Music Modernization Act Notices of License, Notices of Nonblanket Activity, Data Collection and Delivery Efforts, and Reports of Usage and Payment
| Published date | 22 April 2020 |
| Citation | 85 FR 22518 |
| Record Number | 2020-08379 |
| Section | Proposed rules |
| Court | Library Of Congress,U.s. Copyright Office |
Federal Register, Volume 85 Issue 78 (Wednesday, April 22, 2020)
[Federal Register Volume 85, Number 78 (Wednesday, April 22, 2020)]
[Proposed Rules]
[Pages 22518-22549]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08379]
[[Page 22517]]
Vol. 85
Wednesday,
No. 78
April 22, 2020
Part II
Library of Congress
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U.S. Copyright Office
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37 CFR Part 210
Music Modernization Act Notices of License, Notices of Nonblanket
Activity, Data Collection and Delivery Efforts, and Reports of Usage
and Payment; Reporting and Distribution of Royalties to Copyright
Owners by the Mechanical Licensing Collective; Treatment of
Confidential Information by the Mechanical Licensing Collective and
Digital Licensee Coordinator; Transparency of the Mechanical Licensing
Collective and Its Database of Musical Works Information; Proposed
Rules
Federal Register / Vol. 85, No. 78 / Wednesday, April 22, 2020 /
Proposed Rules
[[Page 22518]]
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LIBRARY OF CONGRESS
U.S. Copyright Office
37 CFR Part 210
[Docket No. 2020-5]
Music Modernization Act Notices of License, Notices of Nonblanket
Activity, Data Collection and Delivery Efforts, and Reports of Usage
and Payment
AGENCY: U.S. Copyright Office, Library of Congress.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The U.S. Copyright Office is issuing a notice of proposed
rulemaking regarding information to be provided by digital music
providers pursuant to the new compulsory blanket license to make and
deliver digital phonorecords of musical works established by title I of
the Orrin G. Hatch-Bob Goodlatte Music Modernization Act. The law
establishes a new blanket license, to be administered by a mechanical
licensing collective, and to become available on January 1, 2021.
Having solicited public comments through a previous notification of
inquiry, through this notice, the Office is proposing regulations
concerning notices of license, data collection and delivery efforts,
and reports of usage and payment by digital music providers. The Office
is also proposing regulations concerning notices of nonblanket activity
and reports of usage by significant nonblanket licensees, as well as
language addressing data collection efforts by musical work copyright
owners.
DATES: Written comments must be received no later than 11:59 p.m.
Eastern Time on May 22, 2020.
ADDRESSES: For reasons of government efficiency, the Copyright Office
is using the regulations.gov system for the submission and posting of
public comments in this proceeding. All comments are therefore to be
submitted electronically through regulations.gov. Specific instructions
for submitting comments are available on the Copyright Office's website
at https://www.copyright.gov/rulemaking/mma-notices-reports/. If
electronic submission of comments is not feasible due to lack of access
to a computer and/or the internet, please contact the Office using the
contact information below for special instructions.
FOR FURTHER INFORMATION CONTACT: Regan A. Smith, General Counsel and
Associate Register of Copyrights, by email at [email protected], or
Jason E. Sloan, Assistant General Counsel, by email at
[email protected]. Each can be contacted by telephone by calling (202)
707-8350.
SUPPLEMENTARY INFORMATION:
I. Background
This notice of proposed rulemaking (``NPRM'') is being issued
subsequent to a notification of inquiry, published in the Federal
Register on September 24, 2019, that describes in detail the
legislative background and regulatory scope of the present rulemaking
proceeding.\1\ The Copyright Office assumes familiarity with that
document, and encourages anyone reading this NPRM who has not reviewed
it to do so before continuing.
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\1\ 84 FR 49966 (Sept. 24, 2019). All rulemaking activity,
including public comments, as well as legislative history and
educational material regarding the Music Modernization Act, can
currently be accessed via navigation from https://www.copyright.gov/music-modernization/. Comments received in response to the September
2019 notification of inquiry are available at https://www.regulations.gov/docketBrowser?rpp=25&po=0&dct=PS&D=COLC-2019-0002&refD=COLC-2019-0002-0001. Related ex parte letters are
available at https://www.copyright.gov/rulemaking/mma-implementation/ex-parte-communications.html. References to these
comments and letters are by party name (abbreviated where
appropriate), followed by ``Initial,'' ``Reply,'' or ``Ex Parte
Letter'' as appropriate.
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On October 11, 2018, the president signed into law the Orrin G.
Hatch-Bob Goodlatte Music Modernization Act (``MMA'') which, among
other things, substantially modifies the compulsory ``mechanical''
license for making and distributing phonorecords of nondramatic musical
works under 17 U.S.C. 115.\2\ It does so by switching from a song-by-
song licensing system to a blanket licensing regime that will become
available on January 1, 2021 (the ``license availability date''), and
be administered by a mechanical licensing collective (``MLC'')
designated by the Copyright Office. Digital music providers (``DMPs'')
will be able to obtain the new compulsory blanket license to make
digital phonorecord deliveries (``DPDs'') of musical works, including
in the form of permanent downloads, limited downloads, or interactive
streams (referred to in the statute as ``covered activity,'' where such
activity qualifies for a compulsory license), subject to compliance
with various requirements, including reporting obligations.\3\ DMPs may
also continue to engage in those activities through voluntary, or
direct licensing with copyright owners, in which case the DMP may be
considered a significant nonblanket licensee (``SNBL'') under the
statute, subject to separate reporting obligations.
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\2\ Public Law 115-264, 132 Stat. 3676 (2018).
\3\ As permitted under the MMA, the Office designated a digital
licensee coordinator (``DLC'') to represent licensees in proceedings
before the Copyright Royalty Judges (``CRJs'') and the Copyright
Office, to serve as a non-voting member of the MLC, and to carry out
other functions. 17 U.S.C. 115(d)(5)(B); 84 FR 32274 (July 8, 2019);
see also 17 U.S.C. 115(d)(3)(D)(i)(IV), (d)(5)(C).
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As detailed in the previous notification of inquiry, the statute
specifically directs the Copyright Office to adopt a number of
regulations to govern the new blanket licensing regime and vests the
Office with broad general authority to adopt such regulations as may be
necessary or appropriate to effectuate the new blanket licensing
structure.
Having solicited public comments through the notification of
inquiry, the Office is preparing multiple notices of proposed
rulemaking to address various subjects presented in the notification.
This NPRM specifically addresses notices of license, notices of
nonblanket activity, data collection and delivery efforts, and reports
of usage and payment, which were among those topics requested by
various commenters to be prioritized because they relate to core
information needed by both DMPs and the MLC to prepare and ready their
operations in advance of the blanket license becoming available.\4\
Notices addressing confidentiality, the musical works database, and
accounting statements to copyright owners are being published
simultaneously with this NPRM, and the Office will continue to consider
whether further rulemakings are appropriate. For example, the Office is
separately engaged in a policy study regarding best practices that the
MLC may consider to reduce the incidence of unclaimed accrued
royalties. A notification of inquiry seeking comment regarding that
study will be forthcoming in connection with considerations of
potential regulatory activity related to the distribution of such
royalties by the MLC to musical work copyright owners identified in the
musical works database in years following the license availability
date.\5\
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\4\ DLC Reply at 1; MLC Initial at 2; Future of Music Coalition
(``FMC'') Reply at 3.
\5\ More information about the unclaimed royalties study can be
found at https://www.copyright.gov/policy/unclaimed-royalties/.
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The MMA significantly altered the complex music licensing landscape
after careful congressional deliberation following extensive input
from, and negotiations between, a variety of stakeholders.\6\ In this
NPRM, as well as
[[Page 22519]]
the other notices published concurrently, the Copyright Office has
endeavored to build upon that foundation and propose a reasonable
regulatory framework for the MLC, DMPs, copyright owners and
songwriters, and other interested parties to operationalize the various
duties and entitlements set out by statute.\7\ The subjects of this
proposed rule, as much as any the MMA charges the Office with
implementing, have made it necessary to propose regulatory language
that navigates convoluted nuances of the music data supply chain and
differing expectations of the MLC, DMPs, and other stakeholders, while
remaining cognizant of the potential effect upon varied business
practices across the digital music marketplace.\8\ While the Office's
task was aided by receipt of numerous helpful and substantive comments
representing interests from across the music ecosystem, in many cases,
the comments also uncovered divergent assumptions and expectations as
to the shouldering and execution of relevant duties assigned by the
MMA.
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\6\ See, e.g., Music Policy Issues: A Perspective from Those Who
Make It: Hearing on H.R. 4706, H.R. 3301, H.R. 831 and H.R. 1836
Before H. Comm. On the Judiciary, 115th Cong. 4 (2018) (statement of
Rep. Nadler) (``For the last few years, I have been imploring the
music community to come together in support of a common policy
agenda, so it was music to my ears to see--to hear, I suppose--the
unified statement of support for a package of reforms issued by key
music industry leaders earlier this month. . . . This emerging
consensus gives us hope that this committee can start to move beyond
the review stage toward legislative action.''); 164 Cong. Rec.
H3522, 3537 (daily ed. Apr. 25, 2018) (statement of Rep. Collins)
(``[This bill] comes to the floor with an industry that many times
couldn't even decide that they wanted to talk to each other about
things in their industry, but who came together with overwhelming
support and said this is where we need to be.''); 164 Cong. Rec.
S501, 502 (daily ed. Jan. 24, 2018) (statement of Sen. Hatch) (``I
don't think I have ever seen a music bill that has had such broad
support across the industry. All sides have a stake in this, and
they have come together in support of a commonsense, consensus bill
that addresses challenges throughout the music industry.''); 164
Cong. Rec. H3522, 3536 (daily ed. Apr. 25, 2018) (statement of Rep.
Goodlatte) (``I tasked the industry to come together with a unified
reform bill and, to their credit, they delivered, albeit with an
occasional bump along the way.''). See also U.S. Copyright Office,
Copyright and the Music Marketplace at Preface (2015), https://www.copyright.gov/policy/musiclicensingstudy/copyright-and-the-music-marketplace.pdf (noting ``the problems in the music
marketplace need to be evaluated as a whole, rather than as isolated
or individual concerns of particular stakeholders'').
\7\ See Alliance of Artists & Recording Cos. v. DENSO Int'l Am.,
Inc., 947 F.3d 849, 863 (D.C. Cir. 2020) (``[T]he best evidence of a
law's purpose is the statutory text, and most certainly when that
text is the result of carefully negotiated compromise among the
stakeholders who will be directly affected by the legislation.'')
(internal quotation marks, brackets, and citations omitted).
\8\ See, e.g., Nat'l Cable & Telecomms. Ass'n v. Brand X
internet Servs., 545 U.S. 967, 980 (2005) (``[A]mbiguities in
statutes within an agency's jurisdiction to administer are
delegations of authority to the agency to fill the statutory gap in
reasonable fashion.'') (citing Chevron, U.S.A., Inc. v. Nat. Res.
Def. Council, Inc., 467 U.S. 837 (1984)); see also Report and
Section-by-Section Analysis of H.R. 1551 by the Chairmen and Ranking
Members of Senate and House Judiciary Committees, at 12 (2018),
https://www.copyright.gov/legislation/mma_conference_report.pdf
(``Conf. Rep.'') (acknowledging that ``it is to be expected that
situations will arise that were not contemplated by the
legislation,'' and that ``[t]he Office is expected to use its best
judgement in determining the appropriate steps in those
situations'').
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In proposing the following rule, where comments diverged sharply,
the Office has proposed regulatory language that it believes best
reflects the statutory language and its animating goals in light of the
record before it.\9\ As the Office previously noted, the ``MLC has a
tight deadline to become fully operational,'' and it encourages
continued dialogue to expeditiously resolve or refine areas of
disagreement among interested stakeholders.\10\ Accordingly, the Office
also welcomes parties to file joint comments on issues of common
agreement and consensus.\11\ If parties disagree with aspects of the
Office's proposal, they are encouraged to provide specific alternative
regulatory language for the Office to consider.\12\
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\9\ See H.R. Rep. No. 115-651, at 14 (2018); S. Rep. No. 115-
339, at 15 (2018); Conf. Rep. at 12 (``The Copyright Office has the
knowledge and expertise regarding music licensing through its past
rulemakings and recent assistance to the Committee[s] during the
drafting of this legislation.''); see also 84 FR at 49967-68.
\10\ 84 FR at 32296.
\11\ See, e.g., Joint Comments of Dig. Media Ass'n, Nat'l Music
Publishers' Ass'n, Recording Indus. Ass'n of Am., Harry Fox Agency,
Inc., & Music Reports, Inc. Submitted in Response to U.S. Copyright
Office's July 27, 2012, Notice of Proposed Rulemaking (Oct. 25,
2012) (regarding section 115 statement of account regulations).
\12\ Guidelines for ex parte communications, along with records
of such communications, are available at https://www.copyright.gov/rulemaking/mma-implementation/ex-parte-communications.html. The
Office encourages parties to refrain from requesting ex parte
meetings on this proposed rule until they have submitted written
comments. As stated in the guidelines, ex parte meetings with the
Office are intended to provide an opportunity for participants to
clarify evidence and/or arguments made in prior written submissions,
and to respond to questions from the Office on those matters.
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The Office seeks public comments on all aspects of this NPRM, but
asks that any comments directed at other subjects discussed in the
notification of inquiry be reserved for the appropriate notice of
proposed rulemaking. In recognition of the significant changes brought
by the MMA, and challenges both in setting up a fully functional MLC
and for DMPs to adjust their internal practices, the Office also
invites comment on whether it would be beneficial to adopt the proposed
rule on an interim basis. If necessary, based on feedback received, the
Office would make appropriate adjustments to the regulatory language
before the rule is finalized, and following the license availability
date. This approach would allow the Office more flexibly to make
necessary modifications in response to new evidence, unforeseen issues,
or where something is otherwise not functioning as intended.
II. Proposed Rule
Having reviewed and considered all relevant comments received in
response to the notification of inquiry, and having engaged in a number
of ex parte communications with commenters, the Office has weighed all
appropriate legal, business, and practical implications and equities
that have been raised, and proposes the following with respect to
notices of license, notices of nonblanket activity, data collection and
delivery efforts, and reports of usage and payment under the MMA.\13\
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\13\ In addition to these substantive topics, the rule also
proposes a technical reorganization of part 210 of the Office's
regulations, whereby the current subpart A and subpart B are flipped
so that when final, subpart A will contain the Office's current
regulations for the non-blanket section 115 license and subpart B
will contain the Office's new regulations for the blanket license.
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A. Notices of License and Nonblanket Activity
The MMA requires entities engaging in covered activities to file
notice with the MLC regarding such activities. A DMP seeking a blanket
license must file a notice of license (``NOL''), while an entity
qualifying as an SNBL must file a notice of nonblanket activity
(``NNBA''). The Copyright Office must prescribe regulations regarding
the form and content for these notices.\14\
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\14\ See 84 FR at 49969.
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1. Notices of License
In response to the Office's notification of inquiry, the MLC and
DLC offer disparate views as to what NOLs should look like and how they
should operate. The DLC argues that NOLs should be relatively brief and
high-level in describing the DMP's covered activities, and should only
need to be filed once.\15\ The MLC seeks considerably more detail about
the DMP's activities, as well as an ongoing duty to file an amended NOL
whenever any information changes.\16\ The DLC also seeks a harmless
error rule (whereby immaterial errors in an NOL would not render it
invalid), while the MLC argues against one.\17\ Both the MLC and DLC
provide specific regulatory language for their competing views.\18\
Among other commenters weighing in on the issue of NOLs, the
International
[[Page 22520]]
Confederation of Societies of Authors and Composers (``CISAC'') & the
International Organisation representing Mechanical Rights Societies
(``BIEM'') and Monica Corton Consulting advocate for having a clear and
sufficiently detailed description of the DMP's activities.\19\ Music
Reports proposes that DMPs be required to submit a concise description
of their activities, and also information about the individual sound
recordings made available.\20\ Based on the record before it, the
Office proposes the following rules for NOLs.
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\15\ DLC Initial at 5; DLC Reply at 2-5.
\16\ MLC Initial at 2-9; MLC Reply at 2-7; see also Nat'l Music
Publishers' Ass'n (``NMPA'') Reply at 2-3 (agreeing with the MLC's
position).
\17\ DLC Initial at 5; MLC Reply at 8-9.
\18\ DLC Reply Add. at A-2-3; MLC Reply App. A at 1-3.
\19\ CISAC & BIEM Reply at 4; Monica Corton Consulting Reply at
1.
\20\ Music Reports Initial at 2-3.
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Name and contact information. The Office proposes requiring
essentially the same name and contact information for DMPs as proposed
by the MLC and DLC, which is also in general accord with the current
requirements both for completing a notice of intention to obtain a
compulsory license under section 115 (``NOI'') \21\ and a notice of use
of sound recordings under the sections 112 and 114 statutory licenses
(``NOU'').\22\
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\21\ See 37 CFR 201.18(d)(1)(i) and (ii).
\22\ See id. at Sec. 370.2(b)(1) through (4).
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Submission. The Office proposes rules governing the submission
criteria for NOLs that are generally in line with the commenters'
proposals and the requirements of existing Copyright Office filings,
namely that NOLs be submitted in a manner reasonably determined by the
MLC, that NOLs be signed by an appropriate representative of the DMP
who certifies to his or her authority to make the submission and the
truth of the submitted information, and the MLC confirms receipt of
NOLs.\23\
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\23\ See, e.g., id. at Sec. Sec. 201.18(c), (d)(3), and (e),
201.35(f)(3), and 370.2(c).
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Description of DMP and its covered activities. The proposed rule
diverges from both the DLC and MLC proposals as to the requisite level
of detail NOLs must contain to describe the DMP and its covered
activities. At one end, the DLC's proposal to only provide ``[a]
general description of the covered activities,'' seems inconsistent
with the statute.\24\ NOLs must ``specif[y] the particular covered
activities in which the digital music provider seeks to engage.'' \25\
Moreover, the statute tasks the MLC not merely with ``receiv[ing]''
NOLs, but also ``review[ing], and confirm[ing] or reject[ing]''
them.\26\ And one of the grounds for rejecting an NOL is if ``the
digital music provider or notice of license does not meet the
requirements of this section or applicable regulations.'' \27\ Taken
together, the Office believes that the statute requires an NOL to
contain a description that is sufficient to reasonably establish the
DMP's eligibility for a blanket license and to provide reasonable
notice of the manner in which the DMP seeks to engage in covered
activities under the blanket license.
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\24\ See DLC Reply Add. at A-2.
\25\ 17 U.S.C. 115(d)(2)(A) (emphasis added).
\26\ Id. at 115(d)(3)(F)(i).
\27\ Id. at 115(d)(2)(A)(iii)(I) (emphasis added).
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To that end, the rule proposes that NOLs contain a statement from
the DMP that it has a good-faith belief in its eligibility for the
blanket license and its ability to comply with all payments, terms, and
other responsibilities under the blanket license. In specifying its
particular covered activities, the Office proposes that the DMP specify
or check off each applicable DPD configuration and service type from a
list.\28\ By DPD configuration, the Office refers to the different
types of DPDs a DMP might make, such as permanent downloads, limited
downloads, interactive streams, and noninteractive streams. By service
type, the Office refers to the general types of offerings through which
a user may receive DPDs, such as whether the service is subscription-
based, part of a bundle, a locker, free to the user, and/or part of a
discount plan. The proposed rule does not require that the description
of the DMP's service type(s) be tied to the specific categories of
activities or offerings adopted by the Copyright Royalty Judges
(``CRJs'') in 37 CFR part 385 (although such information would be
permitted), because such details may go beyond the more general notice
function the Office understands NOLs to serve; in any event, that
information will be reported in reports of usage, as discussed below.
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\28\ See MLC Initial at 9 (proposing that information be
provided ``through a simple `check the box' method''). This is also
somewhat similar to how the current NOU form works.
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In proposing this middle-ground approach, the Office tentatively
concludes that the MLC's position bends the statute too far the other
way. To the extent the MLC may need any of the more detailed
information it proposes to require through NOLs to fulfill its
obligations under the statute, the Office generally agrees with the DLC
that it would be more appropriate for such information to be provided
as part of each DMP's monthly reports of usage, addressed separately
below.\29\ While the MLC contends that there is value in obtaining this
sort of information ahead of the DMPs' reports,\30\ at least based on
the current record, this potential value does not seem to outweigh the
potential burden on DMPs to provide such duplicative information,
especially if DMPs are required to amend NOLs with changes of practice,
as the MLC proposes.
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\29\ See DLC Reply at 4.
\30\ See MLC Ex Parte Letter Jan. 29, 2020 (``MLC Ex Parte
Letter #1'') at 3-4.
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The Office is inclined, however, to make an exception for
information concerning any applicable voluntary license or individual
download license the DMP may be operating under concurrently with the
blanket license. The Office tentatively agrees with the MLC that
obtaining such information from DMPs in advance of any pertinent report
of usage is beneficial, because the MLC may need to identify specific
musical works subject to such licenses so that they can be carved out
from the blanket license royalty calculations, which the MLC asserts
will be ``very complicated and time-consuming.'' \31\ While the DLC
requests that this not be imposed as a legal requirement in the NOL
regulations themselves, the DLC does concede that, ``[i]f there is some
operational need,'' this is reasonable information for the MLC to seek
``during the on-boarding process, prior to the filing of the first
report of usage.'' \32\
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\31\ See MLC Ex Parte Letter Feb. 26, 2020 (``MLC Ex Parte
Letter #2'') at 2; see also MLC Reply at 3-4.
\32\ See DLC Reply at 5.
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Harmless errors. In accord with the DLC's proposal, the Office
proposes a harmless error rule similar to others it has previously
adopted, including for section 115 notices of intention to obtain a
compulsory license sent under the song-by-song licensing process.\33\
Given the material consequences of being denied a blanket license that
could otherwise result from a trivial deficiency in an NOL, the Office
believes that such a provision is reasonable.\34\ The Office is
inclined to disagree with the MLC's arguments that such a provision
would be ambiguous and unnecessary. While the statutory cure period
\35\ may lessen the need for a harmless error provision, it does not
seem to obviate the need completely. As to any ambiguity, the Office is
not aware of any difficulties with applying the Office's current
harmless error rules. Moreover, such a rule would be in accord with the
MMA's default and termination provision, which refers to ``material[ ]
deficien[cies]'' and noncompliance with ``material term[s]
[[Page 22521]]
or condition[s] of the blanket license.'' \36\
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\33\ See 37 CFR 201.18(h); see also id at Sec. 201.10(e)
(notices of termination).
\34\ See 66 FR 45241, 45243 (Aug. 28, 2001) (``[P]otential
licensees should not be denied the use of the license if such errors
do not affect the legal sufficiency of the notice.'').
\35\ 17 U.S.C. 115(d)(2)(A)(iv).
\36\ See id. at 115(d)(4)(E)(i) (emphasis added).
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Amendments. In accord with the MLC's proposal, the rule proposes
requiring DMPs to amend their NOLs within 45 days of any information
changing. Given the notice function NOLs are supposed to serve, it does
not strike the Office as unreasonable to require DMPs to amend NOLs
when DMPs make significant changes to how they are engaging, or seeking
to engage, in covered activities or when their contact information
changes. Having considered the DLC's arguments on this matter, the
Office concludes that the following reasons support an amendment
requirement. First, the statute expressly provides for ``an amended
notice of license'' in the context of curing deficiencies in a rejected
NOL.\37\ Second, there would seem to be little meaning behind the
requirement that NOLs ``specif[y] the particular covered activities in
which the digital music provider seeks to engage,'' if DMPs never need
to provide notice of changes to those particulars.\38\ Third, the
statute requires the MLC to ``maintain a current, publicly accessible
list of blanket licenses that includes contact information for the
licensees and the effective dates of such licenses.'' \39\ The Office
has previously adopted an amendment requirement pursuant to a similarly
worded statutory provision, and believes one is reasonable in this
context as well so as to ensure that the contact information the MLC is
required to make publicly available is always kept up to date.\40\
Fourth, although section 115 NOIs have no such amendment requirement,
NOUs do,\41\ meaning that services operating under sections 112 and 114
are already complying with a similar requirement. Finally, between the
reasonable amount of information the Office proposes be required, the
statutory notice and cure mechanism, and the proposed inclusion of a
harmless error rule, the amendment requirement would not be unduly
burdensome or amount to a ``trap for the unwary'' as the DLC
contends.\42\ The Office proposes that information about voluntary
licenses and individual download licenses be subject to their own
amendment requirement, separate from NOL amendments.
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\37\ See id. at 115(d)(2)(A)(iv).
\38\ See id. at 115(d)(2)(A); see also MLC Reply at 5-6.
\39\ Id. at 115(d)(3)(F)(i) (emphasis added).
\40\ See 37 CFR 201.38(c)(3) (a requirement to ``timely updat[e]
information when it has changed,'' adopted under 17 U.S.C.
512(c)(2), which states that the Copyright Office ``shall maintain a
current directory of agents available to the public for
inspection'').
\41\ Id. at Sec. 370.2(e).
\42\ Cf. 81 FR 75695, 75704 (Nov. 1, 2016) (with respect to
adopting a renewal requirement for online service providers to keep
current their designations with the Copyright Office for purposes of
the section 512 safe harbor, the Office concluded that ``[n]or does
the rule create `a trap for the unwary' as some opponents allege,''
because ``[i]f, after [receiving] multiple reminders, a service
provider fails to renew its designation, it can hardly be said to
have let its designation lapse unwittingly'').
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Delegation of authority to the MLC. The Office generally agrees
with the DLC that the MLC need not have authority, delegated by
regulation, to require additional substantive information from DMPs
with respect to NOLs.\43\ If, in the course of establishment, the MLC
identifies a legitimate need for additional information, the Office
will make adjustment to the regulatory language. Of course, the MLC may
ask DMPs for additional information, which DMPs may voluntarily elect
to provide. The Office believes that certain matters, such as the
precise format and method of submission of NOLs, are best left flexible
and subject to the MLC's commercially reasonable discretion and
business judgment.\44\
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\43\ See DLC Reply at 6.
\44\ See SoundExchange Initial at 15-16.
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Reporting sound recordings. The Office disagrees with Music
Reports' proposal that NOLs contain a list of all sound recordings made
available to the public for substantially the same reasons as set forth
by the DLC.\45\
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\45\ See DLC Reply at 6.
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Transition to blanket licenses. The rule proposes that DMPs
obtaining the blanket license automatically pursuant to 17 U.S.C.
115(d)(9)(A) must still submit valid NOLs.
Public access. To govern the MLC's obligations under 17 U.S.C.
115(d)(3)(F)(i), and for transparency in how the MLC confirms or
rejects NOLs, and terminates blanket licenses, the rule proposes that
the MLC be required to maintain a current, free, and publicly
accessible and searchable online list of all blanket licenses,
including various details, such as information from NOLs, whether an
NOL has been rejected and why, and whether a blanket license has been
terminated and why.
2. Notices of Nonblanket Activity
Based on the record before it, the Office generally agrees with
commenters that NOLs and NNBAs should not differ substantially, as they
serve similar purposes.\46\ Thus, the Office proposes that the
regulations for NNBAs generally mirror the requirements for NOLs, with
conforming adjustments reflecting appropriate distinctions between the
two types of notices.
---------------------------------------------------------------------------
\46\ See DLC Initial at 3; MLC Initial at 10-11; MLC Reply at 8;
Music Reports Initial at 2-3; CISAC & BIEM Reply at 4.
---------------------------------------------------------------------------
B. Data Collection and Delivery Efforts
While the MLC is ultimately tasked with the core project of
matching musical works to sound recordings embodying those works, and
identifying and locating the copyright owners of those works (and
shares thereof), the MMA outlines roles for certain DMPs and copyright
owners to facilitate this task by collecting and providing related data
to the MLC. DMPs using the blanket license must ``engage in good-faith,
commercially reasonable efforts to obtain'' various sound recording and
musical work information from sound recording copyright owners and
other licensors of sound recordings made available through the DMP's
service.\47\ As the Office observed in the notification of inquiry,
this obligation is directly connected to the reports of usage discussed
below. The MMA also obligates musical work copyright owners with works
that are listed in the MLC's database to ``engage in commercially
reasonable efforts to deliver'' to the MLC for the database, if not
already listed, ``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.'' \48\ In the
notification of inquiry, the Office asked whether it is appropriate to
promulgate regulations concerning these provisions.\49\
---------------------------------------------------------------------------
\47\ 17 U.S.C. 115(d)(4)(B).
\48\ Id. at 115(d)(3)(E)(iv).
\49\ See 84 FR at 49969-70.
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1. Efforts by Digital Music Providers
Most comments received by the Office concerning data collection and
delivery efforts pertain to requirements for DMPs under the blanket
license; the MLC and DLC each propose specific regulatory language. The
MLC's proposal is expansive.\50\ First, it would require DMPs to
collect and provide ``all identifying information'' about relevant
sound recordings and musical works from ``the record label or other
entity furnishing rights to the sound recording'' that is ``in the
entity's
[[Page 22522]]
possession.'' \51\ Second, DMPs would have to undertake ``all
reasonable steps'' to ensure collection of this information,
``including affirmatively requiring'' the entity to provide it
``whether through contract or otherwise.'' \52\ Third, it would require
a DMP to also provide ``all information that is in its possession
concerning sound recording[s] and musical work[s] used on its
service,'' regardless of when, how, or from where it was obtained.\53\
Fourth, it would require all collected information to be provided to
the MLC promptly after being received and contemporaneously with
monthly reports of usage.\54\ Fifth, the information would have to be
delivered to the MLC in the same format with the same content as it was
delivered to the DMP, without any revisions, re-titling, or other
modifications to the information.\55\ Sixth, DMPs would have to provide
timely updates to all such information.\56\ Lastly, DMPs would have to
certify as to their compliance with these requirements.\57\
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\50\ See MLC Reply App. B at 7-8; see also MLC Reply at 10
(``[T]he DMPs' existing mechanisms for obtaining sound recording
information have been insufficient, resulting in numerous recordings
that cannot be matched to musical compositions, which led to the MMA
specifically requiring greater efforts from the DMPs.''); NMPA Reply
at 3-4 (same); FMC Reply at 3 (``Clear and robust guidelines are
necessary to ensure that licensees are making aggressive efforts to
get the data as complete and accurate as possible.'').
\51\ MLC Reply App. B at 7.
\52\ Id. at 7; see also Barker Initial at 10 (proposing that
DMPs not release sound recordings unless and until they receive
appropriate data from the record label); CISAC & BIEM Reply at 6
(agreeing with the MLC that DMPs should take ``all reasonable
steps'').
\53\ MLC Reply App. B at 7.
\54\ Id. at 7.
\55\ Id. at 8.
\56\ Id.
\57\ Id.
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The DLC strongly opposes the MLC's proposal, arguing that DMPs'
obligations should be limited to providing whatever information can be
obtained from record labels and distributors, and passing that
information on to the MLC.\58\ The DLC contends that DMPs have no
ability to compel record labels and distributors to provide them with
information, and further asserts that DMPs are only obligated to
provide information to the MLC via their reports of usage.\59\ The
DLC's competing proposal essentially restates the statute as to what is
required of DMPs, but further proposes that DMPs can satisfy their
obligations under section 115(d)(4)(B) ``by collectively arranging for
the [MLC] to obtain'' the required information from SoundExchange,\60\
``which shall provide this information at reasonable or no cost.'' \61\
---------------------------------------------------------------------------
\58\ DLC Initial at 7; DLC Reply at 6-11.
\59\ DLC Reply at 8-9.
\60\ SoundExchange is the collective designated by the CRJs to
collect and distribute royalties under the section 112 and section
114 statutory licenses concerning noninteractive digital audio
transmissions of sound recordings.
\61\ DLC Reply Add. at A-4; see also DLC Reply at 10-11.
---------------------------------------------------------------------------
Two particular issues surrounding these proposals were discussed at
length in the comments and during several ex parte communications. The
first is the DLC's proposal for DMPs to be able to satisfy their
section 115(d)(4)(B) obligations by arranging for the MLC to receive
data from SoundExchange. Several commenters assert that the record
labels themselves are the best source of authoritative sound recording
data, and that it is important that the MLC's sound recording
information come from an authoritative source.\62\ The DLC and others
(including A2IM, RIAA, and industry standards consultant Paul Jessop
\63\) further argue that a single, aggregated, unaltered, regularly
updated, and verified feed of this information from SoundExchange
(which is sourced directly from sound recording copyright owners) would
be ideal, and avoid the possibility that different DMPs would submit
disparate and potentially contradictory data that the MLC would need to
expend time and resources to reconcile.\64\ The DLC also argues that
under this proposal, the MLC could rely on only a single or limited
number of data fields from DMPs' reports of usage (e.g., international
standard recording code (``ISRC'')) to find the sound recording to
engage in matching efforts.\65\
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\62\ See Recording Industry Association of America, Inc.
(``RIAA'') Initial at 4; American Association of Independent Music
(``A2IM'') & RIAA Reply at 2-3; Jessop Initial at 2-3; Recording
Academy Initial at 2.
\63\ Mr. Jessop, a former U.S. and U.K. recording association
executive, has participated in the development or revision of
various relevant standards bodies or individual codes, including
ISRC, ISWC, and ISNI. Jessop Initial at 1-2.
\64\ DLC Reply at 10; RIAA Initial at 4-5; A2IM & RIAA Reply at
2-3 (also noting that record labels vary their own data sent to
different DMPs to meet different DMP requirements); Jessop Reply at
2; see also Universal Music Group (``UMG'') & RIAA Ex Parte Letter
at 2 (``SoundExchange gets the same data feeds as the DMPs . . . but
then it dedupes and deconflicts the data.''); Sony Music (``Sony'')
& RIAA Ex Parte Letter at 2.
\65\ DLC Reply at 10.
---------------------------------------------------------------------------
The MLC, while acknowledging that it ``intends to use SoundExchange
as a valuable source of information for sound recording identifying
information,'' opposes this proposal.\66\ A main argument of the MLC is
that even if the DMPs were to provide the MLC with access to
SoundExchange's data to satisfy their data collection obligations, it
would not be a substitute for their reporting obligations because the
DMPs are the only ones with the authoritative data as to what they
actually streamed.\67\ The MLC also says that receiving only ISRCs from
DMPs, as the DLC suggests, would be insufficient for proper sound
recording identification, contending that ``[t]here is no
comprehensive, authoritative, central database for matching ISRC codes
with other metadata fields, there are incorrect ISRC codes in use, and
attempting to match streaming uses based on ISRC reporting alone would
be unreliable, unprecedented and highly inappropriate.'' \68\
---------------------------------------------------------------------------
\66\ MLC Reply at 11 n.7.
\67\ MLC Ex Parte Letter #2 at 5, 7; see MLC Ex Parte Letter #1
at 2.
\68\ MLC Reply at 16 n.9; MLC Ex Parte Letter #2 at 5; MLC Ex
Parte Letter Apr. 3, 2020 (``MLC Ex Parte Letter #4'') at 9.
---------------------------------------------------------------------------
The second issue concerns the MLC's proposal to require DMPs to
provide the MLC with the information provided by sound recording
copyright owners and licensors in the original, unmodified form in
which it is received by the DMP, without any revisions, re-titling, or
other edits or changes. The MLC and others explain that DMPs alter some
amount of sound recording data, generally titles, artist names, and
versions for display purposes in their public-facing service (e.g.,
changing ``Hello'' to ``Hello (Radio Edit),'' or changing ``Puff
Daddy,'' ``P. Diddy,'' and ``Puffy'' all to ``Diddy''), and suggest
that merely passing on the modified data to the MLC would frustrate
matching efforts.\69\ The MLC also argues that, in connection with the
proposal to permit DMPs to provide access to SoundExchange's data to
avoid having to report unaltered data, having to match the DMPs'
reports against SoundExchange's data in an attempt to recapture what
was originally delivered to the DMPs by record labels and distributors
is ``unworkable and wildly inefficient.'' \70\
---------------------------------------------------------------------------
\69\ MLC Reply at 11; RIAA Initial at 3, 5-6; Sony & RIAA Ex
Parte Letter at 2 (Dec. 9, 2019); MLC Ex Parte Letter #1 at 2; MLC
Ex Parte Letter #2 at 5-6; MLC Ex Parte Letter #4 at 8-9; Jessop
Initial at 2-3; A2IM & RIAA Reply at 2-3, 3 n.1.
\70\ MLC Ex Parte Letter #2 at 5-6.
---------------------------------------------------------------------------
On the other hand, to support their position that the MLC should
obtain authoritative sound recording data from a single source for its
database, A2IM & RIAA point out that their ``member labels vary the
metadata they send the different DMPs in order to meet the services'
idiosyncratic display requirements. Even if the DMPs were to pass on
those feeds to the MLC unaltered, the MLC would still receive
conflicting data that it will have to spend time and resources
reconciling.'' \71\ Music Reports similarly points out that ``a row of
sound recording metadata provided by one DMP in relation to a discrete
sound recording may differ from the row of metadata a second DMP
provides in relation to the same sound recording, with additional or
different data fields
[[Page 22523]]
or identifiers unique to that DMP.'' \72\ The MLC does not address this
issue in its comments.
---------------------------------------------------------------------------
\71\ A2IM & RIAA Reply at 2.
\72\ Music Reports Initial at 3.
---------------------------------------------------------------------------
The DLC readily acknowledges that individual DMPs may alter certain
data fields, characterizing it as necessarily cleaning and fixing the
data so that information related to a recording's artist name, title,
or other listener-facing fields are normalized.\73\ The DLC asserts
that it would be highly burdensome for DMPs to retain and report
unaltered data, because for many services, usage reporting pipelines
have been designed to pull data from product databases that feature the
``corrected'' fields; it suggests that the MLC's proposal would require
an unnecessary maintaining of a parallel archive of data that may
entail material engineering efforts.\74\ The DLC also argues that
providing each of these fields unaltered is unlikely to palpably
improve the MLC's matching efforts, because other data fields that
remain unaltered, in particular the ISRC (which both the DLC and MLC
seem to agree exists for over 99% of reported tracks), are far better
for identifying sound recordings.\75\ The DLC also states that
alteration happens relatively infrequently, citing that for at least
two DMPs, fewer than 1% of track titles are modified, and that
alterations are minor, such that any reasonably sophisticated matching
algorithm should not be stymied.\76\
---------------------------------------------------------------------------
\73\ DLC Reply at 9-10; DLC Ex Parte Letter Feb. 14, 2020 (``DLC
Ex Parte Letter #1) Presentation at 15 (discussing ``Hello (Radio
Edit)'' example; explaining that a DMP may receive information from
different sources listing a band name in various fashions such as
``Cure,'' ``The Cure,'' and ``Cure, The'' which would be reconciled
into ``The Cure'' for display on the service's platform).
\74\ See DLC Ex Parte Letter #1 Presentation at 15.
\75\ DLC Ex Parte Letter Mar. 4, 2020 (``DLC Ex Parte Letter
#3'') at 2.
\76\ DLC Ex Parte Letter #3 at 2 (discussing MediaNet and
YouTube, and noting that all of MediaNet's alterations are made at
the request of the record labels).
---------------------------------------------------------------------------
The MMA was designed in part to address challenges related to data
delivery in the digital supply chain, and after analyzing the comments
and conducting repeated meetings with the MLC, DLC, and recording
company and publishing interests, it is apparent to the Copyright
Office that abstruse business complexities and misunderstandings
persist. As discussed further below, it is not clear that the relevant
parties agree on exactly which fields reported from sound recording
owners or distributors to DMPs are most useful to pass through to the
MLC, which fields the MLC should be expected or does expect to
materially rely upon in conducting its matching efforts, or which
fields are typical or commercially reasonable for DMPs to alter, such
as in the course of arranging for all songs by the same artist (e.g.,
``Diddy'') to be retrieved in an organized fashion in response to an
end user's search. And while the Office reached out to the MLC and DLC
shortly after these entities were designated to encourage cooperation
on these business-specific questions in anticipation of the significant
prospective regulatory work, and understands they have engaged in
dialogue, particularly after the submission of initial comments, it
does not appear that discussions have yet bridged these areas of
difference.\77\
---------------------------------------------------------------------------
\77\ See MLC Initial at 1 n.2 (``While the MLC and the [DLC]
have not collaborated on the submission of initial comments in this
proceeding, collaboration has been discussed and is anticipated in
connection with reply comments, with the intent to provide
supplemental information in reply comments as to any areas of common
agreement.''); DLC Initial at 2 n.3 (``While the MLC and DLC have
not collaborated on the submission of initial comments in this
proceeding, collaboration has been discussed and is anticipated in
connection with reply comments, with the intent to provide
supplemental information in reply comments as to any areas of common
agreement.''); MLC Reply at 1 n.2 (``Following the filing of the
initial comments, the DLC and the MLC have engaged in a concerted
effort to reach compromise on regulatory language. While the
complexity of the issues has made it difficult to reach compromise,
the DLC and the MLC plan to continue discussions and will revert
back to the Office with any areas of compromise.''); DLC Reply at 1
n.3 (``Following the filing of the initial comments, DLC and MLC
have engaged in a concerted effort to reach compromise on regulatory
language. While the complexity of the issues has made it difficult
to reach compromise, the DLC and MLC plan to continue discussions
and will revert back to the Office with any areas of compromise.'').
To the Office's knowledge, the MLC and DLC were not able to reach
agreement on any areas.
---------------------------------------------------------------------------
To a certain extent, the MLC and DLC also appear to advance
positions that go somewhat further than necessary even under their
preferred approaches. For example, although the MLC does not intend to
use every required or requested field in its matching processes,\78\
its proposed language would require every reportable sound recording
field to be provided in unaltered form.\79\ Similarly, the Office
understands that DMPs may typically alter only a few fields (e.g.,
titles, artist names, and versions) relevant to its consumer-facing
platform fronts, yet the DLC has proposed language that would not
restrict services from editing even universal identifiers. Relatedly,
both parties may somewhat underestimate certain business realities that
drive the other's positions: It seems reasonable to the Office both
that different streaming services may choose to display the same artist
or recording title in a different way as a competitive or data
architecture matter (e.g., ``I Feel Good'' vs. ``I Got You (I Feel
Good)'') and have designed reporting systems around the fields as used
on their products, and also that such discrepancies in artist or title
names may add complexity to the MLC's efforts to match sound recordings
to underlying musical works. Based on the record, it thus appears that
the MLC's matching efforts will need to involve analysis of multiple
fields (i.e., not just ISRCs), and also that the MLC will need to
reconcile certain sound recording information against its database.
---------------------------------------------------------------------------
\78\ MLC Ex Parte Letter #4 at 10-11 (noting that the MLC ``does
not anticipate'' the ``sound recording copyright owner'' or
``producer'' fields ``being utilized in matching,'' and contemplates
using ``some, but not all'' of other specific fields for matching).
\79\ See MLC Reply App. C at 11.
---------------------------------------------------------------------------
In light of these disagreements and areas of uncertainty, and the
considerable, yet non-exhaustive,\80\ information submitted in this
rulemaking, the Office sought to craft a reasonable approach that
satisfies the main concerns of the most interested parties. Based on
the record before it, the Office proposes the following rules with
respect to DMP data collection and delivery efforts.
---------------------------------------------------------------------------
\80\ For example, while all were discussed at length in concept,
the Office did not receive a full listing of which fields in the ERN
specification any of the parties wish to be passed through, a
comparison to licensable fields in the SoundExchange database, or
certain ``information concerning the use in the DDEX DSRF format of
different metadata fields related to identification of sound
recordings and musical works identification.'' See MLC Ex Parte
Letter #3 at 3. At this stage, commenters remain encouraged to
submit additional data, but along with a clear explanation of why
such data might support a change in the proposed regulatory
language.
---------------------------------------------------------------------------
Relationship to reports of usage. The MMA's data collection efforts
and reports of usage provisions are best read together, with section
115(d)(4)(B) describing the appropriate efforts DMPs must engage in to
acquire the information to be reported to the MLC in reports of usage
under section 115(d)(4)(A). Section 115(d)(4)(B) only refers to
``[c]ollecti[ng]'' and ``obtain[ing]'' information, while section
115(d)(4)(A) refers to ``reporting'' and expressly requires that
certain information ``acquired'' by the DMP, ``including pursuant to
[section 115(d)(4)(B)],'' be reported.\81\ Consequently, the rule
proposes that the data collected pursuant to section 115(d)(4)(B) be
delivered to the MLC in DMPs' reports of usage in accordance with the
rules governing such reports (discussed below). This would not
foreclose the MLC from seeking information from DMPs outside of their
[[Page 22524]]
reports of usage on a voluntary basis, or even potentially that, upon a
different showing, a different rule requiring delivery of certain
information outside of reports of usage could be appropriate.
---------------------------------------------------------------------------
\81\ See 17 U.S.C. 115(d)(4)(A)-(B).
---------------------------------------------------------------------------
Appropriate efforts. At least on the record before it, the Office
declines to propose a one-size-fits-all approach as to what constitutes
``good-faith, commercially reasonable efforts to obtain,'' and so is
disinclined to adopt a rule as strict as the MLC proposes. First, what
may be commercially reasonable for one DMP may not be commercially
reasonable for another, and even for the same DMP, a commercially
reasonable action with respect to one sound recording copyright owner
may not be commercially reasonable with respect to another. Second, the
MMA did not impose a data delivery burden on sound recording copyright
owners and licensors, so any rule compelling their compliance would
seem to be at odds with Congress's intent. DMPs must make genuine
efforts to attempt to collect information from record labels and other
distributors, but if those parties ultimately refuse, it does not
necessarily mean that the DMP has not satisfied its collection effort
obligations. Thus, the Office is wary of proposals mandating DMPs to
require delivery of information from sound recording copyright owners
and licensors through contractual or other means. Third, while it is
important for DMPs to genuinely and fruitfully engage in appropriate
collection and reporting efforts, the primary tasks of matching and
data curation are assigned to the MLC, and the DMPs must fully fund the
MLC's undertaking of these critical tasks. Fourth, it does not appear
that DMPs are necessarily required by the statute to deliver all
pertinent information known to them or in their possession. For
example, section 115(d)(4)(B) only refers to information obtained
specifically ``from sound recording copyright owners and other
licensors of sound recordings,'' and the musical work information
required to be reported under section 115(d)(4)(A)(ii)(I)(bb) is
limited to information ``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.'' \82\
---------------------------------------------------------------------------
\82\ See id. at 115(d)(4)(A)-(B).
---------------------------------------------------------------------------
With these observations in mind, the Office proposes to codify a
minimal floor requirement that should not unduly burden DMPs, but which
will still constitute a continuous and ongoing obligation to attempt to
collect relevant data. The Office also proposes, in accord with the
DLC's proposal, to adopt a rule providing that a DMP may satisfy its
obligations under section 115(d)(4)(B) by arranging for the MLC to
receive appropriate data from an authoritative source, such as
SoundExchange. Though, as explained further below, this would not
obviate the need to report data to the MLC in reports of usage.
Under the proposed floor requirement, where a DMP has not obtained
all applicable sound recording and musical work information from sound
recording copyright owners and licensors, the DMP will have a
continuous and ongoing obligation to formally request such information
in writing on a quarterly basis. The rule further proposes that DMPs
request updates for obtained data periodically and at the MLC's
request. This proposal is to ensure that DMPs make ongoing active
efforts to get missing and outdated information from record labels and
distributors without burdening DMPs or sound recording copyright owners
and licensors in ways the statute does not seem to intend.
The Office is generally inclined to agree with commenters regarding
provision of access to the SoundExchange database, and proposes that it
be an option for interested DMPs. Based on all of the comments, it
seems efficient for the MLC to have access to an aggregated, regularly
updated, and verified feed of the applicable data sourced directly from
copyright owners, rather than consistently need to sort through
potentially contradictory DMP-provided label data--especially where the
Office has been told that labels sometimes provide different data for
the same works to different DMPs, and that labels themselves sometimes
send updates that alter previously-reported fields.\83\ To be clear,
DMPs would not be required to arrange for the MLC to have access to
SoundExchange's data; it would just be one option for complying with
their data collection obligations. And the MLC would not be required to
rely on these data; it would also receive data from monthly reports of
usage and from musical work copyright owners, and would remain free to
gather data from other sources to build and supplement its database as
well. In sum, the record suggests that access to such a sound recording
database can be expected to provide the MLC with more authoritative
sound recording ownership data than it may otherwise get from
individual DMPs engaging in separate efforts to coax additional
information from entities that are under no obligation to provide it
for purposes of the section 115 license.
---------------------------------------------------------------------------
\83\ See A2IM & RIAA Reply at 2; DLC Ex Parte Letter #3 at 2.
---------------------------------------------------------------------------
In particular, SoundExchange's repertoire database appears to be a
reasonable analog for the data DMPs might otherwise obtain from sound
recording copyright owners and licensors through the collection efforts
mandated by section 115(d)(4)(B). In its role as administrator under
the section 112 and section 114 licenses, SoundExchange appears to
receive largely the same record label and distributor data feeds that
the DMPs receive.\84\ And its database appears to be robust:
---------------------------------------------------------------------------
\84\ See, e.g., UMG & RIAA Ex Parte Letter at 2 (Dec. 6, 2019)
(``SoundExchange gets the same data feeds as the DMPs. . . .
SoundExchange receives data from approximately 3400 labels,
including certain independent distributors (e.g., CdBaby).'').
SoundExchange has worked for years and spent many millions of
dollars to develop its repertoire database, an authoritative
repository of information identifying approximately 30 million sound
recordings, all of which was sourced directly from the copyright
owners of the recordings. . . . This database collects about 50
fields of information on each recording in the database, and
includes [ISRCs] for all of those recordings. . . . To keep this
database up to date with information about new releases,
SoundExchange receives electronic data feeds directly from record
companies and distributors that together cover more than 100 rights
owners. This real-time data covers almost all commercially-
significant U.S. recordings, and a large number of foreign-origin
recordings as well. We have also received repertoire information in
other forms from more than 20,000 other rights owners.\85\
---------------------------------------------------------------------------
\85\ SoundExchange Initial at 2-3.
The Office is, however, inclined to agree with the MLC that DMPs
are the only authoritative source for what they actually used, and no
amount of data from other sources can tell the MLC what was truly
played on the DMP's service. Therefore, the proposed rule makes clear
that while DMPs may satisfy their section 115(d)(4)(B) collection
obligations in this manner, it does not excuse DMPs from their
reporting obligations under section 115(d)(4)(A) (discussed below).
DMPs would still have to report all required information, subject to
the applicable qualifications (e.g., having been acquired in the
metadata provided to the DMP by sound recording copyright owners).
There would just not be any further obligation to take affirmative
steps to obtain additional information beyond what the DMP otherwise
[[Page 22525]]
acquires in the ordinary course of engaging in covered activities.
The Office's proposed rule makes other additional adjustments to
the DLC's proposal. First, the source of the data could be another
similarly authoritative source with a database size similar to
SoundExchange; it would not specifically have to be SoundExchange.
Second, the proposed rule would not require the authoritative source to
provide its data at ``reasonable or no cost.'' As discussed above, the
statute does not impose reporting burdens on sound recording copyright
owners and, by extension, SoundExchange. Third, the Office proposes
that if the DMP knows that a specific sound recording or set of
recordings is not in the database, then provision of access to that
database is insufficient and the DMP must, for such recording(s),
formally request information in writing on a quarterly basis from the
label or other distributor who supplied the recording, as described
above.
Appropriate information. The Office is inclined to disagree with
the breadth of the MLC's proposal to require the collection of ``all
identifying information.'' The statute specifically enumerates
information that is required to be collected, which is connected with
the list of information required to be reported.\86\ Thus, the rule
instead proposes that collection efforts extend to the statutorily
enumerated information and any additional information required by the
Copyright Office to be included in reports of usage (discussed below).
---------------------------------------------------------------------------
\86\ See 17 U.S.C. 115(d)(4)(A)-(B).
---------------------------------------------------------------------------
With respect to the question of whether DMPs must provide the
applicable information in unaltered form, the Office proposes a
compromise approach. The Office notes that the proposed regulatory
language addresses this in the section on reports of usage, rather than
data collection, but since this issue was mostly raised by commenters
in the context of data collection efforts, it is discussed here instead
of below. The Office has essentially been told by the DLC that
retaining and reporting unaltered data is generally burdensome and
unhelpful for matching, while the MLC and others argue that it is
generally needed and helpful for matching. Both positions seem to have
at least some degree of merit with respect to certain aspects. The
Office therefore offers what it believes to be a reasonable middle
ground to balance these competing concerns.
Instead of requiring DMPs to always report unaltered data or
permitting DMPs to never report it, the rule proposes that a DMP can
satisfy its reporting obligations by reporting either the originally
acquired version of data within a specific field or the modified
version, but subject to important limitations.
First, the DMP would have to report the unaltered data in any of
the following three cases: (1) Where the MLC has adopted a nationally
or internationally recognized standard, such as DDEX, that is being
used by the particular DMP, and either the unaltered version or both
versions are required to be reported under that standard; (2) where
either the unaltered version or both versions are reported by the
particular DMP pursuant to any voluntary license or individual download
license; or (3) where either the unaltered version or both versions
were periodically reported by the particular DMP to its licensing
administrator or to copyright owners directly prior to the license
availability date. The first scenario tethers the requirement to
provide unaltered data to whether a recognized standard setting body,
for a standard the DMP uses, concludes that the information is
important enough to be required. In such cases, it seems reasonable to
require DMPs to undertake such burdens as may be necessary to comply
with that decision.\87\ The second and third scenarios connect the
requirement to provide unaltered data to the capabilities of the DMP's
systems. If a DMP was reporting the unaltered version, or both
versions, prior to the license availability date or reports the
unaltered version, or both versions, under other licenses, the DMP must
similarly report such data to the MLC. The Office is also contemplating
a fourth scenario for commenters to consider: Where the unaltered
version or both versions are/were commonly reported in the industry by
a majority of DMPs of comparable size and sophistication to the
particular DMP either currently or prior to the license availability
date.
---------------------------------------------------------------------------
\87\ See DLC Ex Parte Letter #3 at 4 (``DDEX has an extensive
and rigorous process of evaluating the fields that are required to
be reported to assist with matching.'').
---------------------------------------------------------------------------
The second limitation would be that DMPs would not be permitted to
only report modified versions of any unique identifier, playing time,
or release date. The record does not suggest that DMPs typically adjust
these particular items, but to the extent they do or might consider it
in the future, it would seem to be particularly harmful to the MLC's
matching efforts. The DLC itself acknowledges the primacy of unique
identifiers like ISRCs. And playing time and release date seem to be
particularly helpful for matching, especially when distinguishing
between different recorded versions of a song by the same artist. The
Office invites comment on this aspect of the proposed rule, including
whether ``release date'' should be further qualified as ``release
year.''
Third, a DMP would not be permitted to only report modified
versions of information belonging to categories that the DMP was not
periodically altering prior to the license availability date. That
would ensure that to the extent a DMP makes changes to its systems to
alter new types of data, the DMP would need to retain the ability to
report the unaltered versions.
Certification. The Office is inclined to agree with the MLC's
proposal to require DMPs to certify as to their compliance with their
section 115(d)(4)(B) obligations, and proposes that such a
certification be included in DMPs' reports of usage. Such a requirement
would be analogous to other related certification requirements.\88\
---------------------------------------------------------------------------
\88\ See 17 U.S.C. 115(d)(10)(B)(iv)(III)(aa); 37 CFR
201.18(d)(1)(vi).
---------------------------------------------------------------------------
2. Efforts by Copyright Owners
Only a few commenters spoke to the collection efforts of copyright
owners; the MLC and DLC each propose specific regulatory language. The
MLC's proposed language essentially restates the statute.\89\ The MLC
argues that what constitutes commercially reasonable efforts for all
musical work copyright owners cannot be defined because of the broad
spectrum of musical work copyright owners, ranging from multinational
publishing companies to individual do-it-yourself singer-
songwriters.\90\ The MLC's comments characterize its proposal as
imposing an obligation on musical work copyright owners ``to provide
information in their possession, custody or control,'' ensuring ``that
large music publishers with detailed records of sound recordings
embodying their musical compositions will be obligated to provide such
information to the MLC, while still allowing for individual songwriters
to comply with the regulation without undue hardship.'' \91\ The MLC
also asserts that DMPs are better positioned to collect sound recording
data because they deal directly with sound recording copyright
[[Page 22526]]
owners and licensors, whereas the existence of the compulsory license
makes it so that many musical work copyright owners have no
relationship with sound recording copyright owners or licensors, and so
it would be inappropriate to require them to seek out and deliver
information they do not already have.\92\
---------------------------------------------------------------------------
\89\ MLC Reply App. B at 8.
\90\ MLC Initial at 15.
\91\ MLC Reply at 12.
\92\ MLC Initial at 16; MLC Reply at 13.
---------------------------------------------------------------------------
The DLC's proposal would require musical work copyright owners to
engage in commercially reasonable efforts to collect all available
information about the applicable sound recordings, including at least
the title, featured artist, and, if available, ISRC.\93\ The DLC's
proposal would also require copyright owners to provide the MLC with
all available information related to performing rights societies
through which performance rights in each musical work are licensed.\94\
The DLC asserts that copyright owners are best positioned to provide
the relevant information and disagrees with the MLC's characterization,
stating that musical work copyright owners can obtain sound recording
information in a variety of ways.\95\
---------------------------------------------------------------------------
\93\ DLC Reply Add. at A-4.
\94\ Id. at A-5.
\95\ DLC Initial at 8; DLC Reply at 12, Add. A-5.
---------------------------------------------------------------------------
A2IM & RIAA also commented on this issue, related to their overall
viewpoint that the MLC should get sound recording data from a single
authoritative source, rather than from DMPs and musical work copyright
owners.\96\ They further suggest that publishers should have to provide
sufficient information to unambiguously identify sound recordings,
which they say would generally entail a title, featured artist, and
ISRC.\97\
---------------------------------------------------------------------------
\96\ A2IM & RIAA Reply at 2; see also RIAA Initial at 9
(proposing that ``commercially reasonable efforts'' be defined as
requiring the MLC to leverage existing industry infrastructure,
including DDEX, SoundExchange's ISRC lookup service, and
SoundExchange's Music Data Exchange).
\97\ A2IM & RIAA Reply at 12-13; see also RIAA Initial at 7-9.
---------------------------------------------------------------------------
Based on the record before it, the Office proposes the following
rules with respect to musical work copyright owner data collection and
delivery efforts.
Appropriate efforts. The Office agrees with the MLC that the wide
variety of musical work copyright owners makes it challenging to adopt
a one-size-fits-all approach as to what constitutes ``commercially
reasonable efforts to deliver.'' Consequently, the Office proposes to
codify a minimal floor requirement that should not unduly burden less-
sophisticated musical work copyright owners--similar in approach to the
minimal floor requirement discussed above for DMPs. The rule proposes
that musical work copyright owners periodically monitor the MLC's
database for missing and inaccurate sound recording information
relating to their musical works, and if an issue is discovered, then
the copyright owner must provide the pertinent sound recording
information to the MLC if the information is known to the copyright
owner or, as the MLC proposes, is otherwise within the copyright
owner's possession, custody, or control. By limiting the obligation in
this manner, musical work copyright owners would not have to
affirmatively seek out information from sound recording copyright
owners or licensors they may have no relationship with, but would have
to provide information that may be contained in some of the sources the
DLC discusses (e.g., royalty statements under the compulsory license
and reporting from performing rights organizations). As to the proposal
from A2IM & RIAA, the statute imposes a requirement on musical work
copyright owners--not the MLC--so the Office does not interpret this
provision to encompass requiring the MLC to obtain sound recording data
from certain sources.
Appropriate information. The Office is inclined to agree with the
DLC and A2IM & RIAA that more than just the sound recording title
should be provided. Section 115(d)(3)(E)(iv) refers to ``information
regarding the names of the sound recordings,'' while in other places,
the MMA only refers to ``the name of the sound recording'' or ``sound
recording name.'' \98\ Moreover, as the RIAA points out, in most cases,
sound recordings are likely to share the same name as the underlying
musical work, making a requirement limited to the sound recording's
title largely meaningless.\99\ Thus, the rule proposes, in accord with
the comments of the DLC and A2IM & RIAA, that sound recording titles,
including alternative and parenthetical titles, featured artists, and
ISRCs should all be provided (subject to the appropriate efforts
discussed above). The Office does not agree with the DLC's proposal
regarding performing rights organization information for musical works,
as that information does not seem to fit within the meaning of
``information regarding the names of the sound recordings.'' \100\
---------------------------------------------------------------------------
\98\ Compare 17 U.S.C. 115(d)(3)(E)(iv) (emphasis added) with
id. at 115(d)(3)(E)(ii)(IV)(bb), (d)(3)(E)(iii)(I)(dd),
(d)(4)(A)(ii)(I)(aa).
\99\ See RIAA Initial at 8-9; see also DLC Initial at 8.
\100\ See 17 U.S.C. 115(d)(3)(E)(iv) (emphasis added).
---------------------------------------------------------------------------
C. Reports of Usage and Payment--Digital Music Providers
As discussed in the notification of inquiry, DMPs operating under
the blanket license must report their usage of musical works and pay
applicable royalties to the MLC. The statute contains two relevant
reporting and payment provisions, sections 115(c)(2)(I) and
115(d)(4)(A), and the Copyright Office is to prescribe regulations
pursuant to both.\101\ These regulations are to cover matters such as
the form, content, delivery, certification, and adjustment of reports
of usage and payment, as well as requirements under which records of
use must be maintained and made available to the MLC by DMPs.\102\
---------------------------------------------------------------------------
\101\ See 84 FR at 49970-71.
\102\ See id.
---------------------------------------------------------------------------
Various commenters spoke to issues concerning reports of usage in
responding to the notification of inquiry, and the MLC, DLC, and Music
Reports provided proposed regulatory language.
In promulgating reporting and payment rules for the section 115
license, the Copyright Office has long followed a ``guiding principle''
that ``the regulations should preserve the compulsory license as a
workable tool, while at the same time assuring that copyright owners
will receive full and prompt payment for all phonorecords made and
distributed.'' \103\ The Office has ``accordingly evaluated proposed
regulatory features using `three fundamental criteria' '': (1) `` `the
accounting procedures must not be so complicated as to make use of the
compulsory license impractical;' '' (2) `` `the accounting system must
insure full payment, but not overpayment;' '' and (3) `` `the
accounting system must insure prompt payment.' '' \104\ The Office has
also previously stressed that ``transparency is critical where
copyright owners are compelled by law to license their works.'' \105\
Today, the Office reaffirms these conclusions, which the Office has
carefully considered in formulating this proposed rule. The Office also
credits Congress's intention that, under the MMA, reports of usage
``should be consistent with then-current industry practices regarding
how . . . limited downloads and interactive streams are tracked and
reported.'' \106\
---------------------------------------------------------------------------
\103\ 79 FR 56190, 56190 (Sept. 18, 2014) (internal quotation
marks omitted) (quoting 45 FR 79038, 79039 (Nov. 28, 1980)).
\104\ Id. (internal brackets omitted) (quoting 45 FR 79038,
79039 (Nov. 28, 1980)).
\105\ 79 FR at 56201.
\106\ See H.R. Rep. No. 115-651, at 12; S. Rep. No. 115-339, at
13; Conf. Rep. at 10; see also U.S. Copyright Office, Copyright and
the Music Marketplace at 30-31 (noting that pre-MMA, mechanical
licenses were overwhelmingly administered through direct licenses).
---------------------------------------------------------------------------
[[Page 22527]]
Based on the record before it, and with these guiding principles in
mind, the Office proposes the following rules with respect to reports
of usage and payment to be delivered to the MLC by DMPs under the
blanket license.
General operation and timing. The rule proposes a general scheme
whereby DMPs operating under the blanket license must report usage and
pay royalties to the MLC on a monthly basis, with a cumulative annual
report due each year, and an ability to make adjustments to monthly and
annual reports and related royalty payments, including to correct
errors and replace estimated inputs with finally determined figures.
As required by section 115(d)(4)(A)(i), the rule proposes that
monthly reports of usage and related royalty payments must be delivered
to the MLC within 45 day of the end of the applicable monthly reporting
period.\107\ The Office disagrees with the MLC, which would read the
statute as requiring royalty payments to be due within 20 days rather
than within the same 45-day period as their associated reports of
usage.\108\ As the DLC points out, the statute and legislative history
counsel that both are due within 45 days.\109\ Section 115(d)(4)(A)(i)
states that DMPs shall ``report and pay'' ``in accordance with''
section 115(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,'' while section
115(c)(2)(I) states that ``[e]xcept as provided in paragraph[]
(4)(A)(i) . . . of subsection (d), royalty payments shall be made on or
before the twentieth day of each month.'' \110\ Given that one
provision refers to ``monthly reporting'' and the other refers to
``royalty payments,'' in order to give meaning to the ``except''
language, it would seem that both provisions must be read as referring
to both reporting and payment. The legislative history confirms this
intent.\111\ And it is in accord with the Office's longstanding
interpretation of section 115.\112\
---------------------------------------------------------------------------
\107\ See 17 U.S.C. 115(d)(4)(A)(i).
\108\ See MLC Reply at 23.
\109\ See DLC Ex Parte Letter #1 Presentation at 2-3.
\110\ 17 U.S.C. 115(c)(2)(I), (d)(4)(A)(i) (emphasis added).
\111\ See H.R. Rep. No. 115-651, at 27 (``Subparagraph A
identifies the data that must be reported to the collective by a
digital music provider along with its royalty payments due 45
calendar days after the end of a monthly reporting period.'')
(emphasis added); S. Rep. No. 115-339, at 24 (same); Conf. Rep. at
20 (same).
\112\ See 37 CFR 201.19(b)(5) (1978) (``Each Monthly Statement
of Account shall be served . . . together with the total royalty . .
. on or before the twentieth day of the immediately succeeding
month.'') (emphasis added).
---------------------------------------------------------------------------
Under the proposed rule, an annual report of usage would be due on
the 20th day of the sixth month after the end of the DMP's fiscal
year--the same timing as currently required for annual statements of
account under the non-blanket section 115 license, and the same timing
as proposed by Music Reports.\113\ The Office is inclined to disagree
with the DLC that the statute does not require annual reporting
certified by a certified public accountant (``CPA'').\114\ The Office
has reasonably considered the DLC's various arguments on this subject,
but the plain language of section 115(c)(2)(I) seems to clearly state
that ``detailed cumulative annual statements of account, certified by a
certified public accountant, shall be filed for every compulsory
license under subsection (a).'' \115\ Even if that were not the case,
the Office tentatively concludes that requiring CPA certification of
annual reporting, pursuant to the Office's broad regulatory authority,
is reasonable and appropriate. While, as the DLC notes, the MMA creates
a new triennial audit right, copyright owners remain unable to directly
audit DMPs--they can only audit the MLC, which may, but is not required
to, audit DMPs.\116\ And certified annual reporting may diminish the
need to initiate the same level of audits of individual DMPs by the
MLC; as the DLC is well-aware, DMPs effectively fund such audits
through the administrative assessment. An annual CPA certification
would also occur more frequently than these triennial audits, to the
extent audits occur at all.\117\ Thus, requiring an annual CPA-
certified report would ensure that copyright owners continue to be
given at least as much comfort in the accuracy of DMP reporting as
before the MMA.\118\ The MMA is intended to increase transparency, not
diminish it.\119\
---------------------------------------------------------------------------
\113\ See id. at Sec. 210.17(g)(1); Music Reports Initial at
18.
\114\ See DLC Initial at 9-12; DLC Reply at 22 n.97.
\115\ See 17 U.S.C. 115(c)(2)(I) (emphasis added).
\116\ See id. 115(d)(3)(L), (d)(4)(D).
\117\ See MLC Ex Parte Letter #2 at 4 (noting that the MLC is
not funded at a level necessary to audit every DMP every three
years).
\118\ See 79 FR at 56203 (``[T]he purpose of the CPA
certification requirement is to give the copyright owner firm
assurance that it is receiving all the royalties to which it is
entitled.'').
\119\ As the DLC points out, the audit right was adopted in part
upon the recommendation of the Copyright Office; this recommendation
was not made with a corresponding suggestion to decrease the
potential reliability of indicia provided in licensee annual
statements. See DLC Initial at 11 (citing U.S. Copyright Office,
Copyright and the Music Marketplace at 173-74). See also, e.g., 164
Cong. Rec. S6292, 6293 (daily ed. Sept. 25, 2018) (statement of Sen.
Hatch) (``I need to thank Chairman Grassley, who shepherded this
bill through the committee and made important contributions to the
bill's oversight and transparency provisions.''); 164 Cong. Rec.
S501, 504 (daily ed. Jan. 24, 2018) (statement of Sen. Coons)
(``This important piece of legislation will bring much-needed
transparency and efficiency to the music marketplace.''); Proposal
of DLC Submitted in Response to U.S. Copyright Office's Dec. 21,
2018, Notice of Inquiry, Ex. C at 2 (Mar. 21, 2019) (recognizing
``the goals of the MMA to provide licensing efficiency and
transparency'').
---------------------------------------------------------------------------
Regarding adjustments, the rule proposes that a report adjusting a
monthly report of usage can be delivered to the MLC any time between
delivery of the monthly report being adjusted and delivery of the
annual report covering that monthly report. The rule would also permit
a DMP, at its option, to forego filing a separate report of adjustment
and instead combine it with the applicable annual report. The latter
option is similar to how adjustments to monthly statements currently
operate under the non-blanket section 115 license,\120\ and the former
option, allowing adjustments to be made at an earlier point in time, is
something both the MLC and DLC propose and that the Office believes
reasonably provides additional flexibility and may facilitate more
prompt and accurate payments to copyright owners.\121\ In accord with
the DLC's proposal, and as is the case currently for monthly accounting
statements under the non-blanket section 115 license, this effectively
would require any adjustment to a monthly report of usage to be made
within six months \122\ of the end of the relevant annual period
covering that monthly report (which, as discussed above, is the
proposed deadline for delivering the annual report).\123\
---------------------------------------------------------------------------
\120\ See 37 CFR 210.16(d)(3)(i), 210.17(d)(2)(ii).
\121\ See DLC Reply at 21-22, Add. A-10-11; MLC Initial at 19-
20; MLC Reply at 27, App. C at 14.
\122\ Technically the 20th day of the sixth month.
\123\ See DLC Reply at 21-22, Add. A-10-11. While the MLC
proposes a different deadline, the MLC seems to concede that the
DLC's proposed timing would be reasonable. See MLC Reply at 27.
---------------------------------------------------------------------------
The Office is inclined to agree with both the MLC and DLC that
certain items may still need to be adjusted after the end of this six-
month period,\124\ as is permitted currently in connection with
performance royalty estimates under the non-blanket section 115
license.\125\ The Office thus proposes that an annual report of usage
may be adjusted within six months (the same
[[Page 22528]]
timing as is currently permitted in connection with performance royalty
estimates \126\) of any one of the following occurrences, which are
drawn from both the MLC and DLC proposals and strike the Office as
being reasonable: (1) Exceptional circumstances; (2) when adjusting a
previously estimated input after the input becomes finally established
(see below); (3) following an audit; or (4) in response to a change in
applicable rates or terms under 37 CFR part 385.\127\
---------------------------------------------------------------------------
\124\ See DLC Reply at 22, Add. A-10-11; MLC Initial at 19-20;
MLC Reply App. C at 14.
\125\ See 37 CFR 210.17(d)(2)(iii) (describing amended annual
statements of account).
\126\ See id.
\127\ See DLC Reply at 22, Add. A-10-11; MLC Reply App. C at 14.
---------------------------------------------------------------------------
Processing, invoices, and response files. A significant issue
raised by the DLC throughout the rulemaking proceeding is that there
must be a back-and-forth process through which DMPs receive royalty
invoices and response files \128\ from the MLC after delivering monthly
reports of usage, but before royalty payments are made or deducted from
a DMP's account with the MLC. The DLC states that this process is an
industry-standard practice for many DMPs that use third-party vendors
to calculate and process their royalty payments.\129\ The DLC is
specifically concerned with the handling of voluntary licenses,
explaining that because such licenses are often procured through
blanket deals covering all musical works in a publisher's catalog, the
DMP usually does not know which specific musical works are covered, and
will be reliant on the MLC to make that determination based on its
statutorily directed matching efforts; this in turn affects the amount
of royalties the DMP owes under the blanket license.\130\ The DLC seems
especially worried that if invoices and response files are not
required, DMPs will be effectively compelled to also use the MLC to
administer their voluntary licenses (compared to a DMP processing in-
house or through an alternate vendor) because the DMPs will not
otherwise be able to properly account to copyright owners under these
direct deals.\131\ At bottom, the DLC ostensibly seeks to retain the
status quo for these deliverables whereby the MLC, in fulfilling the
matching and calculation role previously performed by DMPs and their
vendors, would provide the royalty invoices and response files DMPs
either generated or received from their vendors under the pre-MMA
regime.\132\
---------------------------------------------------------------------------
\128\ The DLC describes ``response files'' as detailing the
results of the matching process and essentially serving as the
``backup'' to the invoice, confirming where royalties are being
paid, DLC Reply at 16, and including such information as song title,
vendor-assigned song code, composer(s), publisher name, publisher
split, vendor-assigned publisher number, publisher/license status,
and royalties per track, DLC Ex Parte Letter #1 Presentation at 11.
\129\ See DLC Initial at 13-14; DLC Reply at 13-16; DLC Ex Parte
Letter Feb. 14, 2020 (``DLC Ex Parte Letter #1'') at 1-2; DLC Ex
Parte Letter #1 Presentation at 3-13; DLC Ex Parte Letter #3 at 4.
\130\ DLC Initial at 13-14; DLC Reply at 13-16; DLC Ex Parte
Letter #1 Presentation at 3-13.
\131\ DLC Ex Parte Letter #1 Presentation at 3-13.
\132\ DLC Reply at 16.
---------------------------------------------------------------------------
To this end, the DLC proposes that DMPs first deliver their monthly
reports of usage to the MLC, and that the MLC then use the reported
data to match reported sound recordings to musical works and their
copyright owners, confirm uses subject to voluntary licenses and the
corresponding amounts to be deducted from royalties otherwise due under
the blanket license, calculate royalties owed under the blanket
license, and deliver an invoice to the DMP setting forth the royalties
owed along with a response file.\133\ The DLC proposes not to prescribe
when a DMP must deliver its report of usage, so long as it is before
the statutory 45-day deadline, but would require the MLC to provide
invoices and the response file within 15 days of receiving a monthly
report of usage.\134\
---------------------------------------------------------------------------
\133\ Id. at Add. A-9; see also id. at 15-16.
\134\ Id. at Add. A-9; DLC Ex Parte Letter #3 at 4; see also DLC
Ex Parte Letter #1 at 1-2 (``[D]ifferent services have different
internal accounting and payment practices, and imposing a rigid
interim reporting deadline on all services will impede rather than
accommodate those different practices.'').
---------------------------------------------------------------------------
The MLC does not seem to generally disagree with this choreography
and ultimately states that it intends to provide DMPs with both
invoices and response files, but argues that such matters, particularly
with respect to timing, are not ripe for rulemaking.\135\ The MLC
further states that to be logistically workable, there must be a fixed
DMP reporting deadline, to provide the MLC with predictability in its
staffing and resources.\136\ It proposes that, to the extent the Office
adopts a rule, DMPs be required to deliver reports within 15 days after
the end of the monthly reporting period and believes it can process
them within 25 days, which would then allow 5 days to remit payment (or
have the MLC charge a DMP's account) before the statutory 45-day
deadline expires.\137\
---------------------------------------------------------------------------
\135\ MLC Ex Parte Letter #2 at 2-3.
\136\ Id. at 2.
\137\ The MLC addressed planned timing with the Office during
its February 21, 2020, ex parte communication. See generally MLC Ex
Parte Letter #2 at 2.
---------------------------------------------------------------------------
Having carefully considered this issue, the Office proposes a
process that would require the MLC to provide invoices and response
files generally along the outlines of the DLC's proposal.\138\ The
Office, however, generally proposes to adopt the timing deadlines that
the MLC indicates would be acceptable to its operations. Given that the
current non-blanket section 115 license requires monthly reporting and
payment within 20 days, and commenters state that DMPs generally report
to their vendors within 10 days or less,\139\ the proposed 15-day
deadline should not be burdensome. To the extent it is, it is optional;
a DMP could take the full 45 days permitted under the statute, but it
would not be entitled to an invoice if it does, absent special
arrangement with the MLC (see ``Voluntary agreements to alter process''
below). The rule further proposes that response files must be requested
by DMPs, in which case they must be delivered by the MLC within the
same 25-day period the MLC will have to process reports.\140\ The
Office believes the proposed rule is a reasonable approach to ensuring
that DMPs that need invoices and response files can get them, while
providing the MLC the time it needs to generate them. The proposed rule
is intended to further the Office's longstanding policy objective that
the compulsory license should be a realistic and practical alternative
to voluntary licensing. The Office appreciates the MLC's position
requesting the Office refrain from issuing a rule on this matter for
the time being, but tentatively agrees with the DLC that a rule would
ultimately be valuable to build reliance that DMPs can obtain these
items. The Office is not opposed to revisiting the precise choreography
at a later date.
---------------------------------------------------------------------------
\138\ The Office is inclined to disagree with the DLC's proposal
that the MLC provide the DMP with the amount of royalties owed under
voluntary licenses. See DLC Reply Add. at A-9. That seems more like
something the MLC would only be obligated to calculate and provide
if it is privately engaged as the DMPs administrator for such
voluntary licenses. See 17 U.S.C. 115(d)(3)(C)(iii); see also MLC Ex
Parte Letter #2 at 3.
\139\ See Music Reports Initial at 7; MLC Ex Parte Letter #2 at
2.
\140\ The rule also proposes that a DMP may request a response
file even when it is not entitled to an invoice because the
information may still be of use to the DMP, such as for its
voluntary licenses. In such cases, the MLC would have 25 days from
the end of the 45-day reporting deadline to deliver the response
file.
---------------------------------------------------------------------------
Content of monthly reports of usage. In addition to basic
information like the covered period and the name of the DMP and its
associated services, the rule proposes that monthly reports of usage
contain a detailed statement covering the royalty payment and
accounting information and sound recording and musical work information
discussed below. Such information would be required for each sound
recording embodying a musical work
[[Page 22529]]
that is used by the DMP in covered activities during the applicable
monthly reporting period.\141\ As required by the statute, this would
cover ``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.'' \142\ The rule proposes,
in accord with the proposals of the MLC and DLC, that information be
reported in such a manner as from which the MLC may separate the
reported information for each different applicable activity or
offering, including each different applicable activity and offering
defined by the CRJs in 37 CFR part 385.\143\ This seems necessary for
the MLC to be able to properly confirm DMP royalty payments considering
that different activities and offerings are subject to different rate
calculations under part 385, and part 385 specifically provides that
``royalties must be calculated separately with respect to each Offering
taking into consideration Service Provider Revenue and expenses
associated with each Offering.'' \144\ Monthly reports would also have
to contain appropriate information about applicable voluntary licenses
and individual download licenses to the extent not otherwise provided
separately as discussed above with respect to NOLs.\145\
---------------------------------------------------------------------------
\141\ See MLC Reply App. C at 9-10; DLC Reply Add. at A-6.
\142\ See 17 U.S.C. 115(d)(4)(A)(ii).
\143\ See MLC Initial at 18; MLC Reply App. C at 9; DLC Reply
Add. at A-6.
\144\ See 37 CFR 385.21(b) (emphasis added).
\145\ See 17 U.S.C. 115(d)(4)(A)(ii)(II).
---------------------------------------------------------------------------
The MLC asks the Office to clarify ``that offerings with different
consumer price points are different offerings to be reported
separately.'' \146\ The DLC disagrees.\147\ This issue does not seem
appropriate for the Office to opine on one way or the other. The CRJs
in part 385 use the terms ``Licensed Activity'' and ``Offering,'' and
provide definitions for both, which are relevant to the rate
calculations.\148\ Any concerns should be addressed to the CRJs.
---------------------------------------------------------------------------
\146\ MLC Ex Parte Letter #2 at 4; see MLC Ex Parte Letter Mar.
24, 2020 (``MLC Ex Parte Letter #3'') at 2.
\147\ DLC Ex Parte Letter #3 at 3 (``The rates established by
the Copyright Royalty Board, however, are not based on customer
price points, which is why reporting based on those distinctions
should not be required.'').
\148\ See 37 CFR 385.2, 385.21, 385.22, 385.31.
---------------------------------------------------------------------------
The Office is inclined to disagree with the MLC with respect to
requiring DMPs to report usage for non-music content (e.g.,
podcasts).\149\ Such information seems only relevant if somehow
necessary for calculating statutory royalties, in which case, the
proposed rule would cover it. The Office, at least on the record before
it, is not persuaded by the MLC's more general argument that nascent
DMPs may not understand the difference between section 115 offerings
and non-section 115 offerings.\150\
---------------------------------------------------------------------------
\149\ See MLC Reply App. C at 12.
\150\ See MLC Initial at 5, 18-19; see also DLC Reply at 20
(opposing the MLC's proposal).
---------------------------------------------------------------------------
As with NOLs discussed above, the Office is also not inclined to
provide the MLC with authority to require additional substantive
information from DMPs in connection with their reports of usage, as the
MLC proposes, although such information could be provided
permissively.\151\ Particularly if issued on an interim basis, the
Office will consider adjusting the relevant rule in the future if
necessary.
---------------------------------------------------------------------------
\151\ See MLC Reply App. C at 10, 12; see also DLC Reply at 20
(opposing the MLC's proposal).
---------------------------------------------------------------------------
The Office is also not inclined to adopt a default rule entitling
DMPs to provide various required information to the MLC separately from
their reports, as the DLC proposes.\152\ The Office has concerns about
potential logistical challenges it could create for the MLC, but has no
objection to DMPs doing this if the MLC agrees (see ``Voluntary
agreements to alter process'' below).
---------------------------------------------------------------------------
\152\ See DLC Reply at 17, Add. A-7.
---------------------------------------------------------------------------
Royalty payment and accounting information. With respect to
specific accounting information and royalty calculation details
required to be reported, the Office proposes to essentially retain the
current rule governing non-blanket section 115 licenses, but with two
paths to account for whether the DMP delivering the report is entitled
to an invoice or not (which in turn, depends upon the date on which the
DMP's report is delivered to the MLC).\153\ Where the DMP will receive
an invoice, it would be required to report all information necessary
for the MLC to compute the royalties payable under the blanket license,
in accordance with part 385, and all information necessary to enable
the MLC to provide a detailed and step-by-step accounting of the
calculation of such royalties, sufficient to allow each applicable
copyright owner, in turn, to assess the manner in which the MLC, using
the DMP's information, determined the royalty owed and the accuracy of
the royalty calculations. Where the DMP is not entitled to an invoice,
it would be required to make its own calculations and provide the same
detailed and step-by-step accounting of the calculation of such
royalties, sufficient for the MLC to assess their accuracy. In both
cases, the DMP would be required to report the number of payable units
(e.g., permanent downloads, plays, constructive plays) for each
reported sound recording, whether pursuant to a blanket license,
voluntary license, or individual download license. In neither case
would the DMP be expected to calculate or estimate per-work royalty
allocations.
---------------------------------------------------------------------------
\153\ See 37 CFR 210.16(c)(2); see also MLC Initial at 18
(supporting retention); Music Reports Initial at 11 (same).
---------------------------------------------------------------------------
In proposing to carry forward the current regulatory construct, the
Office observes that the MMA does not appear to require any specific
accounting or calculation details beyond the number of DPDs,\154\ and,
as noted above, the MMA's legislative history suggests that Congress
did not intend for such reporting details to necessarily change.\155\
The Office, therefore, is not inclined to substantially deviate from
its existing rule.
---------------------------------------------------------------------------
\154\ See 17 U.S.C. 115(d)(4)(A)(ii); see also Music Reports
Initial at 4 (observing that the MMA has ``a glaring gap'' that
``omits any requirement that DMPs deliver to the MLC . . . any of
the underlying information that would be required to show how the
DMPs have calculated their royalty payments'').
\155\ See H.R. Rep. No. 115-651, at 12; S. Rep. No. 115-339, at
13; Conf. Rep. at 10.
---------------------------------------------------------------------------
The MLC and DLC sharply disagree on this matter. The MLC argues
that the current level of accounting detail in reporting is
insufficient and opaque, and proposes that the regulations remedy this
by enumerating a considerable amount of detailed royalty accounting
calculation and background information that DMPs must be required to
report.\156\ The DLC objects to the MLC's purported need for much of
this information, and argues that compiling that level of information
into monthly reports would be operationally burdensome and ``will be a
substantial engineering challenge.'' \157\ The DLC further argues that
it would be more appropriate for the information sought by the MLC to
be obtained via the
[[Page 22530]]
statutorily permitted audits.\158\ The MLC contends that these
triennial audits are insufficient.\159\
---------------------------------------------------------------------------
\156\ See MLC Initial at 19; MLC Reply at 14, 19-20, App. C at
9-12; MLC Ex Parte Letter #2 at 3. Some examples of what the MLC
seeks include information regarding how the DMP calculates service
revenue and total cost of content (including e.g., categories of
revenue, subscription prices, deductions from revenue, and the types
of consideration expensed for obtaining sound recording rights),
information about bundles, discounts, free trials, and promotional
offerings (including e.g., family and student plan data, which
products/services constitute a bundle, and bundle component
pricing), and information about DPDs for which the DMP does not pay
royalties.
\157\ DLC Ex Parte Letter #1 at 2; DLC Ex Parte Letter #1
Presentation at 14 (``The MLC has not explained why it needs this
data to perform its core matching, collection, and distribution
activities. Moreover, these changes will be a substantial
engineering challenge. For instance, the inputs into determining the
prices of the elements of a bundle are not data that is stored in a
format amenable to reporting.''); DLC Reply at 17-20.
\158\ DLC Reply at 17; DLC Ex Parte Letter #1 at 2.
\159\ MLC Ex Parte Letter #2 at 4.
---------------------------------------------------------------------------
Regardless of whatever the current reporting situation may be, the
Office tentatively concludes that the MLC should have access to much of
the information it seeks, but that it may be appropriate for some of
this underlying backup information to be made available separate from
monthly reports of use. As previously noted, ``transparency is critical
where copyright owners are compelled by law to license their works,''
\160\ and so it seems appropriate for the MLC to have access to as much
information as is reasonably necessary for it to ``engage in efforts to
. . . confirm proper payment of royalties due.'' \161\ That the scope
of that information may be cumbersome for DMPs is a product of the
complexity of the rate structure adopted by the CRJs (which presumably
could be changed in future ratemakings). The Office, however, is also
mindful of other previously noted guiding principles, that the
compulsory license must remain a ``workable tool'' and that ``the
accounting procedures must not be so complicated as to make use of the
compulsory license impractical.'' \162\ To appropriately balance these
competing concerns, the Office proposes a compromise approach whereby
DMPs must make much of the information proposed by the MLC available to
the MLC as part of their records of use.\163\ As discussed below in
more detail, the Office proposes to clarify its recordkeeping rule with
enumerated examples of the types of records DMPs must retain and make
available.
---------------------------------------------------------------------------
\160\ 79 FR at 56201.
\161\ See 17 U.S.C. 115(d)(3)(G)(i)(I)(cc).
\162\ 79 FR at 56190.
\163\ See 17 U.S.C. 115(d)(4)(A)(iii), (iv)(I).
---------------------------------------------------------------------------
The MLC and DLC both acknowledge the practical reality that
reporting will need to use estimates in certain circumstances,\164\ as
is permitted for performance royalties under the current rules
governing the non-blanket section 115 license.\165\ While the MLC
proposes that estimates be limited to performance royalties,\166\ the
DLC proposes a broader provision covering any royalty calculation
``input that is unable to be finally determined.'' \167\ The DLC
asserts that this expansion is appropriate because there are other
royalty calculation inputs, such as the applicable consideration
expensed for sound recording rights, that may not be established when
an applicable report may be due.\168\
---------------------------------------------------------------------------
\164\ See DLC Reply at 16, Add. A-8; MLC Reply App. C at 13.
\165\ See 37 CFR 210.16(d)(3)(i).
\166\ MLC Reply App. C at 13.
\167\ DLC Reply Add. at A-8.
\168\ DLC Reply at 16; see also DLC Initial at 15-16.
---------------------------------------------------------------------------
The rule proposes that a reasonable estimate be permitted for any
royalty calculation input that is unable to be finally determined at
the time the report is delivered to the MLC, if the reason the input
cannot be finally determined is outside the DMP's control. It seems
reasonable to permit such estimations, but only where the DMP cannot
unilaterally finalize the input. The proposed rule would allow use of
an estimate where an input remains uncertain because of a bona fide
dispute between the DMP and another party. But using an estimate
because of a purely internal tracking or accounting issue, for example,
would not be acceptable. The rule would require the DMP to deliver a
report of adjustment after any estimated input becomes finally
determined. The Office also proposes to specifically permit DMPs to
calculate their total royalties owed under the blanket license by using
a reasonable estimate of the amount to deduct for usage subject to
voluntary licenses and individual download licenses, where the DMP is
not entitled to an invoice but still dependent on the MLC to confirm
such usage. The rule would require the DMP to deliver a report of
adjustment after the MLC confirms such usage.
The Office is not inclined to adopt the DLC's proposal to clarify
that making any adjustments to these estimates would not be a basis for
charging late fees, terminating a blanket license, or requiring payment
of audit fees.\169\ Any applicable late fees are governed by the CRJs,
and any clarification should come from them. Whether or not payment of
audit fees is incurred is governed by 17 U.S.C. 115(d)(4)(D). And
whether or not the license can be terminated is governed by 17 U.S.C.
115(d)(4)(E).
---------------------------------------------------------------------------
\169\ See DLC Reply at 16-17, Add. A-8; see also MLC Ex Parte
Letter #2 at 7-8 (opposing the DLC's proposal).
---------------------------------------------------------------------------
Sound recording and musical work information. With respect to the
specific information required to be reported for purposes of
identifying each sound recording embodying a musical work used by a
DMP, the proposed rule is derived from the statute, current
regulations, and the public comments (including the specific proposals
of the MLC and DLC). In alignment with the statute, the proposed rule
essentially has three tiers of information: (1) Sound recording
information that must always be reported (e.g., sound recording name
and featured artist); (2) sound recording information that must be
reported ``to the extent acquired by the [DMP] in connection with its
use of sound recordings of musical works to engage in covered
activities, including pursuant to [section 115(d)(4)](B)'' (e.g., sound
recording copyright owner, producer, and ISRC); (3) and associated
musical work information that must be reported ``to the extent acquired
by the [DMP] 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 [section 115(d)(4)](B)'' (e.g.,
songwriter, publisher, and international standard musical work code
(``ISWC'')).\170\
---------------------------------------------------------------------------
\170\ See 17 U.S.C. 115(d)(4)(A)(ii)(I)(aa)-(bb).
---------------------------------------------------------------------------
In addition to the statutorily enumerated information, the Office
is proposing certain additional data fields that the record indicates
are likely to be beneficial to the MLC's key function of engaging in
matching efforts to identify reported sound recordings, the musical
works embodied in them, and the related copyright owners due royalties.
For example, within the first tier described above--that must always be
reported--the Office proposes including playing time \171\ and any
unique identifier assigned by the DMP (including any code that can be
used to locate and listen to the sound recording on the DMP's
service).\172\ Besides being helpful for matching, particularly where
there are multiple versions of a recording, playing time can be
necessary for computing royalties.\173\
---------------------------------------------------------------------------
\171\ See 37 CFR 210.16(c)(3)(v); Music Reports Initial at 12;
DLC Reply Add. at A-7; MLC Reply App. C at 11; RIAA Initial at 6;
Recording Academy Initial at 3; FMC Reply at 4.
\172\ See 37 CFR 210.16(c)(3)(iii)(C); Music Reports Initial at
12.
\173\ See id. at Sec. 385.11(a) and 385.21(c).
---------------------------------------------------------------------------
Regarding DMP identifiers, at this time, the Office is inclined to
agree with the DLC's proposal that DMPs provide these in lieu of the
audio links the MLC requests.\174\ The MLC argues that these links may
be critical to properly match and pay royalties because the audio is
``the only truly authoritative evidence of the digital use,'' and
claims that it would not be burdensome for DMPs to provide them.\175\
Specifically, it points out that audio links have been provided by
certain DMPs in connection with past settlements related to unclaimed
[[Page 22531]]
royalties, and suggests that audio links would be particularly useful
to reduce the incidence of unclaimed royalties and ownership
disputes.\176\ The DLC contends that it would be burdensome to require
``all digital music providers to engineer their systems'' to provide
active links in monthly reporting, and suggests that identifiers serve
as a workable alternative, stating that, at least for Amazon, Apple,
Google, Pandora, and Spotify, these identifiers would be sufficient for
the MLC to locate and listen to a particular track using the search
feature on each DMP's consumer-facing service.\177\
---------------------------------------------------------------------------
\174\ See DLC Ex Parte Letter #1 Presentation at 15; DLC Ex
Parte Letter #2 at 3; MLC Initial at 20; MLC Reply at 18-19, App. C
at 10.
\175\ MLC Reply at 18-19; see also MLC Ex Parte Letter #1 at 2-
3; MLC Ex Parte Letter #4 at 5.
\176\ MLC Ex Parte Letter #1 at 2-3.
\177\ See DLC Ex Parte Letter #2 at 3; see also DLC Reply at 17-
18; DLC Ex Parte Letter #1 Presentation at 15. The MLC disputes the
utility and widespread existence of such identifiers. MLC Ex Parte
Letter #2 at 6; MLC Ex Parte Letter #4 at 5.
---------------------------------------------------------------------------
The Office understands the MLC to believe that audio links will be
most useful not in connection with automated matching efforts, but
rather to feature on its online claiming portal, similar to claiming
portals used in connection with class settlements over unclaimed
royalties or collective management organizations that operate claims-
based systems.\178\ It is not clear whether links might be featured for
all sound recordings embodying musical works listed in the database, or
only those with missing or incomplete ownership information. Either
way, while the planned inclusion of audio links is commendable, the
record to date does not establish that the method by which the MLC
receives audio links should be a regulatory issue, rather than an
operational matter potentially resolved by MLC and DLC members,
including through the MLC's operations advisory committee.
---------------------------------------------------------------------------
\178\ See MLC Ex Parte Letter #4 at 5 (``[I]t would be unfair,
and economically infeasible for many songwriters, to require the
purchase of monthly subscriptions to each DMP service in order to
fully utilize the statutorily-mandated claiming portal.'').
---------------------------------------------------------------------------
For example, while the DLC suggests that inclusion of audio links
for every recording reported on a monthly basis by each DMP would be
burdensome, a few DLC members suggested in passing to the Office that
they could just provide the MLC with a free monthly subscription in
lieu of such reporting. It is not clear to what extent the parties have
engaged on such logistical discussions to determine if this, or other
operational solutions, may serve as a workable alternative. The Office
declines at this time to propose a rule including audio links in
monthly reporting, but encourages the parties, including individual DLC
members, to further collaborate upon a solution for the MLC portal to
include access to specific tracks (or portions thereof) when necessary,
without cost to songwriters or copyright owners. The Office hopes that
this matter can be resolved after the parties confer further, but
remains open to adjusting this aspect of the proposed rule if
developments indicate it is necessary.
In the second tier described above--sound recording information
that must only be reported to the extent acquired--the rule proposes to
include version,\179\ release date,\180\ album title,\181\ label
name,\182\ distributor,\183\ and other unique identifiers beyond ISRC,
including catalog number,\184\ universal product code,\185\ and any
distributor-assigned identifier.\186\
---------------------------------------------------------------------------
\179\ See DLC Reply Add. at A-7; MLC Reply App. C at 11; RIAA
Initial at 6; Recording Academy Initial at 3; FMC Reply at 4.
\180\ See DLC Reply Add. at A-7; MLC Reply App. C at 11; RIAA
Initial at 6; Recording Academy Initial at 3; FMC Reply at 4.
\181\ See DLC Ex Parte Letter #1 Presentation at 15; MLC Ex
Parte Letter #4 at 11.
\182\ See 37 CFR 210.16(c)(3)(iii)(A); Music Reports Initial at
12; MLC Ex Parte Letter #4 at 11.
\183\ See DLC Reply Add. at A-7; MLC Reply App. C at 10.
\184\ See 37 CFR 210.16(c)(3)(iii)(A); Music Reports Initial at
12; MLC Ex Parte Letter #4 at 11.
\185\ See 37 CFR 210.16(c)(3)(iii)(B); Music Reports Initial at
12; DLC Ex Parte Letter #1 Presentation at 15; MLC Ex Parte Letter
#4 at 11.
\186\ See 37 CFR 210.16(c)(3)(iii)(C); Music Reports Initial at
12.
---------------------------------------------------------------------------
In the third tier described above--related musical work information
that must only be reported to the extent acquired in the metadata
provided by sound recording copyright owners and licensors--the rule
proposes to include musical work name,\187\ musical work copyright
owner,\188\ and international standard name identifier (``ISNI'') and
interested parties information code (``IPI'') for each songwriter,
publisher, and musical work copyright owner.\189\
---------------------------------------------------------------------------
\187\ See 37 CFR 210.16(c)(3)(i); Music Reports Initial at 12.
\188\ Though the statute already requires songwriter, publisher,
and respective ownership share, the publisher may not always be the
copyright owner, and in some cases, the owner may be neither the
publisher nor the songwriter.
\189\ See 37 CFR 210.16(c)(3)(vii); Music Reports Initial at 12;
MLC Ex Parte Letter #4 at 11.
---------------------------------------------------------------------------
The Office disagrees with the MLC's proposal that the musical work
information enumerated in the statute be required ``to the extent
otherwise known by the [DMP].'' \190\ This seems directly at odds with
the statute, which states that such information shall be provided ``to
the extent acquired by the [DMP] 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 [section 115(d)(4)](B).''
\191\ As the Office previously cautioned, ``while the Office's
regulatory authority is relatively broad, it is obviously constrained
by the law Congress enacted; the Office can fill statutory gaps, but
will not entertain proposals that conflict with the statute.'' \192\
---------------------------------------------------------------------------
\190\ See MLC Reply App. C at 11; see also MLC Initial at 17
n.7.
\191\ See 17 U.S.C. 115(d)(4)(A)(ii)(I)(bb); see also DLC Reply
at 18 (disagreeing with the MLC's proposal for the same reason).
\192\ 84 FR at 49968 (citations omitted).
---------------------------------------------------------------------------
In addition to establishing the three tiers described above, the
Office further proposes that certain information, primarily that
covered by the second and third tiers, must only be reported to the
extent ``practicable,'' a term defined in the proposed rule. Similar to
the arguments made with respect to the collection and reporting of
unaltered data discussed above, the DLC asserts that it would be
burdensome from an operational and engineering standpoint for DMPs to
report additional categories of data not currently reported, and that
DMPs should not be required to do so unless it would actually improve
the MLC's matching ability.\193\ The record suggests that all of the
data categories described above possess some level of utility,
although, as noted above, there is disagreement as to the particular
degree of usefulness of each. It would seem that different data points
may be of varying degrees of helpfulness depending on what other data
points for a work may or may not be available.
---------------------------------------------------------------------------
\193\ See DLC Ex Parte Letter #1 at 2; DLC Ex Parte Letter #3 at
2.
---------------------------------------------------------------------------
The proposed rule therefore defines ``practicable'' in a very
specific way. First, the proposed definition would always require
reporting of the expressly enumerated statutory categories (e.g., sound
recording copyright owner, producer, ISRC, songwriter, publisher,
ownership share, and ISWC must always be reported, to the extent
appropriately acquired, regardless of any associated DMP burden).
Second, it would require reporting of any other applicable categories
of information (e.g., catalog number, version, release date, ISNI,
etc.) under the same three scenarios discussed above with respect to
unaltered data, and for the same reasons discussed above: (1) Where the
MLC has adopted a nationally or internationally recognized standard,
such as DDEX, that is being used by the particular DMP, and the
information belongs to a category of information required to be
reported under that standard; (2) where the information belongs to a
category of information that is reported by the
[[Page 22532]]
particular DMP pursuant to any voluntary license or individual download
license; or (3) where the information belongs to a category of
information that was periodically reported by the particular DMP to its
licensing administrator or to copyright owners directly prior to the
license availability date. The Office is also contemplating a fourth
scenario for commenters to consider: Where the information belongs to a
category of information that is/was commonly reported in the industry
by a majority of DMPs of comparable size and sophistication to the
particular DMP either currently or prior to the license availability
date. As with the rules about whether a DMP needs to provide unaltered
data, the Office's proposed compromise seeks to appropriately balance
the need for the MLC to receive detailed reporting with the burden that
more detailed reporting may place on certain DMPs.\194\
---------------------------------------------------------------------------
\194\ See also 17 U.S.C. 115(d)(4)(E)(i)(III) (one of the
conditions of default is where a DMP provides a report ``that, on
the whole, is . . . materially deficient as a result of inaccurate,
missing, or unreadable data, where the correct data was available to
the [DMP] and required to be reported'').
---------------------------------------------------------------------------
With respect to the term ``producer,'' the Office agrees with
commenters that it may be confusing and warrants definition.\195\ The
Office proposes to adopt the proposal to use the Recording Academy's
Producers and Engineers Wing definition.\196\
---------------------------------------------------------------------------
\195\ See RIAA Initial at 11; Recording Academy Initial at 3;
see also MLC Reply at 34-35 (explaining the MLC's own confusion over
the term).
\196\ See RIAA Initial at 11; Recording Academy Initial at 3.
---------------------------------------------------------------------------
With respect to the term ``sound recording copyright owner,'' A2IM
& RIAA raise concerns over the reporting of this information and its
use by the MLC, asserting that there is a disconnect between the use of
the term in the statute and the actual information included in the
digital supply chain about different parties associated with a given
sound recording.\197\ In light of this discussion, the Office proposes
that DMPs may satisfy their obligations to report sound recording
copyright owner information by reporting the three DDEX fields
identified by A2IM & RIAA as being most relevant (to the extent such
data is provided to DMPs by sound recording copyright owners or
licensors): DDEX Party Identifier (DPID), LabelName, and PLine.\198\
---------------------------------------------------------------------------
\197\ See A2IM & RIAA Reply at 8-9. Because the main of those
concerns centers around the potential for confusion in the MLC's
public database, the Office has addressed this issue in more depth
in connection with a separately-issued notification of inquiry. See
U.S. Copyright Office, Notification of Inquiry, Transparency of the
Mechanical Licensing Collective and Its Database of Musical Works
Information, Dkt. No. 2020-8, published elsewhere in this issue of
the Federal Register.
\198\ See A2IM & RIAA Reply at 8-9 (explaining the details of
these different fields and asserting that ``each may assist the MLC
in different ways with its task of associating sound recordings with
musical works''); see also MLC Ex Parte Letter #4 at 10.
---------------------------------------------------------------------------
Server fixation date and termination. With respect to the MLC's
proposal to require DMPs to report the date on which each sound
recording is first reproduced by the DMP on its server, the rule
proposes an alternative approach. As a result of the new blanket
licensing system, the MLC contends that the server fixation date is
``required to determine which rights owner is to be paid where one or
more grants pursuant to which a musical work was reproduced in a sound
recording has been terminated pursuant to Section 203 or 304 of the
[Copyright] Act.'' \199\ The Copyright Act permits authors or their
heirs, under certain circumstances and within certain windows of time,
to terminate the exclusive or nonexclusive grant of a transfer or
license of an author's copyright in a work or of any right under a
copyright.\200\ The statute, however, contains an exception with
respect to derivative works, stating that ``[a] derivative work
prepared under authority of the grant before its termination may
continue to be utilized under the terms of the grant after its
termination, but this privilege does not extend to the preparation
after the termination of other derivative works based upon the
copyrighted work covered by the terminated grant.'' \201\
---------------------------------------------------------------------------
\199\ MLC Reply at 19; see also MLC Initial at 20; MLC Ex Parte
Letter #2 at 6-7; MLC Ex Parte Letter #4 at 6-7.
\200\ See 17 U.S.C. 203, 304(c).
\201\ Id. at 203(b)(1), 304(c)(6)(A).
---------------------------------------------------------------------------
As the MLC explains it, ``because the sound recording is a
derivative work, it may continue to be exploited pursuant to the
`panoply of contractual obligations that governed pre-termination uses
of derivative works by derivative work owners or their licensees.' ''
\202\ The MLC contends that the section 115 compulsory license can be
part of this ``panoply,'' and therefore, if the compulsory license
``was issued before the termination date, the pre-termination owner is
paid. Otherwise, the post-termination owner is paid.'' \203\ The MLC
further explains that ``under the prior NOI regime, the license date
for each particular musical work was considered to be the date of the
NOI for that work,'' but ``[u]nder the new blanket license, there is no
license date for each individual work.'' \204\ Thus, the MLC believes
that ``the date that the work was fixed on the DMP's server--which is
the initial reproduction of the work under the blanket license--is the
most accurate date for the beginning of the license for that work.''
\205\
---------------------------------------------------------------------------
\202\ MLC Reply at 19 (quoting Woods v. Bourne Co., 60 F.3d 978,
987 (2d Cir. 1995)); see also MLC Ex Parte Letter #2 at 6-7; MLC Ex
Parte Letter #4 at 6-7.
\203\ See MLC Ex Parte Letter #2 at 6-7; MLC Ex Parte Letter #4
at 6-7.
\204\ MLC Ex Parte Letter #4 at 6-7.
\205\ MLC Ex Parte Letter #2 at 6-7.
---------------------------------------------------------------------------
The MLC argues that including the server date in reports of usage
should not be burdensome for DMPs because they currently possess and
report this information.\206\ The DLC disagrees, stating that not all
DMPs store this information, let alone report it.\207\ The DLC also
attacks the merits of the MLC's reason for wanting the server date, but
at a relatively high-level.\208\ No other commenter directly spoke to
this issue, though one commenter with experience in music publishing
administration suggests concurrence with the MLC's position.\209\
---------------------------------------------------------------------------
\206\ See MLC Reply at 19; MLC Ex Parte Letter #1 at 3; MLC Ex
Parte Letter #2 at 6-7 (``Server Fixation Date is currently a
mandatory field that is reported on the License Request Form from
HFA.''); MLC Ex Parte Letter #4 at 6-7 (``[A]ll file storage systems
log such dates.'').
\207\ DLC Ex Parte Letter #2 at 4; DLC Ex Parte Letter #3 at 5.
\208\ See DLC Ex Parte Letter #2 at 4.
\209\ See Barker Initial at 3-4 (``When [termination] occurs,
the law allows the original copyright owner of the . . . terminated
work to continue to collect royalties for certain uses licensed
prior to the effective date of . . . termination of transfer, while
the new copyright owner of the work may exclusively license all
future uses, and collect royalties for those and certain earlier
uses.'').
---------------------------------------------------------------------------
The MLC's interpretation of the derivative works exception seems at
least colorable, and no publisher or songwriter (or representative
organization) submitted comments disagreeing with what the MLC
characterizes as industry custom and understanding.\210\ Under the MMA,
the MLC's dispute resolution committee will establish policies and
procedures to address ownership disputes (though not resolve legal
claims), and, at least where there is no live controversy between
parties, practices regarding the default payee pursuant to the
derivative works exception is an area where the MLC may need to adopt a
policy for handling in the ordinary course.\211\ Of course, any
songwriter or publisher (or other relevant party) disagreeing with the
[[Page 22533]]
MLC's approach may also challenge such practice, but to the extent the
MLC's approach is not invalidated, or superseded by precedent, it seems
reasonable for the MLC to want to know the applicable license date.
---------------------------------------------------------------------------
\210\ See Woods, 60 F.3d at 986-88. The Office does not
foreclose the possibility of other interpretations, but also does
not find it prudent to itself elaborate upon or offer an
interpretation of the scope of the derivative works exception in
this particular rulemaking proceeding, which is not primarily
focused on termination issues and which has thus far engendered
relatively little commentary on this discrete point.
\211\ See 17 U.S.C. 115(d)(3)(K).
---------------------------------------------------------------------------
It is not clear to the Office, however, whether the MLC has a need
for the server fixation dates of musical works licensed by DMPs prior
to the license availability date, even under its legal theory. With
respect to most musical works first used before the license
availability date, an NOI should have been served on the copyright
owner or filed with the Copyright Office, or the work should have been
otherwise licensed by a voluntary agreement. In cases where the license
was obtained by service of an NOI upon the copyright owner, it would
seem that the MLC could continue to use the relevant NOI date for
termination purposes, as it asserts has been the customary
practice.\212\ Since the MLC represents that this practice was working
fairly well prior to the MMA, the rule does not now propose regulatory
language on this issue. And for those works used via voluntary license,
presumably the parties have relevant records of this agreement, but in
any event, addressing issues related to the administration of such
voluntary agreements may be outside the ambit of the proposed rule. The
Office welcomes comment on this understanding.
---------------------------------------------------------------------------
\212\ See id. at 115(d)(9)(A)(``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.'').
---------------------------------------------------------------------------
In other cases, the effective date of a DMP's blanket license
(which for any currently-operating DMP should ostensibly be the license
availability date) would seem to be the relevant license date,
including for some musical works already being used by DMPs prior to
obtaining a blanket license. For those works being used by a DMP under
the authority of NOIs that had been filed with the Copyright Office,
the statute provides that such ``notices of intention filed before the
enactment date will no longer be effective or provide license authority
with respect to covered activities,'' and so the blanket license date
may become a new, relevant license date.\213\ Musical works may also
have been previously used without a license, whether because the use
qualified for a copyright exception, limitation, or safe harbor (such
as section 512 or the current transition period for good faith efforts
made under section 115(d)(10)), or because the use may have been
infringing, including in cases where the NOI was not valid or
appropriately served. For uses of those works, the effective date of
the DMP's blanket license may similarly be the relevant license date
for termination purposes. A record of the DMP's repertoire as of that
date could be relevant to demonstrate which works were being used at
the time the blanket license attached. To accommodate those instances,
the rule proposes that each DMP take a snapshot of its sound recording
database or otherwise make an archive as it exists immediately prior to
the effective date of its blanket license.\214\
---------------------------------------------------------------------------
\213\ See id. at 115(d)(9)(D)(ii).
\214\ Cf. Music Reports Initial at 3 (proposing that DMPs be
required in their NOLs ``to include lists of sound recordings they
make available to the public'').
---------------------------------------------------------------------------
Going forward, to accommodate those musical works that subsequently
become licensed pursuant to a blanket license after the effective date
of a given DMP's blanket license,\215\ the rule proposes that each DMP
operating under a blanket license keep and retain at least one of three
dates for each sound recording embodying such a musical work. First,
the rule proposes including the server fixation date sought by the MLC.
Because it is not clear, however, that this date is the best or only
potential proxy for the relevant license date, the rule also proposes
two other date options as reasonable proxies for the relevant license
date: The date of the grant first authorizing the DMP's use of the
sound recording and the date on which the DMP first obtains the sound
recording.\216\ Permitting multiple reasonable options may also help
alleviate any particular operational burdens that may exist with
respect to a DMP being required to track the server date specifically.
The Office seeks comment specifically on this aspect of the proposed
rule.
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\215\ See 17 U.S.C. 115(d)(1)(B)(i) (``A blanket license . . .
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)
[discussing voluntary licenses and individual download
licenses].''). Cf. U.S. Copyright Office, Compendium of U.S.
Copyright Office Practices sec. 2310.3(C)(3) (3d ed. 2017) (``[A]
transfer that predates the existence of the copyrighted work cannot
be effective (and therefore cannot be `executed') until the work of
authorship (and the copyright) come into existence.'').
\216\ Indeed, in many cases the Office assumes these three dates
would likely be very close in time, and perhaps even be identical.
---------------------------------------------------------------------------
The rule proposes that the required information described above
need not be reported to the MLC in monthly reports of usage. Rather,
the Office proposes that such information be kept by the DMP in its
records of use, which must be made available to the MLC. These
particular records would be subject to the same five-year retention
period proposed for other records, but since they may be pertinent to
administering the blanket license decades later, the DMP would be
required to provide the MLC with at least 90 days' notice and an
opportunity to claim and retrieve the records before they can be
destroyed or discarded.
It generally seems reasonable to expect that DMPs would track dates
relevant to the licensing of sound recordings, and in the context of
the blanket license, which was specifically adopted to increase
transparency and better ensure that copyright owners receive their due
royalties, it seems particularly reasonable to require DMPs to provide
information that may bear on termination issues that are potentially
clouded by the creation of the blanket license. The Office recognizes
that this particular area is one of the more complicated ones in this
proceeding, and additional comments are especially welcome on this
topic.
Content of annual reports of usage. In general accord with the
MLC's proposal, the Office proposes that annual reports contain
cumulative information for the applicable fiscal year, broken down by
month and by activity and offering, including the total royalty
payable, the total sum paid, the total adjustments made, the total
number of payable units, and to the extent applicable to calculating
the royalties owed, total service provider revenue, total costs of
content, total performance royalty deductions, and total
subscribers.\217\ Receiving these totals and having them broken down
this way seems beneficial to the MLC in confirming proper royalties,
while not unreasonably burdening DMPs, who would not have to re-provide
all of the information contained in the monthly reports covered by the
annual reporting period.
---------------------------------------------------------------------------
\217\ See MLC Reply App. C at 13-14.
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Format and delivery. The Office proposes, in accord with the MLC's
proposal, that separate monthly reports of usage must be delivered for
each month during which there is any activity relevant to the payment
of mechanical royalties for covered activities, and that an annual
report must be delivered for each year during which at least one
monthly report was required to be delivered.\218\
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\218\ See id. at 16.
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The Office proposes that reports of usage must be delivered to the
MLC in
[[Page 22534]]
a machine-readable format that is compatible with the information
technology systems of the MLC as reasonably determined by the MLC,
which in turn must take into consideration relevant industry standards
and the potential for different degrees of sophistication among DMPs.
In accord with both the MLC and DLC proposals, the Office does not
propose to provide more detailed requirements in the regulations, in
order to leave flexibility as to the precise standards and
formats.\219\ For this reason, the Office is not inclined to require
that reporting must specifically utilize DDEX, as proposed by some
\220\--though the Office notes that the MLC plans to support DDEX for
reports of usage.\221\ The Office further proposes to specifically
require the MLC to offer at least two options, where one is dedicated
to smaller DMPs that may not be reasonably capable of complying with
the requirements that the MLC may see fit to adopt for larger DMPs.
This would help ensure that all those qualifying for the blanket
license can make use of it as a practical matter.\222\ The Office
invites comment on this aspect of the proposed rule.
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\219\ See MLC Initial at 20; MLC Reply at 21, App. C at 16; DLC
Initial at 15; DLC Reply at 21, Add. A-8; see also SoundExchange
Initial at 16.
\220\ See A2IM & RIAA Reply at 11; Jessop Reply at 2.
\221\ MLC Reply at 21-22, 35.
\222\ See id. at 21-22 (``While the MLC supports the use of [the
DDEX] format . . . it is mindful of the varying data formats used by
DMPs with varying resources.''); DLC Reply at 21 (stating that the
regulations must ``ensure that the full range of licensees will be
able to report their usage to the MLC without substantial upfront
burdens'').
---------------------------------------------------------------------------
To maintain appropriate flexibility, the Office also proposes that
royalty payments similarly must be delivered in such manner and form as
the MLC may reasonably determine. The Office further proposes a
mechanism by which the MLC may modify its formatting and delivery
requirements after providing appropriate notice to DMPs. The rule
proposes an extended notice period for certain significant changes
because of the level of effort that could potentially be involved for a
DMP to comply.\223\
---------------------------------------------------------------------------
\223\ The Office's proposed rule is somewhat similar to the
MLC's proposal for changing data formats or standards in the context
of the musical works database. See MLC Reply App. F at 22.
---------------------------------------------------------------------------
The Office also proposes a mechanism by which a DMP may be excused
from default under the blanket license and any incurred late fees
because of an untimely delivered report or payment where the reason for
the untimeliness is either the MLC's fault or results from an issue
with the MLC's applicable IT systems. This seems like a reasonable and
equitable accommodation where DMPs are statutorily required to rely on
the MLC and its systems to satisfy certain obligations.
Certifications. The Office proposes applying the current
certification requirements in 37 CFR 210.16(f) and 210.17(f) for
monthly and annual statements of account under the non-blanket section
115 license to monthly and annual reports of usage under the blanket
license.\224\ The current certification requirements were adopted in
2014 after careful consideration by the Office,\225\ and the Office is
disinclined to relitigate the details of these provisions unless
presented with a strong showing that they are unworkable either because
of something specifically to do with the changes made by the MMA or
some other significant industry change that occurred after they were
adopted.
---------------------------------------------------------------------------
\224\ See MLC Reply App. C at 15 (proposing retention of current
monthly certification); DLC Reply Add. at A-8 (proposing a monthly
certification that is substantially similar to one of the current
monthly certification options); Music Reports Initial at 13, 16-17
(proposing retention of one of the current monthly certification
options and one of the current annual certification options).
\225\ See 79 FR 56190.
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Content of reports of adjustment. In general accord with both the
MLC and DLC proposals, the Office proposes that reports of adjustment
contain the following information: (1) An identification of the
previously delivered monthly or annual report(s) being adjusted; (2)
the specific change(s) to such report(s), including the monetary amount
of the adjustment and a detailed description of any changes to any of
the inputs upon which computation of the payable royalties depends,
along with appropriate step-by-step calculations; (3) the particular
sound recordings and uses to which the adjustment applies; and (4) a
description of the reason(s) for the adjustment.\226\ The proposed rule
is also in general accord with the MLC and DLC proposals with respect
to the mechanisms to account for overpayment and underpayment of
royalties: an underpayment will need to accompany delivery of the
report of adjustment, while an overpayment will be credited to the
DMP's account by the MLC.\227\ These requirements strike the Office as
reasonable, and the proposed content should provide the MLC with
sufficient information to confirm the adjustment and properly account
for it to copyright owners.
---------------------------------------------------------------------------
\226\ See DLC Reply Add. at A-10; MLC Reply App. C at 14.
\227\ See DLC Reply Add. at A-10; MLC Reply App. C at 14.
---------------------------------------------------------------------------
Voluntary agreements to alter process. The Office tentatively
agrees with both the MLC and DLC that it would be beneficial to permit
individual DMPs and the MLC to agree to vary or supplement the
particular reporting procedures adopted by the Office--such as the
specific mechanics relating to adjustments or invoices and response
files.\228\ This would permit a degree of flexibility to help address
the specific needs of a particular DMP. The Office proposes two caveats
to this proposal to safeguard copyright owner interests because they
would not be party to any such agreements. First, any voluntarily
agreed-to changes could not materially prejudice copyright owners owed
royalties under the blanket license. Second, the procedures surrounding
the certification requirements would not be alterable because they
serve as an important check on the DMPs that is ultimately to the
benefit of copyright owners.
---------------------------------------------------------------------------
\228\ See DLC Reply Add. at A-11; MLC Reply App. C at 17.
---------------------------------------------------------------------------
Documentation and records of use. The rule proposes, in accord with
the MLC's proposal, to generally carry forward the current rule under
the non-blanket section 115 license, whereby DMPs would be required to
keep and retain all records and documents necessary and appropriate to
support fully all of the information set forth in their reports of
usage for a period of at least five years from the date of delivery of
the particular report.\229\ The Office is not inclined to shorten the
retention period to three years as the DLC proposes \230\ given that
the Office in 2014 found it appropriate to extend the period from three
years to five years.\231\ If anything, the Office may consider
extending the retention period to seven years to align with the
statutory recordkeeping requirements the MMA places on the MLC.\232\
The Office is also not inclined to adopt the DLC's proposal that
recordkeeping requirements be subject to each DMP's ``generally
applicable privacy and data retention policies,'' and be limited merely
to the ``data included in'' the report of usage.\233\ That proposal is
a step in the wrong direction with respect to transparency.\234\ In
accordance with the MMA's requirement that records of use be ``made
available to the [MLC] by [DMPs],'' the rule proposes that the
[[Page 22535]]
MLC be entitled to reasonable access to these records and documents
upon reasonable request, subject to any applicable confidentiality
rules the Office may adopt (and the Office has concurrently published a
notice of proposed rulemaking regarding confidentiality issues).\235\
---------------------------------------------------------------------------
\229\ See MLC Reply App. C at 16; 37 CFR 210.18.
\230\ See DLC Reply at 23, Add. A-11.
\231\ See 79 FR at 56205; see also MLC Ex Parte Letter #2 at 5
(``[T]he three-year audit period look back does not mean that
documents dated more than three years earlier are not relevant to
audits.'').
\232\ See 17 U.S.C. 115(d)(3)(M)(i).
\233\ See DLC Reply Add. at A-11.
\234\ See MLC Reply at 25-26 (``Each DMP should not be permitted
to self-determine its recordkeeping requirements.'').
\235\ See 17 U.S.C. 115(d)(4)(A)(iii), (iv)(I); U.S. Copyright
Office, Notice of Proposed Rulemaking, Treatment of Confidential
Information by the Mechanical Licensing Collective and Digital
Licensee Coordinator, Dkt. No. 2020-7, published elsewhere in this
issue of the Federal Register.
---------------------------------------------------------------------------
As noted above, the Office is proposing to clarify its
recordkeeping rules by enumerating several nonexclusive examples of the
types of records DMPs are obligated to retain and make available to the
MLC. The Office continues to generally agree with the ``minimalist
approach'' it took in 2014 with respect to importing details from the
CRJs' rates and terms regulations in 37 CFR part 385, and therefore the
Office is not inclined to include the level of detail contained in the
MLC's comments.\236\ Rather, the Office proposes to more broadly
articulate requirements encompassing what the MLC seeks. For example:
Records accounting for non-play and other non-royalty-bearing DPDs,
records of promotional and free trial uses required to be maintained
under part 385, records describing each of the DMP's activities or
offerings in sufficient detail to reasonably demonstrate which
activities or offerings they are under part 385 and which rates and
terms apply to them, records with sufficient information to reasonably
demonstrate whether service revenue and total cost of content are
properly calculated in accordance with part 385, records with
sufficient information to reasonably demonstrate whether and how any
royalty floor under part 385 does or does not apply, and records with
such other information as is necessary to reasonably support and
confirm all usage and calculations contained in each report of usage,
including relevant information about subscriptions, bundles, devices,
discount plans, and subscribers.
---------------------------------------------------------------------------
\236\ See 79 FR at 56193.
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Each DMP operating under the blanket license will need to know this
information (to the extent applicable to its services), and so the
Office expects it should not be burdensome to retain and make available
corresponding records.\237\ While described in more generalized terms
than proposed by the MLC, the Office recognizes that the above list is
still fairly tailored to the CRJs' Phonorecords III determination; the
Office will be prepared to revise these examples as necessary to align
with such royalty rates and terms as the CRJs may subsequently adopt.
---------------------------------------------------------------------------
\237\ See DLC Ex Parte Letter #3 at 3 (noting the DLC's openness
to this proposal).
---------------------------------------------------------------------------
D. Reports of Usage--Significant Nonblanket Licensees
As discussed in the notification of inquiry, SNBLs are also
required to deliver reports of usage to the MLC.\238\ Although the
Office asked ``how such reports may differ from the reports filed by
digital music providers under the blanket license,'' the comments
received in response were fairly sparse.\239\ The MLC argues that
reports of usage for SNBLs should be essentially the same as those of
DMPs operating under the blanket license.\240\ While the MLC concedes
various differences between blanket licensees and SNBLs, it asserts
that it needs the same information because the MLC must (1) administer
the process by which unclaimed royalties are to be distributed to
copyright owners identified in the records of the MLC based on market
share of usage under both statutory and voluntary licenses, and (2)
administer collections of the administrative assessment paid by both
blanket licensees and SNBLs to fund the MLC.\241\ The DLC argues that
SNBL reports should be different and need not contain as much
information because ``they do not need to provide information related
to calculation or payment of royalties.'' \242\ The DLC's proposal for
SNBLs omits items contained in its proposal for blanket licensees, such
as royalty calculation data, estimates, adjustments, processing, and
records of use.\243\ The DLC does not directly respond to the MLC's
assertions. Music Reports proposes that blanket licensee and SNBL
reports be substantially the same, except that SNBL reports need not
contain any royalty calculation information.\244\
---------------------------------------------------------------------------
\238\ 84 FR at 49971.
\239\ See id.
\240\ MLC Initial at 20-21; see MLC Reply App. C.
\241\ See MLC Initial at 10-11, 20-21; MLC Reply at 21.
\242\ DLC Initial at 16; see also DLC Reply at 23.
\243\ Compare DLC Reply Add. at A-6-11 with id. at A-12-14.
\244\ Music Reports Initial at 4.
---------------------------------------------------------------------------
The statutory requirements for blanket licensees and SNBLs differ
in a number of material ways. Most notably, SNBLs do not operate under
the blanket license and do not pay statutory royalties to the MLC.
Moreover, royalties paid under voluntary licenses are generally
calculated pursuant to those private agreements, rather than being tied
to particular rates and terms established by the CRJs in 37 CFR part
385. While blanket licensees must deliver reports of usage under
section 115(d)(4)(A), SNBLs are ``not obligated to provide reports of
usage reflecting covered activities under subsection (d)(4)(A),'' but
rather report under section 115(d)(6)(A)(ii).\245\ While that provision
states that SNBL reports of usage are to ``contain[ ] the information
described in paragraph (4)(A)(ii),'' the other requirements of section
115(d)(4), such as with respect to reporting in accordance with section
115(c)(2)(I), formatting, adjustments, and records of use, do not
expressly apply.\246\ By not being required to report in accordance
with section 115(c)(2)(I), SNBLs are not required to deliver CPA-
certified annual reports.\247\ SNBLs are also not subject to data
collection efforts under section 115(d)(4)(B) or audits under section
115(d)(4)(D).
---------------------------------------------------------------------------
\245\ See 17 U.S.C. 115(e)(31).
\246\ See id. at 115(d)(6)(A)(ii).
\247\ See id. at 115(c)(2)(I) (only requiring such reporting for
``compulsory license[s]'').
---------------------------------------------------------------------------
With these observations in mind, it seems reasonable to fashion the
proposed rule for SNBL reports of usage as an abbreviated version of
the reporting provided by blanket licensees. The proposed rule for
SNBLs generally tracks the proposed rule for blanket licensees, but
makes several changes, somewhat along the lines of the DLC's proposal.
For example, provisions about estimates, processing, and records of use
are omitted. The proposed rule also omits an annual reporting
requirement. In contrast to the DLC's proposal, the Office does,
however, propose to require SNBLs to report their payable royalties for
covered activities under relevant voluntary licenses and individual
download licenses, but without reporting any underlying calculations.
The proposed rule also contains an adjustments provision so that SNBLs
have a mechanism to update anything if needed, such as if a play count
error is discovered later on.
In light of the particularly thin record on SNBLs, the Office
encourages further comment on these issues to better inform the
rulemaking process. For example, do other commenters agree with the MLC
that the main purposes of SNBL reporting are to assist the MLC in
distributing unclaimed royalties and collecting the administrative
assessment? If commenters believe that SNBL reporting should serve
other purposes (for example, assisting the MLC's overall matching
efforts), they should identify those additional aims, along with any
adjustments to the information the rule proposes to be reported. Noting
that the MLC must
[[Page 22536]]
distribute unclaimed accrued royalties ``to copyright owners identified
in the records of the collective,'' the Office also seeks comment
regarding whether and to what extent the MLC anticipates incorporating
SNBL-supplied information into its public database.\248\
---------------------------------------------------------------------------
\248\ Id. at 115(d)(3)(J).
---------------------------------------------------------------------------
Further, the Office solicits comment regarding whether the proposed
rule appropriately prescribes reporting of information relevant to the
MLC's tasks in distributing unclaimed royalties and collecting the
administrative assessment. The Office specifically seeks comment as to
what extent the information sought by the MLC is relevant to the
administrative assessment, noting that the method for allocating the
assessment among blanket licensees and SNBLs adopted by the CRJs is
based solely on ``the number of unique and royalty-bearing sound
recordings used per month . . . in Section 115 covered activities.''
\249\ Similarly, the Office welcomes comment regarding whether the
proposed rule provides adequate (or excessive) information to the MLC
for purposes of the MLC calculating market share for distributing
unclaimed royalties.\250\ As noted above, the Office will separately
consider any regulatory activity related to the distribution of such
royalties in connection with its ongoing related policy study.
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\249\ See 37 CFR 390.1 (defining ``Unique Sound Recordings
Count'') (emphasis added).
\250\ For example, the MLC's proposed language seeks information
specific to the part 385 calculations. Does the MLC seek to take
SNBL usage data and apply the part 385 royalty rate calculations
used for blanket licensees as part of determining a transparent and
equitable manner of distribution?
---------------------------------------------------------------------------
III. Subjects of Inquiry
The proposed rule is designed to reasonably implement a number of
regulatory duties assigned to the Copyright Office under the MMA and
facilitate the MLC's administration of the blanket licensing system.
The Office solicits additional public comment on all aspects of the
proposed rule.
List of Subjects in 37 CFR Part 210
Copyright, Phonorecords, Recordings.
Proposed Regulations
For the reasons set forth in the preamble, the Copyright Office
proposes amending 37 CFR part 210 as follows:
PART 210--COMPULSORY LICENSE FOR MAKING AND DISTRIBUTING PHYSICAL
AND DIGITAL PHONORECORDS OF NONDRAMATIC MUSICAL WORKS
0
1. The authority citation for part 210 continues to read as follows:
Authority: 17 U.S.C. 115, 702.
Subpart A [Removed]
0
2. Remove subpart A.
Subpart B [Redesignated as Subpart A] and Sec. Sec. 210.11 Through
210.21 [Redesignated as Sec. Sec. 210.1 Through 210.11]
0
3. Redesignate subpart B as subpart A and, in newly redesignated
subpart A, Sec. Sec. 210.11 through 210.21 are redesignated as
Sec. Sec. 210.1 through 210.11.
Subpart A [Amended]
0
4. In newly redesignated subpart A:
0
a. Remove ``Sec. 210.12'' and add in its place ``Sec. 210.2'';
0
b. Remove ``Sec. 210.15'' and add in its place ``Sec. 210.5'';
0
c. Remove ``Sec. 210.16'' and add in its place ``Sec. 210.6'';
0
d. Remove ``Sec. 210.17'' and add in its place ``Sec. 210.7''; and
0
e. Remove ``Sec. 210.21'' and add in its place ``Sec. 210.11''.
0
5. Amend newly redesignated Sec. 210.1 by adding a sentence after the
first sentence to read as follows:
Sec. 210.1 General.
* * * Rules governing notices of intention to obtain a compulsory
license for making and distributing phonorecords of nondramatic musical
works are located in Sec. 201.18. * * *
Sec. Sec. 210.12 through 210.20 [Added and Reserved]
0
6. Add reserve Sec. Sec. 210.12 through 210.20.
0
7. Add a new subpart B to read as follows:
Subpart B--Blanket Compulsory License for Digital Uses, Mechanical
Licensing Collective, and Digital Licensee Coordinator
Sec.
210.21 General.
210.22 Definitions.
210.23 Designation of the mechanical licensing collective and
digital licensee coordinator.
210.24 Notices of blanket license.
210.25 Notices of nonblanket activity.
210.26 Data collection and delivery efforts by digital music
providers and musical work copyright owners.
210.27 Reports of usage and payment for blanket licensees.
210.28 Reports of usage for significant nonblanket licensees.
Sec. 210.21 General.
This subpart prescribes rules for the compulsory blanket license to
make and distribute digital phonorecord deliveries of nondramatic
musical works pursuant to 17 U.S.C. 115(d), including rules for digital
music providers, significant nonblanket licensees, the mechanical
licensing collective, and the digital licensee coordinator.
Sec. 210.22 Definitions.
For purposes of this subpart:
(a) Unless otherwise specified, the terms used have the meanings
set forth in 17 U.S.C. 115(e).
(b) A blanket licensee is a digital music provider operating under
a blanket license.
(c) The term DDEX means Digital Data Exchange, LLC.
(d) The term GAAP means U.S. Generally Accepted Accounting
Principles, except that if the U.S. Securities and Exchange Commission
permits or requires entities with securities that are publicly traded
in the U.S. to employ International Financial Reporting Standards, as
issued by the International Accounting Standards Board, or as accepted
by the Securities and Exchange Commission if different from that issued
by the International Accounting Standards Board, in lieu of Generally
Accepted Accounting Principles, then an entity may employ International
Financial Reporting Standards as ``GAAP'' for purposes of this section.
(e) The term IPI means interested parties information code.
(f) The term ISNI means international standard name identifier.
(g) The term ISRC means international standard recording code.
(h) The term ISWC means international standard musical work code.
(i) The term producer means the primary person(s) contracted by and
accountable to the content owner for the task of delivering the sound
recording as a finished product.
(j) The term UPC means universal product code.
Sec. 210.23 Designation of the mechanical licensing collective and
digital licensee coordinator.
The following entities are designated pursuant to 17 U.S.C.
115(d)(3)(B) and (d)(5)(B). Additional information regarding these
entities is available on the Copyright Office's website.
(a) Mechanical Licensing Collective, Inc., incorporated in Delaware
on March
[[Page 22537]]
5, 2019, is designated as the mechanical licensing collective; and
(b) Digital Licensee Coordinator, Inc., incorporated in Delaware on
March 20, 2019, is designated as the digital licensee coordinator.
Sec. 210.24 Notices of blanket license.
(a) General. This section prescribes rules under which a digital
music provider completes and submits a notice of license to the
mechanical licensing collective pursuant to 17 U.S.C. 115(d)(2)(A) for
purposes of obtaining a statutory blanket license.
(b) Form and content. A notice of license shall be prepared in
accordance with any reasonable formatting instructions established by
the mechanical licensing collective, and shall include all of the
following information:
(1) The full legal name of the digital music provider and, if
different, the trade or consumer-facing brand name(s) of the
service(s), including any specific offering(s), through which the
digital music provider is engaging, or seeks to engage, in any covered
activity.
(2) The full address, including a specific number and street name
or rural route, of the place of business of the digital music provider.
A post office box or similar designation will not be sufficient except
where it is the only address that can be used in that geographic
location.
(3) A telephone number and email address for the digital music
provider where an individual responsible for managing the blanket
license can be reached.
(4) Any website(s), software application(s), or other online
locations(s) where the digital music provider's applicable service(s)
is/are, or expected to be, made available.
(5) A description sufficient to reasonably establish the digital
music provider's eligibility for a blanket license and to provide
reasonable notice to the mechanical licensing collective, copyright
owners, and songwriters of the manner in which the digital music
provider is engaging, or seeks to engage, in any covered activity
pursuant to the blanket license. Such description shall be sufficient
if it includes at least the following information:
(i) A statement that the digital music provider has a good-faith
belief, informed by review of relevant law and regulations, that it:
(A) Satisfies all requirements to be eligible for a blanket
license, including that it satisfies the eligibility criteria to be
considered a digital music provider pursuant to 17 U.S.C. 115(e)(8);
and
(B) Is, or will be before the date of initial use of musical works
pursuant to the blanket license, able to comply with all payments,
terms, and responsibilities associated with the blanket license.
(ii) A statement that where the digital music provider seeks or
expects to engage in any activity identified in its notice of license,
it has a good-faith intention to do so within a reasonable period of
time.
(iii) A general description of the digital music provider's
service(s), or expected service(s), and the manner in which it uses, or
seeks to use, phonorecords of nondramatic musical works.
(iv) Identification of each of the following digital phonorecord
delivery configurations the digital music provider is, or seeks to be,
making as part of its covered activities:
(A) Permanent downloads.
(B) Limited downloads.
(C) Interactive streams.
(D) Noninteractive streams.
(E) Other configurations, accompanied by a brief description.
(v) Identification of each of the following service types the
digital music provider offers, or seeks to offer, as part of its
covered activities (the digital music provider may, but is not required
to, associate specific service types with specific digital phonorecord
delivery configurations or with particular types of activities or
offerings that may be defined in part 385 of this title):
(A) Subscriptions.
(B) Bundles.
(C) Lockers.
(D) Discounted, but not free-to-the-user, services.
(E) Free-to-the-user services.
(F) Other applicable services, accompanied by a brief description.
(vi) Any other information the digital music provider wishes to
provide.
(6) The date, or expected date, of initial use of musical works
pursuant to the blanket license.
(7) Identification of any amendment made pursuant to paragraph (f)
of this section, including the submission date of the notice being
amended.
(8) A description of any applicable voluntary license or individual
download license the digital music provider is, or expects to be,
operating under concurrently with the blanket license that is
sufficient for the mechanical licensing collective to fulfill its
obligations under 17 U.S.C. 115(d)(3)(G)(i)(I)(bb). This description
should be provided as an addendum to the rest of the notice of license
to help preserve any confidentiality it may be entitled to under
regulations adopted by the Copyright Office. Such description shall be
sufficient if it includes at least the following information:
(i) An identification of each of the digital music provider's
services, including by reference to any applicable types of activities
or offerings that may be defined in part 385 of this title, through
which musical works are, or are expected to be, used pursuant to any
such voluntary license or individual download license. If such a
license pertains to all of the digital music provider's applicable
services, it may state so without identifying each service.
(ii) The start and end dates.
(iii) The musical work copyright owner, identified by name and any
known and appropriate unique identifiers, and appropriate contact
information for the musical work copyright owner or for an
administrator or other representative who has entered into an
applicable license on behalf of the relevant copyright owner.
(iv) A satisfactory identification of any applicable catalog
exclusions.
(v) At the digital music provider's option, and in lieu of
providing the information listed in paragraph (b)(8)(iv) of this
section, a list of all covered musical works, identified by appropriate
unique identifiers.
(c) Certification and signature. The notice of license shall be
signed by an appropriate duly authorized officer or representative of
the digital music provider. The signature shall be accompanied by the
name and title of the person signing the notice and the date of the
signature. The notice may be signed electronically. The person signing
the notice shall certify that he or she has appropriate authority to
submit the notice of license to the mechanical licensing collective on
behalf of the digital music provider and that all information submitted
as part of the notice is true, accurate, and complete to the best of
the signer's knowledge, information, and belief, and is provided in
good faith.
(d) Submission, fees, and acceptance. Except as provided by 17
U.S.C. 115(d)(9)(A), to obtain a blanket license, a digital music
provider must submit a notice of license to the mechanical licensing
collective. Notices of license shall be submitted to the mechanical
licensing collective in a manner reasonably determined by the
collective. No fee may be charged for submitting notices of license.
Upon submitting a notice of license to the mechanical licensing
collective, a digital music provider shall be provided with a prompt
response from the collective confirming receipt of the notice and the
date of receipt. The mechanical
[[Page 22538]]
licensing collective shall send any rejection of a notice of license to
both the street address and email address provided in the notice.
(e) Harmless errors. Errors in the submission or content of a
notice of license that do not materially affect the adequacy of the
information required to serve the purposes of 17 U.S.C. 115(d) shall be
deemed harmless, and shall not render the notice invalid or provide a
basis for the mechanical licensing collective to reject a notice or
terminate a blanket license. This paragraph (e) shall apply only to
errors made in good faith and without any intention to deceive,
mislead, or conceal relevant information.
(f) Amendments. A digital music provider may submit an amended
notice of license to cure any deficiency in a rejected notice pursuant
to 17 U.S.C. 115(d)(2)(A). A digital music provider operating under a
blanket license must submit a new notice of license within 45 calendar
days after any of the information required by paragraphs (b)(1) through
(6) of this section contained in the notice on file with the mechanical
licensing collective has changed. An amended notice shall indicate that
it is an amendment and shall contain the submission date of the notice
being amended. The mechanical licensing collective shall retain copies
of all prior notices of license submitted by a digital music provider.
Where the information required by paragraph (b)(8) of this section has
changed, instead of submitting an amended notice of license, the
digital music provider must promptly deliver updated information to the
mechanical licensing collective in an alternative manner reasonably
determined by the collective. To the extent commercially reasonable,
the digital music provider must deliver such updated information at
least 30 calendar days before delivering a report of usage covering a
period where such license is in effect.
(g) Transition to blanket licenses. Where a digital music provider
obtains a blanket license automatically pursuant to 17 U.S.C.
115(d)(9)(A) and seeks to continue operating under the blanket license,
a notice of license must be submitted to the mechanical licensing
collective within 45 calendar days after the license availability date.
In such cases, the blanket license shall continue to be effective as of
the license availability date, rather than the date on which the notice
is submitted to the collective.
(h) Additional information. Nothing in this section shall be
construed to prohibit the mechanical licensing collective from seeking
additional information from a digital music provider that is not
required by this section, which the digital music provider may
voluntarily elect to provide, provided that the collective may not
represent that such information is required to comply with the terms of
this section.
(i) Public access. The mechanical licensing collective shall
maintain a current, free, and publicly accessible and searchable online
list of all blanket licenses that, subject to any applicable
confidentiality rules established by the Copyright Office, includes:
(1) All information contained in each notice of license, including
amended and rejected notices;
(2) Contact information for all blanket licensees;
(3) The effective dates of all blanket licenses;
(4) For any amended or rejected notice, a clear indication of its
amended or rejected status and its relationship to other relevant
notices;
(5) For any rejected notice, the collective's reason(s) for
rejecting it; and
(6) For any terminated blanket license, a clear indication of its
terminated status, the date of termination, and the collective's
reason(s) for terminating it.
Sec. 210.25 Notices of nonblanket activity.
(a) General. This section prescribes rules under which a
significant nonblanket licensee completes and submits a notice of
nonblanket activity to the mechanical licensing collective pursuant to
17 U.S.C. 115(d)(6)(A) for purposes of notifying the mechanical
licensing collective that the licensee has been engaging in covered
activities.
(b) Form and content. A notice of nonblanket activity shall be
prepared in accordance with any reasonable formatting instructions
established by the mechanical licensing collective, and shall include
all of the following information:
(1) The full legal name of the significant nonblanket licensee and,
if different, the trade or consumer-facing brand name(s) of the
service(s), including any specific offering(s), through which the
significant nonblanket licensee is engaging, or expects to engage, in
any covered activity.
(2) The full address, including a specific number and street name
or rural route, of the place of business of the significant nonblanket
licensee. A post office box or similar designation will not be
sufficient except where it is the only address that can be used in that
geographic location.
(3) A telephone number and email address for the significant
nonblanket licensee where an individual responsible for managing
licenses associated with covered activities can be reached.
(4) Any website(s), software application(s), or other online
locations(s) where the significant nonblanket licensee's applicable
service(s) is/are, or expected to be, made available.
(5) A description sufficient to reasonably establish the licensee's
qualifications as a significant nonblanket licensee and to provide
reasonable notice to the mechanical licensing collective, digital
licensee coordinator, copyright owners, and songwriters of the manner
in which the significant nonblanket licensee is engaging, or expects to
engage, in any covered activity. Such description shall be sufficient
if it includes at least the following information:
(i) A statement that the significant nonblanket licensee has a
good-faith belief, informed by review of relevant law and regulations,
that it satisfies all requirements to qualify as a significant
nonblanket licensee under 17 U.S.C. 115(e)(31).
(ii) A statement that where the significant nonblanket licensee
expects to engage in any activity identified in its notice of
nonblanket activity, it has a good-faith intention to do so within a
reasonable period of time.
(iii) A general description of the significant nonblanket
licensee's service(s), or expected service(s), and the manner in which
it uses, or expects to use, phonorecords of nondramatic musical works.
(iv) Identification of each of the following digital phonorecord
delivery configurations the significant nonblanket licensee is, or
expects to be, making as part of its covered activities:
(A) Permanent downloads.
(B) Limited downloads.
(C) Interactive streams.
(D) Noninteractive streams.
(E) Other configurations, accompanied by a brief description.
(v) Identification of each of the following service types the
significant nonblanket licensee offers, or expects to offer, as part of
its covered activities (the significant nonblanket licensee may, but is
not required to, associate specific service types with specific digital
phonorecord delivery configurations or with particular types of
activities or offerings that may be defined in part 385 of this title):
(A) Subscriptions.
(B) Bundles.
(C) Lockers.
[[Page 22539]]
(D) Discounted, but not free-to-the-user, services.
(E) Free-to-the-user services.
(F) Other applicable services, accompanied by a brief description.
(vi) Any other information the significant nonblanket licensee
wishes to provide.
(6) Acknowledgement of whether the significant nonblanket licensee
is operating under one or more individual download licenses.
(7) The date of initial use of musical works pursuant to any
covered activity.
(8) Identification of any amendment made pursuant to paragraph (f)
of this section, including the submission date of the notice being
amended.
(c) Certification and signature. The notice of nonblanket activity
shall be signed by an appropriate duly authorized officer or
representative of the significant nonblanket licensee. The signature
shall be accompanied by the name and title of the person signing the
notice and the date of the signature. The notice may be signed
electronically. The person signing the notice shall certify that he or
she has appropriate authority to submit the notice of nonblanket
activity to the mechanical licensing collective on behalf of the
significant nonblanket licensee and that all information submitted as
part of the notice is true, accurate, and complete to the best of the
signer's knowledge, information, and belief, and is provided in good
faith.
(d) Submission, fees, and acceptance. Notices of nonblanket
activity shall be submitted to the mechanical licensing collective in a
manner reasonably determined by the collective. No fee may be charged
for submitting notices of nonblanket activity. Upon submitting a notice
of nonblanket activity to the mechanical licensing collective, a
significant nonblanket licensee shall be provided with a prompt
response from the collective confirming receipt of the notice and the
date of receipt.
(e) Harmless errors. Errors in the submission or content of a
notice of nonblanket activity that do not materially affect the
adequacy of the information required to serve the purposes of 17 U.S.C.
115(d) shall be deemed harmless, and shall not render the notice
invalid or provide a basis for the mechanical licensing collective or
digital licensee coordinator to engage in legal enforcement efforts
under 17 U.S.C. 115(d)(6)(C). This paragraph (e) shall apply only to
errors made in good faith and without any intention to deceive,
mislead, or conceal relevant information.
(f) Amendments. A significant nonblanket licensee must submit a new
notice of nonblanket activity with its report of usage that is next due
after any of the information required by paragraphs (b)(1) through (7)
of this section contained in the notice on file with the mechanical
licensing collective has changed. An amended notice shall indicate that
it is an amendment and shall contain the submission date of the notice
being amended. The mechanical licensing collective shall retain copies
of all prior notices of nonblanket activity submitted by a significant
nonblanket licensee.
(g) Transition to blanket licenses. Where a digital music provider
that would otherwise qualify as a significant nonblanket licensee
obtains a blanket license automatically pursuant to 17 U.S.C.
115(d)(9)(A) and does not seek to operate under the blanket license, if
such licensee submits a valid notice of nonblanket activity within 45
calendar days after the license availability date in accordance with 17
U.S.C. 115(d)(6)(A)(i), such licensee shall not be considered to have
ever operated under the statutory blanket license until such time as
the licensee submits a valid notice of license pursuant to 17 U.S.C.
115(d)(2)(A).
(h) Additional information. Nothing in this section shall be
construed to prohibit the mechanical licensing collective from seeking
additional information from a significant nonblanket licensee that is
not required by this section, which the significant nonblanket licensee
may voluntarily elect to provide, provided that the collective may not
represent that such information is required to comply with the terms of
this section.
(i) Public access. The mechanical licensing collective shall
maintain a current, free, and publicly accessible and searchable online
list of all significant nonblanket licensees that, subject to any
applicable confidentiality rules established by the Copyright Office,
includes:
(1) All information contained in each notice of nonblanket
activity, including amended notices;
(2) Contact information for all significant nonblanket licensees;
(3) The date of receipt of each notice of nonblanket activity; and
(4) For any amended notice, a clear indication of its amended
status and its relationship to other relevant notices.
Sec. 210.26 Data collection and delivery efforts by digital music
providers and musical work copyright owners.
(a) General. This section prescribes rules under which digital
music providers and musical work copyright owners shall engage in
efforts to collect and provide information to the mechanical licensing
collective that may assist the collective in matching musical works to
sound recordings embodying those works and identifying and locating the
copyright owners of those works.
(b) Digital music providers. (1) Pursuant to 17 U.S.C.
115(d)(4)(B), in addition to obtaining sound recording names and
featured artists and providing them in reports of usage, a digital
music provider operating under a blanket license 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(s) of such digital music provider the following
information for each such sound recording embodying a musical work:
(i) The sound recording copyright owner(s), producer(s), ISRC(s),
and any other information commonly used in the industry to identify
sound recordings and match them to the musical works the sound
recordings embody as may be required by the Copyright Office to be
included in reports of usage provided to the mechanical licensing
collective by digital music providers.
(ii) With respect to the musical work embodied in such sound
recording, the songwriter(s), publisher name(s), ownership share(s),
ISWC(s), and any other musical work authorship or ownership information
as may be required by the Copyright Office to be included in reports of
usage provided to the mechanical licensing collective by digital music
providers.
(2) As used in paragraph (b)(1) of this section, ``good-faith,
commercially reasonable efforts to obtain'' shall include performing
all of the following acts, subject to paragraph (b)(3) of this section:
(i) Where the digital music provider has not obtained from
applicable sound recording copyright owners or other licensors of sound
recordings (or their representatives) all of the information listed in
paragraph (b)(1) of this section, or where any such information was
obtained before [effective date of final rule] and is no longer in such
form that the digital music provider can use it to comply with
paragraph (b)(2)(iii) of this section, the digital music provider shall
have an ongoing and continuous obligation to, at least on a quarterly
basis, request in writing such information from applicable sound
recording copyright owners and other licensors of sound recordings.
Such requests may be directed to a representative of any such owner or
licensor.
[[Page 22540]]
(ii) With respect to any of the information listed in paragraph
(b)(1) of this section that the digital music provider has obtained
from applicable sound recording copyright owners or other licensors of
sound recordings (or their representatives), the digital music provider
shall have an ongoing and continuous obligation to, on a periodic basis
or as otherwise requested by the mechanical licensing collective,
request in writing from such owners or licensors any updates to any
such information. Such requests may be directed to a representative of
any such owner or licensor.
(iii) Any information listed in paragraph (b)(1) of this section,
including any updates to such information, provided to the digital
music provider by sound recording copyright owners or other licensors
of sound recordings (or their representatives) shall be delivered to
the mechanical licensing collective in reports of usage in accordance
with Sec. 210.27(e).
(3) Notwithstanding paragraph (b)(2) of this section, a digital
music provider may satisfy its obligations under 17 U.S.C. 115(d)(4)(B)
with respect to a particular sound recording by arranging, or
collectively arranging with others, for the mechanical licensing
collective to receive the information listed in paragraph (b)(1) of
this section from an authoritative source, such as the collective
designated by the Copyright Royalty Judges to collect and distribute
royalties under the statutory licenses established in 17 U.S.C. 112 and
114, provided that such digital music provider does not know such
source to lack such information for the relevant sound recording.
Satisfying the requirements of 17 U.S.C. 115(d)(4)(B) in this manner
does not excuse a digital music provider from having to report sound
recording and musical work information in accordance with Sec.
210.27(e).
(4) The requirements of paragraph (b) of this section are without
prejudice to what a court of competent jurisdiction may determine
constitutes good-faith, commercially reasonable efforts for purposes of
eligibility for the limitation on liability described in 17 U.S.C.
115(d)(10).
(c) Musical work copyright owners. (1) Pursuant to 17 U.S.C.
115(d)(3)(E)(iv), 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.
(2) As used in paragraph (c)(1) of this section, ``information
regarding the names of the sound recordings'' shall include, for each
applicable sound recording:
(i) Sound recording name(s), including any alternative or
parenthetical titles for the sound recording;
(ii) Featured artist(s); and
(iii) ISRC(s).
(3) As used in paragraph (c)(1) of this section, ``commercially
reasonable efforts to deliver'' shall include:
(i) Periodically monitoring the musical works database for missing
and inaccurate sound recording information relating to applicable
musical works; and
(ii) After finding any of the information listed in paragraph
(c)(2) of this section to be missing or inaccurate as to any applicable
musical work, promptly delivering complete and correct sound recording
information to the mechanical licensing collective, by any means
reasonably available to the copyright owner, if the information is
known to or otherwise within the possession, custody, or control of the
copyright owner.
Sec. 210.27 Reports of usage and payment for blanket licensees.
(a) General. This section prescribes rules for the preparation and
delivery of reports of usage and payment of royalties for the making
and distribution of phonorecords of nondramatic musical works to the
mechanical licensing collective by a digital music provider operating
under a blanket license pursuant to 17 U.S.C. 115(d). A blanket
licensee shall report and pay royalties to the mechanical licensing
collective on a monthly basis in accordance with 17 U.S.C.
115(c)(2)(I), 17 U.S.C. 115(d)(4)(A), and this section. A blanket
licensee shall also report to the mechanical licensing collective on an
annual basis in accordance with 17 U.S.C. 115(c)(2)(I) and this
section. A blanket licensee may make adjustments to its reports of
usage and royalty payments in accordance with this section.
(b) Definitions. For purposes of this section, in addition to those
terms defined in Sec. 210.22:
(1) The term report of usage, unless otherwise specified, refers to
all reports of usage required to be delivered by a blanket licensee to
the mechanical licensing collective under the blanket license,
including reports of adjustment. As used in this section, it does not
refer to reports required to be delivered by significant nonblanket
licensees under 17 U.S.C. 115(d)(6)(A)(ii) and Sec. 210.28.
(2) A monthly report of usage is a report of usage accompanying
monthly royalty payments identified in 17 U.S.C. 115(c)(2)(I) and 17
U.S.C. 115(d)(4)(A), and required to be delivered by a blanket licensee
to the mechanical licensing collective under the blanket license.
(3) An annual report of usage is a statement of account identified
in 17 U.S.C. 115(c)(2)(I), and required to be delivered by a blanket
licensee annually to the mechanical licensing collective under the
blanket license.
(4) A report of adjustment is a report delivered by a blanket
licensee to the mechanical licensing collective under the blanket
license adjusting one or more previously delivered monthly reports of
usage or annual reports of usage, including related royalty payments.
(c) Content of monthly reports of usage. A monthly report of usage
shall be clearly and prominently identified as a ``Monthly Report of
Usage Under Compulsory Blanket License for Making and Distributing
Phonorecords,'' and shall include a clear statement of the following
information:
(1) The period (month and year) covered by the monthly report of
usage.
(2) The full legal name of the blanket licensee and, if different,
the trade or consumer-facing brand name(s) of the service(s), including
any specific offering(s), through which the blanket licensee engages in
covered activities. If the blanket licensee has a unique DDEX
identifier number, it must also be provided.
(3) The full address, including a specific number and street name
or rural route, of the place of business of the blanket licensee. A
post office box or similar designation will not be sufficient except
where it is the only address that can be used in that geographic
location.
(4) For each sound recording embodying a musical work that is used
by the blanket licensee in covered activities during the applicable
monthly reporting period, a detailed statement, from which the
mechanical licensing collective may separate reported information for
each applicable activity or offering including as may be defined in
part 385 of this title, of all of:
(i) The royalty payment and accounting information required by
paragraph (d) of this section; and
(ii) The sound recording and musical work information required by
paragraph (e) of this section.
[[Page 22541]]
(5) For any voluntary license or individual download license in
effect during the applicable monthly reporting period, the information
required under Sec. 210.24(b)(8). If this information has been
separately provided to the mechanical licensing collective, it need not
be contained in the monthly report of usage, provided the report states
that the information has been provided separately and includes the date
on which such information was last provided to the mechanical licensing
collective.
(6) Where the blanket licensee is not entitled to an invoice under
paragraph (g)(1) of this section:
(i) The total royalty payable by the blanket licensee under the
blanket license for the applicable monthly reporting period, computed
in accordance with the requirements of this section and part 385 of
this title, and including detailed information regarding how the
royalty was computed, with such total royalty payable broken down by
each applicable activity or offering including as may be defined in
part 385 of this title; and
(ii) The amount of late fees, if applicable, included in the
payment associated with the monthly report of usage.
(d) Royalty payment and accounting information. The royalty payment
and accounting information called for by paragraph (c)(4)(i) of this
section shall consist of the following:
(1) Calculations. (i) Where the blanket licensee is not entitled to
an invoice under paragraph (g)(1) of this section, a detailed and step-
by-step accounting of the calculation of royalties payable by the
blanket licensee under the blanket license under applicable provisions
of this section and part 385 of this title, sufficient to allow the
mechanical licensing collective to assess the manner in which the
blanket licensee determined the royalty owed and the accuracy of the
royalty calculations, including but not limited to the number of
payable units, including, as applicable, permanent downloads, plays,
and constructive plays, for each reported sound recording, whether
pursuant to a blanket license, voluntary license, or individual
download license.
(ii) Where the blanket licensee is entitled to an invoice under
paragraph (g)(1) of this section, all information necessary for the
mechanical licensing collective to compute, in accordance with the
requirements of this section and part 385 of this title, the royalties
payable by the blanket licensee under the blanket license, and all
information necessary to enable the mechanical licensing collective to
provide a detailed and step-by-step accounting of the calculation of
such royalties under applicable provisions of this section and part 385
of this title, sufficient to allow each applicable copyright owner to
assess the manner in which the mechanical licensing collective, using
the blanket licensee's information, determined the royalty owed and the
accuracy of the royalty calculations, including but not limited to the
number of payable units, including, as applicable, permanent downloads,
plays, and constructive plays, for each reported sound recording,
whether pursuant to a blanket license, voluntary license, or individual
download license.
(2) Estimates. (i) Where computation of the royalties payable by
the blanket licensee under the blanket license depends on an input that
is unable to be finally determined at the time the report of usage is
delivered to the mechanical licensing collective and where the reason
the input cannot be finally determined is outside of the blanket
licensee's control (e.g., as applicable, the amount of applicable
public performance royalties and the amount of applicable consideration
for sound recording copyright rights), a reasonable estimation of such
input, determined in accordance with GAAP, may be used or provided by
the blanket licensee. Royalty payments based on such estimates shall be
adjusted pursuant to paragraph (k) of this section after being finally
determined.
(ii) Where the blanket licensee is not entitled to an invoice under
paragraph (g)(1) of this section, and the blanket licensee is dependent
upon the mechanical licensing collective to confirm usage subject to
applicable voluntary licenses and individual download licenses, the
blanket licensee shall compute the royalties payable by the blanket
licensee under the blanket license using a reasonable estimation of the
amount of payment for such non-blanket usage to be deducted from
royalties that would otherwise be due under the blanket license,
determined in accordance with GAAP. Royalty payments based on such
estimates shall be adjusted pursuant to paragraph (k) of this section
after the mechanical licensing collective confirms such amount to be
deducted and notifies the blanket licensee under paragraph (g)(2) of
this section. Where the blanket licensee is entitled to an invoice
under paragraph (g)(1) of this section, the blanket licensee shall not
provide an estimate of or deduct such amount in the information
delivered to the mechanical licensing collective under paragraph
(d)(1)(ii) of this section.
(3) Good faith. All information and calculations provided pursuant
to paragraph (d) of this section shall be made in good faith and on the
basis of the best knowledge, information, and belief of the blanket
licensee at the time the report of usage is delivered to the mechanical
licensing collective, and subject to any additional accounting and
certification requirements under 17 U.S.C. 115 and this section.
(e) Sound recording and musical work information. (1) The following
information must be provided for each sound recording embodying a
musical work required to be reported under paragraph (c)(4)(ii) of this
section:
(i) Identifying information for the sound recording, including but
not limited to:
(A) Sound recording name(s), including, to the extent practicable,
all known alternative and parenthetical titles for the sound recording;
(B) Featured artist(s);
(C) Unique identifier(s) assigned by the blanket licensee, if any,
including any code(s) that can be used to locate and listen to the
sound recording through the blanket licensee's public-facing service;
(D) Playing time; and
(E) To the extent acquired by the blanket licensee in connection
with its use of sound recordings of musical works to engage in covered
activities, including pursuant to 17 U.S.C. 115(d)(4)(B), and to the
extent practicable:
(1) Sound recording copyright owner(s);
(2) Producer(s);
(3) ISRC(s);
(4) Any other unique identifier(s) for or associated with the sound
recording, including any unique identifier(s) for any associated album,
including but not limited to:
(i) Catalog number(s);
(ii) UPC(s); and
(iii) Unique identifier(s) assigned by any distributor;
(5) Version(s);
(6) Release date(s);
(7) Album title(s);
(8) Label name(s);
(9) Distributor(s); and
(10) Other information commonly used in the industry to identify
sound recordings and match them to the musical works the sound
recordings embody.
(ii) Identifying information for the musical work embodied in the
reported sound recording, to the extent acquired by the blanket
licensee in the metadata provided by sound recording copyright owners
or other licensors of sound recordings in connection with the use of
[[Page 22542]]
sound recordings of musical works to engage in covered activities,
including pursuant to 17 U.S.C. 115(d)(4)(B), and to the extent
practicable:
(A) Information concerning authorship and ownership of the
applicable rights in the musical work embodied in the sound recording,
including but not limited to:
(1) Songwriter(s);
(2) Publisher(s) with applicable U.S. rights;
(3) Musical work copyright owner(s);
(4) ISNI(s) and IPI(s) for each such songwriter, publisher, and
musical work copyright owner; and
(5) Respective ownership shares of each such musical work copyright
owner;
(B) ISWC(s) for the musical work embodied in the sound recording;
and
(C) Musical work name(s) for the musical work embodied in the sound
recording, including any alternative or parenthetical titles for the
musical work.
(iii) Whether the blanket licensee, or any corporate parent or
subsidiary of the blanket licensee, is a copyright owner of the musical
work embodied in the sound recording.
(2) Subject to paragraph (e)(3) of this section, where any of the
information called for by paragraph (e)(1) of this section is acquired
by the blanket licensee from sound recording copyright owners or other
licensors of sound recordings (or their representatives), and the
blanket licensee revises, re-titles, or otherwise edits or modifies the
information, it shall be sufficient for the blanket licensee to report
either the originally acquired version or the modified version of such
information to satisfy its obligations under paragraph (e)(1) of this
section, unless one or more of the following scenarios apply, in which
case either the unaltered version or both versions must be reported:
(i) If the mechanical licensing collective has adopted a particular
nationally or internationally recognized reporting or data standard or
format (e.g., DDEX) that is being used by the particular blanket
licensee, and either the unaltered version or both versions are
required to be reported under such standard or format.
(ii) Either the unaltered version or both versions are reported by
the particular blanket licensee pursuant to any voluntary license or
individual download license.
(iii) Either the unaltered version or both versions were
periodically reported by the particular blanket licensee prior to the
license availability date.
(3) Notwithstanding paragraph (e)(2) of this section, a blanket
licensee shall not be able to satisfy its obligations under paragraph
(e)(1) of this section by reporting a modified version of any
information belonging to a category of information that was not
periodically revised, re-titled, or otherwise edited or modified by the
particular blanket licensee prior to the license availability date, and
in no case shall a modified version of any unique identifier (including
but not limited to ISRC and ISWC), playing time, or release date be
sufficient to satisfy a blanket licensee's obligations under paragraph
(e)(1) of this section.
(4) Any obligation under paragraph (e)(1) of this section
concerning information about sound recording copyright owners may be
satisfied by reporting the information for applicable sound recordings
provided to the blanket licensee by sound recording copyright owners or
other licensors of sound recordings (or their representatives)
contained in each of the following DDEX fields: DDEX Party Identifier
(DPID), LabelName, and PLine. Where a blanket licensee acquires this
information in addition to other information identifying a relevant
sound recording copyright owner, all such information must be reported
to the extent practicable.
(5) As used in paragraph (e) of this section, it is practicable to
provide the enumerated information if:
(i) It belongs to a category of information expressly required by
the enumerated list of information contained in 17 U.S.C.
115(d)(4)(A)(ii)(I)(aa) or (bb);
(ii) Where the mechanical licensing collective has adopted a
particular nationally or internationally recognized reporting or data
standard or format (e.g., DDEX) that is being used by the particular
blanket licensee, it belongs to a category of information required to
be reported under such standard or format;
(iii) It belongs to a category of information that is reported by
the particular blanket licensee pursuant to any voluntary license or
individual download license; or
(iv) It belongs to a category of information that was periodically
reported by the particular blanket licensee prior to the license
availability date.
(f) Content of annual reports of usage. An annual report of usage,
covering the full fiscal year of the blanket licensee, shall be clearly
and prominently identified as an ``Annual Report of Usage Under
Compulsory Blanket License for Making and Distributing Phonorecords,''
and shall include a clear statement of the following information:
(1) The fiscal year covered by the annual report of usage.
(2) The full legal name of the blanket licensee and, if different,
the trade or consumer-facing brand name(s) of the service(s), including
any specific offering(s), through which the blanket licensee engages in
covered activities. If the blanket licensee has a unique DDEX
identifier number, it must also be provided.
(3) The full address, including a specific number and street name
or rural route, of the place of business of the blanket licensee. A
post office box or similar designation will not be sufficient except
where it is the only address that can be used in that geographic
location.
(4) The following information, cumulative for the applicable annual
reporting period, for each month for each applicable activity or
offering including as may be defined in part 385 of this title, and
broken down by month and by each such applicable activity or offering:
(i) The total royalty payable by the blanket licensee under the
blanket license, computed in accordance with the requirements of this
section and part 385 of this title.
(ii) The total sum paid to the mechanical licensing collective
under the blanket license, including the amount of any adjustment
delivered contemporaneously with the annual report of usage.
(iii) The total adjustment(s) made by any report of adjustment
adjusting any monthly report of usage covered by the applicable annual
reporting period, including any adjustment made in connection with the
annual report of usage as described in paragraph (k)(1) of this
section.
(iv) The total number of payable units, including, as applicable,
permanent downloads, plays, and constructive plays, for each sound
recording used, whether pursuant to a blanket license, voluntary
license, or individual download license.
(v) To the extent applicable to the calculation of royalties owed
by the blanket licensee under the blanket license:
(A) Total service provider revenue, as may be defined in part 385
of this title.
(B) Total costs of content, as may be defined in part 385 of this
title.
(C) Total deductions of performance royalties, as may be defined in
and permitted by part 385 of this title.
(D) Total subscribers, as may be defined in part 385 of this title.
(5) The amount of late fees, if applicable, included in any payment
associated with the annual report of usage.
[[Page 22543]]
(g) Processing and timing. (1) Each monthly report of usage and
related royalty payment must be delivered to the mechanical licensing
collective no later than 45 calendar days after the end of the
applicable monthly reporting period. Where a monthly report of usage
satisfying the requirements of 17 U.S.C. 115 and this section is
delivered to the mechanical licensing collective no later than 15
calendar days after the end of the applicable monthly reporting period,
the blanket licensee shall be entitled to receive an invoice from the
mechanical licensing collective setting forth the royalties payable by
the blanket licensee under the blanket license for the applicable
monthly reporting period, which shall be broken down by each applicable
activity or offering including as may be defined in part 385 of this
title.
(2) After receiving a monthly report of usage, the mechanical
licensing collective shall engage in the following actions, among any
other actions required of it:
(i) The mechanical licensing collective shall engage in efforts to
identify the musical works embodied in sound recordings reflected in
such report, and the copyright owners of such musical works (and shares
thereof).
(ii) The mechanical licensing collective shall engage in efforts to
confirm uses of musical works subject to voluntary licenses and
individual download licenses, and, if applicable, the corresponding
amounts to be deducted from royalties that would otherwise be due under
the blanket license.
(iii) Where the blanket licensee is not entitled to an invoice
under paragraph (g)(1) of this section, the mechanical licensing
collective shall engage in efforts to confirm proper payment of the
royalties payable by the blanket licensee under the blanket license for
the applicable monthly reporting period, computed in accordance with
the requirements of this section and part 385 of this title, after
accounting for, if applicable, amounts to be deducted under paragraph
(g)(2)(ii) of this section.
(iv) Where the blanket licensee is entitled to an invoice under
paragraph (g)(1) of this section, the mechanical licensing collective
shall engage in efforts to compute, in accordance with the requirements
of this section and part 385 of this title, the royalties payable by
the blanket licensee under the blanket license for the applicable
monthly reporting period, after accounting for, if applicable, amounts
to be deducted under paragraph (g)(2)(ii) of this section.
(v) Where the blanket licensee is entitled to an invoice under
paragraph (g)(1) of this section, the mechanical licensing collective
shall deliver such invoice to the blanket licensee no later than 40
calendar days after the end of the applicable monthly reporting period.
(vi) The mechanical licensing collective shall deliver a response
file to the blanket licensee if requested by the blanket licensee.
Where the blanket licensee is entitled to an invoice under paragraph
(g)(1) of this section, the mechanical licensing collective shall
deliver the response file to the blanket licensee contemporaneously
with such invoice. Where the blanket licensee is not entitled to an
invoice under paragraph (g)(1) of this section, the mechanical
licensing collective shall deliver the response file to the blanket
licensee no later than 70 calendar days after the end of the applicable
monthly reporting period. In all cases, the response file shall contain
such information as is common in the industry to be reported in
response files, backup files, and any other similar such files provided
to digital music providers by applicable third-party administrators,
and shall include the results of the process described in paragraphs
(g)(2)(i) through (iv) of this section on a track-by-track and
ownership-share basis, with updates to reflect any new results from the
previous month.
(3) Each annual report of usage and, if any, related royalty
payment must be delivered to the mechanical licensing collective no
later than the 20th day of the sixth month following the end of the
fiscal year covered by the annual report of usage.
(4) The required timing for any report of adjustment and, if any,
related royalty payment shall be as follows:
(i) Where a report of adjustment adjusting a monthly report of
usage is not combined with an annual report of usage, as described in
paragraph (k)(1) of this section, a report of adjustment adjusting a
monthly report of usage must be delivered to the mechanical licensing
collective after delivery of the monthly report of usage being adjusted
and before delivery of the annual report of usage for the annual period
covering such monthly report of usage.
(ii) A report of adjustment adjusting an annual report of usage
must be delivered to the mechanical licensing collective no later than
6 months after the occurrence of any of the scenarios specified by
paragraph (k)(6) of this section, where such an event necessitates an
adjustment. Where more than one scenario applies to the same annual
report of usage at different points in time, a separate 6-month period
runs for each such triggering event.
(h) Format and delivery. (1) Reports of usage shall be delivered to
the mechanical licensing collective in a machine-readable format that
is compatible with the information technology systems of the mechanical
licensing collective as reasonably determined by the mechanical
licensing collective and set forth on its website, taking into
consideration relevant industry standards and the potential for
different degrees of sophistication among blanket licensees. The
mechanical licensing collective must offer at least two options, where
one is dedicated to smaller blanket licensees that may not be
reasonably capable of complying with the requirements of a reporting or
data standard or format that the mechanical licensing collective may
see fit to adopt for larger blanket licensees with more sophisticated
operations. Nothing in this section shall be construed as prohibiting
the mechanical licensing collective from adopting more than two
reporting or data standards or formats.
(2) Royalty payments shall be delivered to the mechanical licensing
collective in such manner and form as the mechanical licensing
collective may reasonably determine and set forth on its website. A
report of usage and its related royalty payment may be delivered
together or separately, but if delivered separately, the payment must
include information reasonably sufficient to allow the mechanical
licensing collective to match the report of usage to the payment.
(3) The mechanical licensing collective may modify the requirements
it adopts under paragraphs (h)(1) and (2) of this section at any time,
provided that advance notice of any such change is reflected on its
website and delivered to blanket licensees using the contact
information provided in each respective licensee's notice of license. A
blanket licensee shall not be required to comply with any such change
before the first reporting period ending at least 30 calendar days
after delivery of such notice, unless such change is a significant
change, in which case, compliance shall not be required before the
first reporting period ending at least 6 months after delivery of such
notice. For purposes of this paragraph (h)(3), a significant change
occurs as to a particular blanket licensee where the mechanical
licensing collective changes any policy requiring information to be
provided under particular reporting or data standards or formats being
used by the blanket licensee, or where the mechanical licensing
collective has
[[Page 22544]]
adopted a particular nationally or internationally recognized reporting
or data standard or format (e.g., DDEX) that is being used by the
blanket licensee and such standard or format is modified by the
standard-setting organization. Where delivery of the notice required by
this paragraph (h)(3) is attempted but unsuccessful because the contact
information in the blanket licensee's notice of license is not current,
the grace periods established by this paragraph (h)(3) shall begin to
run from the date of attempted delivery.
(4) The mechanical licensing collective shall, by no later than the
license availability date, establish an appropriate process by which
any blanket licensee may voluntarily make advance deposits of funds
with the mechanical licensing collective against which future royalty
payments may be charged.
(5) A separate monthly report of usage shall be delivered for each
month during which there is any activity relevant to the payment of
mechanical royalties for covered activities. An annual report of usage
shall be delivered for each fiscal year during which at least one
monthly report of usage was required to have been delivered. An annual
report of usage does not replace any monthly report of usage.
(6) Where a blanket licensee attempts to timely deliver a report of
usage and/or related royalty payment to the mechanical licensing
collective but cannot because of the fault of the collective or an
error, outage, disruption, or other issue with any of the collective's
applicable information technology systems (whether or not such issue is
within the collective's direct control), if the blanket licensee
attempts to contact the collective about the problem within 2 business
days, provides a sworn statement detailing the encountered problem to
the Copyright Office within 5 business days (emailed to the Office of
the General Counsel at [email protected]), and delivers
the report of usage and/or related royalty payment to the collective
within 5 business days after receiving written notice from the
collective that the problem is resolved, then the mechanical licensing
collective shall act as follows:
(i) The mechanical licensing collective shall fully credit the
blanket licensee for any applicable late fee paid by the blanket
licensee as a result of the untimely delivery of the report of usage
and/or related royalty payment.
(ii) The mechanical licensing collective shall not use the untimely
delivery of the report of usage and/or related royalty payment as a
basis to terminate the blanket licensee's blanket license.
(i) Certification of monthly reports of usage. Each monthly report
of usage shall be accompanied by:
(1) The name of the person who is signing and certifying the
monthly report of usage.
(2) A signature, which in the case of a blanket licensee that is a
corporation or partnership, shall be the signature of a duly authorized
officer of the corporation or of a partner.
(3) The date of signature and certification.
(4) If the blanket licensee is a corporation or partnership, the
title or official position held in the partnership or corporation by
the person who is signing and certifying the monthly report of usage.
(5) One of the following statements:
(i) Statement one:
I certify that (1) I am duly authorized to sign this monthly
report of usage on behalf of the blanket licensee; (2) I have
examined this monthly report of usage; and (3) all statements of
fact contained herein are true, complete, and correct to the best of
my knowledge, information, and belief, and are made in good faith.
(ii) Statement two:
I certify that (1) I am duly authorized to sign this monthly
report of usage on behalf of the blanket licensee, (2) I have
prepared or supervised the preparation of the data used by the
blanket licensee and/or its agent to generate this monthly report of
usage, (3) such data is true, complete, and correct to the best of
my knowledge, information, and belief, and was prepared in good
faith, and (4) this monthly report of usage was prepared by the
blanket licensee and/or its agent using processes and internal
controls that were subject to an examination, during the past year,
by a licensed certified public accountant in accordance with the
attestation standards established by the American Institute of
Certified Public Accountants, the opinion of whom was that the
processes and internal controls were suitably designed to generate
monthly reports of usage that accurately reflect, in all material
respects, the blanket licensee's usage of musical works, the
statutory royalties applicable thereto, and any other data that is
necessary for the proper calculation of the statutory royalties in
accordance with 17 U.S.C. 115 and applicable regulations.
(6) A certification that the blanket licensee has, for the period
covered by the monthly report of usage, engaged in good-faith,
commercially reasonable efforts to obtain information about applicable
sound recordings and musical works pursuant to 17 U.S.C. 115(d)(4)(B)
and Sec. 210.26.
(j) Certification of annual reports of usage. (1) Each annual
report of usage shall be accompanied by:
(i) The name of the person who is signing the annual report of
usage on behalf of the blanket licensee.
(ii) A signature, which in the case of a blanket licensee that is a
corporation or partnership, shall be the signature of a duly authorized
officer of the corporation or of a partner.
(iii) The date of signature.
(iv) If the blanket licensee is a corporation or partnership, the
title or official position held in the partnership or corporation by
the person signing the annual report of usage.
(v) The following statement: I am duly authorized to sign this
annual report of usage on behalf of the blanket licensee.
(vi) A certification that the blanket licensee has, for the period
covered by the annual report of usage, engaged in good-faith,
commercially reasonable efforts to obtain information about applicable
sound recordings and musical works pursuant to 17 U.S.C. 115(d)(4)(B)
and Sec. 210.26.
(2) Each annual report of usage shall also be certified by a
licensed certified public accountant. Such certification shall comply
with the following requirements:
(i) Except as provided in paragraph (j)(2)(ii) of this section, the
accountant shall certify that it has conducted an examination of the
annual report of usage prepared by the blanket licensee in accordance
with the attestation standards established by the American Institute of
Certified Public Accountants, and has rendered an opinion based on such
examination that the annual report of usage conforms with the standards
in paragraph (j)(2)(iv) of this section.
(ii) If such accountant determines in its professional judgment
that the volume of data attributable to a particular blanket licensee
renders it impracticable to certify the annual report of usage as
required by paragraph (j)(2)(i) of this section, the accountant may
instead certify the following:
(A) That the accountant has conducted an examination in accordance
with the attestation standards established by the American Institute of
Certified Public Accountants of the following assertions by the blanket
licensee's management:
(1) That the processes used by or on behalf of the blanket
licensee, including calculation of statutory royalties, generated
annual reports of usage that conform with the standards in paragraph
(j)(2)(iv) of this section; and
(2) That the internal controls relevant to the processes used by or
on behalf of the blanket licensee to generate annual reports of usage
were suitably designed and operated effectively during the
[[Page 22545]]
period covered by the annual reports of usage.
(B) That such examination included examining, either on a test
basis or otherwise as the accountant considered necessary under the
circumstances and in its professional judgment, evidence supporting the
management assertions in paragraph (j)(2)(ii)(A) of this section,
including data relevant to the calculation of statutory royalties, and
performing such other procedures as the accountant considered necessary
in the circumstances.
(C) That the accountant has rendered an opinion based on such
examination that the processes used to generate the annual report of
usage were designed and operated effectively to generate annual reports
of usage that conform with the standards in paragraph (j)(2)(iv) of
this section, and that the internal controls relevant to the processes
used to generate annual reports of usage were suitably designed and
operated effectively during the period covered by the annual reports of
usage.
(iii) In the event a third party or third parties acting on behalf
of the blanket licensee provided services related to the annual report
of usage, the accountant making a certification under either paragraph
(j)(2)(i) or (ii) of this section may, as the accountant considers
necessary under the circumstances and in its professional judgment,
rely on a report and opinion rendered by a licensed certified public
accountant in accordance with the attestation standards established by
the American Institute of Certified Public Accountants that the
processes and/or internal controls of the third party or third parties
relevant to the generation of the blanket licensee's annual reports of
usage were suitably designed and operated effectively during the period
covered by the annual reports of usage, if such reliance is disclosed
in the certification.
(iv) An annual report of usage conforms with the standards of this
paragraph (j) if it presents fairly, in all material respects, the
blanket licensee's usage of the copyright owner's musical works under
blanket license during the period covered by the annual report of
usage, the statutory royalties applicable thereto, and such other data
as are relevant to the calculation of statutory royalties in accordance
with 17 U.S.C. 115 and applicable regulations.
(v) Each certificate shall be signed by an individual, or in the
name of a partnership or a professional corporation with two or more
shareholders. The certificate number and jurisdiction are not required
if the certificate is signed in the name of a partnership or a
professional corporation with two or more shareholders.
(3) If the annual report of usage is delivered electronically, the
blanket licensee may deliver an electronic facsimile of the original
certification of the annual report of usage signed by the licensed
certified public accountant. The blanket licensee shall retain the
original certification of the annual report of usage signed by the
licensed certified public accountant for the period identified in
paragraph (m) of this section, which shall be made available to the
mechanical licensing collective upon demand.
(k) Adjustments. (1) A blanket licensee may adjust one or more
previously delivered monthly reports of usage or annual reports of
usage, including related royalty payments, by delivering to the
mechanical licensing collective a report of adjustment. A report of
adjustment adjusting one or more monthly reports of usage may, but need
not, be combined with the annual report of usage for the annual period
covering such monthly reports of usage and related payments. In such
cases, such an annual report of usage shall also be considered a report
of adjustment, and must satisfy the requirements of both paragraphs (f)
and (k) of this section.
(2) A report of adjustment, except when combined with an annual
report of usage, shall be clearly and prominently identified as a
``Report of Adjustment Under Compulsory Blanket License for Making and
Distributing Phonorecords.'' A report of adjustment that is combined
with an annual report of usage shall be identified in the same manner
as any other annual report of usage.
(3) A report of adjustment shall include a clear statement of the
following information:
(i) The previously delivered monthly reports of usage or annual
reports of usage, including related royalty payments, to which the
adjustment applies.
(ii) The specific change(s) to the applicable previously delivered
monthly reports of usage or annual reports of usage, including the
monetary amount of the adjustment and a detailed description of any
changes to any of the inputs upon which computation of the royalties
payable by the blanket licensee under the blanket license depends. Such
description shall include a detailed and step-by-step accounting of the
calculation of the adjustment sufficient to allow the mechanical
licensing collective to assess the manner in which the blanket licensee
determined the adjustment and the accuracy of the adjustment. As
appropriate, an adjustment may be calculated using estimates permitted
under paragraph (d)(2)(i) of this section.
(iii) Where applicable, the particular sound recordings and uses to
which the adjustment applies.
(iv) A description of the reason(s) for the adjustment.
(4) In the case of an underpayment of royalties, the blanket
licensee shall pay the difference to the mechanical licensing
collective contemporaneously with delivery of the report of adjustment.
A report of adjustment and its related royalty payment may be delivered
together or separately, but if delivered separately, the payment must
include information reasonably sufficient to allow the mechanical
licensing collective to match the report of adjustment to the payment.
(5) In the case of an overpayment of royalties, the mechanical
licensing collective shall appropriately credit or offset the excess
payment amount and apply it to the blanket licensee's account.
(6) A report of adjustment adjusting an annual report of usage may
only be made:
(i) In exceptional circumstances;
(ii) When making an adjustment to a previously estimated input
under paragraph (d)(2)(i) of this section;
(iii) Following an audit under 17 U.S.C. 115(d)(4)(D); or
(iv) In response to a change in applicable rates or terms under
part 385 of this title.
(7) A report of adjustment adjusting a monthly report of usage must
be certified in the same manner as a monthly report of usage under
paragraph (i) of this section. A report of adjustment adjusting an
annual report of usage must be certified in the same manner as an
annual report of usage under paragraph (j) of this section, except that
the examination by a certified public accountant under paragraph (j)(2)
of this section may be limited to the adjusted material and related
recalculation of royalties payable. Where a report of adjustment is
combined with an annual report of usage, its content shall be subject
to the certification covering the annual report of usage with which it
is combined.
(l) Clear statements. The information required by this section
requires intelligible, legible, and unambiguous statements in the
reports of usage, without incorporation by reference of facts or
information contained in other documents or records.
(m) Documentation and records of use. (1) Each blanket licensee
shall, for
[[Page 22546]]
a period of at least five years from the date of delivery of a report
of usage to the mechanical licensing collective, keep and retain in its
possession all records and documents necessary and appropriate to
support fully the information set forth in such report of usage,
including but not limited to the following:
(i) Records and documents accounting for digital phonorecord
deliveries that do not constitute plays, constructive plays, or other
payable units.
(ii) Records and documents pertaining to any promotional or free
trial uses that are required to be maintained under applicable
provisions of part 385 of this title.
(iii) Records and documents identifying or describing each of the
blanket licensee's applicable activities or offerings including as may
be defined in part 385 of this title, including information sufficient
to reasonably demonstrate whether the activity or offering qualifies as
any particular activity or offering for which specific rates and terms
have been established in part 385 of this title, and which specific
rates and terms apply to such activity or offering.
(iv) Records and documents with information sufficient to
reasonably demonstrate, if applicable, whether service revenue and
total cost of content, as those terms may be defined in part 385 of
this title, are properly calculated in accordance with part 385 of this
title.
(v) Records and documents with information sufficient to reasonably
demonstrate whether and how any royalty floor established in part 385
of this title does or does not apply.
(vi) Records and documents containing such other information as is
necessary to reasonably support and confirm all usage and calculations
contained in the report of usage, including but not limited to, as
applicable, relevant information concerning subscriptions, devices and
platforms, discount plans (including how eligibility was assessed),
bundled offerings (including their constituent components and pricing
information), and numbers of end users and subscribers (including
unadjusted numbers and numbers adjusted as may be permitted by part 385
of this title).
(vii) Any other records or documents that may be appropriately
examined pursuant to an audit under 17 U.S.C. 115(d)(4)(D).
(2) Each blanket licensee shall, for the period described in
paragraph (m)(3) of this section, keep and retain in its possession the
following additional records and documents:
(i) With respect to each sound recording, that embodies a musical
work, first licensed or obtained for use in covered activities by the
blanket licensee after the effective date of its blanket license, one
or more of the following dates:
(A) The date on which the sound recording is first reproduced by
the blanket licensee on its server;
(B) The date on which the blanket licensee first obtains the sound
recording; or
(C) The date of the grant first authorizing the blanket licensee's
use of the sound recording.
(ii) A record of all sound recordings embodying musical works in
its database or similar electronic system as of immediately prior to
the effective date of its blanket license.
(3) The records and documents described in paragraph (m)(2) of this
section must be kept and retained for a period of at least five years
from the relevant date described in paragraph (m)(2) of this section,
provided that at least 90 calendar days before destroying or discarding
any such records or documents the blanket licensee notifies the
mechanical licensing collective in writing and provides an opportunity
for the collective to claim and retrieve such records and documents. In
no event shall a blanket licensee be required to keep and retain any
such records or documents for more than 50 years.
(4) The mechanical licensing collective or its agent shall be
entitled to reasonable access to all records and documents described in
this paragraph (m) upon reasonable request, subject to any applicable
confidentiality rules established by the Copyright Office. Each report
of usage must include clear instructions on how to request such access
to such records and documents.
(n) Voluntary agreements with mechanical licensing collective to
alter process. Subject to the provisions of 17 U.S.C. 115, a blanket
licensee and the mechanical licensing collective may agree to vary or
supplement the procedures described in this section, including but not
limited to pursuant to an agreement to administer a voluntary license,
provided that any such change does not materially prejudice copyright
owners owed royalties due under a blanket license. The procedures
surrounding the certification requirements of paragraphs (i) and (j) of
this section may not be altered by agreement.
Sec. 210.28 Reports of usage for significant nonblanket licensees.
(a) General. This section prescribes rules for the preparation and
delivery of reports of usage for the making and distribution of
phonorecords of nondramatic musical works to the mechanical licensing
collective by a significant nonblanket licensee pursuant to 17 U.S.C.
115(d)(6)(A)(ii). A significant nonblanket licensee shall report to the
mechanical licensing collective on a monthly basis in accordance with
17 U.S.C. 115(d)(6)(A)(ii) and this section. A significant nonblanket
licensee may make adjustments to its reports of usage in accordance
with this section.
(b) Definitions. For purposes of this section, in addition to those
terms defined in Sec. 210.22:
(1) The term report of usage, unless otherwise specified, refers to
all reports of usage required to be delivered by a significant
nonblanket licensee to the mechanical licensing collective, including
reports of adjustment. As used in this section, it does not refer to
reports required to be delivered by blanket licensees under 17 U.S.C.
115(d)(4)(A) and Sec. 210.27.
(2) A monthly report of usage is a report of usage identified in 17
U.S.C. 115(d)(6)(A)(ii), and required to be delivered by a significant
nonblanket licensee to the mechanical licensing collective.
(3) A report of adjustment is a report delivered by a significant
nonblanket licensee to the mechanical licensing collective adjusting
one or more previously delivered monthly reports of usage.
(c) Content of monthly reports of usage. A monthly report of usage
shall be clearly and prominently identified as a ``Significant
Nonblanket Licensee Monthly Report of Usage for Making and Distributing
Phonorecords,'' and shall include a clear statement of the following
information:
(1) The period (month and year) covered by the monthly report of
usage.
(2) The full legal name of the significant nonblanket licensee and,
if different, the trade or consumer-facing brand name(s) of the
service(s), including any specific offering(s), through which the
significant nonblanket licensee engages in covered activities. If the
significant nonblanket licensee has a unique DDEX identifier number, it
must also be provided.
(3) The full address, including a specific number and street name
or rural route, of the place of business of the significant nonblanket
licensee. A post office box or similar designation will not be
sufficient except where it is the only address that can be used in that
geographic location.
(4) For each sound recording embodying a musical work that is used
[[Page 22547]]
by the significant nonblanket licensee in covered activities during the
applicable monthly reporting period, a detailed statement, from which
the mechanical licensing collective may separate reported information
for each applicable activity or offering including as may be defined in
part 385 of this title, of all of:
(i) The royalty payment and accounting information required by
paragraph (d) of this section; and
(ii) The sound recording and musical work information required by
paragraph (e) of this section.
(5) For each voluntary license and individual download license in
effect during the applicable monthly reporting period, the information
required under Sec. 210.24(b)(8). If this information has been
separately provided to the mechanical licensing collective, it need not
be contained in the monthly report of usage, provided the report states
that the information has been provided separately and includes the date
on which such information was last provided to the mechanical licensing
collective.
(d) Royalty payment and accounting information. The royalty payment
and accounting information called for by paragraph (c)(4)(i) of this
section shall consist of the following:
(1) The mechanical royalties payable by the significant nonblanket
licensee for the applicable monthly reporting period for engaging in
covered activities pursuant to each applicable voluntary license and
individual download license.
(2) The number of payable units, including, as applicable,
permanent downloads, plays, and constructive plays, for each reported
sound recording.
(e) Sound recording and musical work information. (1) The following
information must be provided for each sound recording embodying a
musical work required to be reported under paragraph (c)(4)(ii) of this
section:
(i) Identifying information for the sound recording, including but
not limited to:
(A) Sound recording name(s), including, to the extent practicable,
all known alternative and parenthetical titles for the sound recording;
(B) Featured artist(s);
(C) Unique identifier(s) assigned by the significant nonblanket
licensee, if any, including any code(s) that can be used to locate and
listen to the sound recording through the significant nonblanket
licensee's public-facing service;
(D) Playing time; and
(E) To the extent acquired by the significant nonblanket licensee
in connection with its use of sound recordings of musical works to
engage in covered activities, and to the extent practicable:
(1) Sound recording copyright owner(s);
(2) Producer(s);
(3) ISRC(s);
(4) Any other unique identifier(s) for or associated with the sound
recording, including any unique identifier(s) for any associated album,
including but not limited to:
(i) Catalog number(s);
(ii) UPC(s); and
(iii) Unique identifier(s) assigned by any distributor;
(5) Version(s);
(6) Release date(s);
(7) Album title(s);
(8) Label name(s);
(9) Distributor(s); and
(10) Other information commonly used in the industry to identify
sound recordings and match them to the musical works the sound
recordings embody.
(ii) Identifying information for the musical work embodied in the
reported sound recording, to the extent acquired by the significant
nonblanket licensee 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, and to the extent practicable:
(A) Information concerning authorship and ownership of the
applicable rights in the musical work embodied in the sound recording,
including but not limited to:
(1) Songwriter(s);
(2) Publisher(s) with applicable U.S. rights;
(3) Musical work copyright owner(s);
(4) ISNI(s) and IPI(s) for each such songwriter, publisher, and
musical work copyright owner; and
(5) Respective ownership shares of each such musical work copyright
owner;
(B) ISWC(s) for the musical work embodied in the sound recording;
and
(C) Musical work name(s) for the musical work embodied in the sound
recording, including any alternative or parenthetical titles for the
musical work.
(iii) Whether the significant nonblanket licensee, or any corporate
parent or subsidiary of the significant nonblanket licensee, is a
copyright owner of the musical work embodied in the sound recording.
(2) Subject to paragraph (e)(3) of this section, where any of the
information called for by paragraph (e)(1) of this section is acquired
by the significant nonblanket licensee from sound recording copyright
owners or other licensors of sound recordings (or their
representatives), and the significant nonblanket licensee revises, re-
titles, or otherwise edits or modifies the information, it shall be
sufficient for the significant nonblanket licensee to report either the
originally acquired version or the modified version of such information
to satisfy its obligations under paragraph (e)(1) of this section,
unless one or more of the following scenarios apply, in which case
either the unaltered version or both versions must be reported:
(i) If the mechanical licensing collective has adopted a particular
nationally or internationally recognized reporting or data standard or
format (e.g., DDEX) that is being used by the particular significant
nonblanket licensee, and either the unaltered version or both versions
are required to be reported under such standard or format.
(ii) Either the unaltered version or both versions are reported by
the particular significant nonblanket licensee pursuant to any
voluntary license or individual download license.
(iii) Either the unaltered version or both versions were
periodically reported by the particular significant nonblanket licensee
prior to the license availability date.
(3) Notwithstanding paragraph (e)(2) of this section, a significant
nonblanket licensee shall not be able to satisfy its obligations under
paragraph (e)(1) of this section by reporting a modified version of any
information belonging to a category of information that was not
periodically revised, re-titled, or otherwise edited or modified by the
particular significant nonblanket licensee prior to the license
availability date, and in no case shall a modified version of any
unique identifier (including but not limited to ISRC and ISWC), playing
time, or release date be sufficient to satisfy a significant nonblanket
licensee's obligations under paragraph (e)(1) of this section.
(4) Any obligation under paragraph (e)(1) of this section
concerning information about sound recording copyright owners may be
satisfied by reporting the information for applicable sound recordings
provided to the significant nonblanket licensee by sound recording
copyright owners or other licensors of sound recordings (or their
representatives) contained in each of the following DDEX fields: DDEX
Party Identifier (DPID), LabelName, and PLine. Where a significant
nonblanket licensee acquires this information in addition to other
information
[[Page 22548]]
identifying a relevant sound recording copyright owner, all such
information must be reported to the extent practicable.
(5) As used in paragraph (e) of this section, it is practicable to
provide the enumerated information if:
(i) It belongs to a category of information expressly required by
the enumerated list of information contained in 17 U.S.C.
115(d)(4)(A)(ii)(I)(aa) or (bb);
(ii) Where the mechanical licensing collective has adopted a
particular nationally or internationally recognized reporting or data
standard or format (e.g., DDEX) that is being used by the particular
significant nonblanket licensee, it belongs to a category of
information required to be reported under such standard or format;
(iii) It belongs to a category of information that is reported by
the particular significant nonblanket licensee pursuant to any
voluntary license or individual download license; or
(iv) It belongs to a category of information that was periodically
reported by the particular significant nonblanket licensee prior to the
license availability date.
(f) Timing. (1) An initial report of usage must be delivered to the
mechanical licensing collective contemporaneously with the significant
nonblanket licensee's notice of nonblanket activity. Each subsequent
monthly report of usage must be delivered to the mechanical licensing
collective no later than 45 calendar days after the end of the
applicable monthly reporting period.
(2) A report of adjustment may only be delivered to the mechanical
licensing collective once annually, between the end of the significant
nonblanket licensee's fiscal year and 6 months after the end of its
fiscal year. Such report may only adjust one or more previously
delivered monthly reports of usage from the applicable fiscal year.
(g) Format and delivery. (1) Reports of usage shall be delivered to
the mechanical licensing collective in any format accepted by the
mechanical licensing collective for blanket licensees under Sec.
210.27(h). With respect to any modifications to formatting requirements
that the mechanical licensing collective adopts, significant nonblanket
licensees shall be entitled to the same advance notice and grace
periods as apply to blanket licensees under Sec. 210.27(h), except the
mechanical licensing collective shall use the contact information
provided in each respective significant nonblanket licensee's notice of
nonblanket activity.
(2) A separate monthly report of usage shall be delivered for each
month during which there is any activity relevant to the payment of
mechanical royalties for covered activities.
(3) Where a significant nonblanket licensee attempts to timely
deliver a report of usage to the mechanical licensing collective but
cannot because of the fault of the collective or an error, outage,
disruption, or other issue with any of the collective's applicable
information technology systems (whether or not such issue is within the
collective's direct control), if the significant nonblanket licensee
attempts to contact the collective about the problem within 2 business
days, provides a sworn statement detailing the encountered problem to
the Copyright Office within 5 business days (emailed to the Office of
the General Counsel at [email protected]), and delivers
the report of usage to the collective within 5 business days after
receiving written notice from the collective that the problem is
resolved, then neither the mechanical licensing collective nor the
digital licensee coordinator may use the untimely delivery of the
report of usage as a basis to engage in legal enforcement efforts under
17 U.S.C. 115(d)(6)(C).
(h) Certification of monthly reports of usage. Each monthly report
of usage shall be accompanied by:
(1) The name of the person who is signing and certifying the
monthly report of usage.
(2) A signature, which in the case of a significant nonblanket
licensee that is a corporation or partnership, shall be the signature
of a duly authorized officer of the corporation or of a partner.
(3) The date of signature and certification.
(4) If the significant nonblanket licensee is a corporation or
partnership, the title or official position held in the partnership or
corporation by the person who is signing and certifying the monthly
report of usage.
(5) One of the following statements:
(i) Statement one:
I certify that (1) I am duly authorized to sign this monthly
report of usage on behalf of the significant nonblanket licensee;
(2) I have examined this monthly report of usage; and (3) all
statements of fact contained herein are true, complete, and correct
to the best of my knowledge, information, and belief, and are made
in good faith.
(ii) Statement two:
I certify that (1) I am duly authorized to sign this monthly
report of usage on behalf of the significant nonblanket licensee,
(2) I have prepared or supervised the preparation of the data used
by the significant nonblanket licensee and/or its agent to generate
this monthly report of usage, (3) such data is true, complete, and
correct to the best of my knowledge, information, and belief, and
was prepared in good faith, and (4) this monthly report of usage was
prepared by the significant nonblanket licensee and/or its agent
using processes and internal controls that were subject to an
examination, during the past year, by a licensed certified public
accountant in accordance with the attestation standards established
by the American Institute of Certified Public Accountants, the
opinion of whom was that the processes and internal controls were
suitably designed to generate monthly reports of usage that
accurately reflect, in all material respects, the significant
nonblanket licensee's usage of musical works and the royalties
applicable thereto.
(i) Adjustments. (1) A significant nonblanket licensee may adjust
one or more previously delivered monthly reports of usage by delivering
to the mechanical licensing collective a report of adjustment.
(2) A report of adjustment shall be clearly and prominently
identified as a ``Significant Nonblanket Licensee Report of Adjustment
for Making and Distributing Phonorecords.''
(3) A report of adjustment shall include a clear statement of the
following information:
(i) The previously delivered monthly report(s) of usage to which
the adjustment applies.
(ii) The specific change(s) to the applicable previously delivered
monthly report(s) of usage.
(iii) Where applicable, the particular sound recordings and uses to
which the adjustment applies.
(iv) A description of the reason(s) for the adjustment.
(4) A report of adjustment must be certified in the same manner as
a monthly report of usage under paragraph (h) of this section.
(j) Clear statements. The information required by this section
requires intelligible, legible, and unambiguous statements in the
reports of usage, without incorporation by reference of facts or
information contained in other documents or records.
(k) Harmless errors. Errors in the delivery or content of a report
of usage that do not materially affect the adequacy of the information
required to serve the purpose of 17 U.S.C. 115(d) shall be deemed
harmless, and shall not render the report invalid or provide a basis
for the mechanical licensing collective or digital licensee coordinator
to engage in legal enforcement efforts under 17 U.S.C. 115(d)(6)(C).
This paragraph (k) shall apply only to errors made in good faith and
without any intention to deceive, mislead, or conceal relevant
information.
[[Page 22549]]
(l) Voluntary agreements with mechanical licensing collective to
alter process. Subject to the provisions of 17 U.S.C. 115, a
significant nonblanket licensee and the mechanical licensing collective
may agree to vary or supplement the procedures described in this
section, including but not limited to pursuant to an agreement to
administer a voluntary license, provided that any such change does not
materially prejudice copyright owners owed royalties due under a
blanket license. The procedures surrounding the certification
requirements of paragraph (h) of this section may not be altered by
agreement.
Dated: April 15, 2020.
Regan A. Smith,
General Counsel and Associate Register of Copyrights.
[FR Doc. 2020-08379 Filed 4-17-20; 4:15 pm]
BILLING CODE 1410-30-P
