83 FR 63061 - Notices of Intention and Statements of Account Under Compulsory License To Make and Distribute Phonorecords of Musical Works

LIBRARY OF CONGRESS
Copyright Office

Federal Register Volume 83, Issue 235 (December 7, 2018)

The U.S. Copyright Office is issuing interim regulations pursuant to the Musical Works Modernization Act, title I of the recently enacted Orrin G. Hatch-Bob Goodlatte Music Modernization Act. This interim rule amends the Office's existing regulations pertaining to the compulsory license to make and distribute phonorecords of musical works so as to conform the existing regulations to the new law, including with respect to the operation of notices of intention and statements of account, and to make other minor technical updates. To be clear, this interim rule is generally directed at the present transition period before a blanket license is offered by a mechanical licensing collective and does not include regulatory updates that may be required in connection with the future offering of that blanket license; such updates will be the subject of future rulemakings. These regulations are issued on an interim basis with opportunity for public comment to avoid delay in making these necessary updates and clarifications and because they are technical in nature. The Office welcomes comment on these interim regulations.

[Federal Register Volume 83, Number 235 (Friday, December 7, 2018)]
[Rules and Regulations]
[Pages 63061-63066]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-26579]


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LIBRARY OF CONGRESS

Copyright Office

37 CFR Parts 201, 203, and 210

[Docket No. 2018-10]


Notices of Intention and Statements of Account Under Compulsory 
License To Make and Distribute Phonorecords of Musical Works

AGENCY: U.S. Copyright Office, Library of Congress.

ACTION: Interim rule with request for comments.

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SUMMARY: The U.S. Copyright Office is issuing interim regulations 
pursuant to the Musical Works Modernization Act, title I of the 
recently enacted Orrin G. Hatch-Bob Goodlatte Music Modernization Act. 
This interim rule amends the Office's existing regulations pertaining 
to the compulsory license to make and distribute phonorecords of 
musical works so as to conform the existing regulations to the new law, 
including with respect to the operation of notices of intention and 
statements of account, and to make other minor technical updates. To be 
clear, this interim rule is generally directed at the present 
transition period before a blanket license is offered by a mechanical 
licensing collective and does not include regulatory updates that may 
be required in connection with the future offering of that blanket 
license; such updates will be the subject of future rulemakings. These 
regulations are issued on an interim basis with opportunity for public 
comment to avoid delay in making these necessary updates and 
clarifications and because they are technical in nature. The Office 
welcomes comment on these interim regulations.

DATES: The effective date of the interim regulations is December 7, 
2018. Written comments must be received no later than 11:59 p.m. 
Eastern Time on January 22, 2019.

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-115-techamend/. 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], 
Steve Ruwe, Assistant General Counsel, 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

    On October 11, 2018, the president signed into law the Orrin G. 
Hatch-Bob

[[Page 63062]]

Goodlatte Music Modernization Act (``MMA'').\1\ This bipartisan and 
unanimously enacted legislation represents the realization of years of 
effort by a wide array of policymakers and stakeholders, as well as the 
U.S. Copyright Office, to update the music licensing landscape to 
better facilitate legal licensing of music by digital services.\2\
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    \1\ Public Law 115-264, 132 Stat. 3676 (2018).
    \2\ See S. Rep. No. 115-339, at 1-2 (2018); Report and Section-
by-Section Analysis of H.R. 1551 by the Chairmen and Ranking Members 
of Senate and House Judiciary Committees, at 1 (2018), https://judiciary.house.gov/wp-content/uploads/2018/04/Music-Modernization-Act.pdf; see also H.R. Rep. No. 115-651, at 2-3 (2018) (detailing 
the House Judiciary Committee's efforts to review music copyright 
laws).
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    Title I of the MMA, the Musical Works Modernization Act, 
substantially modifies the compulsory ``mechanical'' license for making 
and distributing phonorecords of nondramatic musical works available 
under 17 U.S.C. 115. Prior to the MMA, a compulsory license was 
obtained by licensees on a per-work, song-by-song basis, whereby a 
licensee was required to serve a notice of intention to obtain a 
compulsory license (``NOI'') on the relevant copyright owner (or file 
the NOI with the Copyright Office if the Office's public records did 
not identify the copyright owner and include an address at which notice 
could be served) and then pay applicable royalties accompanied by 
accounting statements.\3\
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    \3\ See 17 U.S.C. 115(b)(1), (c)(5) (2017); U.S. Copyright 
Office, Copyright and the Music Marketplace 28-31 (2015), https://www.copyright.gov/policy/musiclicensingstudy/copyright-and-the-music-marketplace.pdf (describing operation of prior section 115 
license).
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    The MMA amends this regime in multiple ways, most significantly by 
establishing a new blanket compulsory license that digital music 
providers may obtain to make digital phonorecord deliveries (``DPDs'') 
of musical works, including in the form of permanent downloads, limited 
downloads, or interactive streams.\4\ Instead of licensing one song at 
a time by serving NOIs on individual copyright owners, the blanket 
license will cover all musical works available for compulsory licensing 
and will be centrally administered by a new entity called the 
mechanical licensing collective (``MLC''), to be designated by the 
Register of Copyrights.\5\ Under the MMA, compulsory licensing of 
phonorecords that are not DPDs (e.g., CDs, vinyl, tapes, and other 
types of physical phonorecords) continues to operate on a per-work, 
song-by-song basis, the same as before.\6\
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    \4\ 17 U.S.C. 115(d)(1), (e)(7); see H.R. Rep. No. 115-651, at 
4-6 (describing operation of the blanket license and the new 
mechanical licensing collective); S. Rep. No. 115-339, at 3-6 
(same).
    \5\ 17 U.S.C. 115(d)(1), (3).
    \6\ Id. 115(b)(1); see H.R. Rep. No. 115-651, at 3 (noting 
``[t]his is the historical method by which record labels have 
obtained compulsory licenses''); S. Rep. No. 115-339, at 3 (same); 
see also U.S. Copyright Office, Orrin G. Hatch-Bob Goodlatte Music 
Modernization Act, https://www.copyright.gov/music-modernization/.
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    The new blanket license created by the MMA will not become 
available until the license availability date, which is January 1 
following the expiration of the 2-year period after the enactment date, 
or January 1, 2021.\7\ Until that time, the MMA ``creates a transition 
period in order to move from the current work-by-work license to the 
new blanket license.'' \8\ During this current transition period, 
anyone seeking to obtain a compulsory license to make DPDs must 
continue to do so on a song-by-song basis by serving NOIs on copyright 
owners ``if the identity and location of the musical work copyright 
owner is known,'' and paying them applicable royalties accompanied by 
statements of account.\9\ If the musical work copyright owner is 
unknown, a digital music provider may no longer file a NOI with the 
Copyright Office, but must ``continue[] to search for the musical work 
copyright owner'' using good-faith, commercially reasonable 
efforts.\10\ The digital music provider must eventually either account 
for and pay accrued royalties to the relevant musical work copyright 
owner(s) when found or, if they are not found before the end of the 
transition period, account for and transfer the royalties to the MLC at 
that time.\11\ A digital music provider complying with these 
requirements can avail itself of a limitation on liability for making 
an unauthorized DPD to the royalties that would be due under the 
compulsory license.\12\
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    \7\ 17 U.S.C. 115(d)(2)(B), (e)(15).
    \8\ H.R. Rep. No. 115-651, at 10; S. Rep. No. 115-339, at 10.
    \9\ 17 U.S.C. 115(b)(2)(A), (c)(2)(I); H.R. Rep. No. 115-651, at 
4; S. Rep. No. 115-339, at 3.
    \10\ 17 U.S.C. 115(b)(2)(A), (d)(9)(D)(i), (d)(10)(A)-(B); H.R. 
Rep. No. 115-651, at 4, 10; S. Rep. No. 115-339, at 3, 10, 22.
    \11\ 17 U.S.C. 115(d)(10)(B); see H.R. Rep. No. 115-651, at 4, 
10; S. Rep. No. 115-339, at 3, 10.
    \12\ 17 U.S.C. 115(d)(10)(A)-(B); see H.R. Rep. No. 115-651, at 
4, 10; S. Rep. No. 115-339, at 3, 10.
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    On and after the license availability date, a compulsory license to 
make DPDs will generally only be available through the new blanket 
license, subject to a limited exception for record companies to 
continue using the song-by-song licensing process to make and 
distribute, or authorize the making and distribution of, permanent 
downloads embodying a specific individual musical work (called an 
``individual download license'').\13\ As the legislative history notes, 
the MMA ``maintains the `pass-through' license for record labels to 
obtain and pass through mechanical license rights for individual 
permanent downloads,'' but eliminates the pass-through license for 
digital music providers ``to engage in activities related to 
interactive streams or limited downloads.'' \14\
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    \13\ 17 U.S.C. 115(b)(2)(B), (b)(3), (e)(12); see H.R. Rep. No. 
115-651, at 4; S. Rep. No. 115-339, at 3-4.
    \14\ H.R. Rep. No. 115-651, at 4; S. Rep. No. 115-339, at 4.
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II. Interim Rule

    The Office promulgates the following interim rule to make technical 
amendments to its existing section 115-related regulations to harmonize 
them with the MMA's requirements, and to make other minor technical 
updates. These amendments largely fall into two categories: Those 
affecting NOIs and those affecting statements of account.\15\ The 
Office declines at this time to substantively amend the existing 
regulations beyond the statutorily required updates. The intent of the 
legislation does not signal to the Office that it should be overhauling 
its existing regulations during the transition period before the 
blanket license becomes available; such changes could alter private 
companies' long-established business practices and expectations with 
respect to NOIs and royalty statements during the transition period 
beyond what the statute requires. Having said that, the Office welcomes 
public comment on these amendments and any other specific technical 
amendments that stakeholders would like the Office to consider.
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    \15\ This interim rule also makes minor technical changes to 
other provisions relating to section 115, such as updating the 
description of the Office's Licensing Division in its FOIA-related 
regulations. The Office is also taking this opportunity to make an 
additional technical update to its FOIA-related regulations to 
reflect the Office's current organizational structure.
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A. Notices of Intention

    Under the interim rule, 37 CFR 201.18 is primarily updated to 
implement 17 U.S.C. 115(b), as amended by the MMA. As outlined above, 
as of enactment of the MMA on October 11, 2018: (1) NOIs pertaining to 
phonorecords that are not DPDs (i.e., physical phonorecords such as 
CDs, vinyl, or tapes) may still be served on copyright owners or, if 
the registration or other public records of the Copyright Office do not 
identify the copyright owner and include an address at which the NOI 
can be served, filed with the Copyright Office, the same as

[[Page 63063]]

before enactment of the MMA; (2) NOIs pertaining to DPDs (e.g., 
permanent downloads, limited downloads, or interactive streams) may 
still be served on copyright owners until the license availability 
date, but not afterward, except in the case of a record company seeking 
an individual download license; and (3) NOIs pertaining to DPDs can no 
longer be filed with the Copyright Office under any circumstances.\16\ 
The definition of ``digital phonorecord delivery'' is also updated in 
the regulation to match the amended definition in the MMA.
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    \16\ 17 U.S.C. 115(b), (d)(9)(D)(i).
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    Under the interim rule, the Office is not making any changes to the 
form, content, or manner of service for NOIs. In addition to the 
conforming amendments necessitated by the MMA, the Office is taking 
this opportunity to make two minor clarifying technical updates. First, 
the regulations previously stated that the Office does not provide 
forms to use for serving or filing NOIs, but since 2016, the Office has 
had a required form that must be used to file NOIs electronically with 
the Office.\17\ The interim rule acknowledges this electronic form. 
Second, the interim rule clarifies the Office's current practice, as 
detailed in a 2017 policy statement, of charging a filing fee for so-
called ``returned-to-sender NOIs'' \18\ submitted to the Office.\19\ Of 
course, both of these updates only apply to NOIs pertaining to 
phonorecords that are not DPDs.
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    \17\ See Section 115 NOIs May Now Be Filed With Office In Bulk 
Electronic Form, U.S. Copyright Office NewsNet No. 618 (Apr. 13, 
2016), https://www.copyright.gov/newsnet/2016/618.html.
    \18\ A ``returned-to-sender NOI'' is one that is sent to the 
last address for the copyright owner shown by the Office's records, 
but that is returned to the sender because the copyright owner is no 
longer located at that address or refused to accept delivery. In 
such cases, the original NOI can be filed with the Office. See 37 
CFR 201.18(f)(2).
    \19\ See 82 FR 52221, 52223 (Nov. 13, 2017).
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B. Statements of Account

    Under the interim rule, the Office is not making any amendments to 
the form, content, or manner of service for monthly or annual 
statements of account under subpart B of part 210 of the Office's 
regulations. But the interim rule clarifies that on and after the 
license availability date, these regulations will not apply to any DPDs 
made under a compulsory license, unless they are made by a record 
company under an individual download license.\20\ This means that the 
regulations will not apply to digital music providers reporting and 
paying royalties under a blanket license (such activity will be the 
subject of a separate, future rulemaking).\21\
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    \20\ See 17 U.S.C. 115(b)(3).
    \21\ See id. 115(d)(4)(A)(i).
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    The interim rule also details the requirements for digital music 
providers to report and pay royalties regarding previously unmatched 
works for purposes of eligibility for the limitation on liability for 
making unauthorized DPDs during the transition period before the 
blanket license becomes available. As noted, once a digital music 
provider has identified and located a musical work copyright owner, the 
statute requires the provider to pay the copyright owner all accrued 
royalties accompanied by a cumulative statement of account that 
includes all of the information that would have been provided in 
monthly statements of account from the initial use of the work, had the 
copyright owner been previously identified and located.\22\ If the 
digital music provider has not located the musical work copyright owner 
by the license availability date, the accrued royalties and cumulative 
statement must be provided to the MLC.\23\ The interim regulations 
follow the statute, specifying that the digital music provider must pay 
royalties and provide cumulative statements under subpart B of part 210 
as if they were a compulsory licensee. In providing these cumulative 
statements, the interim rule also requires digital music providers to 
identify the total period covered by the cumulative statement and the 
total royalty payable for the period. This addition is meant to assist 
the copyright owner or the MLC, as the case may be, to quickly 
ascertain the sum of the contents of the cumulative statement. As 
mandated by the MMA, the interim rule also requires that such 
cumulative statements include the certification required for monthly 
statements of account under Copyright Office regulations.\24\
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    \22\ Id. 115(d)(10)(B)(iv)(II)(aa).
    \23\ Id. 115(d)(10)(B)(iv)(III)(aa).
    \24\ See id. 115(d)(10)(B)(iv)(II)(aa), (III)(aa) (cumulative 
statements to be provided ``in accordance with this section and 
applicable regulations, including the requisite certification under 
subsection (c)(2)(I)'').
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III. Request for Comments

    These interim regulations will go into effect immediately after 
publication of this document in the Federal Register. Comments will be 
due 45 days thereafter. The Copyright Office is issuing these interim 
regulations after finding, for good cause, that notice and comment 
prior to their issuance would be contrary to the public interest.\25\ 
The changes to section 115 made by the MMA were effective on October 
11, 2018, and this interim rule conforms the regulations to the new law 
and clarifies for the public the operation of the Office's existing 
section 115-related regulations during the current transition period 
before the license availability date. The rule also must be issued 
without delay because it specifies the information to be contained in 
statements of account provided by digital music providers seeking to 
avail themselves of the limitation on liability available during this 
transition period. Moreover, the amendments made by this interim rule 
are meant to be technical in nature, as they are largely non-
discretionary and merely make statutorily mandated modifications to 
existing rules.
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    \25\ In the past, the Copyright Office has similarly issued 
interim rules upon the enactment of legislation before soliciting 
public comments. See, e.g., Filing of Schedules by Rights Owners and 
Contact Information by Transmitting Entities Relating to Pre-1972 
Sound Recordings, 83 FR 52150, 52153 (Oct. 16, 2018) (issuing 
interim rule regarding certain new types of filings because ``[t]he 
MMA requires swift action by the Office'' and ``a prompt interim 
rule best serves the legal interests of all relevant stakeholders as 
well as the general public''); Freedom of Information Act 
Regulations, 82 FR 9505, 9506 (Feb. 7, 2017) (issuing interim rule 
to implement the FOIA Improvement Act of 2016 because ``allowing for 
notice and public procedure prior to the issuance of . . . interim 
regulations would be impracticable''); Designation of Agent to 
Receive Notification of Claimed Infringement, 63 FR 59233, 59234 
(Nov. 3, 1998) (issuing interim rule regarding designation of agent 
after enactment of the Digital Millennium Copyright Act because 
``online service providers may wish immediately to designate agents 
to receive notification of claimed infringement'').
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    The Copyright Office notes that this is only the first of what will 
be a number of rulemakings required by the MMA that concern the section 
115 license. Over the next few months, the Office will be issuing 
additional notices to address other issues presented by the MMA, 
including the designation of the MLC and the filing by digital music 
providers of notices of license and reports of usage with the MLC under 
the blanket license. This interim rule, in contrast, does not cover the 
MLC or activity under the blanket license, and comments on such matters 
should not be submitted in response to it. Rather, comments submitted 
in response to this notice should be limited to the subjects of this 
interim rule. The Office looks forward to hearing from all who are 
interested in these important issues as the process continues.

List of Subjects

37 CFR Part 201

    Copyright, General provisions.

37 CFR Part 203

    Freedom of information.

[[Page 63064]]

37 CFR Part 210

    Copyright, Phonorecords, Recordings.

Interim Regulations

    For the reasons set forth in the preamble, the Copyright Office 
amends 37 CFR parts 201, 203, and 210 as follows:

PART 201--GENERAL PROVISIONS

0
1. The authority citation for part 201 continues to read as follows:

    Authority: 17 U.S.C. 702.


0
2. Amend Sec.  201.18 as follows:
0
a. Revise paragraphs (a)(1) and (2).
0
b. In paragraph (a)(3):
0
i. Remove ``is each'' and add in its place ``means each''.
0
ii. Remove ``which results'' and add in its place ``that results''.
0
iii. Remove ``nondramatic''.
0
iv. Add two sentences at the end of the paragraph.
0
c. In paragraph (a)(4) introductory text:
0
i. Remove ``A Notice of Intention shall'' and add in its place ``As 
eligible under paragraph (a)(2) of this section, a Notice of Intention 
shall''.
0
ii. Remove ``(f)(3)'' and add in its place ``(f)(2) or (3)''.
0
d. In paragraph (a)(6), remove ``Notwithstanding paragraph (a)(2) of 
this section, a'' and add in its place ``A''.
0
e. Revise paragraph (c).
0
f. In paragraph (d)(1)(iii), remove ``(for example: a record company or 
digital music service)''.
0
g. In paragraph (d)(1)(v)(D), remove ``delivery, or'' and add in its 
place ``delivery (if eligible under paragraph (a)(2) of this section), 
or''.
0
h. In paragraph (f)(1):
0
i. Remove ``If the'' and add in its place ``As eligible under paragraph 
(a)(2) of this section, if the''.
0
ii. Remove the second sentence.
0
i. In paragraph (f)(2):
0
i. Remove ``If the Notice is'' and add in its place ``If a Notice of 
Intention seeking a compulsory license to make and distribute 
phonorecords of a musical work other than by means of digital 
phonorecord delivery is''.
0
ii. Remove ``accompanied by a'' and add in its place ``accompanied by 
the fee specified in Sec.  201.3(e) and a''.
0
j. In paragraph (f)(3), remove ``in the Notice of Intention, the'' and 
add in its place ``in a Notice of Intention seeking a compulsory 
license to make and distribute phonorecords of a musical work other 
than by means of digital phonorecord delivery, the''.
0
k. In paragraph (f)(4), remove ``section 115(b)(1) of title 17 of the 
United States Code'' and add in its place ``17 U.S.C. 115(b)''.
0
l. In paragraph (g), add three sentences at the end of the paragraph.
0
m. In paragraph (h), remove ``section 115(b)(1) of title 17 of the 
United States Code'' and add in its place ``17 U.S.C. 115(b)''.
    The revisions and additions read as follows:


Sec.  201.18  Notice of intention to obtain a compulsory license for 
making and distributing phonorecords of nondramatic musical works.

    (a) General. (1) A ``Notice of Intention'' is a Notice identified 
in section 115(b) of title 17 of the United States Code. If the 
eligibility requirements of 17 U.S.C. 115(a) are satisfied, then, 
subject to 17 U.S.C. 115(b), a person may serve on a copyright owner or 
file with the Copyright Office, as applicable, a Notice of Intention 
and thereby obtain a compulsory license pursuant to 17 U.S.C. 115.
    (2)(i) To obtain a compulsory license to make and distribute 
phonorecords of a musical work other than by means of digital 
phonorecord delivery, a Notice must be served on the copyright owner 
or, if the registration or other public records of the Copyright Office 
do not identify the copyright owner and include an address at which 
Notice can be served, filed with the Copyright Office, before, or not 
later than 30 calendar days after, making, and before distributing, any 
phonorecord of the work.
    (ii) Prior to the license availability date, as defined in 17 
U.S.C. 115(e), to obtain a compulsory license to make and distribute 
phonorecords of a musical work by means of digital phonorecord 
delivery, a Notice must be served on the copyright owner, before, or 
not later than 30 calendar days after, first making any such digital 
phonorecord delivery. On and after the license availability date, as 
defined in 17 U.S.C. 115(e), to obtain such a compulsory license, the 
procedure described in 17 U.S.C. 115(d)(2) must be followed. As of 
October 11, 2018, the Copyright Office does not accept Notices that 
pertain to digital phonorecord deliveries, regardless of whether such a 
Notice also pertains to phonorecords that are not digital phonorecord 
deliveries.
    (iii) Notwithstanding paragraph (a)(2)(ii) of this section, a 
record company, as defined in 17 U.S.C. 115(e), may, on or after the 
license availability date, as defined in 17 U.S.C. 115(e), obtain an 
individual download license, as described in 17 U.S.C. 115(b)(3) and 
defined in 17 U.S.C. 115(e), by serving a Notice on the copyright 
owner, before, or not later than 30 calendar days after, first making 
any digital phonorecord delivery in the form of a permanent download.
    (3) * * * Notwithstanding the foregoing, a permanent download, a 
limited download, or an interactive stream, as defined in 17 U.S.C. 
115(e), is a digital phonorecord delivery. A digital phonorecord 
delivery does not include the digital transmission of sounds 
accompanying a motion picture or other audiovisual work as defined in 
17 U.S.C. 101.
* * * * *
    (c) Form. The Copyright Office does not provide physical printed 
forms for the use of persons serving or filing Notices of Intention, 
but Notices filed electronically must be submitted to the Office in the 
form and manner prescribed in instructions on the Office's website.
* * * * *
    (g) * * * Notwithstanding the foregoing, the Copyright Office will 
examine Notices to ensure that they do not pertain to digital 
phonorecord deliveries. Any Notice submitted to the Office that does 
pertain to digital phonorecord deliveries, regardless of whether such a 
Notice also pertains to phonorecords that are not digital phonorecord 
deliveries, will be rejected. The Office's decision to accept or reject 
such a Notice is without prejudice to any party claiming that the 
Notice does or does not pertain to digital phonorecord deliveries, 
including before a court of competent jurisdiction.
* * * * *

PART 203--FREEDOM OF INFORMATION ACT: POLICIES AND PROCEDURES

0
3. The authority citation for part 203 continues to read as follows:

    Authority: 5 U.S.C. 552.


0
4. Amend Sec.  203.3 as follows:
0
a. Remove paragraph (b)(2).
0
b. Redesignate paragraph (b)(3) as paragraph (b)(2).
0
c. Revise paragraphs (h) and (i).
    The revisions read as follows:


Sec.  203.3   Organization.

* * * * *
    (h) The Copyright Modernization Office (``CMO'') is headed by the 
Director, who is the Register's top advisor on Copyright Office 
modernization and oversees the development and implementation of 
technology initiatives affecting registration and recordation. This 
Office directs and coordinates all modernization activities on behalf 
of the

[[Page 63065]]

U.S. Copyright Office, including resources, communications, stakeholder 
engagement, and business project management. The CMO ensures that 
modernization activities are continuously aligned with the Office's and 
the Library of Congress's strategic goals, and collaborates with the 
Office and the Library to drive modernization efforts. The CMO provides 
project management, data management/analytics, and business analysis. 
It also serves as the primary liaison with the Library of Congress's 
Office and Chief Information Officer (``OCIO'') and serves in a 
leadership function on the Office's Modernization Governance Board.
    (i) The Chief Financial Officer (``CFO'') is a senior staff 
position that serves under the Register and oversees all fiscal, 
financial, and budgetary activities for the Copyright Office. The CFO 
also oversees the Licensing Division, which administers certain 
statutory licenses set forth in the Copyright Act. The Division 
collects royalty payments and examines statements of account for the 
cable statutory license (17 U.S.C. 111), the satellite statutory 
license for retransmission of distant television broadcast stations (17 
U.S.C. 119), and the statutory license for digital audio recording 
technology (17 U.S.C. chapter 10). The Division also accepts and 
records certain documents associated with the use of the mechanical 
statutory license for making and distributing phonorecords of 
nondramatic musical works (17 U.S.C. 115) and the statutory licenses 
for publicly performing sound recordings by means of digital audio 
transmission (17 U.S.C. 112, 114).
* * * * *

PART 210--COMPULSORY LICENSE FOR MAKING AND DISTRIBUTING PHYSICAL 
AND DIGITAL PHONORECORDS OF NONDRAMATIC MUSICAL WORKS

0
5. The authority citation for part 210 continues to read as follows:

    Authority: 17 U.S.C. 115, 702.


0
6. Amend subpart B by revising the heading to read as follows:

Subpart B--Royalties and Statements of Account Under Non-Blanket 
Compulsory License

0
7. Amend Sec.  210.11 by adding a sentence at the end of the paragraph 
to read as follows:


Sec.  210.11  General.

    * * * On and after the license availability date, this subpart 
shall not apply with respect to any digital phonorecord delivery made 
pursuant to the compulsory license unless such digital phonorecord 
delivery is made by a record company under an individual download 
license under 17 U.S.C. 115(b)(3), which must be reported and paid for 
in accordance with Sec.  210.21; that is, this subpart shall not apply 
where a digital music provider reports and pays royalties under a 
blanket license under 17 U.S.C. 115(d)(4)(A)(i).


Sec.  210.12  [Amended]

0
8. Amend Sec.  210.12 as follows:
0
a. In paragraphs (a) and (b), remove ``115(c)(5)'' and add in its place 
``115(c)(2)(I)''.
0
b. In paragraph (c):
0
i. Remove ``is each'' and add in its place ``means each''.
0
ii. Remove ``which results'' and add in its place ``that results''.
0
iii. Remove ``nondramatic''.
0
iv. Add two sentences at the end of the paragraph.
0
c. Add paragraphs (k) through (o).
    The additions read as follows:


Sec.  210.12   Definitions.

    (c) * * * Notwithstanding the foregoing, a permanent download, a 
limited download, or an interactive stream, as defined in 17 U.S.C. 
115(e), is a digital phonorecord delivery. A digital phonorecord 
delivery does not include the digital transmission of sounds 
accompanying a motion picture or other audiovisual work as defined in 
17 U.S.C. 101.
* * * * *
    (k) The term license availability date shall have the meaning given 
in 17 U.S.C. 115(e)(15).
    (l) The term digital music provider shall have the meaning given in 
17 U.S.C. 115(e)(8).
    (m) The term blanket license shall have the meaning given in 17 
U.S.C. 115(e)(5).
    (n) The term record company shall have the meaning given in 17 
U.S.C. 115(e)(26).
    (o) The term individual download license shall have the meaning 
given in 17 U.S.C. 115(e)(12).


Sec.  210.16   [Amended]

0
9. Amend Sec.  210.16(d)(3) by removing ``115(c)(5)'' and adding in its 
place ``115(c)(2)(I)''.


Sec.  210.19  [Amended]

0
10. Amend Sec.  210.19 by removing ``115(c)(6)'' and adding in its 
place ``115(c)(2)(J)''.

0
11. Add Sec. Sec.  210.20 and 210.21 to read as follows:


Sec.  210.20  Statements required for limitation on liability for 
digital music providers for the transition period prior to the license 
availability date.

    This section specifies the requirements for a digital music 
provider to report and pay royalties for purposes of being eligible for 
the limitation on liability described in 17 U.S.C. 115(d)(10). Terms 
used in this section that are defined in 17 U.S.C. 115(e) shall have 
the meaning given those terms in 17 U.S.C. 115(e).
    (a) If the required matching efforts are successful in identifying 
and locating a copyright owner of a musical work (or share thereof) by 
the end of the calendar month in which the digital music provider first 
makes use of the work, the digital music provider shall provide 
statements of account and pay royalties to such copyright owner as a 
compulsory licensee in accordance with this subpart.
    (b) If the copyright owner is not identified or located by the end 
of the calendar month in which the digital music provider first makes 
use of the work, the digital music provider shall accrue and hold 
royalties calculated under the applicable statutory rate in accordance 
with usage of the work, from initial use of the work until the accrued 
royalties can be paid to the copyright owner or are required to be 
transferred to the mechanical licensing collective, as follows:
    (1) Accrued royalties shall be maintained by the digital music 
provider in accordance with generally accepted accounting principles.
    (2) If a copyright owner of an unmatched musical work (or share 
thereof) is identified and located by or to the digital music provider 
before the license availability date, the digital music provider 
shall--
    (i) Not later than 45 calendar days after the end of the calendar 
month during which the copyright owner was identified and located, pay 
the copyright owner all accrued royalties, such payment to be 
accompanied by a cumulative statement of account that includes all of 
the information that would have been provided to the copyright owner 
had the digital music provider been providing Monthly Statements of 
Account as a compulsory licensee in accordance with this subpart to the 
copyright owner from initial use of the work, and including, in 
addition to the information and certification required by Sec.  210.16, 
a clear identification of the total period covered by the cumulative 
statement and the total royalty payable for the period;
    (ii) Beginning with the accounting period following the calendar 
month in

[[Page 63066]]

which the copyright owner was identified and located, and for all other 
accounting periods prior to the license availability date, provide 
Monthly Statements of Account and pay royalties to the copyright owner 
as a compulsory licensee in accordance with this subpart; and
    (iii) Beginning with the monthly royalty reporting period 
commencing on the license availability date, report usage and pay 
royalties for such musical work (or share thereof) for such reporting 
period and reporting periods thereafter to the mechanical licensing 
collective, as required under 17 U.S.C. 115(d) and applicable 
regulations.
    (3) If a copyright owner of an unmatched musical work (or share 
thereof) is not identified and located by the license availability 
date, the digital music provider shall--
    (i) Not later than 45 calendar days after the license availability 
date, transfer all accrued royalties to the mechanical licensing 
collective, such payment to be accompanied by a cumulative statement of 
account that includes all of the information that would have been 
provided to the copyright owner had the digital music provider been 
serving Monthly Statements of Account as a compulsory licensee in 
accordance with this subpart on the copyright owner from initial use of 
the work, accompanied by a certification by a duly authorized officer 
of the digital music provider that the digital music provider has 
fulfilled the requirements of 17 U.S.C. 115(d)(10)(B)(i) and (ii) but 
has not been successful in locating or identifying the copyright owner, 
and further including, in addition to the information and certification 
required by Sec.  210.16, a clear identification of the total period 
covered by the cumulative statement and the total royalty payable for 
the period; and
    (ii) Beginning with the monthly royalty reporting period commencing 
on the license availability date, report usage and pay royalties for 
such musical work (or share thereof) for such period and reporting 
periods thereafter to the mechanical licensing collective, as required 
under 17 U.S.C. 115(d) and applicable regulations.


Sec.  210.21  Record companies using individual download licenses.

    A record company that obtains an individual download license under 
17 U.S.C. 115(b)(3) shall provide statements of account and pay 
royalties as a compulsory licensee in accordance with this subpart.

    Dated: November 30, 2018.
Karyn A. Temple,
Acting Register of Copyrights and Director of the U.S. Copyright 
Office.

    Approved by:
Carla D. Hayden,
Librarian of Congress.
[FR Doc. 2018-26579 Filed 12-6-18; 8:45 am]
 BILLING CODE 1410-30-P