     reproduction or distribution rights in musical works for 
     covered activities, for which the mechanical licensing 
     collective shall charge reasonable fees for such services.
       ``(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--

       ``(aa) to which songwriters have assigned exclusive rights 
     of reproduction and distribution of musical works with 
     respect to covered activities; and
       ``(bb) none of which 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 for 
     the 3-year period preceding the date on which the member is 
     appointed.
       ``(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) Bylaws.--

       ``(I) Establishment.--Not later than 1 year after the date 
     on which the mechanical licensing collective is initially 
     designated by the Register of Copyrights under subparagraph 
     (B)(i), the collective shall establish bylaws to determine 
     issues relating to the governance of the collective, 
     including, but not limited to--

       ``(aa) the length of the term for each member of the board 
     of directors;
       ``(bb) the staggering of the terms of the members of the 
     board of directors;
       ``(cc) a process for filling a seat on the board of 
     directors that is vacated before the end of the term with 
     respect to that seat;
       ``(dd) a process for electing a member to the board of 
     directors; and
       ``(ee) a management structure for daily operation of the 
     collective.

       ``(II) Public availability.--The mechanical licensing 
     collective shall make the bylaws established under subclause 
     (I) available to the public.

       ``(iii) Board meetings.--The board of directors shall meet 
     not less frequently than biannually and discuss matters 
     pertinent to the operations of the mechanical licensing 
     collective, including the mechanical licensing collective 
     budget.
       ``(iv) Operations advisory committee.--The board of 
     directors of the mechanical licensing collective shall 
     establish an operations advisory committee consisting of not 
     fewer than 6 members to make recommendations to the board of 
     directors concerning the operations of the mechanical 
     licensing collective, including the efficient investment in 
     and deployment of information technology and data resources. 
     Such committee shall have an equal number of 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.

       ``(v) 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.
       ``(vi) Dispute resolution committee.--The board of 
     directors of the mechanical licensing collective shall 
     establish and appoint a dispute resolution committee that 
     shall--

       ``(I) consist of not fewer than 6 members; and
       ``(II) include an equal number of representatives of 
     musical work copyright owners and professional songwriters.

       ``(vii) Mechanical licensing collective annual report.--

       ``(I) In general.--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 not less than 3 years, an 
     annual report that sets forth information regarding--

       ``(aa) the operational and licensing practices of the 
     collective;
       ``(bb) how royalties are collected and distributed;
       ``(cc) budgeting and expenditures;
       ``(dd) the collective total costs for the preceding 
     calendar year;
       ``(ee) the projected annual mechanical licensing collective 
     budget;
       ``(ff) aggregated royalty receipts and payments;
       ``(gg) expenses that are more than 10 percent of the annual 
     mechanical licensing collective budget; and
       ``(hh) the efforts of the collective to locate and identify 
     copyright owners of unmatched musical works (and shares of 
     works).

       ``(II) Submission.--On the date on which the mechanical 
     licensing collective posts each report required under 
     subclause (I), the collective shall provide a copy of the 
     report to the Register of Copyrights.

       ``(viii) Independent officers.--An individual serving as an 
     officer of the mechanical licensing collective may not, at 
     the same time, also be an employee or agent of any member of 
     the board of directors of the collective or any entity 
     represented by a member of the board of directors, as 
     described in clause (i).
       ``(ix) Oversight and accountability.--

       ``(I) In general.--The mechanical licensing collective 
     shall--

       ``(aa) ensure that the policies and practices of the 
     collective are transparent and accountable;

[[Page S6241]]

       ``(bb) identify a point of contact for publisher inquiries 
     and complaints with timely redress; and
       ``(cc) establish an anti-comingling policy for funds not 
     collected under this section and royalties collected under 
     this section.

       ``(II) Audits.--

       ``(aa) In general.--Beginning in the fourth full calendar 
     year that begins after the initial designation of the 
     mechanical licensing collective by the Register of Copyrights 
     under subparagraph (B)(i), and in every fifth calendar year 
     thereafter, the collective shall retain a qualified auditor 
     that shall--
       ``(AA) examine the books, records, and operations of the 
     collective;
       ``(BB) prepare a report for the board of directors of the 
     collective with respect to the matters described in item 
     (bb); and
       ``(CC) not later than December 31 of the year in which the 
     qualified auditor is retained, deliver the report described 
     in subitem (BB) to the board of directors of the collective.
       ``(bb) Matters addressed.--Each report prepared under item 
     (aa) shall address the implementation and efficacy of 
     procedures of the mechanical licensing collective--
       ``(AA) for the receipt, handling, and distribution of 
     royalty funds, including any amounts held as unclaimed 
     royalties;
       ``(BB) to guard against fraud, abuse, waste, and the 
     unreasonable use of funds; and
       ``(CC) to protect the confidentiality of financial, 
     proprietary, and other sensitive information.
       ``(cc) Public availability.--With respect to each report 
     prepared under item (aa), the mechanical licensing collective 
     shall--
       ``(AA) submit the report to the Register of Copyrights; and
       ``(BB) make the report available to the public.
       ``(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 the ownership percentage of that owner;
       ``(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 the ownership 
     percentage of that owner;
       ``(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 other person or entity for a fee not to exceed 
     the marginal cost to the mechanical licensing collective of 
     providing the database to such person or entity.

       ``(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 not less than 3 years after the date on which the 
     funds were received by the mechanical licensing collective, 
     or not less than 3 years after the date on which the funds 
     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--

       ``(I) at the Federal, short-term rate; and
       ``(II) that accrues for the benefit of copyright owners 
     entitled to payment of such accrued royalties.

       ``(I) Musical works claiming process.--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 the other 
     records of the collective 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

[[Page S6242]]

     interest associated with that work (or share thereof) to the 
     copyright owner, accompanied by a cumulative statement of 
     account reflecting usage of such work and accrued royalties 
     based on information provided by digital music providers to 
     the mechanical licensing collective.
       ``(J) Distribution of unclaimed accrued royalties.--
       ``(i) Distribution procedures.--After the expiration of the 
     prescribed holding period for accrued royalties provided in 
     subparagraph (H)(i), the mechanical licensing collective 
     shall distribute such accrued royalties, along with a 
     proportionate share of accrued interest, to copyright owners 
     identified in 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 
     January 1 of the second full calendar year to commence after 
     the license availability date, with not less than 1 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 in reports of usage provided by digital 
     music providers for covered activities for the periods in 
     question, including, in addition to usage data provided to 
     the mechanical licensing collective, usage data provided 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 the usage of musical works 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 usage, 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 
     subparagraph (D)(v) 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) Public notice of unclaimed accrued royalties.--The 
     mechanical licensing collective shall--

       ``(I) maintain a publicly accessible online facility with 
     contact information for the collective that lists unmatched 
     musical works (and shares of works), through which a 
     copyright owner may assert an ownership claim with respect to 
     such a work (and a share of such a work);
       ``(II) engage in diligent, good-faith efforts to publicize, 
     throughout the music industry--

       ``(aa) the existence of the collective and the ability to 
     claim unclaimed accrued royalties for unmatched musical works 
     (and shares of such works) held by the collective;
       ``(bb) the procedures by which copyright owners may 
     identify themselves and provide contact, ownership, and other 
     relevant information to the collective in order to receive 
     payments of accrued royalties;
       ``(cc) any transfer of accrued royalties for musical works 
     under paragraph (10)(B), not later than 180 days after the 
     date on which the transfer is received; and
       ``(dd) any pending distribution of unclaimed accrued 
     royalties and accrued interest, not less than 90 days before 
     the date on which the distribution is made; and

       ``(III) as appropriate, participate in music industry 
     conferences and events for the purpose of publicizing the 
     matters described in subclause (II).

       ``(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 subparagraph (D)(vi) shall establish 
     policies and procedures--
       ``(i) for copyright owners to address in a timely and 
     equitable manner disputes relating to ownership interests in 
     musical works licensed under this section and allocation and 
     distribution of royalties by the mechanical licensing 
     collective, subject to the approval of the board of directors 
     of the mechanical licensing collective;
       ``(ii) that shall include a mechanism to hold disputed 
     funds in accordance with the requirements described in 
     subparagraph (H)(ii) pending resolution of the dispute; and
       ``(iii) except as provided in paragraph (11)(D), that 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 3 
     calendar years preceding the year in which the audit is 
     commenced, 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 not later 
     than 45 calendar days after the date on which the notice is 
     received.
       ``(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, except that, 
     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 or 
     owners 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 in this 
     subparagraph, except that 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 the 
     operations of the mechanical licensing collective, including 
     those relating to notices of license, the administration of 
     the claims process of the mechanical licensing collective, 
     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 not 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 the owner or 
     the authorized representative of the owner.
       ``(4) Terms and conditions of blanket license.--A blanket 
     license is subject to, and

[[Page S6243]]

     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), except that the monthly reporting shall be due on 
     the date that is 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), 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 the sound recordings 
     embody;
       ``(bb) to the extent acquired by the digital music provider 
     in the metadata provided by sound recording copyright owners 
     or other licensors of sound recordings in connection with the 
     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 of Copyrights 
     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 sound recording copyright 
     owners and other licensors of sound recordings made available 
     through the service of such digital music provider 
     information concerning--
       ``(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) 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 not more frequently than 
     once in any 3-calendar-year period to cover a verification 
     period of not 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 not 
     later than 45 calendar days after the date on which notice is 
     received.
       ``(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, except that, 
     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 not less than 10 percent, 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 not 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 in this 
     subparagraph, except that 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 1 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 1 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 not less than 60 calendar days.

       ``(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 not later than 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 before the end of the 60-day period described 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

[[Page S6244]]

     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 an appropriate district court 
     of the United States. 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, 
     with the approval of the Librarian of Congress pursuant to 
     section 702, 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 
     not later than 270 days 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 of Copyrights 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 of 
     Copyrights 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 determination of the Register 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) Assist in publicizing the existence of the 
     mechanical licensing collective and the ability of copyright 
     owners to claim royalties for unmatched musical works (and 
     shares of works) through the collective.
       ``(VIII) 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).
       ``(iii) Assistance with publicity for unclaimed 
     royalties.--The digital licensee coordinator shall make 
     reasonable, good-faith efforts to assist the mechanical 
     licensing collective in the efforts of the collective to 
     locate and identify copyright owners of unmatched musical 
     works (and shares of such works) by encouraging digital music 
     providers to publicize the existence of the collective and 
     the ability of copyright owners to claim unclaimed accrued 
     royalties, including by--

       ``(I) posting contact information for the collective at 
     reasonably prominent locations on digital music provider 
     websites and applications; and
       ``(II) conducting in-person outreach activities with 
     songwriters.

       ``(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 an appropriate district court of the United States 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 determines 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

[[Page S6245]]

     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 voluntary 
     contribution described in clause (i) 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, and 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, 
     including, 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) Not later than 270 days after the enactment date, the 
     Copyright Royalty Judges shall commence a proceeding to 
     establish the initial administrative assessment by publishing 
     a notice in the Federal Register seeking petitions to 
     participate.
       ``(II) The mechanical licensing collective and digital 
     licensee coordinator shall participate in the proceeding 
     described in subclause (I), 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 the Copyright 
     Royalty Judges determine appropriate.
       ``(IV) The initial administrative assessment shall be 
     determined, and such determination shall be published in the 
     Federal Register by the Copyright Royalty Judges, not later 
     than 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 (iv).

       ``(iv) Adjustment of administrative assessment.--The 
     administrative assessment may be adjusted by the Copyright 
     Royalty Judges periodically, in accordance with the following 
     procedures:

       ``(I) Not 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 
     May 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 June 
     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 June 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), except that the 
     Copyright Royalty Judges shall have the discretion to reject 
     any such agreement for good cause shown. An administrative 
     assessment adopted under this clause shall apply to all 
     digital music providers and significant nonblanket licensees 
     engaged in covered activities during the period the 
     administrative assessment 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, not later than 
     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 not later 
     than 90 days 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), except that the mechanical licensing 
     collective or the digital licensee coordinator 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

[[Page S6246]]

     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, not later 
     than 90 days after the effective date of the rate and terms 
     established by the Copyright Royalty Judges--
       ``(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 1 or more covered activities 
     with respect to a musical work, except that such substitution 
     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) notices of intention filed before the enactment date 
     will no longer be effective or provide license authority with 
     respect to covered activities, except that, 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, 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) Not 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 1 or more bulk electronic matching 
     processes that are available to the digital music provider 
     through a third-party vendor on commercially reasonable 
     terms, except that a digital music provider may rely on its 
     own bulk electronic matching process if that process 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 not 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) not later than 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) not later than 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) A digital music provider that complies with the 
     requirements of this subparagraph

[[Page S6247]]

     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 
     in the course of engaging in covered activities that accrued 
     not more than 3 years prior to the license availability date, 
     such action may be commenced not later than the later of--
       ``(i) 3 years after the date on which the claim accrued; or
       ``(ii) 2 years after the license availability date.
       ``(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) of this paragraph 
     (except for the administrative assessment referenced in such 
     subparagraph (A) 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, 
     subject to the following conditions:
       ``(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, the term `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 day before 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 
     under 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:
       ``(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, audit, 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 
     qualifies 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

[[Page S6248]]

     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.
       ``(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 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 
     those expenditures, 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:
       ``(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 subsection (a)(3) and section 103(g)(2) 
     shall apply to any proceeding before the Copyright Royalty 
     Judges that is 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.--Not later than 270 
     days after the date of enactment of this Act, the Copyright 
     Royalty Judges shall amend the regulations for section 115 of 
     title 17, United States Code, 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 added by 
     subsection (a). In so doing, the Copyright Royalty Judges 
     shall make adjustments to the language of the regulations as 
     necessary to achieve the same purpose and effect as the 
     original regulations with respect to the rates and terms 
     previously adopted by the Copyright Royalty Judges.
       (e) Copyright Office Activities.--The Register of 
     Copyrights shall engage in public outreach and educational 
     activities--
       (1) regarding the amendments made by subsection (a) to 
     section 115 of title 17, United States Code, including the 
     responsibilities of the mechanical licensing collective 
     designated under those amendments;
       (2) which shall include educating songwriters and other 
     interested parties with respect to the process established 
     under section 115(d)(3)(C)(i)(V) of title 17, United States 
     Code, as added by subsection (a), by which--
       (A) a copyright owner may claim ownership of musical works 
     (and shares of such works); and
       (B) royalties for works for which the owner is not 
     identified or located shall be equitably distributed to known 
     copyright owners; and
       (3) which the Register shall make available online.
       (f) Unclaimed Royalties Study and Recommendations.--
       (1) In general.--Not later than 2 years after the date on 
     which the Register of Copyrights initially designates the 
     mechanical licensing collective under section 115(d)(3)(B)(i) 
     of title 17, United States Code, as added by subsection 
     (a)(4), the Register, in consultation with the Comptroller 
     General of the United States, and after soliciting and 
     reviewing comments and relevant information from music 
     industry participants and

[[Page S6249]]

     other interested parties, shall submit to the Committee on 
     the Judiciary of the Senate and the Committee on the 
     Judiciary of the House of Representatives a report that 
     recommends best practices that the collective may implement 
     in order to--
       (A) identify and locate musical work copyright owners with 
     unclaimed accrued royalties held by the collective;
       (B) encourage musical work copyright owners to claim the 
     royalties of those owners; and
       (C) reduce the incidence of unclaimed royalties.
       (2) Consideration of recommendations.--The mechanical 
     licensing collective shall carefully consider, and give 
     substantial weight to, the recommendations submitted by the 
     Register of Copyrights under paragraph (1) when establishing 
     the procedures of the collective with respect to the--
       (A) identification and location of musical work copyright 
     owners; and
       (B) distribution of unclaimed royalties.

     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 subscription 
     services and preexisting satellite digital audio radio 
     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.--The term ``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.--The term ``terrestrial 
     broadcast station'' means a terrestrial, over-the-air radio 
     or television broadcast station, including an FM translator 
     (as defined in section 74.1201 of title 47, Code of Federal 
     Regulations, and licensed as such by the Federal 
     Communications Commission) whose primary business activities 
     are comprised of, and whose 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 114(f) of such title that 
     is pending on, or commenced on or after, the date of 
     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 114(f) of such title 
     before the date of 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, in the first sentence, 
     by striking ``under paragraph (4)'' and inserting ``under 
     paragraph (3)''.
       (2) Section 801.--Section 801(b) of title 17, United States 
     Code, is amended--
       (A) in paragraph (1), by striking ``The rates applicable'' 
     and all that follows though ``prevailing industry 
     practices.''; and
       (B) in paragraph (7)(B), by striking ``114(f)(3)'' and 
     inserting ``114(f)(2)''.
       (3) Section 803.--Section 803(c)(2)(E)(i)(II) of title 17, 
     United States Code, is amended--
       (A) by striking ``or 114(f)(2)(C)''; and
       (B) by striking ``114(f)(4)(B)'' and inserting 
     ``114(f)(3)(B)''.
       (4) 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''.
       (h) Effective Date of Amended Rate Setting Standard.--The 
     amendments made by subsection (a)(1) shall apply to any 
     proceeding before the Copyright Royalty Judges that is 
     commenced on or after the date of the enactment of this Act.
       (i) Timing of Rate Determinations.--Section 804(b)(3)(B) of 
     title 17, United States Code, is amended, in the third 
     sentence, by inserting the following after ``fifth calendar 
     year'': ``, except that--
       ``(i) with respect to preexisting subscription services, 
     the terms and rates finally determined for the rate period 
     ending on December 31, 2022, shall remain in effect through 
     December 31, 2027, and there shall be no proceeding to 
     determine terms and rates for preexisting subscription 
     services for the period beginning on January 1, 2023, and 
     ending on December 31, 2027; and
       ``(ii) with respect to preexisting satellite digital audio 
     radio services, the terms and rates set forth by the 
     Copyright Royalty Judges on December 14, 2017, in their 
     initial determination for the rate period ending on December 
     31, 2022 shall be in effect through December 31, 2027, 
     without any change based on a rehearing under section 
     803(c)(2) and without the possibility of appeal under section 
     803(d), and there shall be no proceeding to determine terms 
     and rates for preexisting satellite digital audio radio 
     services for the period beginning on January 1, 2023, and''.

     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:
       ``(b) Random Assignment of Rate Court Proceedings.--
       ``(1) In general.--
       ``(A) Definition.--In this paragraph, the term `performing 
     rights society' has the meaning given the term in section 101 
     of title 17.
       ``(B) Determination of license fee.--Except as provided in 
     subparagraph (C), 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 the rules of that court for the 
     division of business among district judges, provided that

[[Page S6250]]

     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.
       ``(C) Exception.--Subparagraph (B) 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.''.

     SEC. 105. PERFORMING RIGHTS SOCIETY CONSENT DECREES.

       (a) Definition.--In this section, the term ``performing 
     rights society'' has the meaning given the term in section 
     101 of title 17, United States Code.
       (b) Notification of Review.--
       (1) In general.--The Department of Justice shall provide 
     timely briefings upon request of any Member of the Committee 
     on the Judiciary of the Senate and the Committee on the 
     Judiciary of the House of Representatives regarding the 
     status of a review in progress of a consent decree between 
     the United States and a performing rights society.
       (2) Confidentiality and deliberative process.--In 
     accordance with applicable rules relating to confidentiality 
     and agency deliberative process, the Department of Justice 
     shall share with such Members of Congress detailed and timely 
     information and pertinent documents related to the consent 
     decree review.
       (c) Action Before Motion to Terminate.--
       (1) In general.--Before filing with the appropriate 
     district court of the United States a motion to terminate a 
     consent decree between the United States and a performing 
     rights society, including a motion to terminate a consent 
     decree after the passage of a specified period of time, the 
     Department of Justice shall--
       (A) notify Members of Congress and committees of Congress 
     described in subsection (b); and
       (B) provide to such Members of Congress and committees 
     information regarding the impact of the proposed termination 
     on the market for licensing the public performance of musical 
     works should the motion be granted.
       (2) Notification.--
       (A) In general.--During the notification described in 
     paragraph (1), and not later than a reasonable time before 
     the date on which the Department of Justice files with the 
     appropriate district court of the United States a motion to 
     terminate a consent decree between the United States and a 
     performing rights society, the Department of Justice should 
     submit to the chairmen and ranking members of the Committee 
     on the Judiciary of the Senate and the Committee on the 
     Judiciary of the House of Representatives a written 
     notification of the intent of the Department of Justice to 
     file the motion.
       (B) Contents.--The notification provided in subparagraph 
     (A) shall include a written report to the chairmen and 
     ranking members of the Committee on the Judiciary of Senate 
     and the Committee on the Judiciary of the House of 
     Representatives setting forth--
       (i) an explanation of the process used by the Department of 
     Justice to review the consent decree;
       (ii) a summary of the public comments received by the 
     Department of Justice during the review by the Department; 
     and
       (iii) other information provided to Congress under 
     paragraph (1)(B).
       (d) Scope.--This section applies only to a consent decree 
     between the United States and a performing rights society.

     SEC. 106. EFFECTIVE DATE.

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

                TITLE II--CLASSICS PROTECTION AND ACCESS

     SEC. 201. SHORT TITLE.

       This title may be cited as the ``Classics Protection and 
     Access Act''.

     SEC. 202. UNAUTHORIZED USE OF PRE-1972 SOUND RECORDINGS.

       (a) Preemption of State Law Rights; Protection for 
     Unauthorized Use.--Title 17, United States Code, is amended--
       (1) in section 301, by striking subsection (c) and 
     inserting the following:
       ``(c) Notwithstanding the provisions of section 303, and in 
     accordance with chapter 14, no sound recording fixed before 
     February 15, 1972, shall be subject to copyright under this 
     title. With respect to sound recordings fixed before February 
     15, 1972, the preemptive provisions of subsection (a) shall 
     apply to activities that are commenced on and after the date 
     of enactment of the Classics Protection and Access Act. 
     Nothing in this subsection may be construed to affirm or 
     negate the preemption of rights and remedies pertaining to 
     any cause of action arising from the nonsubscription 
     broadcast transmission of sound recordings under the common 
     law or statutes of any State for activities that do not 
     qualify as covered activities under chapter 14 undertaken 
     during the period between the date of enactment of the 
     Classics Protection and Access Act and the date on which the 
     term of prohibition on unauthorized acts under section 
     1401(a)(2) expires for such sound recordings. Any potential 
     preemption of rights and remedies related to such activities 
     undertaken during that period shall apply in all respects as 
     it did the day before the date of enactment of the Classics 
     Protection and Access Act.''; and
       (2) by adding at the end the following:

      ``CHAPTER 14--UNAUTHORIZED USE OF PRE-1972 SOUND RECORDINGS

``Sec.
``1401. Unauthorized use of pre-1972 sound recordings.

     ``Sec. 1401. Unauthorized use of pre-1972 sound recordings

       ``(a) In General.--
       ``(1) Unauthorized acts.--Anyone who, on or before the last 
     day of the applicable transition period under paragraph (2), 
     and without the consent of the rights owner, engages in 
     covered activity with respect to a sound recording fixed 
     before February 15, 1972, shall be subject to the remedies 
     provided in sections 502 through 505 and 1203 to the same 
     extent as an infringer of copyright or a person that engages 
     in unauthorized activity under chapter 12.
       ``(2) Term of prohibition.--
       ``(A) In general.--The prohibition under paragraph (1)--
       ``(i) subject to clause (ii), shall apply to a sound 
     recording described in that paragraph--

       ``(I) through December 31 of the year that is 95 years 
     after the year of first publication; and
       ``(II) for a further transition period as prescribed under 
     subparagraph (B) of this paragraph; and

       ``(ii) shall not apply to any sound recording after 
     February 15, 2067.
       ``(B) Transition periods.--
       ``(i) Pre-1923 recordings.--In the case of a sound 
     recording first published before January 1, 1923, the 
     transition period described in subparagraph (A)(i)(II) shall 
     end on December 31 of the year that is 3 years after the date 
     of enactment of this section.
       ``(ii) 1923-1946 recordings.--In the case of a sound 
     recording first published during the period beginning on 
     January 1, 1923, and ending on December 31, 1946, the 
     transition period described in subparagraph (A)(i)(II) shall 
     end on the date that is 5 years after the last day of the 
     period described in subparagraph (A)(i)(I).
       ``(iii) 1947-1956 recordings.--In the case of a sound 
     recording first published during the period beginning on 
     January 1, 1947, and ending on December 31, 1956, the 
     transition period described in subparagraph (A)(i)(II) shall 
     end on the date that is 15 years after the last day of the 
     period described in subparagraph (A)(i)(I).
       ``(iv) Post-1956 recordings.--In the case of a sound 
     recording fixed before February 15, 1972, that is not 
     described in clause (i), (ii), or (iii), the transition 
     period described in subparagraph (A)(i)(II) shall end on 
     February 15, 2067.
       ``(3) Rule of construction.--For the purposes of this 
     subsection, the term `anyone' includes any State, any 
     instrumentality of a State, and any officer or employee of a 
     State or instrumentality of a State acting in the official 
     capacity of the officer or employee, as applicable.
       ``(b) Certain Authorized Transmissions and Reproductions.--
     A public performance by means of a digital audio transmission 
     of a sound recording fixed before February 15, 1972, or a 
     reproduction in an ephemeral phonorecord or copy of a sound 
     recording fixed 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 or reproduction would satisfy the 
     requirements for statutory licensing under section 112(e)(1) 
     or section 114(d)(2), or would be exempt under section 
     114(d)(1), as the case may be, if the sound recording were 
     fixed on or after February 15, 1972; and
       ``(2) the transmitting entity pays the statutory royalty 
     for the transmission or reproduction pursuant to the rates 
     and terms adopted under sections 112(e) and 114(f), and 
     complies with other obligations, in the same manner as 
     required by regulations adopted by the Copyright Royalty 
     Judges under sections 112(e) and 114(f) for sound recordings 
     that are fixed on or after February 15, 1972, except in the 
     case of a transmission that would be exempt under section 
     114(d)(1).
       ``(c) Certain Noncommercial Uses of Sound Recordings That 
     Are Not Being Commercially Exploited.--
       ``(1) In general.--Noncommercial use of a sound recording 
     fixed before February 15, 1972, that is not being 
     commercially exploited by or under the authority of the 
     rights owner shall not violate subsection (a) if--
       ``(A) the person engaging in the noncommercial use, in 
     order to determine

[[Page S6251]]

     whether the sound recording is being commercially exploited 
     by or under the authority of the rights owner, makes a good 
     faith, reasonable search for, but does not find, the sound 
     recording--
       ``(i) in the records of schedules filed in the Copyright 
     Office as described in subsection (f)(5)(A); and
       ``(ii) on services offering a comprehensive set of sound 
     recordings for sale or streaming;
       ``(B) the person engaging in the noncommercial use files a 
     notice identifying the sound recording and the nature of the 
     use in the Copyright Office in accordance with the 
     regulations issued under paragraph (3)(B); and
       ``(C) during the 90-day period beginning on the date on 
     which the notice described in subparagraph (B) is indexed 
     into the public records of the Copyright Office, the rights 
     owner of the sound recording does not, in its discretion, opt 
     out of the noncommercial use by filing notice thereof in the 
     Copyright Office in accordance with the regulations issued 
     under paragraph (5).
       ``(2) Rules of construction.--For purposes of this 
     subsection--
       ``(A) merely recovering costs of production and 
     distribution of a sound recording resulting from a use 
     otherwise permitted under this subsection does not itself 
     necessarily constitute a commercial use of the sound 
     recording;
       ``(B) the fact that a person engaging in the use of a sound 
     recording also engages in commercial activities does not 
     itself necessarily render the use commercial; and
       ``(C) the fact that a person files notice of a 
     noncommercial use of a sound recording in accordance with the 
     regulations issued under paragraph (3)(B) does not itself 
     affect any limitation on the exclusive rights of a copyright 
     owner described in section 107, 108, 109, 110, or 112(f) as 
     applied to a claim under subsection (a) of this section 
     pursuant to subsection (f)(1)(A) of this section.
       ``(3) Notice of covered activity.--Not later than 180 days 
     after the date of enactment of this section, the Register of 
     Copyrights shall issue regulations that--
       ``(A) provide specific, reasonable steps that, if taken by 
     a filer, are sufficient to constitute a good faith, 
     reasonable search under paragraph (1)(A) to determine whether 
     a recording is being commercially exploited, including the 
     services that satisfy the good faith, reasonable search 
     requirement under paragraph (1)(A) for purposes of the safe 
     harbor described in paragraph (4)(A); and
       ``(B) establish the form, content, and procedures for the 
     filing of notices under paragraph (1)(B).
       ``(4) Safe harbor.--
       ``(A) In general.--A person engaging in a noncommercial use 
     of a sound recording otherwise permitted under this 
     subsection who establishes that the person made a good faith, 
     reasonable search under paragraph (1)(A) without finding 
     commercial exploitation of the sound recording by or under 
     the authority of the rights owner shall not be found to be in 
     violation of subsection (a).
       ``(B) Steps sufficient but not necessary.--Taking the 
     specific, reasonable steps identified by the Register of 
     Copyrights in the regulations issued under paragraph (3)(A) 
     shall be sufficient, but not necessary, for a filer to 
     satisfy the requirement to conduct a good faith, reasonable 
     search under paragraph (1)(A) for purposes of subparagraph 
     (A) of this paragraph.
       ``(5) Opting out of covered activity.--
       ``(A) In general.--Not later than 180 days after the date 
     of enactment of this section, the Register of Copyrights 
     shall issue regulations establishing the form, content, and 
     procedures for the rights owner of a sound recording that is 
     the subject of a notice under paragraph (1)(B) to, in its 
     discretion, file notice opting out of the covered activity 
     described in the notice under paragraph (1)(B) during the 90-
     day period beginning on the date on which the notice under 
     paragraph (1)(B) is indexed into the public records of the 
     Copyright Office.
       ``(B) Rule of construction.--The fact that a rights holder 
     opts out of a noncommercial use of a sound recording by 
     filing notice thereof in the Copyright Office in accordance 
     with the regulations issued under subparagraph (A) does not 
     itself enlarge or diminish any limitation on the exclusive 
     rights of a copyright owner described in section 107, 108, 
     109, 110, or 112(f) as applied to a claim under subsection 
     (a) of this section pursuant to subsection (f)(1)(A) of this 
     section.
       ``(6) Civil penalties for certain acts.--
       ``(A) Filing of notices of noncommercial use.--Any person 
     who willfully engages in a pattern or practice of filing a 
     notice of noncommercial use of a sound recording as described 
     in paragraph (1)(B) fraudulently describing the use proposed, 
     or knowing that the use proposed is not permitted under this 
     subsection, shall be assessed a civil penalty in an amount 
     that is not less than $250, and not more than $1000, for each 
     such notice, in addition to any other remedies that may be 
     available under this title based on the actual use made.
       ``(B) Filing of opt-out notices.--
       ``(i) In general.--Any person who files an opt-out notice 
     as described in paragraph (1)(C), knowing that the person is 
     not the rights owner or authorized to act on behalf of the 
     rights owner of the sound recording to which the notice 
     pertains, shall be assessed a civil penalty in an amount not 
     less than $250, and not more than $1,000, for each such 
     notice.
       ``(ii) Pattern or practice.--Any person who engages in a 
     pattern or practice of making filings as described in clause 
     (i) shall be assessed a civil penalty in an amount not less 
     than $10,000 for each such filing.
       ``(C) Definition.--For purposes of this paragraph, the term 
     `knowing'--
       ``(i) does not require specific intent to defraud; and
       ``(ii) with respect to information about ownership of the 
     sound recording in question, means that the person--

       ``(I) has actual knowledge of the information;
       ``(II) acts in deliberate ignorance of the truth or falsity 
     of the information; or
       ``(III) acts in grossly negligent disregard of the truth or 
     falsity of the information.

       ``(d) Payment of Royalties for Transmissions of 
     Performances by Direct Licensing of Statutory Services.--
       ``(1) In general.--A public performance by means of a 
     digital audio transmission of a sound recording fixed 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 the transmission is made pursuant to 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 under 
     certain license agreements.--
       ``(A) Licenses entered into on or after date of 
     enactment.--To the extent that a license agreement described 
     in paragraph (1) entered into on or after the date of 
     enactment of this section extends to a public performance by 
     means of a digital audio transmission of a sound recording 
     fixed before February 15, 1972, that meets the conditions of 
     subsection (b)--
       ``(i) the licensee shall, with respect to such 
     transmission, 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 that transmission due under the license; and
       ``(ii) the royalties paid under clause (i) shall be fully 
     credited as payments due under the license.
       ``(B) Certain agreements entered into before enactment.--To 
     the extent that a license agreement described in paragraph 
     (1), entered into during the period beginning on January 1 of 
     the year in which this section is enacted and ending on the 
     day before the date of enactment of this section, or a 
     settlement agreement with a preexisting satellite digital 
     audio radio service (as defined in section 114(j)) entered 
     into during the period beginning on January 1, 2015, and 
     ending on the day before the date of enactment of this 
     section, extends to a public performance by means of a 
     digital audio transmission of a sound recording fixed before 
     February 15, 1972, that meets the conditions of subsection 
     (b)--
       ``(i) the rights owner shall, with respect to such 
     transmission, pay to the collective designated to distribute 
     receipts from the licensing of transmissions in accordance 
     with section 114(f) an amount that is equal to the difference 
     between--

       ``(I) 50 percent of the difference between--

       ``(aa) the rights owner's total gross performance royalty 
     fee receipts or settlement monies received for all such 
     transmissions covered under the license or settlement 
     agreement, as applicable; and
       ``(bb) the rights owner's total payments for outside legal 
     expenses, including any payments of third-party claims, that 
     are directly attributable to the license or settlement 
     agreement, as applicable; and

       ``(II) the amount of any royalty receipts or settlement 
     monies under the agreement that are distributed by the rights 
     owner to featured and nonfeatured artists before the date of 
     enactment of this section; and

       ``(ii) the royalties paid under clause (i) shall be fully 
     credited as payments due under the license or settlement 
     agreement, as applicable.
       ``(3) Distribution of royalties and settlement monies 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 or settlement monies received under 
     paragraph (2) under a license or settlement described in 
     paragraph (2), which shall be the only payments to which 
     featured and nonfeatured artists are entitled by virtue of 
     the transmissions described in paragraph (2), except for 
     settlement monies described in paragraph (2) that are 
     distributed by the rights owner to featured and nonfeatured 
     artists before the date of enactment of this section.
       ``(4) Payment of royalties under license agreements entered 
     before enactment or not otherwise described in paragraph 
     (2).--
       ``(A) In general.--To the extent that a license agreement 
     described in paragraph (1) entered into before the date of 
     enactment of this section, or any other license agreement not 
     as described in paragraph (2), extends to a public 
     performance by means of a digital audio transmission of a 
     sound recording fixed before February 15, 1972, that meets 
     the conditions of subsection (b), the payments made by the 
     licensee pursuant to the license shall be made in accordance 
     with the agreement.
       ``(B) Additional payments not required.--To the extent that 
     a licensee has made, or will make in the future, payments 
     pursuant to a license as described in subparagraph (A), the 
     provisions of paragraphs (2) and (3) shall not require any 
     additional

[[Page S6252]]

     payments from, or additional financial obligations on the 
     part of, the licensee.
       ``(C) Rule of construction.--Nothing in this subsection may 
     be construed to prohibit the collective designated to 
     distribute receipts from the licensing of transmissions in 
     accordance with section 114(f) from administering royalty 
     payments under any license not described in paragraph (2).
       ``(e) Preemption With Respect to Certain Past Acts.--
       ``(1) In general.--This section preempts any claim of 
     common law copyright or equivalent right under the laws of 
     any State arising from a digital audio transmission or 
     reproduction that is made before the date of enactment of 
     this section of a sound recording fixed before February 15, 
     1972, if--
       ``(A) 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
       ``(B) either--
       ``(i) except in the case of a transmission that would have 
     been exempt under section 114(d)(1), not later than 270 days 
     after the date of enactment of this section, the transmitting 
     entity pays statutory royalties and provides notice of the 
     use of the relevant sound recordings in the same manner as 
     required by regulations adopted by the Copyright Royalty 
     Judges for sound recordings that are fixed on or after 
     February 15, 1972, for all the digital audio transmissions 
     and reproductions satisfying the requirements for statutory 
     licensing under sections 112(e)(1) and 114(d)(2) during the 3 
     years before that date of enactment; or
       ``(ii) an agreement voluntarily negotiated between the 
     rights owner and the entity performing the sound recording 
     (including a litigation settlement agreement entered into 
     before the date of enactment of this section) authorizes or 
     waives liability for any such transmission or reproduction 
     and the transmitting entity has paid for and reported such 
     digital audio transmission under that agreement.
       ``(2) Rule of construction for common law copyright.--For 
     purposes 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 that paragraph as an 
     unlawful distribution, act of record piracy, or similar 
     violation.
       ``(3) Rule of construction for public performance rights.--
     Nothing in this section may be construed to recognize or 
     negate the existence of public performance rights in sound 
     recordings under the laws of any State.
       ``(f) Limitations on Remedies.--
       ``(1) Fair use; uses by libraries, archives, and 
     educational institutions.--
       ``(A) In general.--The limitations on the exclusive rights 
     of a copyright owner described in sections 107, 108, 109, 
     110, and 112(f) shall apply to a claim under subsection (a) 
     with respect to a sound recording fixed before February 15, 
     1972.
       ``(B) Rule of construction for section 108(h).--With 
     respect to the application of section 108(h) to a claim under 
     subsection (a) with respect to a sound recording fixed before 
     February 15, 1972, the phrase `during the last 20 years of 
     any term of copyright of a published work' in such section 
     108(h) shall be construed to mean at any time after the date 
     of enactment of this section.
       ``(2) Actions.--The limitations on actions described in 
     section 507 shall apply to a claim under subsection (a) with 
     respect to a sound recording fixed before February 15, 1972.
       ``(3) Material online.--Section 512 shall apply to a claim 
     under subsection (a) with respect to a sound recording fixed 
     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 use 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 use occurs after the end of the 90-day period 
     beginning on the date on which the information described in 
     subclause (I) is indexed into the public records of the 
     Copyright Office.

       ``(ii) Regulations.--Not later than 180 days after the date 
     of enactment of this section, the Register of Copyrights 
     shall issue regulations that--

       ``(I) establish the form, content, and procedures for the 
     filing of schedules under clause (i);
       ``(II) provide that a person may request that the person 
     receive timely notification of a filing described in 
     subclause (I); and
       ``(III) set forth the manner in which a person may make a 
     request under subclause (II).

       ``(B) Filing of contact information for transmitting 
     entities.--
       ``(i) Filing requirement.--Not later than 30 days after the 
     date of enactment of this section, the Register of Copyrights 
     shall issue regulations establishing the form, content, and 
     procedures for the filing of contact information by any 
     entity that, as of the date of enactment of this section, 
     performs a sound recording fixed before February 15, 1972, by 
     means of a digital audio transmission.
       ``(ii) Time limit on filings.--The Register of Copyrights 
     may accept filings under clause (i) only until the 180th day 
     after the date of 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 use 
     by that entity of a sound recording under subsection (a) if 
     the use occurs 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 
     use 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 a covered activity in 
     violation of 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.
       ``(g) 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 230.
       ``(h) Application to Rights Owners.--
       ``(1) Transfers.--With respect to a rights owner described 
     in subsection (l)(2)(B)--
       ``(A) subsections (d) and (e) of section 201 and section 
     204 shall apply to a transfer described in subsection 
     (l)(2)(B) to the same extent as with respect to a transfer of 
     copyright ownership; and
       ``(B) notwithstanding section 411, that rights owner may 
     institute an action with respect to a violation of this 
     section to the same extent as the owner of an exclusive right 
     under a copyright may institute an action under section 
     501(b).
       ``(2) Application of other provisions.--The following 
     provisions shall apply to a rights owner under this section 
     to the same extent as any copyright owner:
       ``(A) Section 112(e)(2).
       ``(B) Section 112(e)(7).
       ``(C) Section 114(e).
       ``(D) Section 114(h).
       ``(i) Ephemeral Recordings.--An authorized reproduction 
     made under this section shall be subject to section 112(g) to 
     the same extent as a reproduction of a sound recording fixed 
     on or after February 15, 1972.
       ``(j) Rule of Construction.--A rights owner of, or featured 
     recording artist who performs on, a sound recording under 
     this chapter shall be deemed to be an interested copyright 
     party, as defined in section 1001, to the same extent as a 
     copyright owner or featured recording artist under chapter 
     10.
       ``(k) Treatment of States and State Instrumentalities, 
     Officers, and Employees.--Any State, and any instrumentality, 
     officer, or employee described in subsection (a)(3), shall be 
     subject to the provisions of this section in the same manner 
     and to the same extent as any nongovernmental entity.
       ``(l) Definitions.--In this section:
       ``(1) Covered activity.--The term `covered activity' means 
     any activity that the copyright owner of a sound recording 
     would have the exclusive right to do or authorize under 
     section 106 or 602, or that would violate section 1201 or 
     1202, if the sound recording were fixed on or after February 
     15, 1972.
       ``(2) Rights owner.--The term `rights owner' means--
       ``(A) the person that has the exclusive right to reproduce 
     a sound recording under the laws of any State, as of the day 
     before the date of enactment of this section; or
       ``(B) any person to which a right to enforce a violation of 
     this section may be transferred, in whole or in part, after 
     the date of enactment of this section, under--
       ``(i) subsections (d) and (e) of section 201; and

[[Page S6253]]

       ``(ii) section 204.''.
       (b) Conforming Amendment.--The table of chapters for title 
     17, United States Code, is amended by adding at the end the 
     following:

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

               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:
       ``(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 a 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 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 a 
     collective described in subparagraph (A) accepts a letter of 
     direction under that subparagraph, 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 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:
       ``(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 1 or more 
     persons described in subparagraph (B) of this paragraph, 
     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 not less than 120 days, 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 on which 
     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 not less than 120 days before the first distribution by 
     the collective to the person described in subparagraph (B), 
     the collective attempts, 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 does not, 
     as of the date that was 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 to the collective--

       ``(I) a written certification stating, under penalty of 
     perjury, that the person meets the requirements in clauses 
     (i) through (iii); and
       ``(II) a true copy of the contract described in clause 
     (ii).

       ``(C) Multiple certifications.--Subject to subparagraph 
     (D), in a case in which more than 1 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 
     the 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 1 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 1 such payee shall apply only to that payee's 
     share of the receipts payable under paragraph (2)(D), and 
     shall 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:
       ``(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, or by an independent 
     administrator pursuant to subparagraphs (B) and (C) of 
     section 114(g)(2), 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 enactment of this Act.
       (b) Delayed Effective Date.--Paragraphs (5)(B) and (6)(E) 
     of section 114(g) of title 17, United States Code, as added 
     by section 302, shall take effect on January 1, 2020.

                         TITLE IV--SEVERABILITY

     SEC. 401. SEVERABILITY.

       If any provision of this Act or any amendment made by this 
     Act, or any application of such provision or amendment to any 
     person or circumstance, is held to be unconstitutional, the 
     remainder of the provisions of this Act and the amendments 
     made by this Act, and the application of the provision or 
     amendment to any other person or circumstance, shall not be 
     affected.

[[Page S6254]]

  

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