Request for Information on Designation of Mechanical Licensing Collective and Digital Licensee Coordinator, 65747-65754 [2018-27743]
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Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Notices
Dated: December 17, 2018.
Melody Braswell,
Department Clearance Officer for PRA, U.S.
Department of Justice.
[FR Doc. 2018–27578 Filed 12–20–18; 8:45 am]
BILLING CODE 4410–18–P
DEPARTMENT OF LABOR
Mine Safety and Health Administration
II. Applicable Fee
Fee Adjustment for Testing,
Evaluation, and Approval of Mining
Products
Mine Safety and Health
Administration, Labor.
ACTION: Notice of fee adjustment.
AGENCY:
The Mine Safety and Health
Administration (MSHA) announces a
revised hourly rate for the fees charged
to applicants and approval holders for
testing, evaluating, and approving
products for use in mines. MSHA
charges a fee to cover the full cost
(direct and indirect costs) of its services
associated with the approval program.
The new hourly rate is $137.
DATES: MSHA will charge the new
hourly rate for new approval services
starting January 1, 2019.
FOR FURTHER INFORMATION CONTACT:
Dennis L. Ferlich, Chief, Approval and
Certification Center (A&CC), 304–547–
2029 or 304–547–0400 (these are not
toll-free numbers).
SUPPLEMENTARY INFORMATION:
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SUMMARY:
I. Background
Under the Federal Mine Safety and
Health Act of 1977 (Mine Act), as
amended, MSHA’s mission is to prevent
death, disease, and injury from mining
and promote safe and healthy
workplaces for the Nation’s miners.
MSHA approves equipment, materials,
and explosives for use in mines to
assure that the products are designed,
constructed, and maintained so as not to
cause a fire, explosion, or other
accident. MSHA’s regulation under 30
CFR part 5, Fees for Testing, Evaluation,
and Approval of Mining Products,
establishes the method the Agency uses
to calculate the fees needed to recover
costs for approval services.
Under 30 U.S.C. 966, MSHA may
collect and retain up to $2,499,000 of
fees collected for the approval and
certification of equipment, materials,
and explosives for use in mines.
On July 29, 2015, MSHA published a
final rule in the Federal Register (80 FR
45051) that revised the Agency’s
regulation for administering fees for
testing, evaluation, and approval of
products manufactured for use in mines.
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Under the final rule, MSHA revised the
hourly rate by dividing the total of a
prior fiscal year’s approval program
costs (direct and indirect costs) by the
number of total direct hours spent on
approval program activities for that
year. The hourly rate was increased
from $97 to $121.
MSHA began charging the existing
hourly rate on October 1, 2015, for new
approval applications.
Under 30 CFR 5.50, an hourly rate
will remain in effect for at least one year
and be subject to revision at least once
every three years. MSHA calculates the
FY 2019 hourly rate using FY 2017 costs
for baseline data. MSHA has determined
that as of January 1, 2019, the hourly
rate will be $137 per hour for services
on new applications and post-approval
activities (changes to approvals and
post-approval product audits).
• MSHA will process applications
and post-approval activities postmarked
before January 1, 2019, under the
existing FY 2018 hourly rate of $121.
• MSHA will process applications
and post-approval activities postmarked
on or after January 1, 2019, under the
revised FY 2019 hourly rate of $137.
This information is available on
MSHA’s web page at https://
www.msha.gov.
David G. Zatezalo,
Assistant Secretary of Labor for Mine Safety
and Health.
[FR Doc. 2018–27633 Filed 12–20–18; 8:45 am]
BILLING CODE 4510–43–P
LIBRARY OF CONGRESS
Copyright Office
[Docket No. 2018–11]
Request for Information on
Designation of Mechanical Licensing
Collective and Digital Licensee
Coordinator
U.S. Copyright Office, Library
of Congress.
ACTION: Notice of inquiry.
AGENCY:
The U.S. Copyright Office is
issuing a notice of inquiry regarding the
Musical Works Modernization Act, title
I of the Orrin G. Hatch–Bob Goodlatte
Music Modernization Act (‘‘MMA’’),
enacted on October 11, 2018. The MMA
made significant modifications to the
compulsory license in section 115 of
title 17 for making and distributing
phonorecords of musical works (the
‘‘mechanical license’’). Among the many
changes to the section 115 compulsory
SUMMARY:
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license, the MMA calls for establishing
a collective to manage a new blanket
licensing system governing licensed
uses of musical works by digital music
providers. The Register of Copyrights is
directed to designate the mechanical
licensing collective and the digital
licensee coordinator that will carry out
key functions under the new blanket
license.
The Office now solicits information to
identify the appropriate entities to be
designated. The information received in
response to this notice of inquiry will be
publicly posted, and interested
members of the public may publicly
comment on the submissions. After
consideration of the record material, the
Register will publish a notice in the
Federal Register setting forth the
identity of and contact information for
the mechanical licensing collective and
digital licensee coordinator, and the
reasons for the designations.
DATES: Initial written proposals must be
received no later than 11:59 p.m.
Eastern Time on March 21, 2019.
Written reply comments must be
received no later than 11:59 p.m.
Eastern Time on April 22, 2019.
Following submission of these written
comments, the Office may provide for
proponents of written proposals to
supplement or amend their initial
submission, in accordance with specific
instructions established by the Office at
https://www.copyright.gov/rulemaking/
mma-designations/. The Office reserves
the option to seek additional public
input prior to making a designation, to
be announced by separate notice in the
future. Rather than reserving time for
potential extensions of time to file
comments, commenting parties should
be aware that the Office has already
established what it believes to be the
most reasonable deadlines consistent
with the statutory deadlines by which it
must promulgate the regulations
described in this notice of inquiry.
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 in response to this notice 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-designations/. 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.
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Federal Register / Vol. 83, No. 245 / Friday, December 21, 2018 / Notices
FOR FURTHER INFORMATION CONTACT:
Regan A. Smith, General Counsel and
Associate Register of Copyrights, by
email at regans@copyright.gov, Steve
Ruwe Assistant General Counsel, by
email at sruwe@copyright.gov, or Jason
E. Sloan, Assistant General Counsel, by
email at jslo@copyright.gov. 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
Goodlatte Music Modernization Act
(‘‘MMA’’).1 Title I of the MMA
addresses the efficiency and fairness of
the section 115 mechanical license for
the reproduction and distribution of
musical works embodied in digital
phonorecord deliveries by establishing a
blanket licensing system governing such
uses by digital music providers.2 Prior
to passage of the MMA, a digital music
provider seeking to use a protected
musical work was required to either
obtain a voluntary license from the
copyright owner to use the work or
obtain a compulsory license by filing a
notice of intention to obtain a
compulsory license on a song-by-song
basis. A notice of intention could be
filed with the copyright owner or, under
certain circumstances in which the
owner could not be identified, with the
U.S. Copyright Office.3
The MMA creates a new blanket
license for the reproduction and
distribution of musical works by digital
music providers in the form of digital
phonorecord deliveries, including
permanent downloads, limited
downloads, and interactive streams, and
eliminates the song-by-song notice of
intention process for such uses.4 Instead
1 Public
Law 115–264, 132 Stat. 3676 (2018).
S. Rep. No. 115–339, at 1–2 (2018) (‘‘The
current statutory scheme applies inconsistent rules
that place certain technologies at a disadvantage
and result in inequitable compensation variances
for music creators. These inconsistencies have
drawn criticism that music copyright and licensing
laws are too difficult to comply with and do not
adequately reward the artists and professionals
responsible for creating American music.’’); 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 (‘‘Conf. Rep.’’); see
also H.R. Rep. No. 115–651, at 2 (2018) (detailing
the House Judiciary Committee’s efforts to review
music copyright laws).
3 See 17 U.S.C. 115(b)(1), (c)(5) (2017); S. Rep. No.
115–339, at 3; 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).
4 The MMA retains the ability of record
companies to obtain an individual download
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2 See
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of obtaining compulsory licenses on an
individual song-by-song basis, the MMA
directs the Office to designate a
nonprofit entity, the mechanical
licensing collective (‘‘MLC’’) to
administer this new blanket-licensing
system starting in January 2021.5 As set
forth in more detail below, the MLC,
through its board of directors and taskspecific committees, will be responsible
for a variety of duties, including
collecting and distributing royalties
from digital music providers,
establishing a musical works database
relevant to the new blanket license, and
administering a process by which
copyright owners can claim ownership
of musical works (and shares of such
works).6
Licensees will bear the reasonable
costs of establishing and operating the
new MLC. The Copyright Royalty Judges
will conduct a proceeding to determine
the amount of an administrative
assessment fee to be paid by blanket and
significant nonblanket licensees for the
reasonable costs of starting up and
continuing to operate the new MLC.7 A
digital licensee coordinator (‘‘DLC’’)
may be designated to represent digital
music providers in the administration of
the license, including by serving as a
nonvoting board member of the MLC,
and participating in proceedings before
the Copyright Royalty Judges to
determine the administrative
assessment fee.8 To facilitate public
comment, this notice sets forth a brief
explanation of the designation process
and key functions and responsibilities
of the MLC, its board and committees,
and the DLC.
A. Designation Process
The statute directs the Register of
Copyrights to designate the MLC within
270 days of enactment of the MMA.9 To
license on a song-by-song basis. 17 U.S.C. 115(b)(3)
(2018).
5 Id. at 115(d)(3)(B); see also id. at 115(e)(15). The
MLC will begin to administer the blanket license on
the ‘‘license availability date,’’ envisioned by the
statute as January 1, 2021.
6 Id. at 115(d)(3)(C). The Copyright Office is
provided with ‘‘broad regulatory authority’’ to
conduct proceedings as necessary to effectuate the
statute; in addition to a number of regulations that
the Register is specifically directed to promulgate,
the legislative history contemplates that the Register
will ‘‘thoroughly review’’ policies and procedures
established by the MLC. H.R. Rep. No. 115–651, at
5–6; S. Rep. No. 115–339, at 5; see 17 U.S.C.
115(d)(12). The legislative history further suggests
that the Register promulgate the necessary
regulations in a way that ‘‘balances the need to
protect the public’s interest with the need to let the
new collective operate without over-regulation.’’
H.R. Rep. No. 115–651, at 14; S. Rep. No. 115–339,
at 15.
7 17 U.S.C. 115(d)(7)(D).
8 Id. at 115(d)(3)(D)(i)(IV), (d)(5).
9 Id. at 115(d)(3)(B)(i).
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aid in this process, the statute requires
the Register to publish notice in the
Federal Register soliciting information
to assist in identifying the appropriate
entity to serve as the MLC within 90
days of enactment. The notice must
solicit information regarding potential
board members of the MLC, the
operations advisory committee, the
unclaimed royalties oversight
committee and the dispute resolution
committee.10
By law, in order to be designated as
the MLC, the entity should be:
• A single nonprofit entity that is
created by copyright owners to carry out
its statutory responsibilities;
• Endorsed by and enjoying
substantial support from musical work
copyright owners that represent the
greatest percentage of the licensor
market for uses of such works in
covered activities over the preceding 3
years;
• Able to demonstrate to the
Copyright Office that, by the license
availability date, it will have the
administrative and technological
capabilities to perform the required
functions; and
• Governed by a board of directors
that is composed of a mix of voting and
non-voting members as directed by the
statute.11
If no entity meets all of these statutory
criteria, the Register must designate as
the MLC the entity that most nearly fits
these qualifications.12 After 5 years, the
Register will commence a periodic
review of this designation.13
The Register is also directed to
designate the DLC not later than 270
days after the enactment date, following
substantially the same procedure
described for designation of the MLC.14
Unlike the MLC, in the event the
Register is unable to identify an entity
that fulfills the criteria for the DLC, the
Register may decline to designate a
DLC.15
Under the statutory selection criteria,
the name and affiliation of each board
member and each committee established
by the MLC must be solicited by the
Register as part of the designation
10 Id.
at 115(d)(3)(B), (d)(3)(D)(iv)–(vi).
11 Id.
at 115(d)(3)(A), (d)(3)(D)(i).
at 115(d)(3)(B)(iii).
13 Id. at 115(d)(3)(B)(ii); see also H.R. Rep. No.
115–651, at 6 (noting that continuity is expected to
be beneficial so long as the designated entity has
‘‘regularly demonstrated its efficient and fair
administration,’’ whereas evidence of ‘‘fraud, waste,
or abuse,’’ or failure to adhere to relevant
regulations should ‘‘raise serious concerns’’
regarding whether re-designation is appropriate), S.
Rep. No. 115–339, at 5–6 (same).
14 17 U.S.C. 115(d)(5)(B).
15 Id. at 115(d)(5)(B)(iii).
12 Id.
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process.16 The legislative history states
‘‘the Register is expected to allow the
public to submit comments on whether
the individuals and their affiliations
meet the criteria specified in the
legislation; make some effort of its own
as it deems appropriate to verify that the
individuals and their affiliations
actually meet the criteria specified in
the legislation; and allow the public to
submit comments on whether they
support such individuals being
appointed for these positions.’’ 17
Accordingly, as addressed below, the
Copyright Office expects interested
members of the public to comment upon
the proposed governance board in
response to this inquiry.
Similar to the endorsement criteria
discussed below, the statute does not
preclude prospective board members,
vendors, or other affiliates of a
prospective MLC from being included in
submissions from multiple competing
entities. Indeed, based on the statutory
criteria requiring representative of
certain publisher or songwriter
associations to serve as non-voting
board members, there may be some
representatives that might logically
serve on the board of any proposed
MLC.18 Similarly, while the statutory
language authorizes the MLC to arrange
for services of outside vendors, nothing
suggests that such a vendor must offer
exclusive services to that MLC
candidate (let alone one that is yet-to-be
designated).
B. MLC Duties and Functions
The MMA enumerates a number of
functions for the MLC.19 The MLC must
be a single nonprofit entity created by
copyright owners and endorsed by
musical work copyright owners, and it
must possess the administrative and
technological capabilities necessary to
carry out a wide array of responsibilities
in administering blanket licenses.20
This administrative role includes
accepting or rejecting notices of license,
and exercising authority to terminate
licenses when the licensee is in
default.21 The MLC has 30 days to reject
a notice in writing, listing with
specificity why such notice was
16 Id.
at 115(d)(3)(B)(i).
Rep. No. 115–651, at 5; S. Rep. No. 115–
339, at 5; Conf. Rep. at 4; see H.R. Rep. No. 115–
651, at 26 (‘‘This requirement is not waivable by the
Register and is not subject to the alternate
designation language.’’); S. Rep. No. 115–339, at 23
(same).
18 See 17 U.S.C. 115(d)(3)(D)(i).
19 Id. at 115(d)(3)(C)(i)–(iii) (enumerating thirteen
functions, in addition to permission to administer
voluntary licenses).
20 Id. at 115(d)(3)(A)(i)–(iii); see also id. at
115(d)(3)(B)(iii).
21 Id. at 115(d)(3)(F).
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rejected, either because it does meet the
statutory requirements or applicable
regulations,22 or if the digital music
provider has had a blanket license
terminated by the collective within the
past three years.23 The MLC will also
accept notices of nonblanket activity;
that is, a notice that the licensee has
been engaging in making digital
phonorecord deliveries of musical
works without using the blanket license,
from significant nonblanket licensees.24
For digital music providers that are
blanket licensees, the MLC will receive
reports of usage, and collect and
distribute royalties for covered
activities.25 A key aspect of the MLC’s
collection and distribution
responsibilities includes identifying
musical works and copyright owners,
matching them to sound recordings (and
addressing disputes), and ensuring that
a copyright owner gets paid as he or she
should. To that end, the MLC will create
and maintain a free, public database of
musical work and sound recording
ownership information. The MLC will
administer processes by which
copyright owners can claim ownership
of musical works (and shares of such
works), and by which royalties for
works for which the owner is not
identified or located are equitably
distributed to known copyright owners
on a market share basis after a required
holding period. The MLC unclaimed
royalties oversight committee is tasked
with establishing policies and
procedures for such distributions,
subject to the approval of the MLC
board of directors.
To fulfill its responsibilities, the MLC
is statutorily authorized to invest in
relevant resources, and arrange for
services of outside vendors and others,
to support the activities of the MLC.26
It may engage in legal and other efforts
to enforce rights and obligations set
forth under the license, including by
filing bankruptcy proofs of claims for
amounts owed under licenses, and by
acting in coordination with the digital
licensee coordinator.27 The MLC may be
audited by copyright owners due
royalties from the MLC, and so must
maintain records of its activities and
engage in and respond to audits.28 And,
the MLC may audit licensees.29
The MLC may also administer
voluntary licenses issued by, or
22 Id.
at 115(d)(2)(A)(iii)(I).
at 115(d)(2)(A)(iii)(II), and (d)(3)(F).
24 Id. at 115(d)(3)(F), (e)(23).
25 See generally id. at 115(d)(3)(C)(i).
26 Id.
27 Id.
28 Id.; see also id. at 115(d)(3)(L).
29 Id. at 115(d)(4)(D).
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individual download licenses obtained
from, copyright owners only for
reproduction or distribution rights in
musical works for covered activities and
the MLC shall charge reasonable fees for
such services.30 But the MLC may only
issue blanket licenses for digital uses
pursuant to section 115(d)(1), and
administer blanket licenses for
reproduction or distribution rights in
musical works for covered activities.31
The MLC is authorized to initiate and
participate in proceedings before the
Copyright Royalty Judges to establish
the administrative assessment that will
fund the MLC activities. The MLC may
gather and provide documentation for
use in proceedings before the Copyright
Royalty Judges to set rates and terms for
the section 115 license. And, finally, the
MLC may initiate and participate in
proceedings before the Copyright Office
with respect to the foregoing activities.32
C. MLC Board
The board of the MLC shall consist of
14 voting members and 3 nonvoting
members.33 Ten voting members shall
be representatives of music publishers
to which songwriters have assigned
exclusive rights of reproduction and
distribution of musical works with
respect to covered activities, and none
of which may be owned by, or under
common control with, any other board
member. Four voting members shall be
professional songwriters who have
retained and exercise exclusive rights of
reproduction and distribution with
respect to covered activities with
respect to musical works they have
authored. One nonvoting member shall
be a representative of the nonprofit
trade association of music publishers
that represents the greatest percentage of
the licensor market for uses of musical
works in covered activities, as measured
for the 3-year period preceding the date
on which the member is appointed. One
nonvoting member shall be the digital
licensing coordinator, if one has been
designated, or otherwise, the nonprofit
trade association of digital licensees that
represents the greatest percentage of the
licensee market for uses of musical
works in covered activities, as measured
over the preceding 3 full calendar years.
One nonvoting member shall be a
representative of a nationally recognized
nonprofit trade association whose
23 Id.
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30 Id.
at 115(d)(3)(C)(iii).
at 115(d)(3)(C)(ii).
32 Id. at 115(d)(3)(C)(i).
33 For the statutory requirements regarding the
board described in this paragraph, see 17 U.S.C.
115(d)(3)(D)(i).
31 Id.
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primary mission is advocacy on behalf
of songwriters in the United States.34
As the legislative history notes,
‘‘[s]ervice on the Board or its
committees is not a reward for past
actions, but is instead a serious
responsibility that must not be
underestimated . . . . It has been
agreed to by all parties that songwriters
should be responsible for identifying
and choosing representatives that
faithfully reflect the entire songwriting
community on the Board.’’ 35
The MLC board is authorized to adopt
bylaws for the selection of new directors
subsequent to the initial designation of
the MLC.36 The Presidential Signing
Statement accompanying enactment of
the MMA states that directors of the
MLC are inferior officers under the
Appointments Clause of the
Constitution, and that the Librarian of
Congress must approve each subsequent
selection of a new director.37 It also
suggests that the Register work with the
MLC, once designated, to address issues
related to board succession.38
An individual serving as an officer of
the MLC may not, at the same time, also
be an employee or agent of any member
of the board of directors of the collective
or any entity represented by a member
of the board of directors.39
Not later than one year after the date
on which the MLC is initially
designated, the MLC shall establish
publicly available bylaws to determine
issues relating to the governance of the
collective. The MLC bylaws shall
address the length of the term for each
MLC board member, the staggering of
the terms of the board members, a
process for filling a seat on the board
that is vacated before the end of the set
term, a process for electing a board
member, and a management structure
for daily operation of the collective.40
D. MLC Committees
The MMA requires the board to
establish three committees, and the
Office to solicit names of prospective
committee members in this notice. The
statute does not address whether
members may serve on multiple
committees or whether members of the
board may also serve on a committee.
Operations Advisory Committee. The
MLC board of directors is required to
34 Id.
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35 S.
Rep. No. 115–339, at 5.
U.S.C. 115(d)(3)(D)(ii).
37 Statement on Signing the Orrin G. Hatch–Bob
Goodlatte Music Modernization Act, 2018 Daily
Comp. Pres. Doc. 692 (Oct. 11, 2018), https://
www.gpo.gov/fdsys/pkg/DCPD-201800692/pdf/
DCPD-201800692.pdf (‘‘MMA Signing Statement’’).
38 Id.
39 17 U.S.C. 115(d)(3)(D)(viii).
40 Id. at 115(d)(3)(D)(ii).
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establish an operations advisory
committee consisting of not fewer than
six members to make recommendations
to the board concerning the operations
of the collective, including the efficient
investment in and deployment of
information technology and data
resources.41 This committee is required
to have an equal number of members
who are musical work copyright
owners, to be appointed by the MLC
board, and representatives of digital
music providers, to be appointed by the
DLC.42
Unclaimed Royalties Oversight
Committee. The MLC board is required
to establish and appoint an unclaimed
royalties oversight committee consisting
of ten members, five of which shall be
musical work copyright owners and five
of which shall be professional
songwriters whose works are used in
covered activities.43 This committee is
responsible for establishing policies
necessary to undertake a fair
distribution of unclaimed royalties.44
Dispute Resolution Committee. The
MLC board of directors is required to
establish and appoint a dispute
resolution committee consisting of not
fewer than 6 members, which shall
include an equal number of
representatives of musical work
copyright owners and professional
songwriters.45 This committee is
responsible for establishing policies and
procedures for copyright owners to
address disputes relating to ownership
interests in musical works, which shall
include a mechanism to hold disputed
funds pending the resolution of the
dispute.46
E. The DLC
The MMA also calls for the
establishment of a digital licensee
coordinator (‘‘DLC’’) to carry out key
functions under the new blanket
license.47 The DLC is tasked with
coordinating the activities of the
licensees. The DLC shall make
reasonable, good faith efforts to assist
the MLC in its efforts to locate and
identify copyright owners of unmatched
musical works (and shares of such
works) by encouraging digital music
providers to publicize the existence of
the collective and the ability of
copyright owners to claim unclaimed
accrued royalties, including by posting
contact information for the collective at
41 Id.
at 115(d)(3)(D)(iv).
42 Id.
43 Id.
at 115(d)(3)(D)(v).
at 115(d)(3)(J)(ii).
45 Id. at 115(d)(3)(D)(vi).
46 Id. at 115(d)(3)(K).
47 See generally id. at 115(d)(5)(C).
44 Id.
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reasonably prominent locations on
digital music provider websites and
applications and conducting in-person
outreach activities with songwriters.
The DLC is authorized to gather and
provide documentation for, and
participate in proceedings before, the
Copyright Royalty Judges to determine
the administrative assessment to be paid
by digital music providers. Further, the
DLC may initiate and participate in
proceedings before the Copyright Office
with respect to the blanket mechanical
license.
II. Request for Proposals and Related
Information
At this time, the Copyright Office
solicits information to assist in
identifying the appropriate entities to
serve as the MLC and DLC. The MMA
also directs the Register to promulgate
multiple other regulations with respect
to the operation of the revamped blanket
mechanical license and operation of the
MLC, regarding, inter alia, the form of
the notices of license and notice of
nonblanket activity,48 usage reports and
adjustments,49 information to be
included in the musical works
database,50 requirements for the
usability, interoperability, and usage
restrictions of that database,51 and the
disclosure and use of confidential
information.52 The Office will solicit
public comment regarding those
subjects through future notice(s) and
therefore present commenters should
focus their statements on information
relevant to the designation processes.53
A. Mechanical Licensing Collective
The Office hereby requests proposals
for designation as the MLC that include
the identities of all members of a
proposed board of directors and the
various committees, along with contact
information for the collective. Such
proposals should identify the proposed
board members’ relevant background
and affiliations so that interested parties
can submit comments to the Register
addressing whether the parties meet the
statutory requirements set forth in 17
U.S.C. 115(d)(3)(D).
48 Id.
at 115(d)(2)(A)(i), (d)(6)(A)(i).
at 115(d)(4)(A)(iv).
50 Id. at 115(d)(3)(E)(ii)–(iii).
51 Id. at 115(d)(3)(E)(vi).
52 Id. at 115(d)(12)(C).
53 The Office is contemplating whether it may aid
the process to solicit initial public comments on
some of these issues in advance of the final
designation. The Office notes, however, that the
MMA explicitly contemplates that the MLC and
DLC may participate in such proceedings, and
would not expect to conclude any proceeding(s)
without affording that opportunity. See id. at
115(d)(3)(C)(i)(X), (d)(5)(C)(i)(IV). The Office
welcomes comment on this question of timing.
49 Id.
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The Office requests that proposals for
the MLC designations include the
following information, organized by the
categories below.
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1. Administrative and Technological
Capabilities
The following questions are directed
at identifying an entity that can best
perform the duties outlined in section
115(d)(3)(C) of the MMA.
a. General. The Office requests a
business plan, including a statement of
purpose or principles, proposed
schedule, and available budgetary
projections, for the establishment and
operation of the proposed MLC for the
first five years of its existence. In
response to the more granular
information requested below, this plan
should include a description of the
intended technological and/or business
methods for: Establishing and
maintaining the required musical works
database; administering the blanket
license and collecting relevant notices,
usage reports, and administrative
assessments from digital music
providers; administering a process by
which copyright owners can claim
ownership of musical works (and shares
of such works); distributing royalties
generated from unidentified works
equitably; collecting and processing
royalty payments to musical work
copyright owners; and otherwise
fulfilling the MLC’s statutory
obligations.
b. Ownership Identification,
Matching, and Claiming Process. The
Office solicits information tailored to
the proposed MLC’s ability to identify
musical works (and shares of such
works) embodied in particular sound
recordings, and to locate the copyright
owners of such musical works,
including but not limited to:
• The proposed MLC’s plan for
matching sound recordings and musical
works, including plans for developing
or acquiring initial sets of data;
• An explanation of how ownership
information may be populated,
corrected or updated by various
stakeholders and how the proposed
MLC will accommodate submission of
information that may vary by scale and
scope depending upon the technical or
business sophistication of the submitter;
• Best practices, methodologies or
expertise (including manual processes),
that the proposed MLC may employ for
identification of copyright owners and
matching of copyrighted works;
• Intended approaches to
prioritization of matching efforts
(including whether and how factors
such as usage, royalty amounts, genre,
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and vintage of usage of works may guide
prioritization choices);
• The proposed MLC’s target goals or
estimates for matching works in each of
the first five years, and in the aggregate,
expressed both in terms of a percentage
of the market share of musical works in
covered activities, and in terms of a
percentage of the works licensed for use
in covered activity;
• With consideration of the statutory
timeframes regarding distribution of
unclaimed royalties that accrued before
the license availability date, an
explanation how the proposed MLC will
provide adequate opportunity to engage
in requisite identification and matching
efforts and for copyright owners to
search and claim ownership of musical
works (or shares thereof); 54
• Intended approaches to address
fraudulent claims, including any
planned policies or procedures of the
dispute resolution committee noted
below, relevant institutional knowledge
of its board members or prospective
vendors, and intended documentation
regarding claims of ownership of works
or intended technological processes;
and
• Any views regarding how the
proposed MLC intends to interact with
and address ownership information
with collective management
organizations that represent owners of
comparable and/or associated rights.
c. Maintenance of Musical Works
Database. While a well-functioning
musical works database is presumed to
be integral to administering the
matching and claiming process
described above,55 the Office solicits
additional information related to the
creation and operation of this historic
unified music database, specifically:
• How the proposed MLC will
approach interoperability of existing or
future external databases, systems and
applications, including the extent to
which it may adopt or engage with
existing and future frameworks,
standards or formats (including open
standards);
• The proposed MLC’s plans to
utilize and interact with existing and
emerging methods or standards for
identification of parties and works
(including hashes and fingerprint
technologies);
• An explanation of how the
proposed MLC will have the capability
to accept, maintain, and otherwise
handle large data sets, including
consideration of the scale of data that
the MLC will be responsible for
managing;
54 Id.
at 115(d)(3)(J).
Conf. Rep. at 6–7.
• An explanation of how the
proposed MLC intends to approach
access and usage restrictions regarding
the musical works database, including
with respect to digital music providers,
significant nonblanket licensees,
authorized vendors, and other parties’
timely access to data; 56
• An explanation of how the
proposed MLC will approach other
information technology issues,
including security, redundancy,
privacy, and transparency.
d. Collection and Distribution of
Royalties, Including Unclaimed Accrued
Royalties. The Office seeks information
related to the proposed MLC’s royalty
distribution methods and capabilities.
As the legislative history notes, the MLC
is required to collect and distribute
royalties using the information provided
in usage reports on a specific schedule
mandated by statute.57 As the history
further notes, there is an expectation
that ‘‘[a]ll copyright owners shall have
their royalties distributed fairly and no
copyright owner may receive special
treatment as a result of their position on
the Board, its committees, or for any
other reason without a reasonable
basis.’’ 58 Specifically, the Office
requests:
• The proposed MLC’s expected
competence with efficient and effective
payment methods, including addressing
tax and other regulatory documentation
for various payees and entities;
• Any planned approaches with
respect to the collection and
distribution of royalties collected
through bankruptcy proceedings; 59
• Information about the proposed
MLC’s approach to scheduling royalty
payments to identified copyright
owners, including whether the entirety
of unclaimed royalties is intended to be
distributed simultaneously;
• Views regarding whether the
proposed MLC may consider holding
reserve funds to address claims that may
only reasonably be identified after the
statutory holding period, and what if
any criteria might be used to implement
any such reserve practices; 60
• Any policies that the proposed MLC
intends to implement with respect to
undertaking a fair distribution of
unclaimed royalties; 61 and
56 See
17 U.S.C. 115(d)(3)(E)(v).
Rep. No. 115–651, at 12; S. Rep. No. 115–
339, at 13.
58 H.R. Rep. No. 115–651, at 12; S. Rep. No. 115–
339, at 13.
59 See Conf. Rep. at 11.
60 17 U.S.C. 115(d)(3)(H).
61 H.R. Rep. No. 115–651, at 13 (describing
required policies, and noting ‘‘[i]t is the intent of
Congress to ensure that songwriters receive their
57 H.R.
55 See
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• Any other considerations that may
be relevant with respect to the
distribution of claimed and unclaimed
accrued royalties.
e. Investment in Resources and
Vendor Engagement. The Office
understands that proposals for
designation as the MLC may rely on one
or more vendors to ‘‘demonstrate to the
Register of Copyrights that the entity
has, or will have prior to the license
availability date, the administrative and
technological capabilities to perform the
required functions of the mechanical
licensing collective.’’ 62 To the extent
not already provided, the Office
therefore seeks information about actual
or potential vendors, including the
specific functions to be addressed by a
given vendor, the vendors’ relevant
experience with clients and projects
involving similar scale and type, or
industry-specific knowledge. The Office
requests, to the extent practicable:
• The estimated number of employees
the proposed MLC intends to hire and/
or engage through vendors in each of the
first five years;
• The names and resumes of any key
employees that the proposed MLC may
have engaged to design and operate the
statutorily required functions of the
MLC;
• The contracts the proposed MLC
has engaged in, or any funds or other
items of value the proposed MLC has
exchanged in anticipation of being
designated as the MLC;
• Information regarding any conflicts
of interests, including but not limited to
disclosure of common ownership or
other direct or indirect economic
relationships, or prospective
relationships, between board members
of the MLC, their associated publishers
and/or catalogs, and actual or potential
vendors;
• To the extent unaddressed
elsewhere, information regarding any
relevant ‘‘request for information’’ or
‘‘request for proposals’’ issued by the
proposed MLC and responsive
submissions to the extent this
information is relevant to the entity’s
ability to perform the statutory
functions of the MLC.
f. Funding. While the Register’s
process of designating an MLC is
fair share of monies distributed to copyright owners
under subsection (d)(3)(J), while at the same time
respecting contractual relationships. To that end,
payments and credits to songwriters shall be
allocated in proportion to the reported usage of
individual musical works by digital music
providers during the relevant reporting periods. The
50% payment or credit to a songwriter referenced
in subsection (d)(3)(J)(iv)(II) is intended to be
treated as a floor, not a ceiling’’); S. Rep. No. 115–
339, at 14 (same).
62 17 U.S.C. 115(d)(3)(A)(iii).
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separate from the establishment of an
administrative assessment by the
Copyright Royalty Judges,
understanding the proposed funding for
the MLC (in advance of the
establishment of the administrative
assessment) is important to confirming
that the MLC will be ready to
adequately perform its required
functions by the license availability date
and beyond. Further, the statute
separately directs the MLC to establish
procedures to guard against ‘‘abuse,
waste, and the unreasonable use of
funds.’’ 63 Accordingly the Office
requests, for the purposes of this
designation process only, and without
prejudice to the future administrative
assessment proceeding, to the extent
available:
• The anticipated annual costs of the
proposed MLC in each of the first five
years (or the anticipated range of costs),
itemized to the extent possible;
• Information related to the planned
funding of the MLC operations prior to
receipt of administrative assessment
funds, including information that may
relate to voluntary contributions; 64
• Information related to whether and
to what extent the proposed MLC may
take on debt obligations to fund its
operations, and what collateral may be
used to secure such debt; and
• Information regarding whether and
how the proposed MLC may apply
unclaimed accrued royalties on an
interim basis to defray operating costs,
as well as any accompanying plans for
future reimbursement of such royalties
from future collections of the
administrative assessment, including
relevant legal considerations and
guidelines in the event the proposed
MLC does intend to apply unclaimed
accrued royalties.65
g. Education and Outreach. The
Office welcomes information regarding
how a proposed MLC intends to pursue
its education and outreach efforts,
including how it intends to reach
diverse audiences to ‘‘engage in diligent,
good-faith efforts to publicize the
collective and ability to claim
unclaimed accrued royalties for
unmatched musical works (and shares
of such works).’’ 66 Please reference any
relevant experience of proposed board
members, personnel, and potential
vendors.
2. Governance
The following questions are directed
at identifying an entity that can best
63 Id.
at 115(d)(3)(D)(ix)(II)(bb)(BB).
id. at 115(d)(7)(B).
65 See id. at 115(d)(7)(C):
66 S. Rep. No. 115–339, at 14.
adhere to the required governance
criteria outlined in section 115(d)(3)(D)
of the MMA.
a. Composition. As directed by
statute, the Office requests:
• The name and affiliation of each
member of the board of directors
described above and in 17 U.S.C.
115(d)(3)(D)(i);
• The name and affiliation of each
member of the operations advisory
committee described above and in 17
U.S.C. 115(d)(3)(D)(iv);
• The name and affiliation of each
member of the unclaimed royalties
oversight committee described above
and in 17 U.S.C. 115(d)(3)(D)(v);
• The name and affiliation of each
member of the dispute resolution
committee described above and in 17
U.S.C. 115(d)(3)(D)(vi); and
• Proof that the proposed MLC is a
nonprofit entity, not owned by any
other entity that is created by copyright
owners to carry out responsibilities set
forth in the statute.
In responding, please also address the
following topics to explain how these
individuals, and the respective board or
committees, meet the statutory criteria:
• The process and criteria used for
selection of board and committee
members;
• How the proposed songwriter board
members individually and together
faithfully reflect the entire songwriting
community; 67
• How the proposed music publisher
board members individually and
together faithfully reflect the entire
music publisher community;
• Whether the proposed MLC
believes that the board members who
are ‘‘representatives of music publishers
. . . to which songwriters have assigned
exclusive rights of reproduction and
distribution of musical works with
respect to covered activities’’ 68 could
include representatives of music
publishing administrators, where
copyright ownership interests are not
transferred to the publisher, but remain
with the songwriter(s);
• Whether board members, who are
either representatives of music
publishers or professional songwriters,
intend to license covered activity
through the proposed MLC, or whether,
and to what extent, they intend to
license covered activity directly with
licensees; and
• With respect to the unclaimed
royalties oversight committee, how the
proposed members possess specific
insight and knowledge about the types
of owners and songwriters whose works
64 See
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67 Id.
68 17
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may be susceptible to being unmatched
and unclaimed.
The Office notes the Presidential
Signing Statement accompanying
enactment of the law indicates an
expectation that the Register work with
the MLC, once it has been designated,
to ensure that the Librarian retains the
ultimate authority to appoint and
remove all directors.69 The Office
invites comment regarding how the
proposed MLC intends to address issues
relating to succession of board and
committee members, and any other
obligations that may be impacted by this
statement.
b. Governance Issues. The Office
further requests that prospective MLCs
provide:
• Draft bylaws or other
documentation regarding how the MLC
will ensure that the operations of the
MLC and its board are transparent and
accountable; 70
• Information regarding how the
proposed MLC board may identify and
approach perceived or actual conflicts
of interest, including with respect to
applicable law and/or rules of
professional responsibility, and the
selection of board and committee
members and individual vendors; and
• Information regarding how the MLC
may approach confidential information,
including board and committee
member’s access to sensitive
information regarding marketplace
rivals.
3. Indicia of Endorsement and Support
As noted, the MLC must be ‘‘endorsed
by, and enjoy[] substantial support from,
musical work copyright owners that
together represent the greatest
percentage of the licensor market for
uses of such works in covered activities,
as measured over the preceding 3 full
calendar years. ’’ 71 The Office
understands that there may be
conflicting views regarding how the
‘‘greatest percentage of the licensor
market’’ should be measured—i.e., in
market value, or in number of licenses.
That said, the Office has made a few
preliminary interpretations regarding
this clause. For example, because the
section 115 license applies to uses of
phonorecords in the United States, the
relevant market is the United States
market for making and distributing
phonorecords of musical works.
Endorsement may be shown by
69 MMA
Signing Statement.
H.R. Rep. No. 115–651, at 5 (stressing
importance of transparency ‘‘to avoid unnecessary
litigation as well as to gain the trust of the entire
music community’’); S. Rep. No. 115–339, at 5
(same).
71 17 U.S.C. 115(d)(3)(A).
70 See
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including musical work copyright
owners located outside the United
States so long as they control the
relevant rights to works played or
otherwise distributed in the United
States. Similarly, because the statute
seeks support from ‘‘musical work
copyright owners,’’ the relevant support
should come from the parties who have
a relevant ownership interest in the
copyright to musical works (or shares of
such works), in contrast to parties who
do not possess any ownership interest
in the musical work but rather the
ability to administer the works.72
Further, the Office does not read this
clause as prohibiting a musical work
copyright owner from endorsing
multiple prospective MLCs.
The Office requests that a proposed
MLC address how it interprets and
satisfies this endorsement criteria,
including an explanation of how the
proposed MLC has calculated and
documented the endorsement and
substantial support of the requisite
number of copyright owners.
B. DLC and Its Board Members
The Office hereby requests proposals
for designation as the DLC that includes
articles of incorporation, along with
contact information for the collective.
The Office requests that proposals
include a list of proposed board
members and their relevant background
and affiliations. The Office further
requests that proposals for the DLC
designation include the following
information:
• A business plan, including any
statement of purpose or principles and
proposed schedule for establishment
and operation of the proposed DLC in
the first five years of its existence;
• A detailed description outlining
how the proposed DLC has or will have
the administrative capabilities to
perform the required functions; 73
• To the extent available, information
regarding proposed governance
structure, criteria for membership, and
any anticipated dues; 74
• Information regarding how the
proposed DLC intends to address issues
72 Al Kohn & Bob Kohn, Kohn on Music Licensing
170 (4th ed. 2010) (‘‘An administration agreement
is an agreement between two or more people that
provides one of the parties, called the
administrator, the right to administer the music
publishing activities . . . relating to the musical
compositions covered by the agreement, in
exchange for the payment of an administration fee.
Unlike an exclusive administrator under a copublishing agreement, the administrator under an
administration agreement generally does not
acquire any ownership interest in the compositions
covered by the agreement.’’).
73 See 17 U.S.C. 115(d)(5)(B)–(C).
74 See id. at 115(d)(5)(C)(i)(I).
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of confidentiality as it relates to the DLC
representative on the MLC board;
• Views whether a single vendor may
simultaneously provide services
fulfilling the statutory obligations of the
DLC and the MLC;
• Information regarding how the
proposed DLC intends to pursue its
outreach efforts, including ‘‘reasonable,
good-faith efforts to assist the
mechanical licensing collective . . . by
encouraging digital music providers to
publicize the existence of the collective
and the ability of copyright owners to
claim unclaimed accrued royalties. ’’ 75
Please reference any relevant experience
of proposed board members, personnel
and potential vendors; and
• Any other information that
proposed DLC believes is relevant to
demonstrate it best meets the selection
criteria.
Finally, the Office requests that the
proposed DLC address how it interprets
and satisfies the criteria that it must be
‘‘endorsed by and enjoy[] substantial
support from digital music providers
and significant nonblanket licensees
that together represent the greatest
percentage of the licensee market for
uses of musical works in covered
activities, as measured over the
preceding 3 calendar years. ’’ 76 Please
include an explanation of how the
proposed DLC has verified, calculated,
and documented such endorsement and
substantial support, including how the
licensee market was calculated.
III. Additional Opportunity for Public
Participation
Depending on the feedback received,
the Office may request additional
information in the form of a public
notice, directed letters inviting
prospective MLCs to supplement or
respond to certain information, or a
public meeting or hearing.
The Office will also consider whether
to utilize informal meetings to address
discrete issues prior to issuing a
designation by establishing guidelines
for ex parte communications. The
Office’s proceedings typically do not
include discussions about the substance
of a proceeding apart from the noticed
phases of written comments and public
hearings (although the Office does
provide procedural guidance to
participants). But for certain
proceedings, the Office has determined
that informal communications with
participants can be beneficial in limited
circumstances where the Office seeks
specific information or follow-up
75 See
76 Id.
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id. at 115(d)(5)(C)(iii).
at 115(d)(5)(A)(ii).
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regarding the public record.77 Following
that precedent, in this proceeding, any
such communication will be so limited.
The primary means to communicate
views in the course of the designation
process will be through the submission
of written comments. In other words,
informal communication will
supplement, not substitute for, the
written record. While exact guidelines
governing ex parte communications
with the Office regarding the
designation process may be issued at a
later date on https://www.copyright.gov/
rulemaking/mma-designations/, they
would be similar to those imposed by
the Office for the recently concluded
section 1201 proceeding.78 For example,
the participating party or parties will be
responsible for submitting a list of
attendees and written summary of any
oral communication to the Office, which
will be made publicly available on the
Office’s website. In sum, the Office will
require that all such communications be
on the record to ensure the greatest
possible transparency.
Dated: December 18, 2018.
Regan A. Smith,
General Counsel and Associate Register of
Copyrights.
[FR Doc. 2018–27743 Filed 12–20–18; 8:45 am]
BILLING CODE 1410–30–P
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
[18–098]
Notice of Information Collection
National Aeronautics and
Space Administration (NASA).
ACTION: Notice of information collection.
AGENCY:
The National Aeronautics and
Space Administration, as part of its
continuing effort to reduce paperwork
and respondent burden, invites the
general public and other Federal
agencies to take this opportunity to
comment on proposed and/or
continuing information collections.
DATES: All comments should be
submitted within 30 calendar days from
the date of this publication.
ADDRESSES: All comments should be
addressed to Gatrie Johnson, National
Aeronautics and Space Administration,
amozie on DSK3GDR082PROD with NOTICES1
SUMMARY:
77 See, e.g., 82 FR 49550, 49563 (Oct. 26, 2017)
(identifying guidelines for ex parte communications
in section 1201 rulemaking); 82 FR 58153, 58154
(Dec. 11, 2017) (identifying guidelines for ex parte
communications in rulemaking regarding cable,
satellite, and DART license reporting practices).
78 See U.S. Copyright Office, Ex Parte
Communications, https://www.copyright.gov/1201/
2018/ex-parte-communications.html.
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300 E Street SW, Washington, DC
20546–0001.
FOR FURTHER INFORMATION CONTACT:
Requests for additional information or
copies of the information collection
instrument(s) and instructions should
be directed to Gatrie Johnson, NASA
Clearance Officer, NASA Headquarters,
300 E Street SW, JF0000, Washington,
DC 20546 or email Gatrie.Johnson@
NASA.gov.
SUPPLEMENTARY INFORMATION:
I. Abstract
The NASA Contractor Financial
Management Reporting System is the
basic financial medium for contractor
reporting of estimated and incurred
costs, providing essential data for
projecting costs and hours to ensure that
contractor performance is realistically
planned and supported by dollar and
labor resources. The data provided by
these reports is an integral part of the
Agency’s accrual accounting and cost
based budgeting system. Respondents
are reimbursed for associated cost to
provide the information, per their
negotiated contract price and associated
terms of the contract. There are no ‘‘total
capital and start-up’’ or ‘‘total operation
and maintenance and purchase of
services’’ costs associated since NASA
policy requires that data reported is
generated from the contractors’ existing
system. The contractors’ internal
management system shall be relied
upon to the maximum extent possible.
Comments submitted in response to this
notice will be summarized and included
in the request for OMB approval of this
information collection. They will also
become a matter of public record.
II. Methods of Collection
NASA collects this information
electronically and that is the preferred
manner, however information may also
be collected via mail or fax.
III. Data
Title: NASA Contractor Financial
Management Reports.
OMB Number: 2700–0003.
Type of Review: Renewal of a
previously approved collection.
Affected Public: Business or other for
profit, not-for-profit institutions.
Average Expected Annual Number of
Activities: 500.
Average Number of Responses per
Activity: 12.
Annual Responses: 6000.
Frequency of Responses: Monthly.
Average Minutes per Response: 540.
Burden Hours: 54,000.
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IV. Request for Comments
Comments are invited on: (1) Whether
the proposed collection of information
is necessary for the proper performance
of the functions of NASA, including
whether the information collection has
practical utility; (2) the accuracy of
NSA’s estimate of the burden (including
hours and cost) of the proposed
collection of information; (3) ways to
enhance the quality, utility, and clarity
of the information collected; and (4)
ways to minimize the burden of the
collection of information on
respondents, including automated
collection techniques or the use of other
forms of information technology.
Comments submitted in response to
this notice will be summarized and
included in the request for OMB
approval of this information collection.
They will also become a matter of
public record.
Gatrie Johnson,
NASA PRA Clearance Officer.
[FR Doc. 2018–27595 Filed 12–20–18; 8:45 am]
BILLING CODE 7510–13–P
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
[18–100]
Notice of Information Collection
The Office of Chief Health
and Medical Officer (OCHMO), within
the National Aeronautics and Space
Administration (NASA) as part of its
continuing effort to reduce public
burden and maximize the utility of
government information, provides the
general public and other Federal
agencies the opportunity to comment on
an information collection project, as
required by the Paperwork Reduction
Act of 1995. This notice invites
comment on an information collection
project titled, ‘‘Electronic Medical
Record for Implementation of TREAT
Astronaut Act.’’ The TREAT Astronaut
Act is subsection 441 within the
National Aeronautics and Space
Administration Transition
Authorization Act of 2017 (115th
Congress, https://www.congress.gov/
115/plaws/publ10/PLAW115publ10.pdf).
The goal is to maintain digital
medical records of routine health care,
emergency treatment, and scheduled
examinations for active or retired
astronauts in order to develop a
knowledge base and address gaps in
services in support of medical
monitoring, diagnosis and treatment of
conditions associated with human space
flight as stated in Public Law 115–10.
SUMMARY:
E:\FR\FM\21DEN1.SGM
21DEN1
]]>Agencies
[Federal Register Volume 83, Number 245 (Friday, December 21, 2018)]
[Notices]
[Pages 65747-65754]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27743]
=======================================================================
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LIBRARY OF CONGRESS
Copyright Office
[Docket No. 2018-11]
Request for Information on Designation of Mechanical Licensing
Collective and Digital Licensee Coordinator
AGENCY: U.S. Copyright Office, Library of Congress.
ACTION: Notice of inquiry.
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SUMMARY: The U.S. Copyright Office is issuing a notice of inquiry
regarding the Musical Works Modernization Act, title I of the Orrin G.
Hatch-Bob Goodlatte Music Modernization Act (``MMA''), enacted on
October 11, 2018. The MMA made significant modifications to the
compulsory license in section 115 of title 17 for making and
distributing phonorecords of musical works (the ``mechanical
license''). Among the many changes to the section 115 compulsory
license, the MMA calls for establishing a collective to manage a new
blanket licensing system governing licensed uses of musical works by
digital music providers. The Register of Copyrights is directed to
designate the mechanical licensing collective and the digital licensee
coordinator that will carry out key functions under the new blanket
license.
The Office now solicits information to identify the appropriate
entities to be designated. The information received in response to this
notice of inquiry will be publicly posted, and interested members of
the public may publicly comment on the submissions. After consideration
of the record material, the Register will publish a notice in the
Federal Register setting forth the identity of and contact information
for the mechanical licensing collective and digital licensee
coordinator, and the reasons for the designations.
DATES: Initial written proposals must be received no later than 11:59
p.m. Eastern Time on March 21, 2019. Written reply comments must be
received no later than 11:59 p.m. Eastern Time on April 22, 2019.
Following submission of these written comments, the Office may provide
for proponents of written proposals to supplement or amend their
initial submission, in accordance with specific instructions
established by the Office at https://www.copyright.gov/rulemaking/mma-designations/. The Office reserves the option to seek additional public
input prior to making a designation, to be announced by separate notice
in the future. Rather than reserving time for potential extensions of
time to file comments, commenting parties should be aware that the
Office has already established what it believes to be the most
reasonable deadlines consistent with the statutory deadlines by which
it must promulgate the regulations described in this notice of inquiry.
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 in response to this
notice 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-designations/. 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.
[[Page 65748]]
FOR FURTHER INFORMATION CONTACT: Regan A. Smith, General Counsel and
Associate Register of Copyrights, by email at regans@copyright.gov,
Steve Ruwe Assistant General Counsel, by email at sruwe@copyright.gov,
or Jason E. Sloan, Assistant General Counsel, by email at
jslo@copyright.gov. 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 Goodlatte Music Modernization Act (``MMA'').\1\ Title I of
the MMA addresses the efficiency and fairness of the section 115
mechanical license for the reproduction and distribution of musical
works embodied in digital phonorecord deliveries by establishing a
blanket licensing system governing such uses by digital music
providers.\2\ Prior to passage of the MMA, a digital music provider
seeking to use a protected musical work was required to either obtain a
voluntary license from the copyright owner to use the work or obtain a
compulsory license by filing a notice of intention to obtain a
compulsory license on a song-by-song basis. A notice of intention could
be filed with the copyright owner or, under certain circumstances in
which the owner could not be identified, with the U.S. Copyright
Office.\3\
---------------------------------------------------------------------------
\1\ Public Law 115-264, 132 Stat. 3676 (2018).
\2\ See S. Rep. No. 115-339, at 1-2 (2018) (``The current
statutory scheme applies inconsistent rules that place certain
technologies at a disadvantage and result in inequitable
compensation variances for music creators. These inconsistencies
have drawn criticism that music copyright and licensing laws are too
difficult to comply with and do not adequately reward the artists
and professionals responsible for creating American music.'');
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 (``Conf. Rep.''); see also H.R. Rep. No.
115-651, at 2 (2018) (detailing the House Judiciary Committee's
efforts to review music copyright laws).
\3\ See 17 U.S.C. 115(b)(1), (c)(5) (2017); S. Rep. No. 115-339,
at 3; 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).
---------------------------------------------------------------------------
The MMA creates a new blanket license for the reproduction and
distribution of musical works by digital music providers in the form of
digital phonorecord deliveries, including permanent downloads, limited
downloads, and interactive streams, and eliminates the song-by-song
notice of intention process for such uses.\4\ Instead of obtaining
compulsory licenses on an individual song-by-song basis, the MMA
directs the Office to designate a nonprofit entity, the mechanical
licensing collective (``MLC'') to administer this new blanket-licensing
system starting in January 2021.\5\ As set forth in more detail below,
the MLC, through its board of directors and task-specific committees,
will be responsible for a variety of duties, including collecting and
distributing royalties from digital music providers, establishing a
musical works database relevant to the new blanket license, and
administering a process by which copyright owners can claim ownership
of musical works (and shares of such works).\6\
---------------------------------------------------------------------------
\4\ The MMA retains the ability of record companies to obtain an
individual download license on a song-by-song basis. 17 U.S.C.
115(b)(3) (2018).
\5\ Id. at 115(d)(3)(B); see also id. at 115(e)(15). The MLC
will begin to administer the blanket license on the ``license
availability date,'' envisioned by the statute as January 1, 2021.
\6\ Id. at 115(d)(3)(C). The Copyright Office is provided with
``broad regulatory authority'' to conduct proceedings as necessary
to effectuate the statute; in addition to a number of regulations
that the Register is specifically directed to promulgate, the
legislative history contemplates that the Register will ``thoroughly
review'' policies and procedures established by the MLC. H.R. Rep.
No. 115-651, at 5-6; S. Rep. No. 115-339, at 5; see 17 U.S.C.
115(d)(12). The legislative history further suggests that the
Register promulgate the necessary regulations in a way that
``balances the need to protect the public's interest with the need
to let the new collective operate without over-regulation.'' H.R.
Rep. No. 115-651, at 14; S. Rep. No. 115-339, at 15.
---------------------------------------------------------------------------
Licensees will bear the reasonable costs of establishing and
operating the new MLC. The Copyright Royalty Judges will conduct a
proceeding to determine the amount of an administrative assessment fee
to be paid by blanket and significant nonblanket licensees for the
reasonable costs of starting up and continuing to operate the new
MLC.\7\ A digital licensee coordinator (``DLC'') may be designated to
represent digital music providers in the administration of the license,
including by serving as a nonvoting board member of the MLC, and
participating in proceedings before the Copyright Royalty Judges to
determine the administrative assessment fee.\8\ To facilitate public
comment, this notice sets forth a brief explanation of the designation
process and key functions and responsibilities of the MLC, its board
and committees, and the DLC.
---------------------------------------------------------------------------
\7\ 17 U.S.C. 115(d)(7)(D).
\8\ Id. at 115(d)(3)(D)(i)(IV), (d)(5).
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A. Designation Process
The statute directs the Register of Copyrights to designate the MLC
within 270 days of enactment of the MMA.\9\ To aid in this process, the
statute requires the Register to publish notice in the Federal Register
soliciting information to assist in identifying the appropriate entity
to serve as the MLC within 90 days of enactment. The notice must
solicit information regarding potential board members of the MLC, the
operations advisory committee, the unclaimed royalties oversight
committee and the dispute resolution committee.\10\
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\9\ Id. at 115(d)(3)(B)(i).
\10\ Id. at 115(d)(3)(B), (d)(3)(D)(iv)-(vi).
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By law, in order to be designated as the MLC, the entity should be:
A single nonprofit entity that is created by copyright
owners to carry out its statutory responsibilities;
Endorsed by and enjoying substantial support from musical
work copyright owners that represent the greatest percentage of the
licensor market for uses of such works in covered activities over the
preceding 3 years;
Able to demonstrate to the Copyright Office that, by the
license availability date, it will have the administrative and
technological capabilities to perform the required functions; and
Governed by a board of directors that is composed of a mix
of voting and non-voting members as directed by the statute.\11\
\11\ Id. at 115(d)(3)(A), (d)(3)(D)(i).
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If no entity meets all of these statutory criteria, the Register must
designate as the MLC the entity that most nearly fits these
qualifications.\12\ After 5 years, the Register will commence a
periodic review of this designation.\13\
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\12\ Id. at 115(d)(3)(B)(iii).
\13\ Id. at 115(d)(3)(B)(ii); see also H.R. Rep. No. 115-651, at
6 (noting that continuity is expected to be beneficial so long as
the designated entity has ``regularly demonstrated its efficient and
fair administration,'' whereas evidence of ``fraud, waste, or
abuse,'' or failure to adhere to relevant regulations should ``raise
serious concerns'' regarding whether re-designation is appropriate),
S. Rep. No. 115-339, at 5-6 (same).
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The Register is also directed to designate the DLC not later than
270 days after the enactment date, following substantially the same
procedure described for designation of the MLC.\14\ Unlike the MLC, in
the event the Register is unable to identify an entity that fulfills
the criteria for the DLC, the Register may decline to designate a
DLC.\15\
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\14\ 17 U.S.C. 115(d)(5)(B).
\15\ Id. at 115(d)(5)(B)(iii).
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Under the statutory selection criteria, the name and affiliation of
each board member and each committee established by the MLC must be
solicited by the Register as part of the designation
[[Page 65749]]
process.\16\ The legislative history states ``the Register is expected
to allow the public to submit comments on whether the individuals and
their affiliations meet the criteria specified in the legislation; make
some effort of its own as it deems appropriate to verify that the
individuals and their affiliations actually meet the criteria specified
in the legislation; and allow the public to submit comments on whether
they support such individuals being appointed for these positions.''
\17\ Accordingly, as addressed below, the Copyright Office expects
interested members of the public to comment upon the proposed
governance board in response to this inquiry.
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\16\ Id. at 115(d)(3)(B)(i).
\17\ H.R. Rep. No. 115-651, at 5; S. Rep. No. 115-339, at 5;
Conf. Rep. at 4; see H.R. Rep. No. 115-651, at 26 (``This
requirement is not waivable by the Register and is not subject to
the alternate designation language.''); S. Rep. No. 115-339, at 23
(same).
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Similar to the endorsement criteria discussed below, the statute
does not preclude prospective board members, vendors, or other
affiliates of a prospective MLC from being included in submissions from
multiple competing entities. Indeed, based on the statutory criteria
requiring representative of certain publisher or songwriter
associations to serve as non-voting board members, there may be some
representatives that might logically serve on the board of any proposed
MLC.\18\ Similarly, while the statutory language authorizes the MLC to
arrange for services of outside vendors, nothing suggests that such a
vendor must offer exclusive services to that MLC candidate (let alone
one that is yet-to-be designated).
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\18\ See 17 U.S.C. 115(d)(3)(D)(i).
---------------------------------------------------------------------------
B. MLC Duties and Functions
The MMA enumerates a number of functions for the MLC.\19\ The MLC
must be a single nonprofit entity created by copyright owners and
endorsed by musical work copyright owners, and it must possess the
administrative and technological capabilities necessary to carry out a
wide array of responsibilities in administering blanket licenses.\20\
This administrative role includes accepting or rejecting notices of
license, and exercising authority to terminate licenses when the
licensee is in default.\21\ The MLC has 30 days to reject a notice in
writing, listing with specificity why such notice was rejected, either
because it does meet the statutory requirements or applicable
regulations,\22\ or if the digital music provider has had a blanket
license terminated by the collective within the past three years.\23\
The MLC will also accept notices of nonblanket activity; that is, a
notice that the licensee has been engaging in making digital
phonorecord deliveries of musical works without using the blanket
license, from significant nonblanket licensees.\24\
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\19\ Id. at 115(d)(3)(C)(i)-(iii) (enumerating thirteen
functions, in addition to permission to administer voluntary
licenses).
\20\ Id. at 115(d)(3)(A)(i)-(iii); see also id. at
115(d)(3)(B)(iii).
\21\ Id. at 115(d)(3)(F).
\22\ Id. at 115(d)(2)(A)(iii)(I).
\23\ Id. at 115(d)(2)(A)(iii)(II), and (d)(3)(F).
\24\ Id. at 115(d)(3)(F), (e)(23).
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For digital music providers that are blanket licensees, the MLC
will receive reports of usage, and collect and distribute royalties for
covered activities.\25\ A key aspect of the MLC's collection and
distribution responsibilities includes identifying musical works and
copyright owners, matching them to sound recordings (and addressing
disputes), and ensuring that a copyright owner gets paid as he or she
should. To that end, the MLC will create and maintain a free, public
database of musical work and sound recording ownership information. The
MLC will administer processes by which copyright owners can claim
ownership of musical works (and shares of such works), and by which
royalties for works for which the owner is not identified or located
are equitably distributed to known copyright owners on a market share
basis after a required holding period. The MLC unclaimed royalties
oversight committee is tasked with establishing policies and procedures
for such distributions, subject to the approval of the MLC board of
directors.
---------------------------------------------------------------------------
\25\ See generally id. at 115(d)(3)(C)(i).
---------------------------------------------------------------------------
To fulfill its responsibilities, the MLC is statutorily authorized
to invest in relevant resources, and arrange for services of outside
vendors and others, to support the activities of the MLC.\26\ It may
engage in legal and other efforts to enforce rights and obligations set
forth under the license, including by filing bankruptcy proofs of
claims for amounts owed under licenses, and by acting in coordination
with the digital licensee coordinator.\27\ The MLC may be audited by
copyright owners due royalties from the MLC, and so must maintain
records of its activities and engage in and respond to audits.\28\ And,
the MLC may audit licensees.\29\
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\26\ Id.
\27\ Id.
\28\ Id.; see also id. at 115(d)(3)(L).
\29\ Id. at 115(d)(4)(D).
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The MLC may also administer voluntary licenses issued by, or
individual download licenses obtained from, copyright owners only for
reproduction or distribution rights in musical works for covered
activities and the MLC shall charge reasonable fees for such
services.\30\ But the MLC may only issue blanket licenses for digital
uses pursuant to section 115(d)(1), and administer blanket licenses for
reproduction or distribution rights in musical works for covered
activities.\31\
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\30\ Id. at 115(d)(3)(C)(iii).
\31\ Id. at 115(d)(3)(C)(ii).
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The MLC is authorized to initiate and participate in proceedings
before the Copyright Royalty Judges to establish the administrative
assessment that will fund the MLC activities. The MLC may gather and
provide documentation for use in proceedings before the Copyright
Royalty Judges to set rates and terms for the section 115 license. And,
finally, the MLC may initiate and participate in proceedings before the
Copyright Office with respect to the foregoing activities.\32\
---------------------------------------------------------------------------
\32\ Id. at 115(d)(3)(C)(i).
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C. MLC Board
The board of the MLC shall consist of 14 voting members and 3
nonvoting members.\33\ Ten voting members shall be representatives of
music publishers to which songwriters have assigned exclusive rights of
reproduction and distribution of musical works with respect to covered
activities, and none of which may be owned by, or under common control
with, any other board member. Four voting members shall be professional
songwriters who have retained and exercise exclusive rights of
reproduction and distribution with respect to covered activities with
respect to musical works they have authored. One nonvoting member shall
be a representative of the nonprofit trade association of music
publishers that represents the greatest percentage of the licensor
market for uses of musical works in covered activities, as measured for
the 3-year period preceding the date on which the member is appointed.
One nonvoting member shall be the digital licensing coordinator, if one
has been designated, or otherwise, the nonprofit trade association of
digital licensees that represents the greatest percentage of the
licensee market for uses of musical works in covered activities, as
measured over the preceding 3 full calendar years. One nonvoting member
shall be a representative of a nationally recognized nonprofit trade
association whose
[[Page 65750]]
primary mission is advocacy on behalf of songwriters in the United
States.\34\
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\33\ For the statutory requirements regarding the board
described in this paragraph, see 17 U.S.C. 115(d)(3)(D)(i).
\34\ Id.
---------------------------------------------------------------------------
As the legislative history notes, ``[s]ervice on the Board or its
committees is not a reward for past actions, but is instead a serious
responsibility that must not be underestimated . . . . It has been
agreed to by all parties that songwriters should be responsible for
identifying and choosing representatives that faithfully reflect the
entire songwriting community on the Board.'' \35\
---------------------------------------------------------------------------
\35\ S. Rep. No. 115-339, at 5.
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The MLC board is authorized to adopt bylaws for the selection of
new directors subsequent to the initial designation of the MLC.\36\ The
Presidential Signing Statement accompanying enactment of the MMA states
that directors of the MLC are inferior officers under the Appointments
Clause of the Constitution, and that the Librarian of Congress must
approve each subsequent selection of a new director.\37\ It also
suggests that the Register work with the MLC, once designated, to
address issues related to board succession.\38\
---------------------------------------------------------------------------
\36\ 17 U.S.C. 115(d)(3)(D)(ii).
\37\ Statement on Signing the Orrin G. Hatch-Bob Goodlatte Music
Modernization Act, 2018 Daily Comp. Pres. Doc. 692 (Oct. 11, 2018),
https://www.gpo.gov/fdsys/pkg/DCPD-201800692/pdf/DCPD-201800692.pdf
(``MMA Signing Statement'').
\38\ Id.
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An individual serving as an officer of the MLC may not, at the same
time, also be an employee or agent of any member of the board of
directors of the collective or any entity represented by a member of
the board of directors.\39\
---------------------------------------------------------------------------
\39\ 17 U.S.C. 115(d)(3)(D)(viii).
---------------------------------------------------------------------------
Not later than one year after the date on which the MLC is
initially designated, the MLC shall establish publicly available bylaws
to determine issues relating to the governance of the collective. The
MLC bylaws shall address the length of the term for each MLC board
member, the staggering of the terms of the board members, a process for
filling a seat on the board that is vacated before the end of the set
term, a process for electing a board member, and a management structure
for daily operation of the collective.\40\
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\40\ Id. at 115(d)(3)(D)(ii).
---------------------------------------------------------------------------
D. MLC Committees
The MMA requires the board to establish three committees, and the
Office to solicit names of prospective committee members in this
notice. The statute does not address whether members may serve on
multiple committees or whether members of the board may also serve on a
committee.
Operations Advisory Committee. The MLC board of directors is
required to establish an operations advisory committee consisting of
not fewer than six members to make recommendations to the board
concerning the operations of the collective, including the efficient
investment in and deployment of information technology and data
resources.\41\ This committee is required to have an equal number of
members who are musical work copyright owners, to be appointed by the
MLC board, and representatives of digital music providers, to be
appointed by the DLC.\42\
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\41\ Id. at 115(d)(3)(D)(iv).
\42\ Id.
---------------------------------------------------------------------------
Unclaimed Royalties Oversight Committee. The MLC board is required
to establish and appoint an unclaimed royalties oversight committee
consisting of ten members, five of which shall be musical work
copyright owners and five of which shall be professional songwriters
whose works are used in covered activities.\43\ This committee is
responsible for establishing policies necessary to undertake a fair
distribution of unclaimed royalties.\44\
---------------------------------------------------------------------------
\43\ Id. at 115(d)(3)(D)(v).
\44\ Id. at 115(d)(3)(J)(ii).
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Dispute Resolution Committee. The MLC board of directors is
required to establish and appoint a dispute resolution committee
consisting of not fewer than 6 members, which shall include an equal
number of representatives of musical work copyright owners and
professional songwriters.\45\ This committee is responsible for
establishing policies and procedures for copyright owners to address
disputes relating to ownership interests in musical works, which shall
include a mechanism to hold disputed funds pending the resolution of
the dispute.\46\
---------------------------------------------------------------------------
\45\ Id. at 115(d)(3)(D)(vi).
\46\ Id. at 115(d)(3)(K).
---------------------------------------------------------------------------
E. The DLC
The MMA also calls for the establishment of a digital licensee
coordinator (``DLC'') to carry out key functions under the new blanket
license.\47\ The DLC is tasked with coordinating the activities of the
licensees. The DLC shall make reasonable, good faith efforts to assist
the MLC in its efforts to locate and identify copyright owners of
unmatched musical works (and shares of such works) by encouraging
digital music providers to publicize the existence of the collective
and the ability of copyright owners to claim unclaimed accrued
royalties, including by posting contact information for the collective
at reasonably prominent locations on digital music provider websites
and applications and conducting in-person outreach activities with
songwriters. The DLC is authorized to gather and provide documentation
for, and participate in proceedings before, the Copyright Royalty
Judges to determine the administrative assessment to be paid by digital
music providers. Further, the DLC may initiate and participate in
proceedings before the Copyright Office with respect to the blanket
mechanical license.
---------------------------------------------------------------------------
\47\ See generally id. at 115(d)(5)(C).
---------------------------------------------------------------------------
II. Request for Proposals and Related Information
At this time, the Copyright Office solicits information to assist
in identifying the appropriate entities to serve as the MLC and DLC.
The MMA also directs the Register to promulgate multiple other
regulations with respect to the operation of the revamped blanket
mechanical license and operation of the MLC, regarding, inter alia, the
form of the notices of license and notice of nonblanket activity,\48\
usage reports and adjustments,\49\ information to be included in the
musical works database,\50\ requirements for the usability,
interoperability, and usage restrictions of that database,\51\ and the
disclosure and use of confidential information.\52\ The Office will
solicit public comment regarding those subjects through future
notice(s) and therefore present commenters should focus their
statements on information relevant to the designation processes.\53\
---------------------------------------------------------------------------
\48\ Id. at 115(d)(2)(A)(i), (d)(6)(A)(i).
\49\ Id. at 115(d)(4)(A)(iv).
\50\ Id. at 115(d)(3)(E)(ii)-(iii).
\51\ Id. at 115(d)(3)(E)(vi).
\52\ Id. at 115(d)(12)(C).
\53\ The Office is contemplating whether it may aid the process
to solicit initial public comments on some of these issues in
advance of the final designation. The Office notes, however, that
the MMA explicitly contemplates that the MLC and DLC may participate
in such proceedings, and would not expect to conclude any
proceeding(s) without affording that opportunity. See id. at
115(d)(3)(C)(i)(X), (d)(5)(C)(i)(IV). The Office welcomes comment on
this question of timing.
---------------------------------------------------------------------------
A. Mechanical Licensing Collective
The Office hereby requests proposals for designation as the MLC
that include the identities of all members of a proposed board of
directors and the various committees, along with contact information
for the collective. Such proposals should identify the proposed board
members' relevant background and affiliations so that interested
parties can submit comments to the Register addressing whether the
parties meet the statutory requirements set forth in 17 U.S.C.
115(d)(3)(D).
[[Page 65751]]
The Office requests that proposals for the MLC designations include
the following information, organized by the categories below.
1. Administrative and Technological Capabilities
The following questions are directed at identifying an entity that
can best perform the duties outlined in section 115(d)(3)(C) of the
MMA.
a. General. The Office requests a business plan, including a
statement of purpose or principles, proposed schedule, and available
budgetary projections, for the establishment and operation of the
proposed MLC for the first five years of its existence. In response to
the more granular information requested below, this plan should include
a description of the intended technological and/or business methods
for: Establishing and maintaining the required musical works database;
administering the blanket license and collecting relevant notices,
usage reports, and administrative assessments from digital music
providers; administering a process by which copyright owners can claim
ownership of musical works (and shares of such works); distributing
royalties generated from unidentified works equitably; collecting and
processing royalty payments to musical work copyright owners; and
otherwise fulfilling the MLC's statutory obligations.
b. Ownership Identification, Matching, and Claiming Process. The
Office solicits information tailored to the proposed MLC's ability to
identify musical works (and shares of such works) embodied in
particular sound recordings, and to locate the copyright owners of such
musical works, including but not limited to:
The proposed MLC's plan for matching sound recordings and
musical works, including plans for developing or acquiring initial sets
of data;
An explanation of how ownership information may be
populated, corrected or updated by various stakeholders and how the
proposed MLC will accommodate submission of information that may vary
by scale and scope depending upon the technical or business
sophistication of the submitter;
Best practices, methodologies or expertise (including
manual processes), that the proposed MLC may employ for identification
of copyright owners and matching of copyrighted works;
Intended approaches to prioritization of matching efforts
(including whether and how factors such as usage, royalty amounts,
genre, and vintage of usage of works may guide prioritization choices);
The proposed MLC's target goals or estimates for matching
works in each of the first five years, and in the aggregate, expressed
both in terms of a percentage of the market share of musical works in
covered activities, and in terms of a percentage of the works licensed
for use in covered activity;
With consideration of the statutory timeframes regarding
distribution of unclaimed royalties that accrued before the license
availability date, an explanation how the proposed MLC will provide
adequate opportunity to engage in requisite identification and matching
efforts and for copyright owners to search and claim ownership of
musical works (or shares thereof); \54\
---------------------------------------------------------------------------
\54\ Id. at 115(d)(3)(J).
---------------------------------------------------------------------------
Intended approaches to address fraudulent claims,
including any planned policies or procedures of the dispute resolution
committee noted below, relevant institutional knowledge of its board
members or prospective vendors, and intended documentation regarding
claims of ownership of works or intended technological processes; and
Any views regarding how the proposed MLC intends to
interact with and address ownership information with collective
management organizations that represent owners of comparable and/or
associated rights.
c. Maintenance of Musical Works Database. While a well-functioning
musical works database is presumed to be integral to administering the
matching and claiming process described above,\55\ the Office solicits
additional information related to the creation and operation of this
historic unified music database, specifically:
---------------------------------------------------------------------------
\55\ See Conf. Rep. at 6-7.
---------------------------------------------------------------------------
How the proposed MLC will approach interoperability of
existing or future external databases, systems and applications,
including the extent to which it may adopt or engage with existing and
future frameworks, standards or formats (including open standards);
The proposed MLC's plans to utilize and interact with
existing and emerging methods or standards for identification of
parties and works (including hashes and fingerprint technologies);
An explanation of how the proposed MLC will have the
capability to accept, maintain, and otherwise handle large data sets,
including consideration of the scale of data that the MLC will be
responsible for managing;
An explanation of how the proposed MLC intends to approach
access and usage restrictions regarding the musical works database,
including with respect to digital music providers, significant
nonblanket licensees, authorized vendors, and other parties' timely
access to data; \56\
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\56\ See 17 U.S.C. 115(d)(3)(E)(v).
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An explanation of how the proposed MLC will approach other
information technology issues, including security, redundancy, privacy,
and transparency.
d. Collection and Distribution of Royalties, Including Unclaimed
Accrued Royalties. The Office seeks information related to the proposed
MLC's royalty distribution methods and capabilities. As the legislative
history notes, the MLC is required to collect and distribute royalties
using the information provided in usage reports on a specific schedule
mandated by statute.\57\ As the history further notes, there is an
expectation that ``[a]ll copyright owners shall have their royalties
distributed fairly and no copyright owner may receive special treatment
as a result of their position on the Board, its committees, or for any
other reason without a reasonable basis.'' \58\ Specifically, the
Office requests:
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\57\ H.R. Rep. No. 115-651, at 12; S. Rep. No. 115-339, at 13.
\58\ H.R. Rep. No. 115-651, at 12; S. Rep. No. 115-339, at 13.
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The proposed MLC's expected competence with efficient and
effective payment methods, including addressing tax and other
regulatory documentation for various payees and entities;
Any planned approaches with respect to the collection and
distribution of royalties collected through bankruptcy proceedings;
\59\
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\59\ See Conf. Rep. at 11.
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Information about the proposed MLC's approach to
scheduling royalty payments to identified copyright owners, including
whether the entirety of unclaimed royalties is intended to be
distributed simultaneously;
Views regarding whether the proposed MLC may consider
holding reserve funds to address claims that may only reasonably be
identified after the statutory holding period, and what if any criteria
might be used to implement any such reserve practices; \60\
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\60\ 17 U.S.C. 115(d)(3)(H).
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Any policies that the proposed MLC intends to implement
with respect to undertaking a fair distribution of unclaimed royalties;
\61\ and
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\61\ H.R. Rep. No. 115-651, at 13 (describing required policies,
and noting ``[i]t is the intent of Congress to ensure that
songwriters receive their fair share of monies distributed to
copyright owners under subsection (d)(3)(J), while at the same time
respecting contractual relationships. To that end, payments and
credits to songwriters shall be allocated in proportion to the
reported usage of individual musical works by digital music
providers during the relevant reporting periods. The 50% payment or
credit to a songwriter referenced in subsection (d)(3)(J)(iv)(II) is
intended to be treated as a floor, not a ceiling''); S. Rep. No.
115-339, at 14 (same).
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[[Page 65752]]
Any other considerations that may be relevant with respect
to the distribution of claimed and unclaimed accrued royalties.
e. Investment in Resources and Vendor Engagement. The Office
understands that proposals for designation as the MLC may rely on one
or more vendors to ``demonstrate to the Register of Copyrights that the
entity has, or will have prior to the license availability date, the
administrative and technological capabilities to perform the required
functions of the mechanical licensing collective.'' \62\ To the extent
not already provided, the Office therefore seeks information about
actual or potential vendors, including the specific functions to be
addressed by a given vendor, the vendors' relevant experience with
clients and projects involving similar scale and type, or industry-
specific knowledge. The Office requests, to the extent practicable:
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\62\ 17 U.S.C. 115(d)(3)(A)(iii).
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The estimated number of employees the proposed MLC intends
to hire and/or engage through vendors in each of the first five years;
The names and resumes of any key employees that the
proposed MLC may have engaged to design and operate the statutorily
required functions of the MLC;
The contracts the proposed MLC has engaged in, or any
funds or other items of value the proposed MLC has exchanged in
anticipation of being designated as the MLC;
Information regarding any conflicts of interests,
including but not limited to disclosure of common ownership or other
direct or indirect economic relationships, or prospective
relationships, between board members of the MLC, their associated
publishers and/or catalogs, and actual or potential vendors;
To the extent unaddressed elsewhere, information regarding
any relevant ``request for information'' or ``request for proposals''
issued by the proposed MLC and responsive submissions to the extent
this information is relevant to the entity's ability to perform the
statutory functions of the MLC.
f. Funding. While the Register's process of designating an MLC is
separate from the establishment of an administrative assessment by the
Copyright Royalty Judges, understanding the proposed funding for the
MLC (in advance of the establishment of the administrative assessment)
is important to confirming that the MLC will be ready to adequately
perform its required functions by the license availability date and
beyond. Further, the statute separately directs the MLC to establish
procedures to guard against ``abuse, waste, and the unreasonable use of
funds.'' \63\ Accordingly the Office requests, for the purposes of this
designation process only, and without prejudice to the future
administrative assessment proceeding, to the extent available:
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\63\ Id. at 115(d)(3)(D)(ix)(II)(bb)(BB).
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The anticipated annual costs of the proposed MLC in each
of the first five years (or the anticipated range of costs), itemized
to the extent possible;
Information related to the planned funding of the MLC
operations prior to receipt of administrative assessment funds,
including information that may relate to voluntary contributions; \64\
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\64\ See id. at 115(d)(7)(B).
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Information related to whether and to what extent the
proposed MLC may take on debt obligations to fund its operations, and
what collateral may be used to secure such debt; and
Information regarding whether and how the proposed MLC may
apply unclaimed accrued royalties on an interim basis to defray
operating costs, as well as any accompanying plans for future
reimbursement of such royalties from future collections of the
administrative assessment, including relevant legal considerations and
guidelines in the event the proposed MLC does intend to apply unclaimed
accrued royalties.\65\
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\65\ See id. at 115(d)(7)(C):
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g. Education and Outreach. The Office welcomes information
regarding how a proposed MLC intends to pursue its education and
outreach efforts, including how it intends to reach diverse audiences
to ``engage in diligent, good-faith efforts to publicize the collective
and ability to claim unclaimed accrued royalties for unmatched musical
works (and shares of such works).'' \66\ Please reference any relevant
experience of proposed board members, personnel, and potential vendors.
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\66\ S. Rep. No. 115-339, at 14.
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2. Governance
The following questions are directed at identifying an entity that
can best adhere to the required governance criteria outlined in section
115(d)(3)(D) of the MMA.
a. Composition. As directed by statute, the Office requests:
The name and affiliation of each member of the board of
directors described above and in 17 U.S.C. 115(d)(3)(D)(i);
The name and affiliation of each member of the operations
advisory committee described above and in 17 U.S.C. 115(d)(3)(D)(iv);
The name and affiliation of each member of the unclaimed
royalties oversight committee described above and in 17 U.S.C.
115(d)(3)(D)(v);
The name and affiliation of each member of the dispute
resolution committee described above and in 17 U.S.C. 115(d)(3)(D)(vi);
and
Proof that the proposed MLC is a nonprofit entity, not
owned by any other entity that is created by copyright owners to carry
out responsibilities set forth in the statute.
In responding, please also address the following topics to explain
how these individuals, and the respective board or committees, meet the
statutory criteria:
The process and criteria used for selection of board and
committee members;
How the proposed songwriter board members individually and
together faithfully reflect the entire songwriting community; \67\
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\67\ Id. at 5.
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How the proposed music publisher board members
individually and together faithfully reflect the entire music publisher
community;
Whether the proposed MLC believes that the board members
who are ``representatives of music publishers . . . to which
songwriters have assigned exclusive rights of reproduction and
distribution of musical works with respect to covered activities'' \68\
could include representatives of music publishing administrators, where
copyright ownership interests are not transferred to the publisher, but
remain with the songwriter(s);
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\68\ 17 U.S.C. 115(d)(3)(D)(i)(I).
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Whether board members, who are either representatives of
music publishers or professional songwriters, intend to license covered
activity through the proposed MLC, or whether, and to what extent, they
intend to license covered activity directly with licensees; and
With respect to the unclaimed royalties oversight
committee, how the proposed members possess specific insight and
knowledge about the types of owners and songwriters whose works
[[Page 65753]]
may be susceptible to being unmatched and unclaimed.
The Office notes the Presidential Signing Statement accompanying
enactment of the law indicates an expectation that the Register work
with the MLC, once it has been designated, to ensure that the Librarian
retains the ultimate authority to appoint and remove all directors.\69\
The Office invites comment regarding how the proposed MLC intends to
address issues relating to succession of board and committee members,
and any other obligations that may be impacted by this statement.
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\69\ MMA Signing Statement.
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b. Governance Issues. The Office further requests that prospective
MLCs provide:
Draft bylaws or other documentation regarding how the MLC
will ensure that the operations of the MLC and its board are
transparent and accountable; \70\
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\70\ See H.R. Rep. No. 115-651, at 5 (stressing importance of
transparency ``to avoid unnecessary litigation as well as to gain
the trust of the entire music community''); S. Rep. No. 115-339, at
5 (same).
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Information regarding how the proposed MLC board may
identify and approach perceived or actual conflicts of interest,
including with respect to applicable law and/or rules of professional
responsibility, and the selection of board and committee members and
individual vendors; and
Information regarding how the MLC may approach
confidential information, including board and committee member's access
to sensitive information regarding marketplace rivals.
3. Indicia of Endorsement and Support
As noted, the MLC must be ``endorsed by, and enjoy[] substantial
support from, musical work copyright owners that together represent the
greatest percentage of the licensor market for uses of such works in
covered activities, as measured over the preceding 3 full calendar
years. '' \71\ The Office understands that there may be conflicting
views regarding how the ``greatest percentage of the licensor market''
should be measured--i.e., in market value, or in number of licenses.
That said, the Office has made a few preliminary interpretations
regarding this clause. For example, because the section 115 license
applies to uses of phonorecords in the United States, the relevant
market is the United States market for making and distributing
phonorecords of musical works. Endorsement may be shown by including
musical work copyright owners located outside the United States so long
as they control the relevant rights to works played or otherwise
distributed in the United States. Similarly, because the statute seeks
support from ``musical work copyright owners,'' the relevant support
should come from the parties who have a relevant ownership interest in
the copyright to musical works (or shares of such works), in contrast
to parties who do not possess any ownership interest in the musical
work but rather the ability to administer the works.\72\ Further, the
Office does not read this clause as prohibiting a musical work
copyright owner from endorsing multiple prospective MLCs.
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\71\ 17 U.S.C. 115(d)(3)(A).
\72\ Al Kohn & Bob Kohn, Kohn on Music Licensing 170 (4th ed.
2010) (``An administration agreement is an agreement between two or
more people that provides one of the parties, called the
administrator, the right to administer the music publishing
activities . . . relating to the musical compositions covered by the
agreement, in exchange for the payment of an administration fee.
Unlike an exclusive administrator under a co-publishing agreement,
the administrator under an administration agreement generally does
not acquire any ownership interest in the compositions covered by
the agreement.'').
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The Office requests that a proposed MLC address how it interprets
and satisfies this endorsement criteria, including an explanation of
how the proposed MLC has calculated and documented the endorsement and
substantial support of the requisite number of copyright owners.
B. DLC and Its Board Members
The Office hereby requests proposals for designation as the DLC
that includes articles of incorporation, along with contact information
for the collective. The Office requests that proposals include a list
of proposed board members and their relevant background and
affiliations. The Office further requests that proposals for the DLC
designation include the following information:
A business plan, including any statement of purpose or
principles and proposed schedule for establishment and operation of the
proposed DLC in the first five years of its existence;
A detailed description outlining how the proposed DLC has
or will have the administrative capabilities to perform the required
functions; \73\
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\73\ See 17 U.S.C. 115(d)(5)(B)-(C).
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To the extent available, information regarding proposed
governance structure, criteria for membership, and any anticipated
dues; \74\
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\74\ See id. at 115(d)(5)(C)(i)(I).
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Information regarding how the proposed DLC intends to
address issues of confidentiality as it relates to the DLC
representative on the MLC board;
Views whether a single vendor may simultaneously provide
services fulfilling the statutory obligations of the DLC and the MLC;
Information regarding how the proposed DLC intends to
pursue its outreach efforts, including ``reasonable, good-faith efforts
to assist the mechanical licensing collective . . . by encouraging
digital music providers to publicize the existence of the collective
and the ability of copyright owners to claim unclaimed accrued
royalties. '' \75\ Please reference any relevant experience of proposed
board members, personnel and potential vendors; and
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\75\ See id. at 115(d)(5)(C)(iii).
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Any other information that proposed DLC believes is
relevant to demonstrate it best meets the selection criteria.
Finally, the Office requests that the proposed DLC address how it
interprets and satisfies the criteria that it must be ``endorsed by and
enjoy[] substantial support from digital music providers and
significant nonblanket licensees that together represent the greatest
percentage of the licensee market for uses of musical works in covered
activities, as measured over the preceding 3 calendar years. '' \76\
Please include an explanation of how the proposed DLC has verified,
calculated, and documented such endorsement and substantial support,
including how the licensee market was calculated.
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\76\ Id. at 115(d)(5)(A)(ii).
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III. Additional Opportunity for Public Participation
Depending on the feedback received, the Office may request
additional information in the form of a public notice, directed letters
inviting prospective MLCs to supplement or respond to certain
information, or a public meeting or hearing.
The Office will also consider whether to utilize informal meetings
to address discrete issues prior to issuing a designation by
establishing guidelines for ex parte communications. The Office's
proceedings typically do not include discussions about the substance of
a proceeding apart from the noticed phases of written comments and
public hearings (although the Office does provide procedural guidance
to participants). But for certain proceedings, the Office has
determined that informal communications with participants can be
beneficial in limited circumstances where the Office seeks specific
information or follow-up
[[Page 65754]]
regarding the public record.\77\ Following that precedent, in this
proceeding, any such communication will be so limited. The primary
means to communicate views in the course of the designation process
will be through the submission of written comments. In other words,
informal communication will supplement, not substitute for, the written
record. While exact guidelines governing ex parte communications with
the Office regarding the designation process may be issued at a later
date on https://www.copyright.gov/rulemaking/mma-designations/, they
would be similar to those imposed by the Office for the recently
concluded section 1201 proceeding.\78\ For example, the participating
party or parties will be responsible for submitting a list of attendees
and written summary of any oral communication to the Office, which will
be made publicly available on the Office's website. In sum, the Office
will require that all such communications be on the record to ensure
the greatest possible transparency.
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\77\ See, e.g., 82 FR 49550, 49563 (Oct. 26, 2017) (identifying
guidelines for ex parte communications in section 1201 rulemaking);
82 FR 58153, 58154 (Dec. 11, 2017) (identifying guidelines for ex
parte communications in rulemaking regarding cable, satellite, and
DART license reporting practices).
\78\ See U.S. Copyright Office, Ex Parte Communications, https://www.copyright.gov/1201/2018/ex-parte-communications.html.
Dated: December 18, 2018.
Regan A. Smith,
General Counsel and Associate Register of Copyrights.
[FR Doc. 2018-27743 Filed 12-20-18; 8:45 am]
BILLING CODE 1410-30-P
